I'm the equity research analyst here at Sidoti that covers Pitney Bowes, ticker symbol PBI. It is my pleasure to introduce Lance Rosenzweig, CEO, Bob Gold, CFO, as well as Alex Brown, Director of Investor Relations. The format for today will be a management presentation for the first 20 or so minutes, and then we will open up for Q&A. For those in the audience, if you have a question, please type your questions in the Q&A box at the bottom of your Zoom screen, and then I will read the questions out loud. With no further delay, Lance, the floor is yours.
Thank you, Anthony. Appreciate all the great work you're doing. Welcome, everybody. Welcome to the Pitney Bowes presentation. As Anthony mentioned, I'm joined by Bob Gold, who has recently joined us in the past couple of weeks as our Chief Financial Officer. Very, very excited to have Bob on board. Alex has been running our IR program. Slides two and three of the deck have important information on forward-looking statements and our financial presentations, use of non-GAAP measures, et cetera. Please study this important information. Slide four gives a good overview of Pitney Bowes at a glance. Pitney Bowes is a business with two business segments. One we call SendTech, which is a business that does shipping technology, hardware, and software, as well as mailing hardware and software, together with a complementary financial services offering through the Pitney Bowes Bank, which we also own.
Our second segment, Presort Services, is a large-scale mail sortation business that handles large volumes of mail based on the postal work share discounts. We will go through details on both of those segments shortly. Overall, we are about a $2 billion revenue company, and we are very highly profitable. I could not have said that a year ago. Today, after a transformation that we have initiated and largely implemented, we have driven much, much stronger cash generation. We have strengthened our balance sheet and did a significant amount of deleveraging. We are working toward a business that is a sustainable, long-term growing business. Page five talks about our board. Most of our board members are relatively new with the company. All are new within the past couple of years.
Kurt Wolf, who is a large shareholder of our company and an independent director, was very instrumental in initiating change at Pitney Bowes on the board and within the company. We are very appreciative of the really, I think, exceptional board that we have overseeing our business. I am also very appreciative and very, very happy about our senior leadership team. Bob is a great new example. The team that we have that leads our business segments, that leads our legal team, that leads our finance, our IT organization, our HR organization, has just done exceptional work in facilitating the transformation that we have implemented over the past year. Slide six has a summary of the results that we have been able to effectuate during this transformation.
Our EBIT has improved from $172 million in 2023 to $385 million in 2024, and we're guiding to $450 million-$480 million in 2025. Our EPS, even more profound improvement from $0.04 in 2023 to $0.82 in 2024, guiding to $1.10-$1.30. Free cash flow, dramatic improvement from $22 million in 2023 to $290 million in 2024, guiding to $330 million-$370 million. The way we were able to implement this transformation is through four key strategic initiatives. First is the exit of our Global Ecommerce, or GEC, segment. That was a segment of Pitney Bowes that was a money-losing segment without an opportunity to be turned around. We exited that business very effectively. We sold control to a third party, which then effectuated the wind down of that business.
Now that that business is no longer part of Pitney Bowes, we have brought back close to $140 million of EBITDA, which were all losses within that business. Second is cost rationalization. We found when we started that Pitney Bowes had very high overheads, unnecessarily high. We were able to significantly reduce our cost structure and operate far more efficiently as a business. In particular, we have taken out $120 million of cost as of the end of 2024, all within the prior few months. We anticipate taking that number to $170 million-$190 million of annualized cost reductions. Third is cash optimization. Pitney Bowes has been very focused not only on improving earnings, but even more so on improving cash and the management of cash. We have done that both by improving our EBITDA as well as by optimizing the use of cash within our company.
In particular, we were able to repatriate significant amounts of cash from overseas operations back to the U.S. We were able to improve the utilization of cash from the Pitney Bowes Bank, back to the parent company. We were able to take other measures in terms of working capital improvements, et cetera, to improve the management of cash within our company, all of which has resulted in a very important and significant deleveraging of our balance sheet. We repaid entirely from company-generated funds, our most expensive line of debt. We are continuing to reduce our overall corporate debt structure. Slide seven, we start digging into details on our two business segments. First, SendTech. We are very excited about this business. SendTech is a shipping and mailing hardware and software company. We have a base of over 600,000 customers, and we service over 90% of the Fortune 500.
It's a very durable, long-standing customer relationship with minimal client concentration. The majority of our revenue, 65%, is recurring. SendTech comprises almost two-thirds of our revenues at just under $1.3 billion. Our revenues have been slowly declining in low single digits on the whole within the business. A segment of that business, which is our shipping technology business, is growing rapidly at double digits. We do anticipate this business becoming an overall growing segment in the future. Our EBIT margins have been improving despite the decline in revenues as we've grown our more profitable lines of business and as we continue to simplify and take cost out of the business.
SendTech has a strong model with over 65% recurring revenues. We have products, which includes hardware products and supplies that are sold in conjunction with those products. We have services that include our SaaS software offering, which is an integrated shipping optimization software for clients. We enable clients to save a lot of money when they're shipping packages and related professional services and maintenance that goes along with those services. For example, for more complicated enterprise-level implementations, we have a professional services organization that helps to implement our technologies. Finally, a financing business, including the Pitney Bowes Bank. We provide financing for our equipment. We provide financing for postage, and we provide financing for third-party companies. Let's dig a little bit more and provide a greater knowledge of this financing business. I'll turn it over to Bob.
Good afternoon. Our Global Financial Services business is really an enabler of our business, and it's integral to the Pitney Bowes business model. Through the Global Financial Services, we provide captive financing for equipment and postage. Within that business, the Pitney Bowes Bank resides within that business. In total, we have $1.15 billion in lease and lending receivables, generating $350 million of revenue, contributing to our high-margin recurring cash flows. At a high level, our business is made up of three segments: captive equipment financing, which reflects financing of the hardware products that we sell.
In the center of this slide, you see postage payment enabling. We do that in two forms. Customers put deposits at Pitney Bowes Bank for payment of postage. We also extend lines of credit to our customers for the purpose of paying postage. A growth opportunity within the Global Financial Services business is non-captive financing in adjacencies. We see this as an opportunity to leverage our core competencies, both with the bank and the Global Financial Services group, to grow that segment.
Thank you, Bob. Slide 10 gives a longer-term outlook for SendTech. 2025 is a transition year as we are at the end of a migration of our products to a new technology that is compliant with new government standards on security. It is called an IMI migration. Slight bit of headwinds as we reach the tail end of that. We expect that to be mitigated by the second half of 2025. Longer term, we do expect this business to transition from a single-digit revenue decliner to a single-digit revenue grower with consistent 30+% EBIT margins. The reasons that we are able to make this transition, the key drivers, are our shipping technology offering, which is a SaaS software product and series of products for different market sectors, as well as other growth factors such as the financing opportunities that Bob mentioned with the bank and more digital mailing solutions.
Slowing that down is the slow decline in mail volumes. We believe that our growth factors will be able to overwhelm that, resulting in a single-digit revenue-growing business. Similarly, our EBIT, where we are anticipating 30%+ consistent EBIT margins, are driven by very profitable software offerings, as well as continued reductions in optimization and simplification of the business. Our second segment, about a third of our business, is our Presort Services segment. Presort is the largest work share partner of the USPS. We process over 15 billion pieces of mail annually. Our clients tend to be large companies that ship large volumes of mail. They send us literally truckloads of mail. We sort them through a system of automated machines and technology. We redistribute that back efficiently to the USPS for distribution to Americans. There is further opportunity for continued productivity improvement in this business.
It's a consistently growing business. We've grown revenues in 11 of the last 12 years. The only year we didn't grow revenues was during the COVID year. It's a business that has been growing largely organically, but does have an opportunity for creative tuck-in acquisitions. We closed one of these acquisitions in January of this year. It's an opportunity to improve the number of customers, the service for our customers, the performance for our team, and to better utilize the capacity of our business. We give snapshots of our revenues, which have been growing consistently and very well. In 2024, for example, significant growth despite having done no tuck-in acquisitions. That was all organic and accelerating EBIT margins. Presort business is a business that enables our clients and the USPS to significantly cut their costs. We take mail that has not been sorted.
We're able to affix postage. We're able to sort that mail. We're able to provide a very important component to the middle mile of the mail distribution stream in the U.S. This enables the U.S. to be much more efficient in the delivery of mail, to save money, and to support all Americans that rely on mail for so many important, whether it's packages or whether it's important mail that they receive, including to the most rural parts of America. Longer term, we expect Presort to continue to execute the way it has historically executed: continued low single-digit revenue growth and consistent 25+% EBIT margins. We are a very solid company in terms of market share. We're expanding in terms of the classes of mail that we support, for example, not just First-Class Mail, but also Marketing Mail. We're continuing to optimize our business. We're reinvesting in this business.
We're improving our capital. We're continuing to drive down costs for the American citizens that really rely on this for their mail. For the first time in a long time, Pitney Bowes is able to comment on capital allocation. I say that because prior to the last few months, the company was much more highly leveraged. It was using its cash to service its debt. Cash flow was declining, et cetera. Today, cash flow is large and improving. Cash flow has given us opportunities and options. We have refinanced successfully all of our near-term maturities of our debt. We have repaid our highest-cost debt, enabling us to significantly improve our balance sheet. We are now utilizing our cash to reinvest in our company. We see very attractive continued opportunities to invest in our capital, to drive down our costs, to improve our productivity.
For example, we set a very high bar on ROI for internal investments, and we're very happy with how those are doing. We're utilizing cash to return capital to shareholders, including both a dividend, which has been consistently available to shareholders and was recently increased by 20% in the most recent quarter, as well as share repurchases. Our board recently authorized a $150 million share repurchase plan. I personally believe that our shares are very undervalued and that we're going to see a very nice return on our share repurchases. Finally, debt paydown. We have enough cash that we can really create a balanced approach to both return of capital to shareholders as well as continued deleveraging of our balance sheet. As I mentioned, we recently repaid our most expensive debt, $275 million of senior secured 2028s, entirely through internal cash.
We are continuing to look to opportunistically pay down debt. Our debt has done very well from a trading point of view. When there are opportunities, we expect to take advantage of those opportunities. Overall, our investment thesis is very clear. We have business units with very strong market positions, a very durable customer base with minimal concentration, and stronger and stronger growth factors that will result in a consistently growing business. We have a balance sheet that is continuing to be strengthened because of our very strong cash flows and our continued reduction of debt. We have a commitment by our board and management team to return capital to shareholders because we feel like that is a good investment for our company and that is the right thing to do for our shareholders. Our board and our management team are completely aligned.
We believe that our transformation is continuing to happen, that there are continuing opportunities to take cost out of our company, that we are going to be moving to a mindset of continued improvement and continued efficiencies and continued value creation. I believe we are a very strong, undervalued cash-generative business with tremendous opportunity going forward. Thank you all for listening. Anthony, we will turn it back over to you for Q&A.
Thank you very much, Lance and Bob and Alex, for sharing the Pitney Bowes story. As a quick reminder, if you do have a question, you can type it into the Q&A box at the bottom of the Zoom screen. We already have a bunch of questions that have come in here. I'll start with one of my own questions here. Let's take SendTech first. You reorganized your sales force from a geographically based organization to now looking more on a vertical market basis. What have been some of the benefits that you have already seen from that change? How should we think about that going forward as far as your ability to grow that segment?
Yeah, thank you, Anthony. It's a very powerful advantage for us to have enough scale that we can organize by vertical market. I'll give you a couple of examples. The financial services vertical, banking and financial services, is a vertical with complicated businesses, large businesses. By organizing in that vertical, we're able to develop expertise of our sales team, our sales support team, our sales engineers, so that they can talk about the advantages that we bring to certain banking clients, for example, and how we can apply that advantages to other banks. That's far more effective than just selling because you happen to live in Chicago and the entity is in Chicago as well. Similarly, in healthcare, a heavily regulated business, a business with a tremendous opportunity for savings.
Pitney Bowes, by having a healthcare vertical, is able to apply our healthcare experts to talk the same language of hospital chains, of pharmacy companies, of large distributors, for example. We are already seeing, and I have been out on some of these calls with our sales team, great results by the energy and the knowledge that they bring through many, many years of experience in these vertical markets.
Gotcha. Okay. As far as Presorts, obviously, that's been a great business for you guys here. Can you just talk about what the competitive landscape is within Presort, the barriers to entry, and then just to follow on that? You did make a small acquisition of Royal Alliances in January. Maybe just talk about how that came to be and kind of what the current pipeline is for acquisitions in pre-sort.
Yeah, absolutely. As I mentioned, we love our Presort business. It's been performing exceptionally well. I've had an opportunity to visit many of our Presort locations. I most recently met with the Minneapolis location. Not only did I see a team that was performing so well, I saw clients that were very happy. The reason that they're happy is because of both the relationship that we've built with them, the passion we have behind their business, and the success that we've done with our really great team. We see that throughout our Presort operations. That business has been a very steady and consistently performing business. Pitney Bowes is the largest player in that sector. We're also the only company in that space with a nationwide footprint. We are able to work with large enterprise clients that's generating mail from all over the U.S.
We're able to deepen our partnership with the USPS and offer them more and more savings as they look toward opportunities to improve their own operations. We're very happy about the performance and the opportunity within Presort. You mentioned the Royal Alliances business, and we'd like to welcome the Royal Alliances clients to Pitney Bowes. We're just as passionate in making sure the quality of our work is excellent for you. We see that again as an opportunity to acquire more subscale businesses that are able to put on our more advanced and higher-performing platform and provide better results for clients and also accretive earnings literally from day one.
Gotcha. As you mentioned before, Lance, you've had a very long and successful relationship with the USPS. Just wondering, with the new Trump administration, do you see any potential changes to that? I mean, there have been some various theories out there as far as what could happen with the USPS. Just wondering what your thoughts are on that, how that could potentially evolve and impact Pitney Bowes.
Sure. Sure. Pitney Bowes has been a partner of the U.S. government and the USPS for 100 years. We have a very, very deep relationship and partnership within that organization. The USPS performs vital functions for Americans. They're delivering mail to everyone, regardless of where they live, from the most urban to the most rural locations. They're doing it pretty well. There are opportunities for improvement. Pitney Bowes is working very hard to help, both in terms of improving the speed of mail delivery, to improve the cost of mail delivery, to really help the USPS network to achieve its goal of getting closer and closer to a break-even government organization.
I'm excited about the work that we're doing with the government, both the USPS as well as other government entities. We have very strong relationships, for example, with the U.S. military. We have a really terrific program that we're doing with the Navy, for example. I think that we have great opportunities to further those relationships in the new administration.
Sounds good. Okay. Switching gears. On paper, your company does seem highly leveraged. That being said, can you speak to how much of the debt is tied to the Pitney Bowes Bank and how much that distorts the amount of debt you actually have and why the actual leverage is actually lower, but maybe if you could just kind of parse out the debt that's tied to the bank versus on a corporate level?
Yeah. Let me take a big picture answer, and then I'll turn it over to Bob maybe for some more specifics. I would say that that would have been true maybe a year ago because our cash flow was so crappy. Now that our free cash flow is very strong, I would not say that we're that highly leveraged. We've got very strong debt coverage, and we set a goal of a 3.0 coverage ratio within the next 24 months. We're improving that literally every day. The amount of debt is not as high as it looks like because we both have a lot of cash and also because we have a lot of finance receivables within the bank. Maybe, Bob, if you want to kind of elaborate.
Sure. First, just echoing on what Lance just said, we do carry a lot of cash, but about $300 million, approximately, of that cash is at the bank and is required to be there for certain regulatory purposes. The bank itself, or I should say GFS, is carrying, as I mentioned earlier, $1.15 billion of lease and loan receivables. It is really a very strong asset on GFS books. To Lance's point, our current leverage today is maybe in the mid-threes and coming down. It is a really good story from where I sit.
Thanks for that. Okay. Given the changes to your business now with just focusing on Presort and SendTech, the question that we have here is, who would you view as your most appropriate peers, and what are some of the competitive advantages that you have against them?
Yeah. We have different competitors in our different business segments. In the Presort business, it tends to be much smaller businesses, mom-and-pop shops, regional players, etc. Pitney Bowes is the only nationwide competitor in that space. It is a business where scale really matters. Scale gives us both greater efficiencies, greater discounts from the USPS because we are able to achieve that much more value for them. It is something that we are very happy with, our competitive positioning within that market.
The SendTech business competes in some different sectors with different sets of competitors. For example, in the technology business, which is our shipping technology, we compete with a company called Auctane. In the hardware business, we compete with a French importer called Quadient. We have a lot of smaller companies. Most shareholders, for example, they are private companies. You would not have heard of them. It's kind of a fragmented space in really all of our different business segments.
Given the changes to the business, which has been much simplified and certainly much more profitable, how do you guys think about CapEx needs this year and beyond? As far as maybe kind of parse out what's kind of maintenance CapEx versus growth-focused capital spending?
Great question. CapEx we've guided will be consistent with where we were last year, so approximately $75 million. We have a very high hurdle on CapEx because we get a great return on it. In many cases, we're able to significantly improve our capacity and improve our utilization by replacing older equipment with more modern equipment. It is a good mix of investment capital and maintenance capital, all of which generates a very positive return.
Gotcha. Okay. As far as your outlook for additional acquisitions or perhaps joint ventures, would that be something that you would be open to? How do you guys think about that?
Yeah. I would categorize acquisitions as something that we're very interested in, small tuck-in acquisitions. They're very accretive. They're very profitable for us. They're very positive. We are shying away from any large transformative M&A. We don't need those. We've got two great business segments that have tremendous opportunity without the need for transformative acquisitions.
Understood. Okay. We are pretty much out of time at this point. I apologize if we did not get to all the questions that came in, but we will need to wrap it up here at this point. Thank you very much, Lance, Bob, and Alex for sharing the Pitney Bowes story. Thank you also to everyone listening in and putting forth some good thoughtful questions as well. We will wrap it up here, and I hope everyone has a productive day here at the conference. Thanks very much.
Thank you very much.
Thank you.
Take care. Thank you.