Q2 2023 Pitney Bowes Inc Earnings Call
Good morning, and welcome to the Pitney Bowes second quarter 2000 twenty-three earnings conference call. Your lines have been placed in a listen only mode. During the conference call and tell the question and answer segment. Today's call is also being recorded if you have any objections. Please just connect your law.
Lions at this time I would now like to introduce participants on today's conference call Mister Mark Lautenbach, President and Chief Executive Officer, Miss Anna Marie Chadwick Executive Vice President and Chief Financial Officer, and Mr. Alexander Brown Senior manager Investor Relations Mister Brown will now begin to call.
[noise] with a safe Harbor overview.
Good morning I'm on.
Alex Brown and thank you for joining us.
Included in today's presentation.
Looking statements about our future business and financial performance.
We're looking statements involve risks and uncertainties that could cause actual results to be materially different from our projections.
More information about these risks and uncertainties that can be found in our earnings press release or 20 twenty-two Form 10-K annual report and other reports filed with the SEC that are located on our website at www.
Dot P b dot com and by clicking on Investor Relations.
Please keep in mind that we do not undertake any obligation to update forward looking statements as a result of new information or development.
Also for non-GAAP measures that are used in the press release or discussed in our presentation materials. You can find reconciliation to the appropriate GAAP measures and the table attached to our press release.
Finally, we have provided a slide presentation and spreadsheet with historical segment information on our website.
And now I'd like to turn the call over to Mark.
Thank you Alex and good morning, everyone.
I appreciate you all joining us this morning.
The second quarter pointed out as we expected as trends from the first quarter largely continued.
Santa Presort group profit for the quarter, although some tech left some transactions on the field that we were expecting.
We expect those transactions to close in the third quarter <unk>.
<unk> had a solid quarter growing both revenue and profit for the second quarter.
Both of these businesses are well positioned for the third quarter and the second half.
Global Commerce continued to experience different crosscurrents.
On the one hand or cross border business continued to face headwind, there's two of our largest clients changed how they access our offerings.
Our digital expedited business treadmill with the overall e-commerce market. However, the large social platform opportunity I've mentioned previous calls.
Come on line.
Hard to predict how this opportunity will roll out.
But it could be a very interesting opportunity.
Growth in our domestic parcel business, where opportunity to create value centered excel.
Accelerated in the second quarter and.
Personal growth for the quarter was right around 30 per cent.
Where women new clients and a growth as well above the market.
Prices in a way it's are less than expected, but consistent with historical periods, where retail performance is under some stress.
Oh network continue to perform well and our service levels are very competitive in the market.
Finally.
Our costs are progressing as expected and are consistent with what was expected in a long term plan.
Let me unpack the cost dynamics in this business because they provide the foundation of our confidence.
A unit costs were transportation improved 12% quarter to quarter and 26% year to year.
Going forward to achieve our long term plan.
Our plan assumes postal costs trading with inflation.
Transportation unit cost remaining relatively flat.
Labour cost inflation, offset by nominal productivity and fixed cost absorption improving as volumes improve.
So it another way the plan relies on fairly standard cost improvements.
I'm sure the market pricing and volume growth well less than we are experiencing right now.
For me however, the big news about the quarter was how well we positioned ourselves for the second half.
We got a lot of important work done.
I don't Wanna give you more details, but our restructuring program is proceeding as we expected.
Not slightly ahead of schedule.
Much of the cost and expense takeout centered N G C. As we right side of that business.
The reset of our cross border business, and we fine tune to account for better than expected performance of the network.
We also completed our refinancing which positions the balance sheet for the next several years.
Next our bank began to buy receivables from our captive leasing company fundamentally improving the earnings power of our bank and diversifying the bank's balance sheet.
We've been working on this for a good bet.
And this development improves the posture of our bank, which was already very strong.
Finally, the July U S. P. S. Right case expanded work sure discounts recognizing the substantial value of the workshop program to the U S. P S and our clients and improving the economics of our presort business going forward.
So to summarize the second quarter. It turned out as we expected lots of work came to fruition upset us out very well for the second half and going forward.
With that I'll turn it over the floor to honour to walk through the operating and financial details with the corner.
Thank you Mark and good morning, everyone.
Before I begin my financial review I'll note that the year every year revenue information will be discussed on a comparable basis, which as previously discussed it just for the impact of currency.
Disposition, a border free any revenue presentation change for a digital services.
This revenue presentation change primarily affects global ecommerce revenues.
And to a lesser extent send thick that change does not affect the dollar profitability of our activities.
Also unless otherwise noted I will speak to other items, such as a bit EBITDA and E. P S on and adjusted basis.
Total revenue for the quarter was 776 million, which is a decrease of 5% compared to the prior year second quarter.
Gross profit for the company was 259 million compared to 274 million for the same period last year, a 6% decrease.
S. G N a was $223 million in the quarter and down 4 million from prior year with an S. G. N. A unallocated corporate expenses were 48 million up from 41 million a year ago, which was largely due to timing of employee variable compensation.
Interest expense, including finance interest was 38 million, which is up to 4 million due to higher interest rates on our floating debt.
I just it was 72 million compared to 82 million a year ago and.
It's just that if it was 32 million compared to 39 million in prior year.
Ah just that E. B S was a two cent loss in the quarter compared to two cents in prior year.
Gap G. P. S was 81 cent loss in the quarter.
Got P. B S includes a non-cash 67 cent goodwill impairment charge related to the global ecommerce segment due to performance of our global ecommerce unit through June 30th 2023, and continuing changes in macroeconomic conditions.
Turning to cash flow.
Gap cash from operating activities was breakeven.
Free cash flow was of use of 11 million compared to a source of 8 million last year.
Topics with a quarter it was 26 million down from 32 million and prior year.
During the quarter, we paid 9 million and dividend unmade 8 million in restructuring payment.
Let's dive into our three business segments.
I'll start with setting thick.
Then tech reported revenues of 321 million in the quarter down 4% compared to prior year.
We continue to make progress on our product refresh an hour now 63% through the eye of my migration, which is up 20 percentage points from prior year.
We are now entering a stage of our product lifecycle, well, we will have less you Lisa opportunities offset by a corresponding increase it fixed term lease extensions.
This is largely due to our success and placing new equipment over the past several years.
From a financial perspective, this shifts results in lower upfront equipment sales offset by higher marching financing revenue.
Bread over the lease term.
This is a net positive to cash flow.
These dynamics, coupled with transactions being deferred played out in the second quarter with equipment sales down 11% compared to prior year and financing revenue only down 1%.
Shipping continues to be a bright spot for sent it in the quarter shipping related revenue grew 14% over prior year and now comprises 12% of segment revenues.
We remain very encouraged by the traction or shipping products are receiving especially in the enterprise segment, where we saw our largest growth.
Moving to profit adjusted segment EBIT grew two per cent over prior year, a synthetic removed cause faster then revenue declined.
We achieved this through initiatives to drive efficiencies and simplified the business.
First we reorganized our supplier network to be less concentrated in China.
While also lowering the cost of equipment manufacturing and freight.
[noise] actions helped offset product mix headwinds and resulted in flat equipment gross margins you're over a year.
Second we continued to optimize our sales and customer service operations.
Driving more clients touch points to lower costs channels. For example, more than 50 per cent of our U S. S. M B client service request.
Are handled via an automated chats function.
This has resulted in a 22% decline total customer touch points, while maintaining and over 80% customer satisfaction score.
These actions continued to demonstrate the durability of the business.
I'll spend a moment on the performance of financial services inside of synthetic.
This quarter, we made significant progress positioning our financial services for long term success by growing finance receivables, including those held at the Pitney Bowes Bank.
We also initiated a program where our bank will participate in the financing of select captive lease receivables.
And initiatives that will be good for the bank and the enterprise overall.
Finance receivables grew 12 million over the quarter to 1.2 billion and we continue to see healthy payment trends across our financing portfolio with delinquencies improving too it's best level and over 15 years.
Next let's drink to prescreen.
Freezer generated revenue of $143 million in the quarter up 3% from prior year.
Total sortation volume declined 5% two 3.6 billion pieces.
Revenue per piece expansion and growth in higher yielding mail classes upset volume declined.
I just it's segment for the quarter was 20 million, an increase of 59% compared to last year.
Adjusted segment, EBIT margin improved 500 basis points to 14%.
The improvement in margins highlight the teams excellent work driving operational efficiency.
More specifically margin improvement was due to better revenue per piece.
Continued labor productivity gains from our investment you shorter's and lower unit transportation costs.
Also as Mark mentioned the U S. B a implemented you rate on July 9th that reflect the value our pre certain network provides our clients and the postal service.
These new right along with continued technology investments and operational improvements will help drive continued strong performance in the second half.
Let's shift to global ecommerce.
Revenue was $313 million down 9% versus prior year.
I'd just that segment if it was a loss of 38 million compared to a loss of 29 million last year.
Cross border continues to weigh heavily on segment performance.
Changes in how our two largest cross border clients access our services, which we described in last quarter's earnings call contributed to over 100% of the year over year decline in segment revenue and drove lower adjusted segment if it.
Cross border revenue, excluding border free declined 55 million versus prior year, and 24 million versus last quarter.
Gross profit was down 13 million and 4 million against the same time periods.
Moving forward, we expect changes in cross border to be less significant on a sequential quarter basis.
We continue to be encouraged by the progress in domestic parcel.
With several strong leading indicators that set the stage for improved financial performance.
These are.
Strong service levels.
Ballroom growth.
[noise] unit cost improvement.
Let me unpack beside him.
First service levels were very competitive in the quarter with on time delivery, reaching the high nineties doing several weeks in the quarter.
This performance bolstered clients satisfaction scores, we reached an all time high and.
And more new clients want our services.
Second.
Domestic parcel volumes were 50 million up 29% over prior year against the market that is close to flat.
Domestic parcel revenue grew 19 per cent.
Third higher volumes, coupled with operational improvements drove 8% lower unit cost versus prior year and three per cent lower versus prior quarter.
Transportation and labor costs are now in line with our longterm model.
Unit transportation costs declined 26% versus prior year, and 12% versus prior quarter and.
And labor costs declined, 12% and 3% against the same periods.
However, similar to last quarter, a mix of lighter weight parcels combined with pricing pressures from market overcapacity resulted in lower revenue per person.
In addition, a regional delivery offerings.
Which have been essential to any more volume in the market have also impacted revenue per person.
These dynamics absorbed the improvement in unit cost.
We already started to address this issue with our newly signed 2023 clients.
Which on average come at a higher revenue per parcel and marches.
We expect volumes from our new clients to start ramping up in the second half and scale as we move into 2024.
From an operating expense perspective, we completed a significant portion of the planned headcount reduction.
We also made progress on our plan to consolidate facilities.
In total we have started the process to close three facilities all of which will occur in the third quarter.
These actions marginally benefited expenses in the second quarter.
And will provide further benefit in the second half of the year and going forward.
Cost actions combined with more attractive incremental volume, we expect to come on line in the second half of the year are the major building blocks required for longterm profitability in the segment.
That said, we expect continued pressure on revenue per parcel into third quarter.
Let me shift gears and discuss the meaningful progress we made on the restructuring and cost reduction plan announced last quarter.
We reduced head count and shifted more processes to shared service centers, resulting in restructuring charge of 22 million.
We are reaffirming our annualized savings target of 75 million by the end of 2024 from the restructuring plan and productivity measures and globally commerce.
Next regarding capital structure.
We took several significant actions to strengthen our balance sheet.
During the quarter, we bought 13 million of bonds and the open market, bringing the total purchase 239 million year to date.
Most importantly earlier this week, we raised 275 million in a private placement offering maturing March 2028.
Net proceeds will be used to redeem the remaining balance of 2024 note as well as a portion of our term loan eh.
After this refinancing our next maturity will be in 2026.
Moving to guidance.
For full year 2023, we expect revenue to be on the lower end of our guidance.
Relatively flat on a comparable basis, we continue to expect adjust that performance to outpace the percent change in revenue.
We also anticipate third quarter revenue and is it to improve versus second quarter is incremental volumes and global ecommerce.
New rate case, and preferred and cost actions materialized.
In conclusion.
Send thick and priest maintained strung momentum with profit growth.
And while cross border remainder headwind in the quarter strong service levels volume growth in unit cost improvement in domestic parcels position globally commerce, well for the second half.
Operator, please open the call to questions. Thank.
Thank you, ladies and gentlemen, do wish to ask a question. Please press one and then they're all on your telephone keypad you can withdraw your question at any time by repeating the ones you will command and if you're using a speaker phone. Please pick up the handset before pressing those numbers. Once again, if you have a question. It's one zero at this time.
One moment Toyota Anthony Liberties, Skeet withstood Odie and company. Please go ahead.
Good morning, and thank you for taking the questions. So so first I guess, maybe a little bit of a bigger picture of questions. So that you can just easily.
Close to public calls since the board of directors was changed.
What can you share with us so far as far as in regards to the initial assessment of the new board.
So it wasn't Ah here's what I would say about the the board I would say the fall in the the Onboarding that we.
Went through with a new board members Ah was terrific.
They were highly engaged lots of great questions and hopefully we pastime lots of great information.
Ah. So that's the first thing I would say I would say the second thing you know.
Reconstituted the committees and the board sure all of those.
Votes were unanimous so you see people coming together to to move forward and then I would say you know beyond that you know, there's a fairly intensive effort Ah for I would say the entire board the the new bomb over his as well as he was actually more members to Ah you know drive shareholder value Ah.
Consistent with how you would expect.
Got it okay. Thank you for that and then you know in in regards to a G E C. So.
Obviously cross border was the biggest headwind within that so if we were to exclude cross border.
Can you comment on the profitability of G E C.
Oh, you know the numbers could have been looking but just kind of ballpark maybe estimates.
Yeah, I would say a director and domestic parcels profit increased and expedited kind of troops.
With the market. So I think on the side of her remarks or.
Somewhere you know the the deterioration in cross border revenue and profit consumed everything and then some over the over the progress with the rest of the settlement married so that that's gonna find its right level. When you know one way or the other.
But you know as we've said all along and I I'd go back to us as we contemplate.
Long term plan.
And where the value creation opportunity is it's in domestic parcels.
So you know I would say the cross borders Clinton's noise right now and the results and you know it seems doing their best to kind of work their way through it.
But you know we continue to keep our eye on the prize and that's when the domestic parcels and you know if you kind of go through that.
Dynamic yoga.
The personal growth.
In the second quarter was terrific well above the market.
The unit costs.
Behaved exactly if not a little bit better than what we would have thought Ah and are consistent with kind of the end points over the long term plan.
The service levels were terrific.
You know and it it was honest or there's some there's some pressure on revenue per piece, which is a little bit of a.
Market phenomenon, and a little bit Ah of some of the new customers that we've.
Right on that come with a slightly different.
Different revenue for peace because there are much more you know focused on regional types.
Of services. So therefore, you're while they bring less revenue per piece. They also bring less cost. So you know the.
The more we start the costs are in the in the revenue per piece the more that we get confident that those dynamics are working out.
Precisely the way that we.
You know would expect the long term plan.
Uh-huh got.
Okay, and then you know so so just to follow up as far as you know cross border. So that's been you know sort of the the biggest challenge just for a.
A few quarters.
Is that a.
Subsegment, though you can you could perhaps maybe carve out and looked to divest or is that not that.
That's not something that you would consider.
No we would absolutely consider it and this is true across the board I mean, I've always said you know we we've.
We'd certainly put the portfolio together in a way that you know they can share structures and get efficiencies and economies of scale and all those things at the same time you know we.
Maintain optionalities, so if a business and you saw it with border free I mean, right. So far for it is kind of the proof in the pudding you know that was a business that we chose to exit.
You know and I would say the rest of the class or a business. You know we have that same degree of Optionality.
Got it Okay and then.
Yeah, I know you mentioned that the revenue per piece will be down in a store or court or is that something is that dynamic is something that you would expect that in the fourth quarter as well or do you think that some point you could start to see a reversal of that or maybe just kind of slapped me I've given the.
A new client Windsor, and or so far and maybe a potential new client when it's that you have in the pipeline.
I would say you know revenue per piece.
Ordered a quarter.
Is a touch of a question for me right now I I, obviously, you know so much of that depends on.
Ah client dynamics, what you know what clients are hitting the ball what consumers are buying.
Etc. So you know quarter of course.
Little bit of Ah.
A guy she had ear I do expect like we'd be down there.
Because some of the new clients, but again no. If you look at our P. P.
Revenue for peace declining Ah Ah Ah in the second quarter.
Transportation cost declining the same amount. So so you know it it it's easy to over rotate on one particular variable you really gotta work at you know the contribution margin and we work out of the client basis. So looking at one variable without kind of working at the attendance.
You know you're gonna cost to lead you to the wrong conclusion.
Got it alright, well, thanks I'll pass it on to the next caller on the best of luck.
Thank you.
And actually go to partake met at West North Coast Research. Please go ahead.
Good morning, Mark.
I know we've had a lot of conversation about the cross border business and I'm wondering do you think this is a particular issue for you or is it a temporary so you know right now I know, it's a drag and I'm wondering if there's a way to reposition the business to make it profitable or is it just you need volume and maybe it's a temporary issue.
Yeah. It was a car guy I think that's to be determined you know.
In all candor you know it it is a business is highly concentrated into customers those customer relationships instead of you know.
Ah evolved Ah you know those dynamics, we'd unexpected to change.
The.
The issue around exchange rates are stabilized or touch so that's a little bit less of a problem.
So you know I I think it was a question mark of how that cross border business involves going forward, but you know again I I think it's easier to kind of over rotate on cross border I would draw your attention back to the domestic parcel business I mean, that's where you know the biggest chunk of revenue is if you work with a longterm plan, that's where all the incremental Ah Ebert is and.
You know two of those.
To your question in the class bore things will work itself out one way or the other either we'll we'll get that business you know.
Moving forward or if not you know I'm I'm confident that it's got somebody in the workplace.
And then mark any one of the things that you were doing was automating a lot of the warehouses.
Abuse and facilities kind of where do you stand on that and obviously you must be paying some dividends as you are seeing better you're seeing lower unit.
Cost.
Yeah, I would say we are mostly done what's the automation investment we are in the process of deploying it we had a great review with the team on a couple of weeks ago.
I would say we've got some sites that are you know aggressively deploying and using.
The new automation, we've got some that have some opportunities in front of them, but what I would say is you know that automation is producing the productivity that was contemplated in the business case when it is you know.
Deployed it was planned.
Good morning, and just one last question you know in today's environment, where maybe the labor is still hard to get and these are looking to make their parcels or e-commerce, a little bit more efficient well what are you hearing for new customers regime.
Your salespeople out our company's looking to outsource bad or is that attitude changing at all.
I'm, sorry, what I'm not sure I understood. The question just the outsourcing all their Ah parcel needs you know coming to a company like you to say hey take over.
The entire parcel.
Parcels shipment process for us.
Well I mean so.
We.
Provide a portion of the total.
Logistics chain Ah. So we don't do the whole thing and and I would say the mid market customers.
Ah are more interested in outsourcing you know more of it larger customers are a little bit more selective.
I would say as you look at the.
Benefits of our business model I would point to a couple of things one is.
You know the postal service final mile delivery.
Is.
Got terrific economics, and you know one that Ah economics that others, you know I have a very hard time recruiting I would say as it relates to our capabilities in the middle Ah.
R. A unit costs are labor costs are are very very competitive versus.
Our competitors and were more flexible to deal with Ah. So you know we provide a nice a veneer of.
Parcels to.
Thanks, Mark I appreciate it.
Yep.
And what time for one more question will go to our map Swope with Barron. Please go ahead.
Hi, Good morning, working on a just just one last for me on on G. C. If you took out cross border.
Globally Commerce have had positive EBITDA for the quarter.
Yeah, I'm not gonna get to that level of detail what I would just reiterate what I said you know you could take out cross border you know either performance.
Would have been better.
Okay fair enough.
I've asked you a couple of times before on the cash side could could you characterize again for us to make it you have to you have about 560 odd million of cash and short term investments how much of that cash is is Ah.
Available to you versus tied up in the bank or Ah overseas et cetera.
Sure. So about about a third of that is available to us as a U S cash on hand.
And then the rest is between the bank and internationally.
And so again just being highly theoretical if you if you chose to deploy all 200 million of that third.
Would you still be able to run the business or do you need to keep some of that cash around.
Oh, I need I need I need a good amount of that to run my working capital.
Gotcha, Okay, and then in Mark may be back to the to the board question.
What is what is the cadence of meetings with the board, but you know when when did you guys next meeting or how often does that happen.
Yeah, I would say it varies I mean, you know we all drove the board schedule to accommodate the new board members I would say right now there may be more frequently just because there's no.
Come more coming up to speed so.
I'm not going to comment on the specifics.
[noise] cadence per se, but I I would say right now, it's a very active and engaged sport.
Sure and then you can you can imagine that people are sort of interested in in what might come out of that I mean, maybe to focus on the two other businesses just for a second.
On the on the Seine Tech side shows nice profitability in the face of some some revenue challenges still can you just talk a little bit about the profitability mix and send tech and and what we should expect and that going forward.
Sure so.
Profitability, we expect to continue at those margins that we're anticipating Ah.
From a revenue perspective, I touch them, destroying my remarks here.
We are now 63 per cent through the I M I conversion.
More of those new opportunities for clients that are coming up have a mix of renewal or an extension concept to their leases instead of a new product being put out because our product last longer than 245.
So what what we'll see in the dynamics playing out is we will see less of the upfront which comes with that original equipment sale and more are very good profit margin renewals coming through a stream revenue and that flows better.
To the bottom line. So net net is a very positive thing from a durability of those cash flows as we anticipate in the Innocentive segment.
C. A summer we expect those margins to kind of continue where they are you know through the long term plan. So we just had all the businesses update their long term plan and you know the the the margins that we have experienced in the last five years or kind of like the margins. We expect the next five years.
So we see the same kind of trend, where maybe it is a little bit of pressure on the revenue side, but but solid performance on the profitability side.
Correct.
That's that's great and and speaking of good profitability, the the presort numbers were or.
Strong.
Could you talk about sort of the same for conversation about where revenue in where profitability goes I'm pretty sure.
Yeah, let let me just make a connection I think if you look at the police or the thought they were absolutely terrific.
You know to us presort in some ways as the poster child for global Commerce.
You look at those two businesses in new substitute the word mail for parcels.
Fairly analogous an in camera, but if you look at the.
History of presort over the last 15 years and.
As they build scale and Ah as they've got more operationally sufficient Ah Ah Ah Ah excellent you can see those margins improve in terms of presort going forward.
No.
Last time, we gave guidance around prescribed it was bargains 15 plus per cent I.
I still think that's the right basic ZIP code you know, we expect flacco slightly positive you know revenue growth there so.
It's a it's a good business and I would say, there's there's opportunity was certainly on the web and decided to do.
Better than that if there was some interesting acquisitions it become available more customers you know decided to.
Outdoors, which is also possible and you know found them pack of Marilyn Mark and they will continue to be great opportunities.
Yeah, I I would say that.
The rate case that the postal service passed in July .
Oh, it's terrific for the market place and it's you know reflect those of.
The value that we provide but that's a really important ah boost to our economics in in our customers economics went forward.
That's great that's really helpful. Thank you.
Yep.
And we can go to Peter So I Kinda was credit sites. Please go ahead.
Hi, good morning.
Uhm following up on that Theresa.
Can.
Can you talk about the.
Press release, the growth and a higher yielding mail client and can you elaborate on what that means.
Sure. So inside of research. We have you know first class mail, we have marketing mail.
Getting metal flats, there's different classes and first class mail is the vast majority of what we processed and that is what mainly declines in that mid single digit range.
On the other hand, we've been going into marketing mail and found it print matter, which are classes of mail that are growing they represent a small portion of the total at the moment, but we anticipate that grows to continue and help offset some of the first classes mailed declined.
Oh, that's great. Thank you and could you talk about he said that a lady and definitely has been done and automation or cabinets and a quarter what was it five division.
To have that handy.
Go ahead.
Sure so.
What we've talked about is capex on a year over year basis. It is declining because the vast majority of our global ecommerce investment are done. So I I will tell you that about 40 or so per cent of our total capex is attributable to global ecommerce.
And then sent that could be the next big one presort has done a lot of the refresh up disorders already so I hope that gives you a little bit of a perspective.
Okay and Mark twice, you said you know.
Cos born in Israel.
Yeah.
I think he said one way or the other.
What is your sense of timing.
Resolution.
Business.
Listen I mean, where I'm at the thoughtful decision on that doesn't I mean, I would say.
The board and management, you know continually works with the portfolio. So it's not like it so.
Once a year thing that's how we look at the portfolio you know all the time and you know the decision that will make us what's the best way for you know first of all the customers and the team and ultimately our shareholders to to move forward. So I'm not going to box myself into a time frame.
Okay and.
I I guess the last part on across the board.
Give them a negative EBITDA.
Is the southern Italian marketplace.
That I guess consistent like is it.
The more expensive the clothing, because otherwise you would not have.
Laughter.
I didn't say it was negative.
I just said the decline in EBITDA out.
Surpassed the improvement in the other businesses.
Are you, saying that cross border.
Even though.
I didn't say it was negative.
Okay. Thank you.
And I'll turn it back over to Mister logging back for any closing remarks.
Great and thanks, everyone for joining this morning, I I wouldn't go back to kind of the same with my wife, the second quarter played out you know lodge, but is expected. It was consistent with the first quarter. So not a lot of drama in the second quarter.
Result.
You know what.
I really like how it position going forward. So you know we've been fighting through us.
I'm interested in economic moment for the last you know Kimberley coupla years since Covid.
Fact that brought our economy affected supply chain affected retail you know it feels like we're getting on the tail end of that right now and as we're coming out of that period.
I like how are positioned a constant expense Ah are.
Ah Ah.
In good shape, a good opportunity as we get into the second half that will make a meaningful difference. So all the caustic not all that.
Most of the cost of the expense benefits are still in front of us It will start to realize that was in the second half that's terrific.
The police art.
Yeah and Santa.
Oh, well positioned in the second half of the year for.
Continued good profit performance Ah that's important you know to the overall.
Most of the enterprises, it's also important for a cash.
And as it relates to.
Ah globally commerce.
The domestic parcel.
Momentum is absolutely terrific and we see that continuing and then again you know we didn't get any questions, but there was some important adjustments that we made that will fortify the bank.
The bank went forward that you know, we're really excited about how the bankers as well positioned. So this economic moment that were in is going to Ah and Ah and the company is extremely well positioned on all fronts. As we go forward. So that we'll close this morning's call and we look forward to visiting with Ya.
Thank you.
And that does conclude our conference for today. Thanks for your participation Excusing AT&T teleconference. Terrorists you may now disconnect.
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Good morning, and welcome to the Pitney Bowes second quarter 2023 earnings Conference call. Your lines have been placed in a listen only mode. During the conference call until the question and answer segment. Today's call is also being recorded if you have any objections. Please disconnect. Your lines at this time I would now like to introduce.
On today's conference call, Mr. Marc Lautenbach, President and Chief Executive Officer, Ms. Anna Marie Chadwick Executive Vice President and Chief Financial Officer, and Mr. Alexander Brown Senior manager of Investor Relations. Mr. Brown will now begin the call with a safe Harbor overview.
Good morning, I'm, Alex Brown, and thank you for joining us.
In today's presentation are forward looking statements about our future business and financial performance.
Forward looking statements involve risks and uncertainties that could cause actual results to be materially different from our projections.
More information about these risks and uncertainties can be found in our earnings press release, our 2022 Form 10-K annual report and other reports filed with the SEC that are located on our website at www Dot P. B dot com and by clicking on Investor Relations.
Please keep in mind that we do not undertake any obligation to update forward looking statements as a result of new information or developments.
Also for non-GAAP measures that are used in the press release or discussed in our presentation materials.
You can find reconciliations to the appropriate GAAP measures in the tables attached to our press release.
Finally, we have provided a slide presentation and spreadsheet with historical segment information on our website.
And now I'd like to turn the call over to Mark.
Thank you Alex and good morning, everyone.
I appreciate you all joining us this morning.
The second quarter played out as we expected as trends from the first quarter largely continued.
Suntech and Presort group profit for the quarter, although some tech left some transactions on the field that we were expecting.
We expect those transactions to close in the third quarter.
<unk> had a solid quarter growing both revenue and profit for the second quarter.
Both of these businesses are well positioned for the third quarter and second half.
Global ecommerce continued to experience different cross currents.
On the one hand, our cross border business continued to face headwinds as two of our largest clients changed how they access our offerings.
Our digital expedited business trade with the overall e-commerce market.
With a large social platform opportunity that Ive mentioned on previous calls.
And they come online.
Hard to predict how this opportunity will rollout.
It could be a very interesting opportunity.
Growth in our domestic parcel business, where our opportunity to create value centered.
Accelerated in the second quarter and parcel growth for the quarter was right around 30%.
We're winning new clients and our growth is well above the market.
Pricing in a way, it's our less than expected.
Consistent with historical periods, where retail performance is under some stress.
Our network continues to perform well and our service levels are very competitive in the market.
Finally.
Our costs are progressing as expected and are consistent with what was expected in our long term plan.
Let me unpack the cost dynamics in this business because they provide the foundation of our confidence.
Our unit costs for transportation improved 12% quarter to quarter and 26% year to year.
Going forward to achieve our long term plan.
Our plan assumes personal cost trending with inflation.
Transportation unit cost remaining relatively flat labor.
Labor cost inflation, offset by nominal productivity and fixed cost absorption improving as volumes improve.
Said another way the plan relies on fairly standard cost improvements.
I'm sure the market pricing and volume growth well less than we're experiencing right now.
For me however, the big news about the quarter was how well we positioned ourselves for the second half.
We got a lot of important work done.
I know, we'll give you more details, but our restructuring program is proceeding as we expected.
Not slightly ahead of schedule.
Much of the cost and expense takeout centered in GC.
We rightsize that business.
The reset of our cross border business, and we fine tuned to account for better than expected performance of the network.
We also completed our refinancing which positioned the balance sheet for the next several years.
Next our bank began to buy receivables from our captive leasing company fundamentally improving the earnings power of our bank and diversifying the banks balance sheet.
<unk> been working on this for a good bet.
This development improves the posture of our bank, which was already very strong.
Finally, the July U S. P. S rate case expanded work share discounts recognizing the substantial value of the workshop program to the U S. P. S on our clients and improving the economics of our presort business going forward.
So to summarize the second quarter turned out as we expected.
Lots of work came to fruition that set us up very well for the second half and going forward.
With that I'll turn it over the floor to Ana to walk through the operating and financial details for the quarter.
Thank you Mark and good morning, everyone.
Before I begin my financial review I'll note that the year over year revenue information will be discussed on a comparable basis, which as previously discussed adjusts for the impact of currency the disposition of border free and a revenue presentation change for our digital services.
This revenue presentation change primarily effects global ecommerce revenues and to a lesser extend centric the change does not affect the dollar profitability of our activity.
Also unless otherwise noted I will speak to other items, such as EBIT EBITDA and EPS on an adjusted basis.
Total revenue for the quarter was 776 million, which is a decrease of 5% compared to the prior year's second quarter.
Gross profit for the company was 259 million compared to 274 million for the same period last year, a 6% decrease.
SG&A was $223 million in the quarter and down $4 million from prior year with an SG&A unallocated corporate expenses were $48 million up from $41 million, a year ago, which was largely due to timing of employee variable compensation.
Interest expense, including finance interest was $38 million, which is up 4 million due to higher interest rates on our floating debt.
Adjusted EBITDA was $72 million compared to $82 million a year ago.
And adjusted EBIT was $32 million compared to $39 million in prior year.
Adjusted EPS was a <unk> <unk> loss in the quarter compared to <unk> in prior year.
GAAP EPS was <unk> 81 cent loss in the quarter.
GAAP EPS includes a noncash 67 cent goodwill impairment charge related to the global ecommerce segment due to performance of our global ecommerce unit through June 30th 2023, and continuing changes in macroeconomic conditions.
Turning to cash flow.
GAAP cash from operating activities was breakeven.
Free cash flow was a use of $11 million compared to a source of $8 million last year.
Capex for the quarter was $26 million down from $32 million in prior year.
During the quarter, we paid $9 million in dividend and made $8 million in restructuring payments.
Let's dive into our three business segments.
I'll start with <unk>.
<unk> reported revenues of $321 million in the quarter down 4% compared to prior year.
We continue to make progress on our product refresh and are now 63% through the IMI migration, which is up 20 percentage points from prior year.
Set by a corresponding increase in <unk>.
Fixed term lease extensions.
This is largely due to our success in placing new equipment over the past several years.
From a financial perspective, this shift results in lower upfront equipment sales offset by higher margin financing revenue.
Brett over the lease term.
This is a net positive to cash flow.
These dynamics, coupled with transactions being deferred.
Good out in the second quarter with equipment sales down 11% compared to prior year and financing revenue only down 1%.
Shipping continues to be a bright spot for sent it in the quarter shipping related revenue grew 14% over prior year and now comprises 12% of segment revenues.
Moving to profit adjusted segment EBIT grew 2% over prior year, our centex remove costs faster than revenue declined.
We achieved this through initiatives to drive efficiencies and simplified the business.
I will highlight too.
First we reorganized our supplier network to be less concentrated in China.
While also lowering the cost of equipment manufacturing and freight.
Actions helped offset product mix headwind and resulted in flat equipment gross margins year over year.
Second we continue to optimize our sales and customer service operations.
Driving more clients touch points to lower cost channels for example, more than 50% of our U S. SMB clients service requests are handled via an automated chat function.
Has resulted in a 22% decline in total customer touch points, while maintaining and over 80% customer satisfaction score.
These actions continue to demonstrate the durability of the business.
I'll spend a moment on the performance of financial services inside of centric.
This quarter, we made significant progress positioning our financial services for long term success by growing finance receivables.
Looting those held at the Pitney Bowes Bank.
We also initiated a program where our bank will participate in the financing of select captive lease receivable.
And initiatives that will be good for the bank and the enterprise overall.
Finance receivables grew $12 million over the quarter to $1 2 billion and we continue to see healthy payment trends across our financing portfolio with delinquencies improving to its best level in over 15 years.
Next let's turn to presort.
<unk> generated revenue of $143 million in the quarter up 3% from prior year.
Total sortation volume declined 5% to $3 6 billion pieces.
Revenue per piece expansion and growth in higher yielding mail classes offset volume decline.
Adjusted segment EBIT for the quarter was $20 million, an increase of 59% compared to last year.
Adjusted segment, EBIT margin improved 500 basis points to 14%.
The improvement in margins highlight the teams excellent work driving operational efficiencies.
More specifically margin improvement was due to better revenue per piece continued labor productivity gains from our investment in new Sorters and lower unit transportation cost.
Also as Mark mentioned the U S. P. S implemented new rates on July 9th that reflect the value. Our presort network provides our clients and the postal service.
This new rate along with continued technology investments and operational improvements will help drive continued strong performance in the second half.
Let's shift to global ecommerce.
Revenue was $313 million down 9% versus prior year.
Adjusted segment EBIT was a loss of $38 million compared to a loss of $29 million last year.
Cross border continues to weigh heavily on segment performance the.
The changes in how our two largest cross border clients access our services, which we described in last quarter's earnings call.
Tribute it to over 100% of the year over year decline in segment revenue and drove lower adjusted segment EBIT.
Cross border revenue, excluding border free declined 55 million versus prior year, and 24 million versus last quarter.
Gross profit was down $13 million and 4 million against the same time periods.
Moving forward, we expect changes in cross border to be less significant on a sequential quarter basis.
We continue to be encouraged by the progress in domestic parcel.
With several strong leading indicators that set the stage for improved financial performance.
These are <unk>.
Strong service levels.
Volume growth.
The unit cost improvement.
Let me unpack these items.
First service levels were very competitive in the quarter with on time delivery, reaching the high Ninety's doing several weeks in the quarter.
Second.
Domestic parcel volumes were 50 million up 29% over prior year against a market that is close to flat.
Domestic parcel revenue grew 19%.
Third higher volumes, coupled with operational improvements drove 8% lower unit cost versus prior year, and 3% lower versus prior quarter.
Our transportation and labor costs are now in line with our long term model.
Unit transportation costs declined 26% versus prior year and 12% versus prior quarter.
And labor costs declined, 12% and 3% against the same periods.
However, similar to last quarter, a mix of lighter weight parcels combined with pricing pressures from market overcapacity.
Bolt it in lower revenue per parcel.
In addition, our regional delivery offerings.
Which have been essential to winning more volume in the market have also impacted revenue per parcel.
These dynamics absorbed the improvement in unit cost.
We already started to address this issue with our newly signed 2023 clients.
Which on average come at a higher revenue per parcel and margin.
We expect volumes from our new clients to start ramping up in the second half and scale as we move into 2024.
From an operating expense perspective, we completed a significant portion of the planned head count reduction.
We also made progress on our plan to consolidate facilities in total we have started the process to close three facilities all of which will occur in the third quarter.
These actions marginally benefited expenses in the second quarter.
And we will provide further benefit in the second half of the year and going forward.
Cost actions combined with more attractive incremental volume, we expect to come online in the second half of the year are the major building blocks required for long term profitability in this segment.
That said, we expect continued pressure on revenue per parcel in the third quarter.
Let me shift gears and discuss the meaningful progress we made on the restructuring and cost reduction plan announced last quarter.
We reduced head count and shifted more processes to shared service centers, resulting in restructuring charge of $22 million.
We are reaffirming our annualized savings target of $75 million by the end of 2024 from the restructuring plan and productivity measures and global ecommerce.
Next regarding capital structure.
We took several significant actions to strengthen our balance sheet.
During the quarter, we bought $13 million of bonds in the open market, bringing the total purchase to $39 million year to date.
Most importantly earlier this week, we raised $275 million in a private placement offering maturing March 2028.
After this refinancing our next maturity will be in 'twenty 'twenty six.
Moving to guidance.
We also anticipate third quarter revenue and EBIT to improve versus second quarter.
Incremental volumes in global ecommerce.
New rate case in presort and cost actions materialize.
In conclusion.
Centric and preferred maintained strong momentum with profit growth.
And while cross border remained a headwind in the quarter strong service levels.
Growth and unit cost improvement in domestic parcels position globally commerce, well for the second half.
Operator, please open the call to questions.
Ladies and gentlemen, much do wish to ask a question. Please press one and then zero on your telephone keypad you can withdraw your question at any time by repeating the ones. They will command and if youre using a speakerphone. Please pick up the handset before pressing those numbers. Once again, if you have a question. It's one zero at this time.
One moment toward of Anthony <unk> with Sidoti and company. Please go ahead.
Good morning, and thank you for taking the questions. So first I guess, maybe a little bit of a bigger picture question. So so this is your first public call since the board of directors was changed.
What can you share with us so far as far as in regards to the initial assessment of the new board.
So it wasn't a here's what I would say about.
The board.
I would say the following the onboarding of that.
We.
Went through with the New board members.
Terrific.
They were highly engaged a lots of great questions and hopefully we passed on lots of great information.
So that's the first thing I would say I would say the second thing you know as we reconstituted the committees and the board chair all of those.
Votes were unanimous so you're going to see people coming together to to move forward and then I would say you know beyond that you know there's a fairly intensive effort for I would say the entire board the new board members as well as existing board members too.
You know drive shareholder value.
Consistent with how you would expect.
Got it okay. Thanks for that and then.
In regards to GEC so.
Obviously cross border was the biggest headwind within that so if we were to exclude cross border.
Can you comment on the profitability.
Oh Gee you see.
Yes.
You know the numbers could have been looking but just kind of ballpark maybe estimates.
Yeah, I would say directionally and domestic parcels profit increased and expedite that kind of trade.
With the market. So I think honest had it in her remarks or.
Somewhere.
The deterioration in cross border revenue and profit consumed everything and then some of the progress with the rest of the segment married so now that that's gonna find its right level. When you know one way or the other.
But you know as we've said all along and I'd go back to as we contemplate our long term plan.
And where the value creation opportunity as it is in domestic parcels.
So I would say the cross borders, creating some noise right now in the results and you know it seems doing their best to kind of work your way through it.
But we continue to keep our eye on the prize and that's in the domestic parcels and you know if you kind of go through that.
The dynamic there.
Parcel growth in the second quarter was terrific well above the market.
The unit costs.
Behaved exactly if not a little bit better than what we would've thought and are consistent with kind of the <unk>.
And points over the long term plan.
The service levels were terrific.
You know and it was honestly theres some theres some pressure on revenue per piece, which is a little bit of I.
<unk> market phenomenon and a little bit of some of the new customers that we've brought on that come with slightly different.
Different revenue per piece because.
They're much more focused on regional types.
Of services. So therefore, you know why they bring less revenue per piece. They also bring us cost so.
More we stopped the costs.
And the revenue per piece the more that we get confident that those dynamics are working out.
Besides the way that we.
Mhm got it Okay and then so just to follow up as far as you know cross border. So that's been sort of the.
The biggest challenge just prefer.
Few quarters.
Is that a <unk>.
Subsegment that you can you could perhaps maybe carve out and look to divest or is that not the that's not something you would consider.
No we would absolutely consider and this is true across the board I mean, I've always said you know.
<unk>.
We've certainly.
Put the portfolio together in a way that they can share structures and get efficiencies and economies of scale and all those things at the same time you know we.
Maintain optionality, so if a business and you saw it with border free I mean, right. So boyfriends kind of the proof in the pudding.
You know that was a business that we chose to exit.
I would say the rest of the cross border business, we have that same degree of Optionality.
Got it Okay and then.
New client wins.
Or so far and maybe potential new client wins.
Do you have in the pipeline.
I would say revenue per piece.
Quarter to quarter.
Is it a touch of a question.
For me right now obviously you know.
So much of that depends on.
Client dynamics, what you now where clients are hitting the ball what consumers are buying.
Et cetera, So you know quarter to quarter, I think it's a little bit of a.
Our gas year to year, I do expect that will likely be down a bit because some of the new clients, but again no. If you look at our P. P. Rev.
Revenue per piece declining there.
In the second quarter.
Transportation cost.
The contribution margin and we look out at our client basis. So looking at one variable without kind of looking at the attendance.
You know unit cost.
Due to the wrong conclusion.
Got it alright, well, thanks I'll pass it onto the next caller on the best of luck.
Thank you.
And next we go to Kartik Mehta with Northcoast Research. Please go ahead.
Hey, good morning, Mark.
I know we've had a lot of conversation about the cross border business and I'm wondering do you think this is a secular issue for you or is it a temporary so right now I know, it's a drag and I'm wondering if there's a way to reposition the business to make it profitable or is it just you need volume and maybe it's a temporary issue.
Yes, listen Craig I think that's to be determined.
The business is highly concentrated into customers those customer relationships as I said have you know evolved those dynamics, we don't expect to change.
The issue around exchange rates have stabilized to touch so that's a little bit less of a problem.
So you know I think it was a question mark of how that cross border business evolves going forward, but again.
It's easy to kind of over rotate on cross border I would draw your attention back to the domestic parcel business I mean, that's where the.
EBIT is and you know to those.
Moving forward or if not you know I'm I'm confident that it's got somebody in the marketplace.
And then mark.
Cost.
We are in the process of deploying it we had a great review with the team in a couple of weeks ago.
I would say we've got some sites that are aggressively.
Aggressively deploying and using.
The new automation or we've got some that have some opportunities in front of them, but what I would say as you know that automation is producing the productivity that was contemplated in the business case when it is you know.
Deploy it was planned.
And these are looking to make their parcels or e-commerce, a little bit more efficient what are you hearing from your customers or is it.
Your salespeople are out are companies looking to outsource that or is that attitude changing at all.
I'm, sorry, I'm not sure I understood the question.
Outsourcing alder.
Parcel needs you know coming to a company like you to say hey take over.
The entire.
Parcel shipment process for us.
Well I mean so.
We.
Provide a portion of the total.
Logistics chain. So we don't do the whole thing and and I would say the mid market customers.
Are more interested in outsourcing more of it larger customers are a little bit more selective.
I would say as you look at the <unk>.
Benefits of our business model.
I would point to a couple of things one is the.
The postal service final mile delivery.
Is Ah got terrific economics, and no one that.
Economics that others are you know have a very hard time recruiting I would say as it relates to our capabilities in the middle.
Our unit costs are labor costs are very very competitive versus.
Our competitors and we're more flexible to deal with so you know we provide a nice veneer of.
Economic capabilities for clients for middle mile to get.
Parcels too.
The you know into the postal service network.
Thanks, Mark I appreciate it.
Yep.
Time for one more question, we'll go to Matt Swope with Baird. Please go ahead.
Hi, Good morning, Mark and Anna just just one last for me on GC.
If you took out cross border would global ecommerce have had positive EBITDA for the quarter.
Yeah, I'm not going to get to that level of detail. What I would say is just reiterate what I said if.
Okay fair enough.
And on a one one that I've asked you a couple of times before on the cash side.
Could you characterize again for us to make it you have to you have about 560 odd million of cash and short term investments.
How much of that cash is available to you versus tied up in the bank or overseas et cetera.
Sure.
So about about a third of that is available to us.
U S cash on hand.
And then the rest is between the bank and international.
Third.
No I need I need I need a good amount of that to run my working capital need.
Gotcha Okay.
And then and Mark maybe back to the to the board question.
What is it what is the cadence of meetings with the board.
You guys next meeting or how often does that happen.
Yeah, I would say it varies I mean, you know we altered the board schedule.
To accommodate the new board members I would say right now there may be more frequently just because there's.
More coming up to speed so.
I'm not going to comment on the specific.
Cadence per se, but I would say right now, it's a very active and engaged board.
No. That's fair and then you can you can imagine that people are sort of interested in what might come out of that I mean, maybe to focus on the two other businesses just for a second.
On the on the Centex side shows nice profitability in.
In the face of some some revenue challenges still can you just talk a little bit about the profitability mix and centex and and what we should expect on that going forward.
Sure. So the profitability, we expect to continue at those margins that were anticipating.
From a revenue perspective I touched on this during my remarks here.
We are now 63% through the IMI conversion.
More of those new opportunities for clients that are coming up have a mix of a renewal or an extension concept to their leases instead of a new product being put out because our product last longer than the 45.
So what we'll see in the dynamics playing out is we will see less of the upfront which comes with that original equipment sale.
More of a very good profit margin.
Renewals coming through a stream.
Revenue and that flows better to the bottom line. So net net is a very positive thing from a durability of those cash flows as we anticipate in the incentive segment I'll give you. The summary, we expect those margins to kind of continue where they are you know through the long term plan. So we just had all of the businesses update their long term plan and you know that.
The margins that we've experienced for the last five years are kind of like the margins. We expect for the next five years.
So we see the same kind of trend, where maybe there's a little bit of pressure on the revenue side, but but solid performance on the profitability side.
Correct.
That's that's great and then speaking of good profitability, the presort numbers were or exceedingly strong.
Could you talk about sort of the same forward conversation about where revenue and where profitability goes in presort.
Yeah, Let me just make a connection I think if you look at the previous owner was I'll say, we're absolutely terrific.
To us presort in some ways is the poster child for global ecommerce.
If you look at those two businesses and you substitute the word mail for parcels the fairly analogous in camera. If you look at the <unk>.
History of presort over the last 15 years.
As they build scale in our house, they've got more operationally sufficient.
Excellent.
See those margins improve in terms of <unk> going forward.
No.
Last time, we gave guidance around presort margins 15 plus percent.
Still think that's the right basic Zip code.
We expect flat to slightly positive revenue growth there so it's.
It's a it's a good business and I would say, there's those opportunities certainly on the revenue side to do better than that if there was some interesting acquisitions have become available on more customers decided to outsource which is also possible.
Bound and packet mail and Oh.
<unk> continues to be great opportunities.
I would say.
The rate case that the postal service passed in July .
Oh, it's terrific for the marketplace and it's reflective of.
The value that we provide but that's a really important boost to our economics.
Our customers' economics going forward.
And we can go to Peter Satcom with Creditsights. Please go ahead.
Hi, good morning.
Can you talk about the.
In the press release the growth in our higher yielding mail classes you elaborate on what that means.
Okay.
Sure. So inside of research. We have you know first class mail, we have marketing mail.
Marketing mail slots, you know theres different.
Classes and first class mail is the vast majority of what we process and that is what.
On the other hand, we've been going into marketing mail and bound it print matter, which are classes of mail that are growing they represent a small portion of the total at the moment, but we anticipate that growth to continue and help offset some of the first class mail decline.
Oh, that's great. Thank you and could you talk about.
He said that.
A lot of investment has been done in automation.
Capex in the quarter what was it by division.
Okay.
Go ahead.
Sure So what we've.
Talked about is capex on a year over year basis.
Is declining because the vast majority of our global ecommerce investments.
Are done so I I will tell you that about 40 or so percent of our total capex is attributable to global ecommerce.
And then sent that would be the next big one.
Presort has done a lot of the refresh of disorders already so I hope that gives you a little bit of a perspective.
Okay.
Mark twice you said.
The cross border guys all.
You know I.
I think you said one way or the other.
Yeah.
Is your sense of timing.
Resolution of that business.
Oh listen I mean makeup.
The board and management continually works with the portfolio. So it's not like it so well.
Once a year thing that's how we look at the portfolio you know all the time and you know the decision that we'll make is what's the best way for first of all our customers and the team are and ultimately our shareholders to move forward, So I'm not going to box myself into a time frame.
Okay.
I guess the last part on cross border.
Given the negative EBITDA is the southern Italian marketplace.
Is that.
Consistent or is it.
Maybe more expensive the closing.
Because otherwise you would not have.
Laughter EBITDA.
I didn't say it was that would be that I just said the decline in EBITDA.
Surpassed the improvement in the other businesses.
Are you, saying that that cross border EBITDA.
I'll pause here.
I didn't say it was negative.
Okay.
Thank you.
And I'll turn the call back over to Mr. Lautenbach for any closing remarks.
Great and thanks, everyone for joining us this morning, I want to go back to kind of the same in the second quarter played out largely as expected. It was consistent with the first quarter. So not a lot of drama in the second quarter.
Result.
<unk>.
What I.
I really like how we're positioned going forward. So you know we've been fighting through.
An interesting economic moment for the last you know candidly a couple of years since COVID-19.
The broader economy are affected supply chain is affected retail you know it feels like we're getting on the tail end of that right now.
And as we're coming out of that period.
I like how we're positioned our cost and expense.
Uh huh.
In good shape good opportunity as we go into the second half that will make a meaningful difference. So all of the costs are not all of the most.
The presort Oh.
<unk> as I said, we're well positioned in the second half of the year for <unk>.
Continued good profit performance that's important you know.
To the overall <unk>.
So at the enterprise, it's also important for our cash.
And as it relates to.
Our global ecommerce.
The domestic parcel.
Our momentum is absolutely terrific and we see that continuing.
And then again, we didn't get any questions, but there were some important adjustments that we made that will fortify the bank the.
The PB bank going forward that we're really excited about how the bankers is well positioned so this economic moment that we're in.
Going to and and the company is extremely well positioned on all fronts. As we go forward. So with that we'll close this morning's call and we look forward to visiting with you going forward. Thank you.
And that does conclude our conference for today. Thanks for your participation and for using AT&T teleconference Service you may now disconnect.