Letter to Shareholders
We have made tremendous progress over the past decade evolving Pitney Bowes into a global shipping and mailing company to help clients reduce the complexities of sending parcels and mail. Ten years ago, when I joined as CEO, Pitney Bowes was stuck in secular decline with substantial debt. We are a much different company today. We are a vibrant company with innovative technology, great capabilities and a steely-eyed determination to serve our clients. We are also positioned to grow with many new opportunities that could not have been previously envisioned. And all this has happened while staying true to our core values.
While our progress has not always been a straight line — or easy — we continue to take the necessary actions to create long-term value. We have invested in our business, our people and our client relationships. This is reflected in our revenue results over the past five years, our employee engagement scores — which are consistent with high performance companies — and our improving client satisfaction scores. While I am confident profitable revenue growth will follow, I would be the first to admit that it has taken longer than I would have hoped. That said, I believe the necessary ingredients are in place for sustained profitable revenue growth.
Our Board of Directors and management team remain focused on delivering sustainable future value for our shareholders. Our strategy has always been keenly focused on a simple truth: Build a great business, consistent with the values that have sustained Pitney Bowes for over 100 years, and positive results will follow.
We continue to believe our portfolio is properly aligned in markets where we have brand permission to win. That being said, we are always are on the lookout for opportunities to drive shareholder value.
Pitney Bowes has been reimagined and reshaped, strategically, with bold investment and a willingness to make the hard decisions to create long-term value. Our culture and resolve have never wavered. The people of this great company continue to do the right thing the right way.
Our watchwords going forward are agility, focus and acceleration. We will benefit from the strong alignment of businesses across our enterprise, which are truly differentiated, better and stronger together. Each of our businesses plays a critical role in driving our strategy and each benefits from significant competitive advantages as part of Pitney Bowes.
Transformation is never easy, but our people continue to forge ahead with grit and resilience.
Recap of 2022
It was a good year overall, given all the external factors our people, clients and markets faced and had to overcome.
During 2022, we successfully reconfigured our parcel network. We added many new, key customer relationships. We established positive momentum toward the end of the year, particularly in Domestic Parcel and Global Ecommerce.
Pitney Bowes Results
- For the year, our revenue was $3.5 billion, similar to 2021 on a comparable basis
- Employee engagement scores were consistent with high-performance companies
- Continued improvement in client satisfaction scores
- Voted one of America’s Best Large Employers, Best Employers for Diversity and Best Employers for Women by Forbes
- Presort processed 16 billion pieces of mail and grew revenue by 5%
- Three new markets entered: Las Vegas Mega Center, Orlando and Salt Lake City
- Grew equipment sales by 4% on a constant currency basis and increased finance receivables by $44 million to $1.2 billion
- 20%+ growth in identified Growth Initiatives
- Introduced the Shipping 360™ Platform and launched PitneyShip Pro, which helped drive shipping-related revenue growth of 22% year over year
Global Ecommerce Highlights
- Processed Domestic Parcel volumes of 170 million, grew Domestic Parcel revenue by 10% and
- Expanded unit margins by $0.34 versus prior year
- Based on new client wins, our annualized Domestic Parcel volumes are now approximately 200 million and we expect to build further on that level for full-year 2023
- Substantial improvement in service levels, which are now comparable to best-of-class providers
- Maintained high service levels and continued contribution margin improvement during the holiday peak season
- Launched next-gen portfolio of ecommerce logistics service platforms: Designed Delivery, Returns and Cross-Border and Fulfillment services
- Network buildout completed with attendant automation
In early April of 2022, we were honored to be present at the signing by President Biden of the historic Postal Reform Bill. The legislation was 14 years in the making and made many necessary changes to the laws regulating the USPS. Our presence underscores the essential role Pitney Bowes plays in how the United States works. With new agreements in place, we look forward to serving as an even greater partner with the USPS in mail and parcels.
Our Past 10 Years — and Our Past 100+
Over the past decade of our stewardship of this remarkable and iconic company, we undertook a purposeful transformation. The Board and management team have taken decisive action to remake the business that is focused on creating long-term value. And an entirely different company has emerged, carrying our proud legacy strengths forward, but also shaping and scaling for the future ahead of us all.
In 2012, it was clear that strategic transformation was required to ensure the long-term viability of Pitney Bowes as a profitable business. Therefore, we simplified our portfolio, expanded our base outside SendTech and Presort to have a strong presence in Global Ecommerce and improved our credit profile, including significantly reducing our debt.
Our focus on creating and bolstering a foundation for sustainable, profitable growth continues. This includes:
- Shifting our business into growth markets that are logical adjacencies
- Reducing complexity of shipping and mailing for our customers through our innovative offerings
- Optimizing our cost structure through right sizing and operational improvements·
- Leveraging economies of scale to drive profitability across the enterprise
This strategic and, frankly, necessary transformation over the past decade has required significant investment, but that CapEx is behind us, and we believe the benefits from these investments will soon be realized.
Of course, along the way we have endured many unforeseen challenges, chief among them the global pandemic and its ensuing fallout, but also two recessions and global supply chain issues across all industries, which contributed to delaying our transformation. But the people of Pitney Bowes did what they always do: persevere.
As we continue to navigate a turbulent market, we believe our businesses are well positioned for future success. We are confident that our shareholders will share in the value that derives from this success in the near future, especially as there has been recovery in various macro factors impacting our business.
A Note on ESG
While our business purpose is rooted in delivering quality and value for our clients and a good return for our investors, at the same time, we are steadily raising the bar on environmental, social and governance matters in keeping with our responsibilities as employer, neighbor and corporate citizen. This broad effort spans environmental sustainability; employee health and safety; diversity, equity and inclusion; ethics and compliance; community involvement; and, philanthropy. Our progress in this regard is detailed in our latest ESG Report.
We built Pitney Bowes for long-term success and keep driving toward it. We see significant opportunity in Domestic Parcel — a business only five years old and on the rise, with a great runway ahead of it. Global Ecommerce remains a strategic necessity for how we navigate and succeed in the present, with tremendous promise ahead.
Long term has always been our frame of reference, in all that we do.
We continue to attract and retain talent that embodies that perspective. We have great people who love working here. You can see it from afar in our NPS numbers, but it’s even more present and palpable up close, in the voices, actions and spirit we share.
We all know that there is still a lot in front of us, but we have the goods and the grit to keep Pitney Bowes moving forward, as a leader and an integral part of how the global economy works best.
Now is our time for acceleration as we work toward bringing our favorable future to life.
Marc B. Lautenbach
President and Chief Executive Officer