Pitney Bowes 2014 Annual Report Download - page 31

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21
favorable pricing. Despite the decline in revenue, EBIT remained relatively flat due to cost savings from the transition to an inside sales
organization and other ongoing productivity initiatives and cost reductions.
North America Mailing revenue decreased 5% in 2013 compared to 2012. Recurring stream revenues, comprised of supplies, rentals and
financing revenue, declined 5% primarily due to fewer meters in service and lower equipment sales in prior periods. The decline in
recurring stream revenues caused a 3% decline in North America Mailing revenue. The remaining 2% decrease was due to lower equipment
sales and support services revenue primarily due to declines in the U.S. EBIT decreased 1% in 2013 compared to 2012 due to the decline
in revenue, partially offset by various productivity initiatives. EBIT also benefited from the progress made in implementing our go-to-
market strategy designed to improve the sales process and reduce costs by providing our clients broader access to products and services
through online and direct sales channels.
International Mailing
International Mailing revenue decreased 5% in 2014 compared to 2013 primarily due to the exit of certain non-core product lines in
Norway, the transition of our business in certain European countries to a dealer network and lower equipment sales and rentals in France.
EBIT increased 24% in 2014 compared to 2013 primarily due to productivity and cost reduction initiatives and savings from the transition
to an inside sales organization in certain European markets.
International Mailing revenue in 2013 was relatively flat compared to 2012 as higher equipment sales, supplies sales and financing
revenue were offset by lower rental revenue. Equipment sales increased 1% primarily due to higher sales in France and Germany, partially
offset by lower sales in the U.K. Supplies revenue increased 2% due to a stabilization in our international meter population, favorable
pricing in the U.K. and higher sales in Asia-Pacific. Rentals revenue declined 8% primarily due to a change in mix from rental to equipment
sales in France. EBIT decreased 6% in 2013 compared to 2012 primarily due to lower margins on equipment sales.
Enterprise Business Solutions
Production Mail
Production Mail revenue decreased 10% in 2014 compared to 2013 primarily due to a 19% decline in equipment sales due to significant
installations of production mail inserters and high-speed printers to certain enterprise customers in 2013. Support services revenue also
declined but was more than offset by higher supplies revenue due to the growing base of production printers. EBIT decreased 14% in
2014 compared to 2013 primarily due to the decline in revenue.
Production Mail revenue increased 6% in 2013 compared to 2012. Higher sales and installations of large production printers globally
and sorters in North America increased Production Mail revenue 8%, while higher supplies sales due to the growing base of production
printers increased Production Mail revenue 2%. These increases were partially offset by lower support services revenue primarily due to
fewer maintenance contracts on new equipment installations which caused a 3% decline in Production Mail revenue. EBIT increased
12% in 2013 compared to 2012 primarily due to the increase in revenue and productivity improvement initiatives.
Presort Services
Presort Services revenue increased 6% in 2014 compared to 2013 primarily due to a 2% increase in the volume of first-class mail processed
and improved operational efficiencies. EBIT increased 18% in 2014 compared to 2013 primarily due to the increase in revenue and
improved operational efficiencies.
Presort Services revenue in 2013 was flat compared to 2012 as reduced discounts in certain presort categories offset the impact of a 2%
increase in presort mail volumes. EBIT decreased 22% in 2013 compared to 2012 primarily due to a benefit of $11 million from insurance
recoveries in 2012 and margin compression in 2013.
Digital Commerce Solutions
DCS revenue increased 21% in 2014 compared to 2013. Of this amount, 16% was due to higher revenue from our global ecommerce
solutions due to an increase in the number of orders processed and parcels shipped. Late in the third quarter, we began outbound ecommerce
services from the U.K., which had a small benefit to the full-year revenue. Higher licensing revenue from our software solutions products,
particularly enterprise location intelligence, increased DCS revenue 5%. Licensing revenue increased 36% in North America and 29%
internationally, primarily due to product enhancements and investments in the specialization of the software sales channel. EBIT increased
53% in 2014 compared to 2013 primarily due to the increase in revenue and improved operating leverage which offset fixed costs and
continued investments in global ecommerce technology and infrastructure.
DCS revenue increased 4% in 2013 compared to 2012. Revenue from our global ecommerce solutions and our digital mail delivery
service drove a 10% increase in DCS revenue. However, this revenue growth was partially offset by a decline in worldwide software
revenue and lower marketing services fees, which caused DCS revenue to decline 4% and 3%, respectively. EBIT increased 3% in 2013