Poised for Growth Pitney Bowes Analyst Day 2016 Agenda Topic Presenter
Adam David Welcome / Introduction Vice President, Investor Relations Marc B. Lautenbach Poised for Growth President and Chief Executive Officer Joe Schmitt Enterprise Business Platform Vice President and Chief Information Officer Roger Pilc Product Innovation Executive Vice President and Chief Innovation Officer Break Bob Guidotti Executive Vice President and President, Software Solutions Software Solutions Mark Taylor Senior Vice President, Software Channels Mark Shearer Reinvent Mailing Executive Vice President and President, Global SMB Solutions Lila Snyder Global Ecommerce Executive Vice President and President, Global Ecommerce Break Mike Monahan Financial Update Executive Vice President, Chief Operating Officer and Chief Financial Officer Q&A Session The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP); however, in our disclosures we use certain non-GAAP measures, such as adjusted earnings before interest and taxes, Adjusted EPS, revenue growth on a constant currency basis, revenue excluding the impact of currency and market exits, free cash flow, Segment EBIT and Segment EBITDA.
The Company reports measures such as adjusted earnings before interest and taxes (EBIT) and Adjusted EPS and adjusted income from continuing operations to exclude the impact of special items like restructuring charges, tax adjustments, goodwill and asset write-downs, and costs related to recent dispositions and market exits. While these are actual Company expenses, they can mask underlying trends associated with its business. Such items are often inconsistent in amount and frequency and as such, the adjustments allow an investor greater insight into the current underlying operating trends of the business.
In addition, revenue growth is presented on a constant currency basis to exclude the impact of changes in foreign currency exchange rates since the prior period under comparison. Constant currency measures are intended to help investors better understand the underlying operational performance of the business excluding the impacts of shifts in currency exchange rates over the period. Constant currency is calculated by converting our current quarter reported results using the prior year’s exchange rate for the comparable quarter. In addition, this quarter the Company reported the comparison of “revenue excluding the impact of currency and market exits” to prior year, which excludes the impact of changes in foreign currency exchange rates since the prior period and also excludes the revenues associated with the recent market exits in several smaller markets. This comparison allows an investor insight into the underlying revenue performance of the business and true operational performance from a comparable basis to prior period. A reconciliation of reported revenue to constant currency revenue, as well as reported revenue to “revenue excluding the impact of currency and market exits” can be found in the Company’s attached financial schedules.
The Company reports free cash flow in order to provide investors insight into the amount of cash that management could have available for other discretionary uses. Free cash flow adjusts GAAP cash from operations for capital expenditures, restructuring payments, unusual tax settlements, contributions to the Company’s pension fund and cash used for other special items. A reconciliation of GAAP cash from operations to free cash flow can be found in the Company’s attached financial schedules.
In addition, Management uses segment EBIT to measure profitability and performance at the segment level. Segment EBIT is determined by deducting from revenue the related costs and expenses attributable to the segment. Segment EBIT and Segment EBITDA exclude interest, taxes, general corporate expenses not allocated to a particular business segment, restructuring charges and goodwill and asset impairments, which are recognized on a consolidated basis. A reconciliation of Segment EBIT to the Company’s total Net Income can be found in the Company’s attached financial schedules.
Pitney Bowes | Analyst Day 2016 3 This document contains “forward-looking statements” about the Company’s expected or potential future business and financial performance. Forward-looking statements include, but are not limited to, statements about its future revenue and earnings guidance and other statements about future events or conditions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to: mail volumes; the uncertain economic environment; timely development, market acceptance and regulatory approvals, if needed, of new products; fluctuations in customer demand; changes in postal regulations; interrupted use of key information systems; the ability to protect the Company’s information technology systems against service interruptions, misappropriation of data, or breaches of security resulting from cyber-attacks or other events; management of outsourcing arrangements; the implementation of a new Enterprise Business Platform; changes in business portfolio; the success of our investment in rebranding the Company; the risk of losing some of the Company’s larger clients in the Global Ecommerce segment; integrating newly acquired businesses, including operations and product and service offerings; foreign currency exchange rates; changes in our credit ratings; management of credit risk; changes in interest rates; the financial health of national posts; increased customs and regulatory risks associated with cross-border transactions; and other factors beyond its control as more fully outlined in the Company's 2015 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission. Pitney Bowes assumes no obligation to update any forward-looking statements contained in this document as a result of new information, events or developments.
Pitney Bowes | Analyst Day 2016 4 Poised for Growth
Marc B. Lautenbach President and Chief Executive Officer The Foundation of a Successful Business Channel
Products and Solutions
Team
Enterprise Business Platform Enterprise Business Platform Portfolio Management
Capital Allocation
Brand Identity
Strategy and Vision 6 The Foundation of a Successful Business
Strategy and Vision 7 The Foundation of a Successful Business
Brand Identity
Strategy and Vision 8 The Foundation of a Successful Business
Since December 2012
Returned over $1 billion to shareholders in the form of dividends and share repurchase
Reduced debt by nearly $1 billion, inclusive of PBIH preferred security and maintained investment grade Capital Allocation Reduced SG&A by over $230 million
Brand Identity Improved working capital management ― Reduced inventory by nearly half
Strategy and Vision ― Improved DSO by a third 9 The Foundation of a Successful Business
Creates Strategic Flexibility Capital Allocation
Brand Identity
Strategy and Vision 10 The Foundation of a Successful Business
Portfolio Principles
Strategically coherent
Leader within market segment Portfolio Management Acceptable returns Capital Allocation
Brand Identity
Strategy and Vision 11 The Foundation of a Successful Business
Divestiture of Pitney Bowes Management Services, Imagitas and non-core product lines
Acquired Borderfree Portfolio Management Narrowed geo-footprint Capital Allocation Economies of Scale and Brand Identity Economies of Experience
Strategy and Vision 12 The Foundation of a Successful Business
Complete end-to-end business processes re-engineered with contemporary technology
Will retire 350 Applications (out of ~600) Enterprise Business Platform ― 37 Enterprise Resource Planning (ERP) and General Ledger platforms to 1 EnterprisePortfolio Business Management Platform ― 10 Leasing Solutions and Databases to 1 ― 16 Customer Relationship Management systems to 1 Capital Allocation ― 4 Field Service Solutions to 1 ― 4 CPQ Platforms to 1 Brand Identity Enables future products and digital relationship with clients Strategy and Vision 13 The Foundation of a Successful Business
Results-To-Date
Deployed to 80 percent Enterprise Business Platform of the business
EnterprisePortfolio Business Management Platform Short-term disruptions more than offset by benefits Capital Allocation Business case intact / improving Brand Identity
Strategy and Vision 14 The Foundation of a Successful Business
Strong Pitney Bowes Heritage Team Alumni from Enterprise Business Platform
EnterprisePortfolio Business Management Platform
Capital Allocation
Brand Identity Private Equity
Strategy and Vision 15 The Foundation of a Successful Business
Team
Enterprise Business Platform
EnterprisePortfolio Business Management Platform
Capital Allocation
Brand Identity
Strategy and Vision 16 The Foundation of a Successful Business
Products and Solutions
Team
Enterprise Business Platform
EnterprisePortfolio Business Management Platform
Capital Allocation
Brand Identity
Strategy and Vision 17 The Foundation of a Successful Business
Products and Solutions Pitney Bowes Products Team Innovative Technologies Enterprise Business Platform Software-based Capabilities EnterprisePortfolio Business Management Platform Delivered as a Service Capital Allocation Platform-based Business Models Brand Identity
Strategy and Vision 18 The Foundation of a Successful Business
Channel
FROM TO Products and Solutions Product Market Team Centric Centric
Enterprise Business Platform Face-to-Face / SMB Telephone / EnterprisePortfolio Business Management Platform Face Web -to- Capital Allocation Face Face-to-Face and Software Systems Brand Identity Integrators
Strategy and Vision 19 Investment Thesis
Strong Strong Dividend Continued Foundation Market Supported by Productivity for Growth Growth in Core Opportunities in Place Selected Business Markets
20 Agenda
Topic Presenter
Joe Schmitt Enterprise Business Platform Vice President and Chief Information Officer Roger Pilc Product Innovation Executive Vice President and Chief Innovation Officer Break Bob Guidotti Executive Vice President and President, Software Solutions Software Solutions Mark Taylor Senior Vice President, Software Channels Mark Shearer Reinvent Mailing Executive Vice President and President, Global SMB Solutions Lila Snyder Global Ecommerce Executive Vice President and President, Global Ecommerce Break Mike Monahan Financial Update Executive Vice President, Chief Operating Officer and Chief Financial Officer Q&A Session Enterprise Business Platform
Joe Schmitt Vice President and Chief Information Officer Objective
Provide an Enterprise Business Platform enabling operating efficiencies and digital relationships Complexity Impacted Operating Efficiency and Client Experience
Global Software Production Presort SMB Ecommerce Solutions Mail Services
Multiple Different Siloed Operating Processes Client Platforms and Policies Data
Pitney Bowes | Analyst Day 2016 24 Foundation for Unlocking Greater Value…
Economies Economies of of Scale Experience
Global Software Production Presort SMB Ecommerce Solutions Mail Services
Product Innovation
Enterprise Business Platform One platform, common processes and policies, integrated client data globally 25 More Than an ERP System…
Pitney Bowes | Analyst Day 2016 26 Benefits Today… and Tomorrow
Today Tomorrow
Sales Efficiency Multi-Channel Expansion
Back Office Efficiency Back Office Optimization
Technology Spend Technology Optimization
Digital Product Enhanced Digital Products, Enablement Analytics and Services
North America Global
2016 2017+ 27 Benefits Today… and Tomorrow
Yesterday Today Tomorrow
Electronic 0% 40% 80%+ Signature
Web 0% 15% 65%+ Serviced
Technology 0% 20% 40%+ Savings
Platform for Physical SaaS-based The Pitney Bowes Offerings (postage) (SendProTM, RelayTM, APIs) Commerce Cloud+++
Geographic Nowhere 80% Revenue Global Coverage
2016 2017+ 28 Provide an Enterprise Business Platform Enabling Operating Efficiencies and Digital Relationships
Integrated systems and common processes provide the foundation for unlocking greater value through Economies of Scale and Economies of Experience
We now have the pieces in place to greatly expand the digital relationship with our clients
We are well positioned to deliver our future products
We’ve achieved benefits today, with significantly more to come in 2017 and beyond
29 Product Innovation
Roger Pilc Executive Vice President and Chief Innovation Officer Objective
Accelerate our ability to create value for our clients, partners and shareholders The Pitney Bowes Model
Business Units
Product Innovation IDENTIFY LOCATE COMMUNICATE SHIP PAY
Great Digital Reinventing Mail Improved Enterprise Business Platform Commerce offerings Efficiency
Pitney Bowes | Analyst Day 2016 32 Like our Customers, PB has been on a Digital Transformation Journey
Expanded Capabilities
• Center of Excellence DESIGN • Design System Business Outcomes • Design Methods Pitney Bowes Commerce • IoT Cloud Data & DATA • Data Platform Analytics • Analytics
How Technology Consumed is Technology How •SaaS CLOUD Software •APIs & ENABLED Hardware •Mobile Evolution of Industry Technologies
Physical Digital-Web Digital-Mobile Digital-IoT
Pitney Bowes | Analyst Day 2016 33 Increasing Revenue and Cost Synergies with a Common Innovation Platform
PB Lines of Business
Software Global Solutions Ecommerce
Pitney Bowes Commerce Cloud
CLOUD DATA DESIGN ENABLED Presort SMB Services
Production Mail Pitney Bowes | Analyst Day 2016 34 Solution Designs Based on Client Feedback DESIGN
Spectrum Spatial Analyst
Relay™ Communications Hub
Epic™ Inserting System DirectView™ User Interface
Pitney Bowes | Analyst Day 2016 35 DATA Leveraging Economies of Experience with our Expanding Data • PLATFORM Capabilities • MANAGEMENT • ANALYTICS
Spectrum CIM and LI
Borderfree
LI Data & Analytics
Pitney Bowes | Analyst Day 2016 36 Economies of Experience with our Growing Data Capabilities DATA • IOT
Client A Phoenix AZ
Global Ecommerce Tracking Clarity™ SmartLink™
“IoT companies aren't selling products anymore, they are selling an experience.”
- Marc Benioff Founder, Chairman & CEO of Salesforce 37 CLOUD Economies of Scale achieved by Cloud Infrastructure and Capabilities, ENABLED and underlying Enterprise Business Platform • SAAS
Spectrum OnDemand
EngageOne® Video
SendPro™ Online Pitney Bowes | Analyst Day 2016 38 CLOUD Economies of Scale achieved by Common PB API Platform ENABLED
• API
Global Shipping Program for eBay
Shipping APIs
Financial Services APIs Pitney Bowes | Analyst Day 2016 39 CLOUD Economies of Experience in Mobile Technologies ENABLED
• MOBILE
Confirm Mobile SendSuite® Tracking Online Mobile
SendPro 300 Pitney Bowes | Analyst Day 2016 40 Expanding Innovation and Technology Capabilities
2013 2016 Future
Broader coverage DESIGN Products on Design System 2 40 and functionality
Wider use, operational IoT Solutions 0 2 DATA efficiencies and Data Sets on Big Data Platform 0 60 revenue impact
Products on AWS 0 30 Growth in numbers, CLOUD impact, usage, cross- 0 200 ENABLED APIs on Apigee/Google BU solutions, partner 2 8 Mobile products participation 41 Accelerate our Ability to Create Value for Our Clients, Partners and Shareholders
We have been creating great Digital Commerce Solutions offerings
We are reinventing our mailing offerings, including by leveraging DCS
Common platforms, groups and capabilities are driving operational efficiency
42 Software Solutions
Bob Guidotti Executive Vice President and President, Software Solutions Mark Taylor Senior Vice President, Software Channels Objective
Execute to drive growth in the Software business We See Tremendous Growth Opportunity
80% of the Fortune 500 invest in Pitney Bowes Software
• 88% of Dow Jones Global Titans • 24 out of the top 25 Insurers • 22 out of the top 25 Healthcare Companies • 17 out of the top 25 Telecoms 54% • 16 out of the top 25 Commercial Banks
$18 Billion Long-Term Market Long-Term Market Growth Rate EBIT Margin Addressable Global Market ~ 20% Why We are in the Software Business
Opportunities with content • Preferences – 360 View • Location • Channels – Digital addresses • Message – AdTech • Data
Insights derived from the address 3001 Summer Street • Destination Stamford, CT 06926 • Social Economic • Area of Risk John Doe • Marketing Potential 100 Main Street New York, NY 10001 • Life Events
Pitney Bowes | Analyst Day 2016 46 Our Software Business is Based on Four Key Platforms
IDENTIFY LOCATE COMMUNICATE
Customer Information Location Intelligence Customer Management Engagement Solutions
DATA
Industry Relevant Data IDENTIFY
Vertical • Financial Services • Insurance • Retail Analyst Awards
Leader – Forrester Wave: Key Differentiators Master Data Management Customer Information • Graph database Leader – Forrester Wave: Management • Global address Customer Analytics Solutions validation • Performance and scalability
DATA Data for determining risk and Industry Relevant Data Data for providing a richer view of fraud individual preferences LOCATE
Vertical • Insurance Analyst Awards • TelCo • Retail Leader - Forrester Wave: Geospatial Analytics Tool Platforms
Saugatuck: Key Differentiators PB LI APIs highlighted favorably • Geocoder Accuracy Location Intelligence • Processing Speed • Boundary Data
DATA
Industry Relevant Data COMMUNICATE
Vertical • Financial Services • TelCo • Insurance Analyst Awards
Leader – Gartner Magic Quadrant Key Differentiators for CCM Software • Personalized interactive video Leader – 2016 CRM Watch list • Digital self-service Winner Customer Engagement • Omni-Channel Solutions engagement
DATA
Industry Relevant Data PB Software’s Breadth and Depth of Data Products is Unrivaled, and is a Significant Competitive Strength
Demographic Data
Location Data
Industry Data
DATA OVER 380 DATA SETS
Industry Relevant Data Expanding Our Routes to Market for Growth
P Direct A Global Sales R Profile Digital Account Executive T Product Specialist Inside Sales N Business Development E R
Data Pitney Bowes | Analyst Day 2016 52 Focus on Expanding the Partner Channel PARTNER
Commercial – Traditional LI Resell Resellers Partners Public Sector Partners
Global System Integrators Regional
Digital OEM Marketplaces
53 Establishing our Partner Ecosystem and its Supporting Infrastructure is Well Underway PARTNER
April 2016 August 2016 October 2016 February 2017 London and Frankfurt Mark Taylor U.S. Partner EMEA Partner Summit Partner Recruitment named SVP of Training Event Software Partner Advisory Council APAC Partner Channels Big Data Summit Symposium World of Watson
July 2016 September 2016 January 2017 NYC Partner recruitment ISM conference with Global Partner event Accenture Summit Partner program launch ACAMS conference in Mexico APAC Partner Summit SIBOS conference with Capgemini
Recruit—Enable—Pipeline—Revenue Accenture Digital is Significantly Expanding our Market Reach for Video PARTNER
Personal interactive video (PIV) creates individualized experiences
User Data + Analytics
Hosted Video Library Customized Experiences PIV Technology Platform Digital Video
55 Execute to Drive Growth in the Software Business
The end market opportunity supports double-digit revenue growth for the business
We have the technology to continue to innovate in this space – giving us the right products and offerings
Our go-to-market strategy is progressing
56 Reinvent Mailing
Mark Shearer Executive Vice President and President, Global Small & Medium Business (SMB) Solutions Objective
Deliver revenue at the high-end of market rates, sustain EBIT margins and create new revenue opportunities We are Reinventing Mailing by Transforming the Mailing Products, Go-to-Market and Business Processes
Entire Product Line Refreshed
Improved New Go-to-Market Digital Approach Relationships Client Leveraging Inside Experience Sales and Digital Channels
Contemporary Business Processes
Pitney Bowes | Analyst Day 2016 59 We are Reinventing Mailing by Transforming the Mailing Products, Go-to-Market and Business Processes
Entire Product Line Refreshed
Improved Client Experience
Pitney Bowes | Analyst Day 2016 60 We are Reinventing Mailing by Transforming the Mailing Products, Go-to-Market and Business Processes
Improved New Go-to-Market Approach Client Leveraging Inside Experience Sales and Digital Channels
Pitney Bowes | Analyst Day 2016 61 We are Reinventing Mailing by Transforming the Mailing Products, Go-to-Market and Business Processes
Improved Client Experience
Contemporary Business Processes
Pitney Bowes | Analyst Day 2016 62 We are Reinventing Mailing by Transforming the Mailing Products, Go-to-Market and Business Processes
Improved Digital Relationships Client Experience
Pitney Bowes | Analyst Day 2016 63 Pitney Bowes SMB Actions Taken to Sustain EBIT Margins
• Go-to-market strategy • Global product launches • Geo-footprint • Enterprise Business Platform • Exit of non-core products
54%
$3 - $4 Billion Long-Term Market Long-Term Market Growth Rate EBIT Margin Global Addressable Market 30% - 35% Reinvent Mailing Products Based on SMB Market Trends
Bringing new value and Reducing complexities Capitalizing on the rapid Making it easier to combine new client experience to through a SaaS delivery growth of shipping with the unique strengths of our SMB clients through model to provide speed multicarrier sending physical mail and digital digital connections to value solutions experiences to SMB client base
Pitney Bowes | Analyst Day 2016 65 The Pitney Bowes Commerce Cloud Platform
Enabling our clients access to the broad range of innovation across Pitney Bowes and partners in the Shipping, Mailing and Digital Commerce Market
Hardware Cloud Enabled 1920 2016
66 Delivering Additional Value with the SendPro™ Family of Products
Pitney Bowes SendPro SaaS Shipping Solution Commerce Cloud SendPro 300
SendPro P Series
SendKit A flexible, multicarrier sending solution to meet office shipping and mailing needs Pitney Bowes | Analyst Day 2016 67 Here’s What Our SendPro Clients Are Saying…
“This is by far the most efficient “This is so intuitive and much and user-friendly shipping tool I easier to use than I expected have come across. I have used from a beta product.” them all, and this is the best.”
Jeremy Kershaw Shannon Skubel United Kennel Club Vital Nutrients
Pitney Bowes | Analyst Day 2016 68 Commerce Cloud Client Portal is the Window into Pitney Bowes
Personalized Experience Access SaaS Applications
SendPro
Order Supplies Manage Payments
69 Commerce Cloud Client Portal is the Window into Pitney Bowes
View Analytics
Track Support Service Articles Cases
70 SmartLink™ Delivers New Value to Existing Hardware by Connecting Meters to the Commerce Cloud
Simplified Account & Device Management
Alerts, Notifications and Proactive Health Management
Usage Analytics Proactive Recommendations & Insights
Pitney Bowes | Analyst Day 2016 71 Here’s What Our SmartLink Clients Are Saying…
“As a small business, any savings “Analog modems are dated and we can take advantage of for office not very friendly with the new SIP supplies is great. Not having to phone systems. We were able remember when to reorder a supply to cut down on some of our lines and having it done for you is even which are billed at $100 per line.” better.”
Laura Interrant Jason Mullins Lotus Motor Cars of Long Island L&N Federal Credit Union
Pitney Bowes | Analyst Day 2016 72 Relay Helps SMB Clients Leverage both Physical and Digital Communications with their Clients You prepare mailing centrally
Physical Mail Delivery
Office 2
Web 73
Main office Relay Hub Print Manager Digital distribution Archive
Physical Mail Delivery
Remote employees Pitney Bowes prepares mailing
Pitney Bowes | Analyst Day 2016 73 Deliver Revenue at the High-End of Market Rates, Sustain EBIT margins and Create New Revenue Opportunities
Producing strong and steady earnings and cash flow, with future benefits expected from the Enterprise Business Platform and new revenue streams
Reinvent mailing by delivering new value to clients with new solutions like SendPro and SmartLink
Creating digital relationships with our clients
74 Global Ecommerce
Lila Snyder Executive Vice President and President, Global Ecommerce Objective
Drive double-digit growth and profitability in the Global Ecommerce business The Ecommerce Opportunity is Unprecedented
(1) Pitney Bowes 2016 Global Online Shopping Study (2) Pitney Bowes 2016 Shipping index 77 (3) Accenture and AliResearch (2015) We are the Industry’s Most Proven, Scalable, Capable Cross-Border Solution
• Enable millions of eBay sellers • Support 250+ retailers on Borderfree Retail Platform • Over 5+ million cross-border shoppers in 220 countries and territories have transacted 54%
Long-Term Market Long-Term Market $7 Billion Growth Rate EBIT Margin Global Market ~ 15% Our Vision: Anywhere to Everywhere™ at Scale
Initiated Cross-border service 2012
Pitney Bowes | Analyst Day 2016 79 Our Vision: Anywhere to Everywhere™ at Scale
Expanded cross-border offerings with retailers and marketplaces 2015
Initiated Cross-border service 2012
Pitney Bowes | Analyst Day 2016 80 Our Vision: Anywhere to Everywhere™ at Scale
Introduced domestic shipping capabilities tailored for ecommerce 2016
Expanded cross-border offerings with retailers and marketplaces 2015
Initiated Cross-border service 2012
Pitney Bowes | Analyst Day 2016 81 Enabling the End-to-End Shopping Experience
Fully Landed Easy Demand Website Cost and Payments, Logistics Customer Generation Localization Compliance Managed Risk Management Care
Borderfree Retail
Pitney Bowes | Analyst Day 2016 82 Enabling the End-to-End Shopping Experience
Fully Landed Easy Demand Website Cost and Payments, Logistics Customer Generation Localization Compliance Managed Risk Management Care
CrossBorderfree-border Marketplace Retail
Pitney Bowes | Analyst Day 2016 83 Enabling the End-to-End Shopping Experience
Fully Landed Easy Demand Website Cost and Payments, Logistics Customer Generation Localization Compliance Managed Risk Management Care
CrossDomesticBorderfree-border ShippingMarketplace Retail
Pitney Bowes | Analyst Day 2016 84 Global Ecommerce is a Volume-Based Business
Lower Goal: Add transaction clients Continue to grow volume costs
Engage Optimize more consumer As business scales, consumers experience margins improve
Pitney Bowes | Analyst Day 2016 85 Meeting Consumers Where They Are ENGAGE MORE CONSUMERS
86 Driving Down Costs through Continuous Innovation LOWER TRANSACTION COSTS
87 Creating a Seamless Experience for Buyers OPTIMIZE CONSUMER EXPERIENCE
88 Building Loyalty with Our Best Consumers ENGAGE MORE CONSUMERS
Pitney Bowes | Analyst Day 2016 89 Driving Double-Digit Growth and Profitability in the Global Ecommerce Business
Continue our proven leadership in the cross-border space
Expand capabilities in domestic shipping
Focus on driving volume
90 Financial Update
Mike Monahan Executive Vice President, Chief Operating Officer and Chief Financial Officer Four Objectives for this Discussion:
1 Demonstrate the progress in our operating model transformation and outline what is next
Demonstrate the shift to benefits and enablement for 2 our operational excellence initiatives
Characterize the changing cash flow generation 3 dynamics and our capital allocation priorities
4 Provide 2017 guidance and key drivers go-forward
Pitney Bowes | Analyst Day 2016 92 Operating Model Transformation We continue to make progress in redesigning our business model through portfolio optimization, innovation and operational excellence
Revenue Trend ($Bn) Revenue Drivers 2013–2016E CAGR of (3%) Normalized CAGR of (2%), excluding: ― Business exits / acquisitions +/- +/- $3.8 ― Geographic market exits $3.8 $3.6 $3.5 $3.5 13 countries exited direct operations ― Platform cut-over Rebalancing revenue mix
(1) 2013 2014 2015 2016E 2017E
Adjusted EPS and FCF Per Share Trends Adjusted EPS $3.13 Lower revenue – changing margin mix FCF $2.57 $2.80 $3.00 $2.38 - Sustained EPS through transformation $2.20 - Operational excellence investments / benefits $2.50 $2.27 $2.12 Improving revenue and margin benefits $2.00 Adj $1.95 EPS EPS$1.90 and Free Cash Flow per Share ($) - $1.50 $1.81 $1.75 $1.82 $1.80 Free Cash Flow - $1.75 Lower finance receivable run-off $1.00 (2) (3) Working capital management 2013 2014 2015 2016E 2017E (1) 2016E revenue assumed at the low-end of guidance range of (1%) - (3%) versus 2015, excluding currency Earnings to drive cash flow (2) 2016E adjusted EPS assumed at the low-end of guidance range of $1.75 - $1.82 94 (3) 2017E free cash flow per share based on shares outstanding as of 09/30/2016 Our transformation has positioned us to achieve growth as we evolve our portfolio
Foundation Launch Benefits Growth
Portfolio Brand Brand Advertising Business Platform Digital Geo-Footprint Business Platform Investment Business Platform New Products Commerce SMB Go-To-Market Product Development New Products Digital Channel Ecommerce Retail Platform Commerce Cloud Reinvent Balance Sheet Digital Commerce Mailing Accelerating
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 2013 - 2014 2015 2016 2017 - 2018 Future State
ReinventStabilize Operational Grow Digital Mailing Excellence Commerce Pitney Bowes | Analyst Day 2016 95 The changing mix of revenue reinforces the importance of our transformation initiatives(1)
2014 2015 2016 YTD
Business Equipment Business Equipment Business Equipment Services Sales Services Sales Services Sales 20% 20% 22% 19% 24% 19%
Support Services Support 16% Services Support 16% Services Recurring Recurring 15% Recurring Streams Streams Streams Software Software Software 32% 32% 31% 11% 11% 10%
Gross Margin 58.1% 58.4% 57.4%
Contributors Challenges Strong growth & acquisition in ecommerce Decline in high-margin SMB base Modest growth in Enterprise Solutions Temporary disruptions caused by transformation ― Presort volume growth Under-performance in Software 96
(1) May not total to 100% due to rounding 2013 – 2015 Adjusted EBIT margins have improved on substantial S,G&A reductions from transformation initiatives
% of Total Revenue 100% Progress 18.1% 19.1% 20.0% 17.6% Operational Excellence 75% 37.5% 36.1% 35.4% 36.2% Channel efficiencies 50% Portfolio simplification Ecommerce synergies 25% 41.5% 41.9% 41.6% 42.6% Revenue mix Short-term transformation impacts 0% 2013 2014 2015 2016 YTD Enterprise Business Platform investments Adjusted EBIT S,G&A(1) R&D Cost of Revenue
(1) S,G&A includes expense reflected in adjusted EBIT
Pitney Bowes | Analyst Day 2016 97 High-growth Digital Commerce markets present opportunity to offset contracting SMB market
Revenue Contribution Market-weighted composite growth rate of ~10% 25% and Market Growth Rates PBI portfolio at weighted average market growth 20% rate ~2%
15% PBI portfolio growth at weighted average market rate adds ~1.5 - 2 points/year 10% Market growth would increase DCS revenue share by ~2 - 3 points/year
year Market CAGR Market year 5%
- 5 Global Ecommerce Global Weighted average market growth
Software 2016 0% Enterprise 25% 50% 75% SMB 100% Share of 2016 YTD Revenue
-5% Market Size Market Growth Rate Market EBIT Margins SMB $3-$4bn (2%) – (4%) 30% - 35% Enterprise $5bn Flat – 2% 15%+ Software $18bn ~10% ~20% Pitney Bowes | Analyst Day 2016 Global Ecommerce $7bn 15% - 20% ~15% 98 Consistent with go-to-market changes, North America SMB is expected to see benefits post the business platform implementation
NA Mailing Y/Y Revenue Trend(1) 2% Progress Headcount Shift Recovery Platform 0% Cut-Over(2) -2% Revenue results within market range -4% 2014 – Q1 2016 -6% ― Equipment sales recovery ― Operational excellence benefits -8% -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Enterprise Business Platform 2014 2015 2016 ― Temporary cut-over impact ― Ongoing refinement and productivity EBIT Margin Trend ― Canada revenue and productivity gains 50% 45% Platform-enabled products launched 40% ― SendPro Shipping ― P300 Mailing / Shipping platform 35% ― SmartLink connectivity device 30% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 Enhanced web store and experience NA Mailing Market Normalized ― Enhanced digital marketing (1) Y/Y revenue comparison excludes the impact of currency for cut-over ― Commerce Cloud (2) Q2 and Q3 2016 platform cut-over impact of $20-$25MM revenue; $10-$15MM EBIT
Pitney Bowes | Analyst Day 2016 99 After go-to-market, geographic footprint and product portfolio rationalization, International SMB is preparing for the Enterprise Business Platform
Int’l Mailing Y/Y Revenue Trend(1) 2% Headcount Shift Recovery Progress 0% -2% -4% Key markets recovered from go-to- -6% market changes -8% ― 2016 YTD normalized revenue in market range -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ― All markets complete 2014 2015 2016 Geo-footprint EBIT Margin Trend ― Exited 13 markets mid 2014 - January 2016 20% ― Exited Norwegian product line in 2014 15% ― All impacts annualized by year-end 2016 10% New product launches 5% ― Products expected in 2017 0% ― P300 Mail / Shipping platform Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ― SmartLink 2014 2015 2016 ― SendPro Shipping Int'l Mailing Market
(1) Y/Y revenue comparison excludes the impact of currency and market exits
Pitney Bowes | Analyst Day 2016 100 With most major transformation initiatives nearing completion, new SMB products and operational excellence benefits present upside
Global SMB Y/Y Revenue Trend(1) 2% Headcount Shift Recovery Platform Drivers 0% Cut-Over(2) Contributors -2% Revenue -4% ― New products -6% ― Platform enablement ― Growing connected population -8% -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 EBIT Margin 2014 2015 2016 ― Operational excellence ― Digital channel EBIT Margin Trend ― Revenue stabilization 50%
40% Challenges 30% Market dynamics 20% ― Market contraction Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ― Mail volumes 2014 2015 2016 SMB Market Normalized Transformation (1) Y/Y revenue comparison excludes the impact of currency and market exits for cut-over (2) Q2 and Q3 2016 platform cut-over impact of $20-$25MM revenue; $10-$15MM EBIT ― International platform development / delivery
Pitney Bowes | Analyst Day 2016 1% change in revenue = ~$18MM revenue 101 at 45%-55% incremental margin Enterprise Business Solutions continues to deliver steady results despite changing market dynamics
Enterprise Y/Y Revenue Trend(1) Progress 10% Revenue 6% Production Mail 2% ― Strong Q3 2016 installs -2% ― New products -6% Presort Services -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ― Growing overall volume 2014 2015 2016 ― 2016 rate case ― New business margins EBIT Margin Trend
20% EBIT Margin 15% Production Mail 10% ― Strong product mix 5% ― Cost management 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Presort Services 2014 2015 2016 ― Revenue mix Enterprise Business Solutions Market ― Labor costs (1) Y/Y revenue comparison excludes the impact of currency and market exits
Pitney Bowes | Analyst Day 2016 102 Enterprise Business Solutions will benefit from opportunities in 2017 rate case, new solutions and services, and network expansion
Revenue Trend ($MM) Y/Y Revenue %(1) $600 4%
2% Drivers $400 0% $200 Contributors -2% Rate case benefits of high-density mail $- -4% Presort network expansion 2013 2014 2015 2016 YTD Higher share of high-margin Presort Presort $ Production Mail $ Y/Y Rev % Market Production Mail IOT Analytics ― Clarity EBIT Trend ($MM) EBIT Margin % ― Professional Services $120 18%
$80 16% Challenges Mail volumes $40 14% Consolidation/outsourcing pressure on maintenance services $- 12% 2013 2014 2015 2016 YTD Presort $ Production Mail $ EBIT Margin % Market (1) Y/Y revenue % comparison excludes the impact of currency and market exits
Pitney Bowes | Analyst Day 2016 1% change in revenue = ~$9MM revenue 103 at 25%-35% incremental margin Digital Commerce growth is driven by successful business integration, product innovation and marketplace growth
DCS Revenue Mix Progress 100% 80% 30% 40% 48% 47% 54% Revenue 60% Global Ecommerce ― Expansions of Borderfree retail 40% 70% 60% 53% ― Growth of GSP with eBay 20% 52% 46% ― Expansion to UK and Australia 0% 2013 2014 2015 2015 YTD 2016 YTD Software Software Ecommerce ― Channel underperformance
DCS EBITDA Trend 14% 15% 14% 13% EBIT Margin 12% 11% Global Ecommerce 10% ― Integration synergies ― Economies of scale 5% 9% 10% 9% 8% 5% Software 0% ― Revenue shortfall 2013 2014 2015 2015 YTD 2016 YTD ― Channel investment EBIT Deprec & Amort Pitney Bowes | Analyst Day 2016 104 After a period of underperformance, Software will leverage a new channel configuration to drive revenue
Software Revenue – TTM ($MM) $450 Drivers $400 $350 Contributors $300 Revenue $250 ― Reallocation of direct resources $200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ― Partner operations development 2014 2015 2016 ― Continued product enhancement / vertical Revenue-TTM solutions
Software EBIT – TTM EBIT Margin % ($MM) $60 25% Challenges $40 15% Build market awareness of brand $20 5% Rapidly onboard / train partners Overall market technology investment $0 -5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 EBIT$-TTM EBIT %-TTM Market EBIT
Pitney Bowes | Analyst Day 2016 1% change in revenue = ~$4MM revenue 105 at 45-55% incremental margin A differentiated technology solution, expanding client base and high-growth market presents significant opportunity in Ecommerce
Global Ecommerce Pro-forma Revenue Y/Y Revenue % ($MM) UK Borderfree Australia $120 GSP Acquired Retail 30% Drivers 20% $80 10% Contributors – Achieving market $40 0% growth Growing base of retailers $- -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Product extensions 2013 2014 2015 2016 Retail/ Global expansion PBI Borderfree Global Ecomm Y/Y % Market Marketplace Volume leverage – economies of scale Global Ecommerce Pro-forma EBIT % / EBITDA % Integration synergies 20%
10% Challenges Currency fluctuations 0% Retail market dynamics -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015 2016 EBIT % EBITDA % Market
Pitney Bowes | Analyst Day 2016 1% change in revenue = ~$4MM revenue 106 at 25-35% incremental margin Operational Excellence As revenue profile changes, revenue mix and component margin performance will drive contribution
% of Total Revenue(1) and Gross Margin
GM GM GM GM 58.5% 58.1% 58.4% 57.4% Software 10.5% 72.2% 11.2% 71.2% 10.8% 70.6% 10.2% 69.2% Business 16.7% 28.7% Services 20.4% 30.0% 22.4% 31.9% 24.1% 31.3% Support 17.1% 38.1% Services 16.4% 39.7% 15.5% 41.8% 15.2% 41.4%
Recurring 32.9% 84.8% 31.9% 85.3% Streams 84.3% 31.9% 84.8% 31.2%
Equipment 22.9% 51.3% 51.4% Sales 20.2% 52.5% 19.4% 52.4% 19.3%
2013 2014 2015 2016 YTD Drivers
Mix shift toward business services Contraction of SMB streams Improving Business Services and Support Services margins 108 (1) May not total to 100% due to rounding Operational excellence benefits driven by the Enterprise Business Platform will reduce S,G&A ratio and support investment
S,G&A Ratios (1) 38% 37.5% % of Total Revenue 37.5% Drivers 37% 37.4%
36.1% 36.2% Achieve +/- $50 million in annual 36% benefits from operational excellence in 35.4% 35.7% 2017 35.5% 35% 35.1% 35.0% Invest in incremental marketing / digital 34% capabilities 34.0% 34.1%
33% Normalize compensation 2013 2014 2015 2016 YTD
Core S,G&A Business Platform Marketing
(1) S,G&A includes expense reflected in adjusted EBIT
Pitney Bowes | Analyst Day 2016 109 With the North American launch and operational excellence benefits being realized, we have recast our remaining global roll-out plan
($MM) S,G&A $24 S,G&A $34 S,G&A $30-35 S,G&A $20-30 S,G&A $20-25 $60 Benefits - Benefits $15 Benefits $25-30 Benefits $45-55 Benefits $40-50 CapEx $44 CapEx $36 CapEx $20-30 CapEx $20-30 CapEx $ 5-10
$40
$20
$- 2013/2014 2015 (1) 2016E 2017E 2018E Benefits S,G&A(2) CapEx Design Build Deploy Optimize Benefits Phased International roll-out Enhanced automation and web functionality Reflects integration of Borderfree
Total benefits now $125 - $150 million 110 (1) 2015 benefits include lower support services from IT provider (2) 2016 – 2018 S,G&A includes depreciation of $7-$13MM/year Capital Allocation We will maintain a balanced approach to capital allocation and ready access to capital markets
Balance Sheet Optimization
Acquisitions Maintain investment grade credit ratios Organic / Investments Divestitures Competitive dividend Free 54% Cash Organic investment in business Flow Tuck-in acquisitions
Share Restructuring Repurchase Opportunistic share repurchase
Dividend
Pitney Bowes | Analyst Day 2016 112 Free cash flow will benefit from earnings growth and a changing portfolio profile
Free Cash Flow ($MM) $635 Drivers $600 $571
$456 $400 - $450 $415 - $485 Earnings growth $400 Working capital improvement $200 ― Optimize cash on platform roll-out ― Business mix toward Global Ecommerce
$- Lower finance receivable run-off 2013 2014 2015 2016E 2017E
FCF $635 $571 $456 $425(2) $450(2) Common Dividend(1) $189 $152 $150 $140 $140
Available FCF $446 $419 $306 $285 $310
(1) Based on payment for common shares; 2016 and 2017 assumed at current share count and dividend payment for illustrative purposes (2) Based on comparison to mid-point of guidance range 113 Debt levels and leverage ratios reflect balanced capital allocation and maintenance of investment grade credit ratios
($MM)
$4,000 $3,642 $3,548 $3,367 $3,246 $296 $296 $3,000 $296 2016 includes $600 million issuance - $1,468 $300MM PBIH preferred redeemed $1,597 $1,967 $1,424 11/01/16 $2,000 Finance receivables leverage ratio $1,000 changed from 10x to 8x EBITDA – 2016 $1,878 $1,655 $1,526 $1,400 ― Reflects rating agencies methodology changes $- 2013 2014 2015 Q3 2016 (1) ― $32 million more implied operating Finance Receivables-Related Debt (2) Implied Operating Company Debt PBIH company debt Leverage Ratio
S&P / Moody’s(3) 2.3 / 2.6 2.2 / 3.1 2.2 / 2.8 2.8 / 2.9 5 Yr CDS Spreads 123 75 119 176
(1) 2016 balances as of September 30, 2016; reflects redemption of PBIH preferred security on November 1, 2016 (2) Debt allocated to finance receivables assumes a 10:1 debt to equity ratio for 2013 – 2015; 2016 assumes an 8:1 debt to equity ratio per change in rating agency methodology 114 (3) Leverage ratio based on adjusted debt:adjusted EBITDA; 2016 represents estimate for year-end Free cash flow and access to capital markets remains strong to address future debt maturities
($MM) Free Cash Flow 2017 guidance mid-point $450MM Progress $1,000 Less dividend run-rate(3) (140) Available free cash flow $310MM $800 New $600 million – 5 year bond issued 09/22/16 $600 $150 $600 $600 ― Commercial paper $0 at 09/30/16 $400 $500 $500 ― PBIH preferred redeemed 11/01/16 $425 $200 $296 $300 $300 Funding future maturities: ― Free cash flow $- 2016 2017(2) 2018 2019 2020 2021 2024 2043 ― Commercial paper ― Refinancing
(1) PBIH Bonds Term Loan
(1) PBIH preferred security redeemed November 1, 2016 (2) $115MM 2037 note puttable in 2017 115 (3) Assumed at current share count and dividend payment for illustrative purposes Capital investment returning to ‘normalized’ levels post Enterprise Business Platform implementation
($MM) ($MM) Capital Expenditures Depreciation & Amortization $300 $300
$211 $198 $185 - $190 $180 - $190 $200 $181 $166 $200 $173 $150 - $155 $138 $130 - $150
$100 $100
$- $- 2013 2014 2015 2016E 2017E 2013 2014 2015 2016E 2017E Enterprise business platform CapEx
Common Dividend/Yield(1) ($MM) Share Repurchase ($MM) (Dividend Yield) $197 $200 $400 $301 15% $150 $132 $300 14% $100 $189 10% $100 $200 $152 $150 $140 $50 $50 $100 5% 4% 4% 5% $- $- 3% $- $- 0% 2011 2012 2013 2014 2015 2016YTD 2012 2013 2014 2015 2016E (1) 2016E assumed at current share count and dividend payment The disciplined stewardship of capital while transforming the business is evident in the Company’s ROIC ratios
Return on Invested Capital
Borderfree System Acquired Cut-Over 30% Progress
27.6% 25% 27.3% Ensure sufficient hurdle rates on organic 24.1% investment 20% 21.8% 21.7% 19.0% Strictly adhere to identified acquisition 15% criteria 15.3% 14.5% 14.5% 10% Drive leverage in acquired business Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2015 2016 Achieve operational excellence benefits EBITDA % EBIT % NOPAT %
Pitney Bowes | Analyst Day 2016 117 Outlook Digital Commerce growth, operational excellence and platform leverage will drive 2017 outlook
Revenue Revenue Growth 2017(1) (2%) to 1% 4% Y/Y % excluding impacts of currency Drivers: 2% . SMB: New products and digital capabilities 0% . Ecommerce growth -2% . Software channel -4% . Enterprise: Perform on the model
(2) Adjusted EPS EPS 2017 $1.80 to $1.95 $2.00 Drivers: . Operational excellence $1.80 . SMB: platform leverage . Ecommerce growth . Software revenue leverage $1.60
($MM) Free Cash Flow Free Cash Flow 2017 $415MM to $485MM Drivers: $600 . Earnings growth $500 . Operational excellence $400 . Working capital improvements $300 2013 2014 2015 2016E 2017E . Digital Commerce – cash conversion cycle (1) 2017 revenue comparison to 2016E, excluding the impacts of currency 119 (2) Adjusted EPS excludes the impact of special items, such as restructuring and asset impairment charges and tax adjustments There are a number of factors that will drive improved performance in 2017 and beyond
North America Mailing – Realize business platform benefits; New products & client value Software – Improved performance; New partner channel to impact results Global Ecommerce – Add volume through marketplace and retail networks; Expand Shipping APIs; Synergy savings Presort – USPS proposed rate case; New clients; Network expansion Operational Excellence – Benefits to materialize through 2018 Production Mail – Similar performance to 2016; Contingent on large deals International Mailing – Potential temporary disruption from business platform cut-over Other – Marketing; Normalize compensation Market Factors – 120 Currency; Interest; Tax Summary Summary of objectives:
1 Operating model transformation ― Transformation has enabled us to adapt to market and business model changes ― Transitioning to benefit realization and growth enablement
2 Operational excellence benefits and enablement ― 80% of business activity on new platform ― Program benefits increased to $125 - $150MM
Pitney Bowes | Analyst Day 2016 122 Summary of objectives:
3 Cash flow dynamics and capital allocation ― Future earnings growth will drive free cash flow ― Continue a disciplined capital allocation strategy
4 2017 guidance and drivers ― Improving revenue outlook of (2%) to 1% growth ― Return to growth in EPS and Free Cash Flow
Pitney Bowes | Analyst Day 2016 123 Executive Bios
Pitney Bowes | Analyst Day 2016 Marc B. Lautenbach President and Chief Executive Officer Marc B. Lautenbach is currently President and Chief Executive Officer at Pitney Bowes Inc. Marc was appointed President and CEO in December 2012, and is a member of the Board of Directors.
Before joining Pitney Bowes, Marc spent 27 years at IBM. Marc’s tenure at IBM included senior positions, leading the consulting and systems integration business in North America, sales in the Americas, and leading the small and medium business globally. In addition, Marc held senior executive positions in IBM Asia Pacific.
Marc was elected to the Campbell’s Soup Company Board of Directors in June 2014. He is also a member of Catalyst, Inc., and a member of the Board of Trustees at Denison University.
Marc graduated magna cum laude and Phi Beta Kappa at Denison University in 1983 and went on to receive an MBA from the Kellogg Graduate School of Management at Northwestern University in 1985.
Pitney Bowes | Analyst Day 2016 125 Michael Monahan Executive Vice President, Chief Operating Officer and Chief Financial Officer
Michael Monahan is Executive Vice President, Chief Operating Officer and Chief Financial Officer. In this role, he has global responsibilities for sales operations, client operations, information technology, procurement, supply chain and real estate. In addition he leads the financial operations of the company on a global basis, which includes treasury, audit, investor relations, tax functions, and, has oversight of the corporate development and corporate strategy functions.
Previously, Mike was President of the Mailstream Solutions and Services – Americas, the portfolio of which included North and South American operations and Presort Mail Services. He has overseen Pitney Bowes’ entry and expansion in the U.S. domestic and international mail services markets. He led the formation of the company’s Presort Mail Services division through a series of acquisitions and partnerships.
Mike joined Pitney Bowes in 1988 and held positions in Corporate Accounting, Investor Relations, Corporate Development, and as a business unit CFO. Prior to joining the company, he was a senior auditor with Price Waterhouse.
Mike is Chairman of the Audit Committee and member of the Executive Committee of the National Board of the Armed Services YMCA. He is also a member of the board of the Pitney Bowes Foundation. Mike is a Certified Public Accountant and holds B.S. and M.S. degrees from the State University of New York at Albany.
Pitney Bowes | Analyst Day 2016 126 Joe Schmitt Vice President and Chief Information Officer Joseph Schmitt is Vice President and Chief Information Officer for Pitney Bowes Inc. He is responsible for the management of the company’s global IT Shared Services unit which provides corporate systems strategy and planning, development and maintenance, and technical operation services for PBI’s global enterprise. Joe is a corporate officer and a member of the Senior Management Team.
Most recently, Joe held similar responsibilities as Senior Vice President and CIO for Steward Health Care System. While there, he realigned its technology strategy and deployed new hospital and ambulatory systems. Prior to Steward, Joe held the position of Technology and Operations Executive for New York-based Cerberus Capital Management where he engaged in M&A activities for Cerberus’ $20B private equity portfolio.
Joe began his career as a strategy and systems integration consultant and spent 12 years at General Electric holding various technology, operations and Six Sigma leadership positions.
Joe holds Bachelor of Science degrees in Economics and Industrial Management from Carnegie Mellon University.
Pitney Bowes | Analyst Day 2016 127 Roger Pilc Executive Vice President and Chief Innovation Officer Roger Pilc is Executive Vice President and Chief Innovation Officer of Pitney Bowes Inc. He leads worldwide engineering, strategic technology and innovation, enterprise growth initiatives and technology alliances. Roger reports to President and Chief Executive Officer Marc B. Lautenbach and is an Officer of the company.
Roger joined Pitney Bowes in June 2013 from CA Technologies, the leading enterprise management software provider. From 2007 to 2013, he held various leadership roles as a Senior Vice President and General Manager, including leading CA Technologies’ largest distributed systems management business unit, as well as running another business unit driving CA Technologies growth and market share leadership in cloud systems management. He also led the CA Technologies Strategic Alliances and Business Development team, and their Service Provider and Industry Vertical solutions initiatives.
Roger began his career at management consulting firms Booz Allen Hamilton and McKinsey & Company. Working in New York and London, his client roster spanned telecommunications, finance, consumer goods, defense electronics and aerospace. In 2001, he became Chief Operating Officer at enterprise management software company SMARTS. SMARTS enjoyed nearly five-fold revenue growth and launched a series of innovative solutions during Roger’s four-year tenure, and was bought by EMC for over $260 million. In addition, he was CEO of Whale Communications, a security software vendor which he successfully led and sold to Microsoft.
Roger earned from Cornell University a B.S. from the College of Engineering and a B.A. from the College of Arts and Sciences. He has an M.S. from Stanford University and an M.B.A. from Harvard Business School. Pitney Bowes | Analyst Day 2016 128 Bob Guidotti Executive Vice President and President, Software Solutions As the global leader of Software Solutions for Pitney Bowes, Bob is helping the company expand its global footprint as it rolls out a new suite of vertical software solutions. Built on the company’s leading customer engagement, location intelligence and data quality technologies, the new solutions address common business challenges – including fraud management, compliance, network optimization and customer communication – shared by clients across various industries. Bob is responsible for the overall strategy, sales and development of the company’s software solutions business.
Bob came to Pitney Bowes with more than 20 years of experience in the software business. Most recently, Bob was General Manager, Software Sales at IBM, where he was responsible for sales, technical sales, and channels for the Software portfolio worldwide. Bob held a series of executive positions including head of IBM software sales in North America, where he managed and directed a team of more than 7,000 people and more than $8 Billion of revenue in annual sales and services.
Bob earned his undergraduate degree in marketing from Pace University.
Pitney Bowes | Analyst Day 2016 129 Mark Taylor Senior Vice President, Software Channels Mark Taylor is the Senior Vice President of Software Partner Channels for Software Solutions at Pitney Bowes. In this role, Mark leads the overall strategy, execution and growth of the company’s worldwide partner network.
Before joining Pitney Bowes in April 2016, he was President, Global OCS at Arrow Electronics. Mark held a series of executive positions at Arrow and has extensive experience transforming businesses by working with worldwide system integrators, influencers and distributors.
Mark graduated from Georgia State University with a BBA in Finance. He is also a board member of the Technology Association of Georgia. Mark is married with two children and resides in Atlanta, GA.
Pitney Bowes | Analyst Day 2016 130 Mark Shearer Executive Vice President and President, Global SMB Solutions Mark Shearer is Executive Vice President and President, Global SMB Solutions. In this role, he leads the core business of Pitney Bowes focused on shipping and mailing products and technologies worldwide in the small and medium-sized marketplace.
Before joining Pitney Bowes in 2013, Mark had a distinguished 30-year career at IBM, during which he served in numerous leadership roles for global markets and product lines. Early in his tenure, he led IBM’s worldwide sales relationships for major banks headquartered in New York City, and then moved to Tokyo to lead a $1 billion business focused on telecommunications and media companies in the Asia-Pacific region. Other executive roles included General Manager of Small and Medium Business Services and General Manager of the System I business, a $2 billion segment with more than 100,000 customers around the world.
Mark also held several senior marketing positions, including Vice President of Marketing for IBM Americas, Vice President of Marketing for the mainframe business, and Vice President of Marketing & Strategy for IBM Systems & Technology, where he was responsible for marketing and strategy for IBM’s more than $20 billion hardware business worldwide.
Mark earned his undergraduate degree in Economics from Princeton University. He supports the Berkshire Taconic Community Foundation and serves on the Board of Trustees for the Scoville Memorial Library.
Pitney Bowes | Analyst Day 2016 131 Lila Snyder Executive Vice President and President, Global Ecommerce Lila Snyder is the President, Global Ecommerce at Pitney Bowes Inc. In this role, she is responsible for the company’s overall international ecommerce and cross-border shipping business, and the integration of the company’s acquisition of Borderfree.
Prior to this role, Lila was the president of the company’s global production mail business for enterprise-level clients, including some of the world’s largest banks, insurers and telecom companies. This business focused on the creation of high-value, relevant, timely and targeted customer communications, as well as driving client insight through data and analytics.
Before joining Pitney Bowes in November 2013, Lila was a partner at McKinsey & Company, Inc. In this role, she was the leader of McKinsey's Stamford office and focused on serving clients in the technology, media and communications sectors. Her work spanned strategy, operations, marketing and sales, working with clients to drive sustainable performance and build capabilities.
Lila holds S.M. and Ph.D. degrees in mechanical engineering from the Massachusetts Institute of Technology and a B.S. degree in mechanical engineering from the University of Miami.
Pitney Bowes | Analyst Day 2016 132 Adam David Vice President, Investor Relations Adam David is the Vice President of Investor Relations for Pitney Bowes and has been in this position since March 2016. In this role, Adam is focused on managing the company’s communications with its investment community.
Prior to this role, Adam was Vice President, Office of the CEO. He reported to Marc Lautenbach and supported Marc and the Senior Management Team in executing on the Pitney Bowes strategy.
Before assuming the Office of the CEO role in 2015, Adam David was Vice President of Finance. In this role, he lead the decision support efforts for the company, which drew on his extensive experience in finance and accounting, coupled with a successful track record of consistently driving toward financial targets and building strong teams to set and meet business objectives.
Prior to taking on this responsibility in 2013, Adam had served as Vice President, Group Financial Officer, for both Pitney Bowes Communications Solutions and Pitney Bowes Management Services. Under his leadership, the decision support team brought greater focus on the profitability and operations of these two groups.
Adam joined Pitney Bowes in 2007 from IBM where he most recently served as Director of Finance, IBM Americas Global Technology Services, responsible for finance and planning of this $14 billion business unit. He began his career with IBM in 1996 in Corporate Finance and rose to positions of increasing responsibility in the Global Financing business.
Prior to joining IBM, Adam held positions with Readers Digest Association, PepsiCo and Price Waterhouse Coopers.
He is a Certified Public Accountant and has a B.S. in accounting from Iona College.
Pitney Bowes | Analyst Day 2016 133 Appendix Reconciliation of reported revenue to revenue excluding currency and Market Exits
Nine months ended ($ millions) September 30, Twelve months ended December 31, 2016 2015 2014 2013
Revenue, as reported $ 2,520 $ 3,578 $ 3,822 $ 3,791 Exclude revenue from Market Exits and impact of currency 19 98 (62) (72) Lost revenue from platform cutover 23 - - - Revenue, excluding Market Exits, currency and platform cutover $ 2,562 $ 3,676 $ 3,760 $ 3,719
Pitney Bowes | Analyst Day 2016 135 Reconciliation of reported net income to adjusted earnings
Nine months ended ($ millions) September 30, Twelve months ended December 31, 2016 2015 2014 2013
Net income $ 191 $ 426 $ 352 $ 161 Loss (income) from discontinued operations, net of tax 2 (5) (33) 145 Restructuring charges and asset impairments, net 32 18 59 59 Loss (gain) on disposition of businesses 3 (84) - - Acquisition and disposition transaction costs - 11 - - Legal settlement - 4 - - Investment divestiture - (7) (10) - Tax cost - preferred stock redemption 5 - - - Acquisition/disposition related expenses - 7 - - Extinguishment of debt - - 38 20 Income from continuing operations, after income taxes, as adjusted 233 370 406 385 Provision for income taxes, as adjusted 107 187 156 116 Income from continuing operations before income taxes, as adjusted 340 557 562 501 Interest, net 104 159 169 187 EBIT, as adjusted 444 716 731 688 Depreciation and amortization 140 173 197 195 EBITDA, as adjusted $ 584 $ 889 $ 928 $ 883
Pitney Bowes | Analyst Day 2016 136 Reconciliation of reported diluted earnings per share to adjusted diluted earnings per share from continuing operations
Nine months ended September 30, Twelve months ended December 31, 2016 2015 2014 2013
Diluted earnings per share $ 0.93 $ 2.03 $ 1.64 $ 0.70 Loss (income) from discontinued operations, net of tax 0.01 (0.03) (0.17) 0.71 Restructuring charges and asset impairments, net 0.17 0.09 0.29 0.29 Loss (gain) on sale/disposition of businesses 0.01 (0.42) - - Acquisition and disposition transaction costs - 0.06 - - Legal settlement - 0.02 - - Investment divestiture - (0.04) (0.05) - Tax cost - preferred stock redemption 0.03 - - - Acquisition/disposition related expenses - 0.04 - - Extinguishment of debt - - 0.19 0.10
Diluted earnings per share from continuing operations, as adjusted $ 1.16 $ 1.75 $ 1.90 $ 1.81
Note: The sum of the earnings per share amounts may not equal the totals due to rounding.
Pitney Bowes | Analyst Day 2016 137 Reconciliation of reported net cash from operating activities to free cash flow
Nine months ended ($ millions) September 30, Twelve months ended December 31, 2016 2015 2014 2013 Net cash provided by operating activities $ 291 $ 515 $ 656 $ 625 Capital expenditures (116) (166) (181) (138) Restructuring payments 51 62 56 60 Pension contribution 37 - - - Reserve account deposits 2 (24) (16) (20) Payments (receipts) related to investment divestiture - 20 (6) - Acquisition/disposition related expenses - 10 - - Tax and other payments on sale of business and leverage lease assets - 21 - 75 Cash transaction fees - 18 - - Extinguishment of debt - - 62 33
Free cash flow $ 265 $ 456 $ 571 $ 635
Pitney Bowes | Analyst Day 2016 138 Thank You