Pitney Bowes Board Restructuring and Reorganization to Cut Jobs and Facilities – Sourcing Journal

Pitney Bowes Maybe I’ll have a facelift after that shareholders elected four out of five board members recommended by the hedge fund, who wants to take a new direction.

In the Shipment At the shipping company’s annual meeting on Tuesday, investors voted to select former Getty Images chief financial officer Milena Alberti-Perez, former Newgistics CEO Todd Everett, former ShippingEasy CEO Katie May and executive director and chief investment Hestia Capital Officer Kurtis Wolf into the nine members of the firm. Member of the board.

Proxy Advisory Firm Institutional Shareholder Services (ISS) recommended all four nominees before voting.

The vote came after Hestia Capital, which owns 9.1 percent Pitney Bowes Equities, called for board changes while criticizing the company’s focus on its Global E-Commerce (GEC) segment. The unit, which provides business-to-consumer logistics services for domestic and cross-border parcel delivery, returns and fulfillment, has seen its profits fall every year since 2015.

In 2022 alone, GEC posted an EBIT loss of $100 million, on top of a $99 million segment loss the year before. Unit revenue fell 17 percent to $348.4 million in the company’s first quarter, while comparable revenue declined 5 percent. On the plus side, Pitney Bowes said its global e-commerce division processed 50 million domestic packages in the quarter, up 22 percent from 41 million in 2022, and that on-time performance was in the mid-90 percent range.

But Hestia’s problems went well beyond GEC, particularly insofar as it thought Partners with American Eagle Outfitters slowed growth in other businesses like SendTech, its cloud-based mail and parcel shipping software solution, and its mail sorting and distribution service, Presort.

Both companies reported revenue declines for the quarter, with SendTech reporting a 6 percent decline in revenue to $327.2 million and Presort reporting a 1 percent decline to $158.9 million. But they both still made money, with SendTech reporting adjusted EBITDA of $104.1 million while Presort generated $35.4 million. In contrast, GEC posted an Adjusted EBITDA loss of $17.8 million, supporting Hestia’s argument that unity shouldn’t be Pitney Bowes’ top priority.

The hedge fund accused Pitney Bowes of failing to acquire companies like this one ship station. On the other hand, Hestia also criticized the way in which the shipping company has spent capital on acquisitions – namely the purchase agreement cross-border e-commerce Platform Borderfree for $395 million just to sell it for one only $100 million Seven years later.

In a conference call on the results on May 4 ahead of the vote, CEO Marc Lautenbach said the company would roll out one restructuring Profit and cash flow improvement program. This should save about $75 million per year, but will result in a saving downsizing and plant closures, the CEO said.

The company did not provide any details of the restructuring.

“I would say that these are older websites. They weren’t automated. They’re all close to new sites that we’ve built,” Lautenbach said. “We originally thought we might need them in the longer term as a kind of safety valve for the larger sites. The larger locations work so incredibly well that we just don’t need them. I’m not going to give you any specific websites.”

Restructuring costs are expected to be between $40 million and $50 million, with the majority of that being recognized in 2023. Pitney Bowes expects to achieve about two-thirds of total annual gross savings — about $50 million — by the end of 2024.

The investors re-elected three other directors, including Lautenbach, as well as former MG Advisors Inc. Chair Mary Steele Guilfoile and former New York State Insurance Fund Commissioner and Audit Committee Chair Sheila Stamps.

Two new director nominations from Pitney Bowes have also been appointed to the board, including retired UPS president of corporate strategy Steve Brill and former Harley-Davidson treasurer and interim chief financial officer Darrell Thomas.

The above results are subject to certification by an independent election auditor.

“We welcome all of the new directors, including the nominees from Hestia Capital Partners, and look forward to working constructively with them on the future of the company and on behalf of all shareholders,” Pitney Bowes said in a statement.

A Hestia candidate, Lance Rosenzweig, was not elected to the board. Rosenzweig, who most recently ran the software company Support.com, had been proposed by the hedge fund as a candidate to succeed Lautenbach on an interim basis as CEO.

With Lautenbach re-elected to the nine-member board, Hestia is unlikely to be able to go through with his plan to replace him as CEO. In March, then-Chairman Michael Roth resigned after months of back-and-forth between executives and the board of Hestia and Pitney Bowes.

“We are very grateful to our fellow shareholders for voting to elect four Hestia-nominated director candidates at this year’s AGM. We would also like to thank the many shareholders who have taken the time to have thoughtful discussions with us over the past few weeks and months,” Wolf said in a statement. “This commitment will stand to benefit the four of us as we step into the boardroom and begin to work with incumbent directors to drive a value-added transformation at Pitney Bowes.”

The restructuring of the board follows Pitney Bowes reported first quarter revenue of $834.5 million, down 10 percent, or 4 percent on a comparable basis year-over-year. In the quarter, the company suffered a net loss of $7.7 million.

For the remainder of the year, Pitney Bowes continues to expect revenue to grow in the flat to mid single-digit percentage range on a like-for-like basis and expects adjusted EBIT performance to exceed revenue percentage change.

“Our list believes it has received a mandate to make constructive, positive change,” Wolf said. “And we look forward to working with our fellow directors to fulfill that mandate in the short and long term.”