2016 Guidance
This guidance discusses future results, which are inherently subject to unforeseen risks and developments. As such, discussions about the business outlook should be read in the context of an uncertain future, as well as the risk factors identified in the safe harbor language at the end of this release and as more fully outlined in the Company's 2015 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission.
This guidance excludes any unusual items that may occur or additional portfolio or restructuring actions, not specifically identified, as the Company implements plans to further streamline its operations and reduce costs. Revenue guidance is provided on a constant currency basis because the Company cannot reasonably predict the impact future changes in currency exchange rates will have on revenue. Additionally, the Company cannot provide GAAP EPS and GAAP cash from operations guidance due to the uncertainty of future potential restructurings, goodwill and asset write-downs, unusual tax settlements or payments and contributions to its pension funds, acquisitions, divestitures and other potential adjustments, which could (individually or in the aggregate) have a material impact on the Company’s performance. The Company’s guidance is based on an assumption that the global economy and foreign exchange markets in 2016 will not change significantly.
The Company expects improving trends in the business in the second half of the year as a result of actions taken to achieve its long term strategic initiatives. Based on year-to-date results, particularly in Software, along with the second quarter temporary impact in North America Mailing as a result of the new enterprise business platform cutover, the Company is adjusting its annual guidance.
The Company now expects, for the full year 2016:
- Revenue, on a constant currency basis, to be in the range of a 1 percent decline to 3 percent decline when compared to 2015.
- Adjusted EPS to be in the range of $1.75 to $1.82, excluding the year-to-date EPS charge of $0.13 related to restructuring, asset impairments, dispositions expense and discontinued operations.
- Free cash flow to be in the range of $400 million to $450 million.
- Annual tax rate in the range of 33 percent to 35 percent.
Therefore, for the second half of 2016 the Company expects:
- Revenue, on a constant currency basis, to be in the range of 2 percent growth to 2 percent decline when compared to 2015.
- Adjusted EPS to be in the range of $1.03 to $1.10.
- Free cash flow to be in the range of $254 million to $304 million.
To achieve improvement in the second half of the year as compared to the first half, the Company expects:
- The North America Mailing business to return to a more normalized level as the Company continues to make progress post the new enterprise business platform cutover.
- Enterprise Solutions Group to perform similar to the first half.
- Within Digital Commerce Solutions, Software license revenue growth is expected to improve as a result of the progress the Company is making in channel efficiency and channel partner engagement. Global Ecommerce, post the anniversary of the Borderfree acquisition, is expected to grow revenue double-digits in the second half, subject to no material changes in key currency valuations or any new material impacts from the Brexit decision or Canada Post labor negotiations. This will be driven by continued transaction volume growth, as well as the acquisition of new and expansion of existing retail clients.
- Adjusted EPS and free cash flow will benefit from the expected revenue improvements, reduced marketing and ERP expense from first half levels.
- Adjusted EPS will also benefit from the early benefits from the new enterprise business platform cost savings, particularly in the fourth quarter.
- Free cash flow will also benefit from the recovery of delayed billing and collections activity related to the enterprise business system cutover.
Conference Call and Webcast
Management of Pitney Bowes will discuss the Company’s results in a
broadcast over the Internet today at 8:00 a.m. ET. Instructions for
listening to the earnings results via the Web are available on the
Investor Relations page of the Company’s web site at
www.pb.com.
