Pitney Bowes Names Second Interim CEO in As Many Years
Pitney Bowes is yet again seeing a change at the top.
Seven months after CEO Marc Lautenbach stepped down from his role, his interim replacement Jason Dies is following suit.
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Lance Rosenzweig, who was appointed to the Pitney board earlier this month at the company’s annual shareholders meeting, will serve as the new interim CEO of Pitney Bowes in Dies’ place.
A new process is being started to appoint a permanent CEO, with the board retaining a search firm to support this process.
Dies’ departure also coincides with additional cost cuts at the shipping and mailing company. While Pitney Bowes had already announced expense reductions of approximately $85 million, the company has identified another $60 million to $100 million across the organization that could be cut per year.
The cost savings are separate from those related the company’s Global Ecommerce (GEC) business-to-consumer logistics services unit. Pitney Bowes is accelerating its review of the segment due to years of losses.
Hestia Capital, the shareholder that first wanted to replace Lautenbach and shake up the board in early 2023, had long beat the drum that the company rethink its GEC-centric strategy or identify a strategic alternative for the segment.
Ancora Holdings, another hedge fund that sought to overhaul Pitney’s board last year and install a new CEO, said last year it wanted the mailing firm to sell the GEC business. The current board said in a statement it is increasing its involvement in the review so it can be completed in the near term.
In the first quarter, the Global Ecommerce unit saw revenue declines of 2 percent to $333 million, along with widening adjusted EBITDA losses of $21 million. The lower Global Ecommerce revenue was driven by a 49 percent decline in cross-border revenue from changes in how two large clients access the company’s services.
For the wider Pitney Bowes business, revenue was flat at $830.5 million, while net losses totaled $2.9 billion. Last year, the firm recorded an annual loss of $385.6 million and an 8 percent decline in revenues.
The struggles at Pitney Bowes, and its GEC segment, come amid a weak freight and parcel market that has forced couriers like UPS, FedEx and the USPS to implement massive cost-cutting plans.
“The market is clearly at overcapacity,” Dies said during the company’s earnings call on May 2. “You heard that from multiple of our competitors. You heard it from the USPS as they talked about their volumes. That’s creating tremendous pressure on rate per piece. I think the USPS had a number that said there’s about a 12 million parcels a day of overcapacity across the entire country. And until that begins to normalize a little bit, I think you’re going to continue to see pressure on that rate per piece.”
Under Rosenzweig’s leadership, Pitney Bowes will be carrying out multiple money-saving initiatives as the pressure piles on rates.
The company is working to reduce its go-forward required cash needs by approximately $200 million, and says it intends to achieve this goal by improving its liquidity forecasting and management, making a decision on the GEC business and optimizing the balance sheet of its financial service business, Pitney Bowes Bank.
Pitney Bowes also intends to deleverage the corporate balance sheet and prioritize the pay down of its high-cost debt. As of March 31, the company still has $1.6 billion in total current liabilities.
In connection with these initiatives, Pitney Bowes has retained two consulting firms with financial and operational expertise.
“For more than 100 years, Pitney Bowes has maintained its strength as a business by adapting and evolving at the right points in time. The decision to appoint Lance and pursue a new set of strategic initiatives reflects our view that this is another key inflection point,” said Jill Sutton, chair of the board at Pitney Bowes, in a statement. “We’re going to move with greater urgency in the coming quarters to transform Pitney Bowes into a much more efficient enterprise focused on its profitable, cash-generating segments.”
Sutton extolled Rosenzweig’s background as a public company CEO and private equity operating executive, with expertise in technology services. Most recently, from August 2022 to October 2022, he served as the CEO of Support.com, a provider of customer and technical support solutions and security software. Previously, he served as CEO of global business process outsourcing company Startek from July 2018 to January 2020.
Pitney Bowes will host an investor conference call at 8 a.m. May 29, to introduce Rosenzweig and discuss the new strategic initiatives.