Financial Performance Overview

The company reported mixed financial results in 2024 compared to the prior year. Total revenue decreased 3% to $2.03 billion, primarily due to lower support services and equipment sales, partially offset by higher business services revenue. However, the company was able to reduce total costs and expenses by 2%, leading to a significant turnaround in profitability.

Income from continuing operations was $103 million in 2024, compared to a loss of $61 million in 2023. This improvement was driven by lower operating expenses, including reduced salary costs from headcount reductions, as well as a favorable tax benefit. However, the company continued to report a net loss overall due to losses from discontinued operations.

Segment Performance

The company’s two main business segments - SendTech Solutions and Presort Services - had divergent performance in 2024.

The SendTech Solutions segment, which provides mailing and shipping technology, saw revenue decline 4% to $1.28 billion. This was due to lower support services and equipment sales, partially offset by growth in business services like shipping subscriptions. However, the segment was able to maintain strong profitability, with adjusted EBIT of $402 million, only a 2% decline from 2023.

In contrast, the Presort Services segment, which provides mail sortation services, had an excellent year. Revenue increased 7% to $663 million, and adjusted EBIT jumped 49% to $166 million. This was driven by pricing actions, cost savings, and productivity improvements from investments in automation.

Cost Management and Restructuring

A key driver of the company’s improved profitability was its focus on reducing costs. Total costs and expenses declined 2% in 2024, with significant savings in areas like salary expense, professional fees, and marketing.

The company also continued its restructuring efforts, with restructuring charges increasing $25 million compared to 2023. These charges were related to the 2023 and 2024 restructuring plans, which aimed to streamline operations and reduce the workforce.

Additionally, the company recorded a $124 million goodwill impairment charge in 2023 related to the former Global Ecommerce segment, which was sold or dissolved prior to 2024.

Liquidity and Capital Resources

The company ended 2024 with $486 million in cash, cash equivalents, and short-term investments. Management believes this, along with cash flow from operations and available credit facilities, will be sufficient to fund the company’s needs for the next 12 months.

In 2024, the company repaid $178 million of its Notes due in 2028 and made $56 million in scheduled principal payments. Subsequent to year-end, the company refinanced its debt, entering into a new $1 billion credit agreement with improved terms.

The company also provided $28 million in funding to the Ecommerce Debtors through a debtor-in-possession (DIP) facility as part of the Global Ecommerce Chapter 11 bankruptcy proceedings. $11 million of this DIP facility has been repaid, with the remaining balance fully reserved.

Outlook and Key Risks

Looking ahead, the company faces both opportunities and challenges. The growth in business services, particularly shipping subscriptions, provides a promising avenue for revenue expansion. However, the continued decline in support services and equipment sales remains a headwind.

The company’s ability to maintain adequate liquidity is dependent on managing costs, improving productivity, and ensuring timely payments from clients. Macroeconomic and geopolitical conditions could also impact the company’s performance.

Additionally, the company’s pension obligations and the ongoing Ecommerce Restructuring represent potential risks that require close monitoring.

Overall, the company’s 2024 results demonstrate progress in its turnaround efforts, with improved profitability and a strengthened financial position. However, the company must continue to adapt to industry changes and execute its strategic initiatives to drive sustainable growth and value creation.