Q4 2025 Pitney Bowes Inc Earnings Call

February 18, 2026

Alex Brown: Ladies and gentlemen, thank you for standing by. Welcome to the Q4 2025 Pitney Bowes Earnings Conference Call. Joining us today are Chief Executive Officer Kurt Wolf, Chief Financial Officer Paul Evans, and Director of Investor Relations Alex Brown. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you would need to press star one one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. It is my pleasure to turn the call over to Alex Brown, Director of Investor Relations. Please go ahead.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Q4 2025 Pitney Bowes Earnings Conference Call. Joining us today are Chief Executive Officer Kurt Wolf, Chief Financial Officer Paul Evans, and Director of Investor Relations Alex Brown. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you would need to press star one one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. It is my pleasure to turn the call over to Alex Brown, Director of Investor Relations. Please go ahead.

Speaker #1: At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone.

Speaker #1: You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker #1: It is my pleasure to turn the call over to Alex Brown, Director, Investor Relations. Please go ahead.

Speaker #2: Good morning, and thank you for joining us. Included 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.

Alex Brown: Good morning, and thank you for joining us. Included 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 items can be found in our earnings press release, our Form 10-K, and other reports filed with the SEC that are located on our website at www.pb.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 any new information or developments. Also included in today's presentation are non-GAAP measures. Specifically, EBIT, EBITDA, EPS, and free cash flow are all on an adjusted basis. You can find a reconciliation for these items to the appropriate GAAP measure in the tables attached to our press release.

Speaker #2: More information about these items can be found in our earnings press release, our Form 10-K, and other reports filed with the SEC that are located on our website at www.pb.com by clicking on Investor Relations.

Speaker #2: Please keep in mind that we do not undertake any obligation to update forward-looking statements as a result of any new information or developments. Also, included in today's presentation are non-GAAP measures.

Speaker #2: Specifically, EBIT, EBITDA, EPS, and free cash flow are all on an adjusted basis. You can find a reconciliation for these items to the appropriate GAAP measure in the tables attached to our press release.

Speaker #2: We have also provided a slide presentation and a spreadsheet with historical segment information on our website. With that, I'd like to turn the call over to Kurt.

Alex Brown: We have also provided a slide presentation and a spreadsheet with historical segment information on our website. With that, I'd like to turn the call over to Kurt.

Speaker #3: Good morning, and thank you for joining us. I trust that everyone has had a chance to read our earnings release and my quarterly letter.

Kurt Wolf: Good morning, and thank you for joining us. I trust that everyone has had a chance to read our earnings release and my quarterly letter. As such, I will keep my comments brief. First, I'd like to welcome our recently announced executive hires. It's exciting to see the level of talent we are now able to attract to Pitney Bowes. I'm particularly pleased to have Steve Fischer join the company. Steve is an accomplished bank leader, something that stood out during the recruiting process. I look forward to working closely with him to maximize the value of Pitney Bowes Bank. Moving to Q4, our results demonstrate the progress we're making in transforming Pitney Bowes. While we did have some tailwinds, our financials were strong, absent those benefits, and reflect the growing strength of our business. In closing, we are rapidly progressing through our transformation.

Speaker #3: As such, I will keep my comments brief. First, I'd like to welcome our recently announced executive hires. It's exciting to see the level of talent we are now able to attract to Pitney Bowes.

Speaker #3: I'm particularly pleased to have Steve Fisher join the company. Steve is an accomplished bank leader—something that stood out during the recruiting process. I look forward to working closely with him to maximize the value of Pitney Bowes Bank.

Speaker #3: Moving to the fourth quarter, our results demonstrate the progress we're making in transforming Pitney Bowes. While we did have some tailwinds, our financials were strong absent those benefits and reflect a growing strength of our business.

Speaker #3: In closing, we are rapidly progressing through our transformation. In 2025, we significantly strengthened the foundation of our business, taking meaningful steps in upgrading leadership, simplifying our structure, and streamlining processes in eliminating costs.

Kurt Wolf: In 2025, we significantly strengthened the foundation of our business, taking meaningful steps and upgrading leadership, simplifying our structure, streamlining processes, and eliminating costs. All of this is putting us on strong footing as we pivot to a focus on profitable growth and beginning our external review with qualified advisors during Q2. With that, let's open the call for questions.

Speaker #3: All of this is putting us on strong footing as we pivot to a focus on profitable growth and begin our external review with qualified advisors during the second quarter.

Speaker #3: With that, let's open the call for questions.

Alex Brown: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced, and to withdraw your question, please press star one one again. And our first question will come from Aaron Kimson with Citizens. Your line is now open.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced, and to withdraw your question, please press star one one again. And our first question will come from Aaron Kimson with Citizens. Your line is now open.

Speaker #4: Thank you. As a reminder, to ask a question please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again.

Speaker #4: And our first question will come from Erin Kimpson with Citizens. Your line is now open.

Speaker #5: Oh, great. Thank you, guys. Kurt, can you expand on the additional market uncertainty and geopolitical challenges you mentioned in your letter as reasons for the wider guidance range?

[Analyst] (Citizens): Oh, great. Thank you, guys. Kurt, can you expand on the additional market uncertainty and geopolitical challenges you mentioned in your letter as reasons for the wider guidance range?

Aaron Kimson: Oh, great. Thank you, guys. Kurt, can you expand on the additional market uncertainty and geopolitical challenges you mentioned in your letter as reasons for the wider guidance range?

Speaker #2: Yeah, Erin, thanks for the question. Thanks for joining the call. Yeah, some of the things that we've—I guess I would point to—one is we've seen in the past there's been issues with government shutdowns.

Kurt Wolf: Yeah, Aaron, thanks for the question. Thanks for joining the call. Yeah, some of the things that we've... You know, I guess I would point to one is, as we've seen in the past, there's been issues with government shutdowns. I think there's no guarantee that doesn't happen again. As we talked about during our Q3 call, that certainly affects some of our performance in the SendTech space. More broadly, obviously, you know, there's questions about a change at the Fed. Other, you know, there's some uncertainty about where the direction of the economy is going. We're a pretty non-cyclical business. However, I would really point to our marketing mail aspect of the presort business, which is more economically sensitive.

Speaker #2: I think there's no guarantee that doesn't happen again. As we talked about during our Q3 call, that certainly affects some of our performance in the Centech space.

Speaker #2: More broadly, obviously, there are questions about a change at the Fed, and other—there's some uncertainty about where the direction of the economy is going. And we're a pretty non-cyclical business.

Speaker #2: However, I would really point to our marketing mail aspect of the pre-sort business, which is more economically sensitive. So, while we don't expect anything major, we are cognizant that there could be potential headwinds related to both of them, but do not necessarily expect them.

Kurt Wolf: So, while we don't expect anything major, we are cognizant that there could be potential headwinds related to both of them, but not necessarily expect them.

Speaker #5: Okay, that makes sense. And then I wanted to ask on the presort business as well. You mentioned new business wins and no churn since June of 2025.

[Analyst] (Citizens): ... Okay, that makes sense. And then I wanted to ask on the Presort business as well. You mentioned new business wins and no churn since June of 2025. I think you had a nice win in the state of Pennsylvania that was well-publicized in Q4. Are boomerang customers and, and new wins generally reflected in Presort volumes immediately, or is there a ramp time where Debbie and her team get agreements, but the volumes come at the end of a pre-existing contract with another vendor, and you have some visibility into the ramp?

Aaron Kimson: ... Okay, that makes sense. And then I wanted to ask on the Presort business as well. You mentioned new business wins and no churn since June of 2025. I think you had a nice win in the state of Pennsylvania that was well-publicized in Q4. Are boomerang customers and, and new wins generally reflected in Presort volumes immediately, or is there a ramp time where Debbie and her team get agreements, but the volumes come at the end of a pre-existing contract with another vendor, and you have some visibility into the ramp?

Speaker #5: I think you had a nice win in the state of Pennsylvania that was well publicized in Q4. Are boomerang customers and new wins generally reflected in pre-sort volumes immediately?

Speaker #5: Or is there a ramp time where Debbie and her team get agreements, but the volumes come at the end of a pre-existing contract with another vendor, and you have some visibility into the ramp?

Speaker #2: Usually, they come in pretty quickly. But what I would point to is there's definitely a sales cycle that can be pretty long. So, we got more aggressive starting in June of last year, and it's taken time to fill that pipeline.

Kurt Wolf: Usually they come in pretty quickly, but what I would point to is there's definitely a sales cycle that can be pretty long. So, you know, we got more aggressive starting in June of last year, and it's taken time to fill that pipeline. And I think at this point, the pipeline's pretty full start to finish. And one thing I'd point to is, you know, our customer wins that we had in Q4, we've essentially met that level of wins this, you know, half the way into Q1 of this year. So you can see as that pipeline is filled, that we're getting more and more wins on a more rapid basis. And then finally, in terms of flow through to the financials, it does take a little bit of time.

Speaker #2: And I think at this point, the pipeline's pretty full, start to finish. And one thing I'd point to is the customer wins that we had in Q4—we've essentially met that level of wins halfway into Q1 of this year.

Speaker #2: So you can see, as that pipeline is filled, that we're getting more and more wins on a more rapid basis. And then finally, in terms of flow-through to the financials, it does take a little bit of time.

Kurt Wolf: you know, we, we have to add, you know, multiple customers. We have a lot of major losses from the first half of last year that we're trying to eclipse. So it, it's just gonna be a process over, over the next few months, few months and quarters.

Speaker #2: We have to add multiple customers. We have a lot of major losses from the first half of last year that we're trying to eclipse.

Speaker #2: So, it's just going to be a process over the next few months—a few months and quarters.

[Analyst] (Citizens): Understood. Thank you, guys.

Aaron Kimson: Understood. Thank you, guys.

Speaker #5: Understood. Thank you, guys.

Alex Brown: Thank you. And our next question is gonna come from Anthony Lebiedinski with Sidoti. Your line is open.

Operator: Thank you. And our next question is gonna come from Anthony Lebiedinski with Sidoti. Your line is open.

Speaker #4: Thank you. And our next question is going to come from Anthony Lebiedzinski with Sidoti. Your line is open.

Anthony Lebiedzinski: Good morning, and thank you for taking the questions. So just a quick follow-up, Kurt, you said that the government shutdown had some impact in the quarter. Any way you guys could quantify what that impact may have been?

Speaker #3: Good morning, and thank you for taking the questions. So, just a quick follow-up to Kurt. You said the government shutdown had some impact in the quarter.

Speaker #3: Any way you guys could quantify what that impact may have been?

Paul Evans: Hi, Anthony, it's Paul Evans. Yeah, look, we were impacted on that. That was hardware purchases. It sort of pushed it into the subsequent quarter. So we saw most of it in Q3 last year. I'm not sure we'd go down to that level of granularity to give that, but I mean, we are, you know, susceptible to government shutdowns.

Speaker #6: Hi, Anthony. It's Paul Evans. Yeah, look, we were impacted on that. That was hardware purchases. It sort of pushed it into the subsequent quarter.

Speaker #6: So, we saw most of it in Q3 last year. I'm not sure we'd go down to that level of granularity to give that. But, I mean, we are susceptible to government shutdowns.

Speaker #3: Understood. Okay. So, Kurt, in your shareholder letter, you mentioned being more aggressive with pricing on pre-sort. So, just wondering if you could further expand on that as far as how perhaps aggressive you would be with pricing to win back clients, and what type of EBIT margins should we think about as we look at the pre-sort business going forward?

Anthony Lebiedzinski: Understood. Okay. So, Kurt, in your shareholder letter, you mentioned being more aggressive with pricing on Presort. So, just wondering if you could further expand on that as far as how perhaps aggressive you would be with pricing to win back clients, and what type of EBIT margins should we think about as we look at the Presort business going forward?

Speaker #2: Yeah, I'll let Paul speak to the EBIT margins. But just broadly speaking, what I'd highlight on that—I know there's been questions about what's going on in pre-sort—to be quite honest, I think we got caught flat-footed early last year; industry margins went up.

Kurt Wolf: Yeah, I'll let Paul speak to the EBIT margins. But just broadly speaking, what I'd highlight on that, I know there's been questions about what's going on in Presort. You know, to be quite honest, I think we got caught flat-footed early last year. Industry margins went up, and pretty much everybody in the space did what you would expect, which was to go out and be aggressive to try to win new customers with the higher margin levels. We, unfortunately, were not in the same boat. So, you know, we did face a lot of headwinds in terms of customer losses and having to give concessions to our customers, but we weren't necessarily aggressive going after customers in the space, and that's really what's happening now.

Speaker #2: And pretty much everybody in the space did what you would expect, which was to go out and be aggressive to try to win new customers with the higher margin levels.

Speaker #2: We, unfortunately, were not in the same boat. So we did face a lot of headwinds in terms of customer losses and having to give concessions to our customers.

Speaker #2: But we weren't necessarily aggressive going after customers in the space, and that's really what's happening now. So, when we talk about being aggressive on pricing, a lot of it is trying to pull in new business.

Kurt Wolf: So, when we talk about being aggressive on pricing, a lot of it is trying to pull in new business. We've already, you know, made the required concessions to our existing customer base, so it's really about winning new customers.

Speaker #2: We've already made the required concessions to our existing customer base, so it's really about winning new customers.

Speaker #5: So Anthony, to add to that, I think if you sort of target low to mid-20% range for EBIT margins, but it's also important to note that we are the low-cost provider.

Paul Evans: And Anthony, to add to that, I think if you sort of target low to mid 20% range for EBIT margins. But it's also important to note that we are the low-cost provider, so, you know, we can sustain that. So when we come out and say we're gonna get more aggressive on our pricing strategy, and, you know, we can certainly afford to do that.

Speaker #5: So, we can sustain that. So, when we come out and say we're going to get more aggressive on our pricing strategy, we can certainly afford to do that.

Speaker #3: Gotcha. Okay. And then my last question before I pass it on to others. So as we look at the free cash flow guidance, you guys add back restructuring payments to your definition of free cash flow.

Anthony Lebiedzinski: Got you. Okay. And then my last question before I pass it on to others. So as we look at the Free Cash Flow guidance, you guys add back restructuring payments to your definition of Free Cash Flow. So how much restructuring payments are you guys assuming in 2026?

Speaker #3: So, how much restructuring payments are you guys assuming in 2026?

Paul Evans: It is true, yeah, we do add it back, and the reason we add it back is it's not really representative of our business going forward. I'm just trying to think if we've offered that level of detail in the past on that. Maybe, maybe I'll circle back to that payment. I'm not sure we've offered that level of detail.

Speaker #2: For 2020, it is true. Yeah, we do add it back. And the reason we add it back is it's not really representative of our business going forward.

Speaker #2: I'm just trying to think if we've offered that level of detail in the past on that. Maybe I'll circle back to that payment. I'm not sure we've offered that level of detail.

Speaker #3: Okay, understood. Well, thanks very much, and best of luck.

Anthony Lebiedzinski: Okay, understood. Well, thanks very much, and best of luck.

Speaker #6: Thanks, Anthony.

Paul Evans: Thanks, Anthony.

Alex Brown: Thank you. And our next question is gonna come from George Tong with Goldman Sachs. Your line is open.

Operator: Thank you. And our next question is gonna come from George Tong with Goldman Sachs. Your line is open.

Speaker #4: Thank you. And our next question is going to come from George Tong with Goldman Sachs. Your line is open.

Speaker #5: Hi. Thanks. Good morning. Going back to the pre-sort business—hi. In terms of winning back customers and being more competitive on pricing, given the comps ease pretty materially in the second half of this year, would you expect that by then you would return to positive growth in pre-sort?

George Tong: Hi, thanks. Good morning. Going back to the Presort business. In terms of winning back customers and being more competitive on pricing, given the comps ease pretty materially in the second half of this year, would you expect that by then you would return to positive growth in Presort?

Speaker #6: I think we'll see. It'll be an easier comp year over year on growth. But we've got to get past Q1, Q2, which are going to be tougher comps for us.

Paul Evans: I think we'll see. It'll be an easier comp year over year on growth, but, you know, we've got to get past Q1, Q2, which are gonna be tougher comps for us. But again, as we said before, you know, we stopped the decline mid last year. We've Kurt sort of empowered Debbie Pfeiffer to be more aggressive on pricing. And as Kurt also mentioned, there is a sales cycle to this, so we're certainly getting some traction, but I think second half of the year will be a better comp for us.

Speaker #6: But again, as we said before, we stopped the decline. Mid last year, we sort of empowered Debbie Pfeiffer to be more aggressive on pricing.

Speaker #6: And as Kurt also mentioned, there is a sales cycle to this. So we're certainly getting some traction, but I think the second half of the year will be a better comp for us.

Speaker #5: Okay, makes sense. And then in the fintech business, how do you envision the revenue performance over the course of the year? If there's any bifurcation of performance in the first half of the year, for example, versus the second half, would you expect the second half to be stronger?

George Tong: Okay, makes sense. Then in the SendTech business, how do you envision the revenue performance over the course of the year? If there's any bifurcation of performance in the first half of the year, for example, versus the second half, would you expect the second half to be stronger within the SendTech business?

Speaker #5: Within the fintech business?

Speaker #2: Well, let's start first with the year. We expect top-line decline in the business. But if you split apart the year, we believe the second half of the year will be stronger than the front part of the year.

Paul Evans: Well, let's start first for the year. We expect a top-line decline in the business, but if you split apart the year, we believe the second half of the year will be stronger than the front part of the year.

Speaker #3: Yeah. And George, I'll get sequential year-over-year throughout 2025. You can see there's a trend—it's essentially getting more positive every quarter. And that ties back to what we've spoken about in the past with the IMI migration.

Kurt Wolf: ... Yeah, and George, if you look at, you know, you know, sequential year-over-year throughout 2025, you can see there's a, a trend, you know, essentially getting more positive every quarter, and that ties back to what we've spoken about in the past with the IMI migration. And again, we expect that to, to continue. So we can't guarantee that each year-over-year comparison is going to get better quarter by quarter, but that should, we expect to be somewhat the trend on a go-forward basis, you know, at least through 2026.

Speaker #3: And again, we expect that to continue. So, we can't guarantee that each year-over-year comparison is going to get better quarter by quarter.

Speaker #3: But that should be somewhat the trend on a go-forward basis, at least through 2026.

Speaker #5: Yes, makes sense. Thanks so much.

Operator: Yes. Makes sense. Thanks so much.

George Tong: Yes. Makes sense. Thanks so much.

Speaker #6: Thank you, George.

Kurt Wolf: Thank you, George.

Alex Brown: Thank you. The next question will come from Jasper Bibb with Truist. Your line is open.

Speaker #4: Thanks. Thank you. And the next question will come from Jasper Bibb with Truist. Your line is open.

Operator: Thank you. The next question will come from Jasper Bibb with Truist. Your line is open.

Speaker #5: Hey, good morning, guys. I was just curious how you're thinking about the underlying mix in fintech in '26. I think the letter mentioned you didn't get the growth rate you wanted in the shipping technology piece.

Jasper Bibb: Hey, good morning, guys. I was just curious how you're thinking about the underlying mix in SendTech in 2026. I think the letter mentioned you didn't get the growth rate you wanted in the shipping technology piece. Could you maybe frame for us how you think you're thinking about the growth rates in the shipping technology business in 2026 versus, I guess, maybe the core hardware business and everything that's associated with the mailing meters, et cetera?

Speaker #5: Could you maybe frame for us how you're thinking about the growth rates in the shipping technology business in '26 versus, I guess, maybe the core hardware business and everything that's associated with the mailing, papers, etc.?

Speaker #2: Yeah, yeah. And we can essentially cut it into three pieces. We have the Mailing Meter business, we have the Shipping business, and the Shipping Software business.

Kurt Wolf: Yeah. Yeah, and we can essentially cut it into three pieces. We have, you know, the mailing meter business, we have the shipping business, shipping software business, and then we have the bank, which currently is reported as a part of SendTech. So with respect to the mailing meters, you know, again, the IMI migration certainly created some serious headwinds in 2025. We expect that to slowly ease. In addition to that, we've had a bias in the past of always focusing on growing markets, which does not apply to the mailing meter business. So, you know, one of the things that Todd's really identified since joining the company is, we probably aren't doing as much as we could to slow that rate of decline.

Speaker #2: And then we have the bank, which currently is reported as a part of fintech. So with respect to the mailing meters, again, the IMI migration certainly created some serious headwinds in 2025.

Speaker #2: We expect that to slowly ease. In addition to that, we've had a bias in the past of always focusing on growing markets, which does not apply to the mailing meter business.

Speaker #2: So, one of the things that Todd's really identified since joining the company is that we probably aren't doing as much as we could to slow that rate of decline.

Speaker #2: So I think there's a lot of effort that's going to be put into slowing the rate of decline. So that's what I'd say about the mail meter business.

Kurt Wolf: So I think there's a lot of effort is going to be put into slowing the rate of decline. So that's what I'd say about the mail meter business. With respect to shipping software, you know, Todd's done some great work there. We have a vast array of product offerings, and we're trying to get more focused on how we do that. And then also we're trying to figure out where do we have the best competitive advantage so we can better hone our go-to-market strategy. I think it's going to take some time to fully identify exactly what that looks like. But I will say that we're not, you know, we're not cautious or slow in how we go about this.

Speaker #2: With respect to shipping software, Todd's done some great work there. We have a vast array of product offerings, and we're trying to get more focused on how we do that.

Speaker #2: And then also, we're trying to figure out where we have the best competitive advantage so we can better hone our go-to-market strategy. I think it's going to take some time.

Speaker #2: To fully identify exactly what that looks like. But I will say that we're not cautious or slow in how we go about this. Todd's aggressively already testing some concepts in the market.

Kurt Wolf: Todd's aggressively already testing some concepts in the market, so we'll have more in future quarters on that. And then with respect to the bank, as you saw with the hiring of Steve, that's really unlocking the opportunity for us to focus on growth in the bank. So too early to say just yet, but, you know, that's an area we're really excited about. But we will obviously show caution given the risks associated with the lending space. So hopefully that gives you some good color.

Speaker #2: So we'll have more in future quarters on that. And then, with respect to the bank, as you saw with the hiring of Steve, that's really unlocking the opportunity for us to focus on growth in the bank.

Speaker #2: So too early to say just yet. But that's an area we're really excited about. But we will obviously show caution given the risks associated with the lending space.

Speaker #2: So hopefully, that gives you some good color.

Speaker #5: No, that's very helpful. Maybe just one on capital returns. Pretty aggressive pace of buybacks in the fourth quarter. It seems like that maybe slowed a little bit in the first, call it, month and a half of '26.

Jasper Bibb: No, that's, that's very helpful. Is maybe just one on capital returns. A pretty aggressive pace of buybacks in, in Q4. It seems like that maybe slowed a little bit in the first, call it, month and a half of 2026. Just wanted to get, you know, an update on how you're thinking about the balance of share repurchase, the dividend, and other priorities in 2026.

Speaker #5: Just wanted to get an update on how you're thinking about the balance of share repurchase and the dividend and other priorities in '26.

Speaker #6: Yeah. So Jasper, this is Paul. Look, I think the keyword on share buybacks and debt buybacks is opportunistic. I mean, we were very opportunistic in Q4.

Paul Evans: Yeah. So Jasper, this is Paul. Look, I think the keyword on share buybacks and debt buybacks is opportunistic. I mean, we're very opportunistic in Q4. We're just, you know, it's. We're very disciplined on how we look at this. You know, I think I'll say it on here. I mean, we're committed to a net debt to EBITDA around 3x, but you know, we definitely see that our stock continues to be undervalued, and so we will continue to buy our stock. Again, relative to dividends, that's a quarter-by-quarter decision. This quarter, we decided the best use of our capital was to continue to look at debt buybacks and share buybacks.

Speaker #6: We're just very disciplined on how we look at this. I think I'll say it on here. I mean, we're committed to a net debt of EBITDA of around three times but we definitely see that our stock continues to be undervalued.

Speaker #6: And so we will continue to buy our stock. Again, relative to dividends, that's a quarter-by-quarter decision. This quarter, we decided the best use of our capital is to continue to look at debt buybacks and share buybacks.

Jasper Bibb: Very helpful. Thanks for taking the questions, guys.

Speaker #5: Very helpful. Thanks for taking the questions, guys.

Speaker #3: Thanks, Jasper.

Paul Evans: Thanks, Jasper.

Alex Brown: Thank you. Our next question will come from Curtis Nagle with Bank of America. Your line is open.

Operator: Thank you. Our next question will come from Curtis Nagle with Bank of America. Your line is open.

Speaker #4: Thank you. And our next question will come from Curtis Nagel with Bank of America. Your line is open.

Speaker #6: Hi, Curtis.

Kurt Wolf: Hi, Curtis.

Operator: Great. Good morning. Thanks for taking my question. Just wanted to follow up quickly on the free cash flow guide. You know, it came in nicely above where the street was. In terms of the components, yeah, maybe we can return to that restructuring point later. But, are you including the net investments in the loan receivables from the cash from investing line? I think the sort of comparable or, you know, the component of that in cash from ops is in there. So just wondering kind of how all that rounds out, and is that in the guide?

Curtis Nagle: Great. Good morning. Thanks for taking my question. Just wanted to follow up quickly on the free cash flow guide. You know, it came in nicely above where the street was. In terms of the components, yeah, maybe we can return to that restructuring point later. But, are you including the net investments in the loan receivables from the cash from investing line? I think the sort of comparable or, you know, the component of that in cash from ops is in there. So just wondering kind of how all that rounds out, and is that in the guide?

Speaker #5: Great, good morning. Thanks for taking my question. Just wanted to follow up quickly on the free cash flow guide—came in nicely above where the Street was.

Speaker #5: In terms of the components, yeah, maybe we can return to that restructuring point later. But are you including the net investments in the loan receivables from the cash from investing line?

Speaker #5: I think the sort of comparable, or the component of that, in cash from ops is in there. So just wondering kind of how all that rounds out.

Speaker #5: And is that in the guide?

Speaker #2: A little bit on free cash flow. A big component of free cash flow is pre-sort prepayments. We don't control the timing of that, per se.

Paul Evans: A little bit on free cash flow. A big component of free cash flow is presort prepayments. We don't control the timing of that, per se, but, you know, we had a very strong Q4 on that, despite not fully controlling it. So that's definitely a larger component for us when we look at that. And as far as the detail on the amount of restructuring in there, I'm just not sure that that's a number that we've given out in the past.

Speaker #2: But we had a very strong Q4 on that, despite not fully controlling it. So that's definitely a larger component for us when we look at that.

Speaker #2: And as far as the detail on the amount of restructuring in there, I'm just not sure that that's a number that we've given out in the past.

Speaker #5: Okay. All right. Thanks for taking the question.

Operator: Okay. All right. Thanks for taking the question.

Curtis Nagle: Okay. All right. Thanks for taking the question.

Speaker #6: Thank you, Curtis.

Kurt Wolf: Thank you, Curtis.

Alex Brown: Thank you. The next question comes from Dylan Bandy with North Coast Research. Your line is open.

Operator: Thank you. The next question comes from Dillon Bandi with Northcoast Research. Your line is open.

Speaker #4: Thank you. And the next question comes from Dylan Bandy with North Coast Research. Your line is open.

Speaker #5: Hi, Dylan.

Kurt Wolf: Hi, Dylan.

Speaker #7: Hey, guys. Thanks for taking the question. Looking at that target of three times net debt, is that a 2026 target, or are you guys kind of looking more into 2027 or longer term for that?

Dylan Bandy: Hey, guys. Thanks for taking the question. Looking at that target of 3 times Net Debt, is that a 2026 target, or are you guys kind of looking more into 2027 or longer term for that?

Speaker #2: I think on how we define net debt, we actually came in at the end of the year slightly below a three times net debt to adjusted EBITDA.

Paul Evans: I think on how we define net debt, we actually came in end of the year slightly below a 3x net debt to adjusted EBITDA. I think it's just a good overall target to be. There might be times where we're slightly above it on a quarter or slightly below it, but I think for this business going forward, that's the right place to be.

Speaker #2: I think it's just a good overall target to be. There might be times where we're slightly above it in a quarter or slightly below it.

Speaker #2: But I think, for this business going forward, that's the right place to be.

Speaker #3: Yeah. And Dylan, just to add to that, I think Paul's highlighted we're going to be opportunistic in our capital allocation. And we've said on previous calls, we're cognizant of how the market views us and what levels of debt they think we can manage.

Kurt Wolf: Yeah, and Dylan, just to add to that, you know, I think Paul's highlighted we're going to be opportunistic in our capital allocation. And we've said on previous calls, you know, we're cognizant of how the market views us and what levels of debt they think we can manage. So, we believe we get high or have a higher ratio than that. But, you know, as long as the market doesn't believe it, we're gonna, you know, we're gonna follow the market's lead on that. So what I would say is, by being opportunistic in the capital markets, we may go above, we may go below, but that's sort of our, you know, the mean or the point we wanna keep returning to over time.

Speaker #3: So we believe we could have a higher ratio than that. But as long as the market doesn't believe it, we're going to follow the market's lead on that.

Speaker #3: So, what I would say is, by being opportunistic in the capital markets, we may go above, we may go below, but that's sort of our mean, or the point we want to keep returning to over time.

Speaker #3: So we may go above for a bit, return back, or go below for a bit, and then return back.

Kurt Wolf: So we may go above for a bit, return back, or go below for a bit, and then return back.

Speaker #5: Gotcha. That's really helpful. And then Kurt, in your letter, you talked about Centex exiting its low point of the product cycle. Has there been any fundamental change in that business, whether that's renewal rates or price competition?

Dylan Bandy: Got you. That's really helpful. And then, Kurt, in your letter, you talked about SendTech exiting its low point of the product cycle. Has there been any fundamental change in that business, whether that's, you know, renewal rates or price competition, or do you guys just overall feel confident about that? Thanks.

Speaker #5: Or do you guys just overall feel confident about that? Thanks.

Speaker #6: Yeah. No, I would just say overall, we feel confident. We believe we have the best products in the market. I think the market agrees with that in terms of buying habits.

Kurt Wolf: Yeah, no, I would just say overall, we feel confident. We have, we believe we have the best products in the market. I think the market agree, you know, the market agrees with that in terms of buying habits. We're doing, we're doing increasingly well in the federal space and the government space. And again, it's just... It really is, you know, there was a low point tied to the IMI migration. We're recovering from it. We are recovering from it, and there's fundamentally nothing that's really changed as far as we can see in terms of, you know, you know, the rate of decline that we've historically seen, you know, should change going forward.

Speaker #6: We're doing increasingly well in the federal space and the government space. And again, it's just it really is there was a low point tied to the IMI migration we're covering from it.

Speaker #6: We are recovering from it. And there's fundamentally nothing that's really changed, as far as we can see, in terms of the rate of decline that we've historically seen should change going forward.

Speaker #5: Great, thank you guys very much.

Dylan Bandy: Great. Thank you guys very much.

Speaker #6: Yeah. Thank you, Dylan.

Kurt Wolf: Yeah. Thank you, Dylan.

Alex Brown: Thank you. And as a reminder, to ask a question, please press star one one on your telephone. And our next question comes from Justin Dopirjala with DOMO Capital Management. Your line is open.

Operator: Thank you. And as a reminder, to ask a question, please press star one one on your telephone. And our next question comes from Justin Dopirjala with DOMO Capital Management. Your line is open.

Speaker #4: Thank you. And as a reminder to ask a question, please press star 11 on your telephone. And our next question comes from Justin Dopierala with DOMO Capital Management.

Speaker #4: Your line is open.

Kurt Wolf: Justin.

Speaker #6: Hi, Justin. Good morning, Curtis.

Justin Dopierala: Good morning.

Kurt Wolf: Good morning, Justin.

Justin Dopierala: Doing well. So, do the new hires you've announced signal that you're no longer looking to sell the business as part of the strategic review?

Speaker #7: Doing well. So, do the new hires you’ve announced signal that you’re no longer looking to sell the business as part of the strategic review?

Justin Dopierala: Doing well. So, do the new hires you've announced signal that you're no longer looking to sell the business as part of the strategic review?

Kurt Wolf: No, no, not at all. Again, what I'd highlight is with these additions, and I hope everybody recognizes the level of talent we've brought in here, it's gonna be important no matter what the future of the business is. You know, these are great executives, bring a lot to the table. No matter where this company goes, they're gonna be a great asset going forward. So that is in no way a comment on the future path of the company.

Speaker #2: No, no, not at all. Again, what I'd highlight is, with these additions—and I hope everybody recognizes the level of talent we've brought in here—it's going to be important no matter what the future of the business is.

Speaker #2: These are great executives. They bring a lot to the table. No matter where this company goes, they're going to be a great asset going forward.

Speaker #2: So that is in no way a comment on the future path of the company.

Speaker #5: Got it. I know you touched a little bit on restructuring. In Q4, it was a lot larger than I was expecting. I would assume in 2026 that these costs drop closer to zero.

Justin Dopierala: Got it. I know you touched a little bit on restructuring. You know, in Q4, it was a lot larger than I was expecting. I would assume, you know, in 2026, that these costs drop closer to zero. I don't know if you can say what was the largest restructuring cost in Q4?

Speaker #5: I don't know if you can say what was the largest restructuring cost in Q4?

Speaker #2: Oh, just a headcount reductions.

Paul Evans: Oh, just, headcount reductions.

Speaker #5: Okay. So essentially one-time cost.

Justin Dopierala: Okay. So that was actually one-time cost.

Kurt Wolf: In 2026, but most of it will, you know, it's already captured in the 25 number.

Speaker #2: In '26, but most of it is already captured in the '25 number.

Kurt Wolf: In 2026, but most of it will, you know, it's already captured in the 25 number.

Speaker #5: Perfect. Also, it appears that your dominance in the pre-sort space has contributed to a much lower price for pre-sort customers. I was just wondering, how does the USPS view this with respect to workshare discounts?

Justin Dopierala: Perfect. You know, it also appears that your dominance in the Presort space has contributed to a much lower price for Presort customers. I was just wondering, how does the USPS view this with respect to work share discounts, and wouldn't the post office also benefit considerably if they simply privatized the entire Presort function to companies like Pitney Bowes in the future?

Speaker #5: And wouldn't the post office also benefit considerably if they simply privatized the entire pre-sort function to companies like Pitney Bowes in the future?

Speaker #2: Yeah. Yeah. I don't think we're going to comment on post or relations. All I'd say is we have an amazingly constructive relationship with the post office.

Kurt Wolf: Yeah. Yeah, I don't think we're going to comment on postal relations. All I'd say is we have an amazingly constructive relationship with the post office. With respect to work share discounts, you know, the whole rationale for those being introduced is, and it's common throughout the government, whether you look at Medicare with, you know, Medicare Part C, there's always an interest in figuring out private-public partnerships, and that's exactly what these work share discounts are. And then in terms of, you know, I think you're asking about pricing, yeah, I completely agree.

Speaker #2: With respect to work share discounts, the whole rationale for those being introduced is, and it's common throughout the government—whether you look at Medicare, or whether it's Medicare Part C—there's always an interest in figuring out private-public partnerships.

Speaker #2: And that's exactly what these work share discounts are. And then in terms of I think you were asking about pricing, yeah, I completely agree.

Kurt Wolf: In the end of the day, one of the big benefits of the Work Share Discounts is not only does it save money for the post office, but a lot of those discounts end up getting passed on to customers. So it creates a lower cost for the end user of postal services, which, you know, helps keep, you know, volume going through the postal system due to lower costs. So I think it's a win-win for the post office, but, you know, I can't speak on their behalf.

Speaker #2: In the end of the day, one of the big benefits of the work share discounts is not only does it save money for the post office, but a lot of those discounts end up getting passed on to customers.

Speaker #2: So it creates a lower cost for the end user of postal services, which helps keep volume going through the postal system due to lower costs.

Speaker #2: So, I think it's a win-win for the Post Office. But I can't speak on their behalf.

Speaker #5: Absolutely. Got it. And I think you briefly touched on this, but looking ahead over maybe the next few years, what do you think are the top growth opportunities that you're seeing?

Justin Dopierala: Absolutely. Got it. And I think you briefly touched on this, but looking ahead over the, maybe the next few years, what do you think are the top growth opportunities that you're seeing?

Speaker #2: I think I'd say in pre-sort, obviously, given that we're the low-cost provider in the market, our pricing strategy—we should see growth there. But that'll take a little time.

Paul Evans: I think, I'd say in Presort, obviously, given that we're the low-cost provider in the market, you know, we, our pricing strategy, we should see growth there, but that'll take a little time. We're seeing more inbounds on acquisition opportunities, so we will definitely look at that. You know, the renewed focus back on mail and investment, where we have to decelerate the decline, that, in a sense, is a form of growth. And then shipping, I mean, the team that Kurt and Todd assembled there, you know, we like our chances on how to evolve. And then finally, with Steve, you know, coming on to run the bank, I think there will be definitely opportunities there for us.

Speaker #2: We're seeing more inbounds on acquisition opportunities, so we will definitely look at that. The renewed focus back on mail and investment, where we have to, is to slow the decline.

Speaker #2: That, in a sense, is a form of growth. And then shipping, I mean, the team that Kurt and Todd assembled there, we like our chances on how to evolve.

Speaker #2: And then, finally, with Steve coming on to run the bank, I think there will definitely be opportunities there for us.

Speaker #5: Okay. And just, I guess, lastly, analyst coverage from yesterday seems to amplify that there's still a huge opportunity to educate people on the fundamentals of the Pitney Bowes business.

Justin Dopierala: Okay. And just, I guess, lastly, you know, analyst coverage from yesterday seems to amplify that there's still a huge opportunity to educate people on the fundamentals of the Pitney Bowes business. Are you planning to have an investor day in 2026?

Speaker #5: Are you planning to have an investor day in 2026?

Speaker #2: Yeah. Yes, we are. And I certainly agree with you on the education level. But as Paul said, we're incredibly opportunistic in our allocation of capital.

Kurt Wolf: Yeah. Yes, we are. So, and I certainly agree with you on the education level, but as Paul said, we're incredibly opportunistic in our allocation of capital. I think when we sit here and look at it, I think we're trading on a levered basis of 4x free cash flow. So, and I think our... You know, we did have a decline in revenue that was larger than typical last year, which I think maybe creates some concern from shareholders. But again, a lot of that is tied to customer losses and Presort that was entirely preventable and shouldn't recur going forward. And then in SendTech, it was tied to the IMI migration.

Speaker #2: I think when we sit here and look at it, I think we're trading on a levered basis at four times free capital. So, and I think we did have a decline in revenue that was larger than typical last year, which I think maybe creates some concern from shareholders.

Speaker #2: But again, a lot of that is tied to customer losses and pre-sort that was entirely preventable and shouldn't recur going forward. And then, incentive—it was tied to the IMI migration.

Speaker #2: But to quote Warren Buffett: when you buy hamburgers and the price of hamburgers goes down, you should be happy. So we're not worried about short-term price movements.

Kurt Wolf: But, to you know, quote Warren Buffett, "When the price, you know, if you, if you buy hamburgers and the price of hamburgers goes down, you should be happy." So, you know, we're not worried about short-term price movements. We just are opportunistic about how we handle them. You know, our belief is in the long-term, long-term outcome of the company.

Speaker #2: We just are opportunistic about how we handle them. Our belief is in the long-term outcome for the company.

Speaker #5: Excellent. Thank you.

Justin Dopierala: Excellent. Thank you.

Speaker #2: Yep. Thank you, Justin.

Kurt Wolf: Yep. Thank you, Justin.

Alex Brown: Thank you. At this time, I'm showing no further questions in the queue. I would now like to turn the call back to Kurt for closing remarks.

Operator: Thank you. At this time, I'm showing no further questions in the queue. I would now like to turn the call back to Kurt for closing remarks.

Speaker #4: Thank you. And at this time, I'm showing no further questions in the queue. I would now like to turn the call back to Kurt for closing remarks.

Speaker #2: Yeah, thank you, everybody, for joining us. We appreciate your continued investment in our company. Hopefully, everybody has seen the results of Q4 and can see some of the progress we're making.

Kurt Wolf: Yeah, thank you, everybody, for joining us. Appreciate your continued investment in our company. You know, hopefully, everybody has seen the results of Q4, you know, show some of the progress we're making. I know everybody's eager to understand and see when we get to growth, but what we hope people appreciate, and I think the right best investors will appreciate, we're doing everything we can to build a strong foundation, and as that foundation is built, it's gonna be much, we're gonna be much more successful in our pursuit of growth going forward. So thank you for your continued investment, your continued faith in us, and we will do our best to continue to deliver strong results for you. So thank you all.

Speaker #2: I know everybody's eager to understand and see when we get to growth. But what we hope people appreciate—and I think the right investors will appreciate—is that we're doing everything we can to build a strong foundation, and as that foundation is built, we're going to be much more successful in our pursuit of growth going forward.

Speaker #2: So, thank you for your continued investment, your continued faith in us, and we will do our best to continue to deliver strong results for you.

Speaker #2: So thank you all.

Alex Brown: Thank you for participating. You may now disconnect.

Operator: Thank you for participating. You may now disconnect.

Q4 2025 Pitney Bowes Inc Earnings Call

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