Good morning. And welcome to the Pitney Bowes First Quarter 2015 Results Conference Call. Your lines have been placed in a listen-only mode during the conference call until the question-and-answer segment. Today’s call is also being recorded. If you have any objections, please disconnect your lines at this time. I would now like to introduce your speakers for today's conference call, Mr. Marc Lautenbach, President and Chief Executive Officer; Mr. Michael Monahan, Executive Vice President, Chief Operating Officer and Chief Financial Officer; and Mr. Charles McBride, Vice President, Investor Relations. Mr. McBride, will now begin the call with the Safe Harbor overview.

Good morning. Included in this presentation are forward-looking statements about our expected future business and financial performance. Forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from our projections. More information about these risks and uncertainties can be found in our 2014 Form 10-K annual report and other reports filed with the SEC that are located on our website at www.pb.com and by clicking on Investor Relations. Please keep in mind that we do not undertake any obligation to update any forward-looking statements as a result of new information or developments. Also, for non-GAAP measures used in the press release or discussed in this presentation, you can find reconciliations to the appropriate GAAP measures in the tables attached to our press release and also on our Investor Relations website. Additionally, we have provided slides that summarize most of the points we will discuss during the call. These slides can also be found on our Investor Relations website. Now, our President and Chief Executive Officer, Marc Lautenbach, will start with a few opening remarks. Marc?

Thank you, Charlie, and good morning, everyone. 2015 is a very important year in our transformation and our first quarter results reinforce the underlying strength of our business model, our strategy to unlock value in our company. Earnings before interest and taxes grew 5%, 7% if you adjust for currency. We grew our EBIT even as we made substantial investments in our systems, our brand and our product development. Our first quarter results were affected by currency fluctuation, divestiture is not accounted for in discontinued [operations] [ph] and the higher than usual tax rate. The impact of the strong dollar took almost 4 points off of revenue and divestitures reduced revenue by a little less than 1 point. We expect our tax rate to return to more normal levels later in the year. In the second half of the year, the currency impacts will begin to wrap, assuming the dollar stays at the current level. There are three things that are clear about the first quarter. First, we anticipate that we would be operated in a challenging macroeconomic environment this year and that’s what we saw in the first quarter. Economic conditions around the world are choppy and diverging monetary policies are creating fluctuations in currencies. Second, even with these challenges, our growth businesses grew close to double digits, excluding the impact of currency. And finally, unlike the first quarter of last year, where we executed very well, our first quarter of 2015 was a more typical start to the year. Turning to our three strategic initiatives, first, stabilizing our Mail business, our Enterprise Mail businesses performed very well in the quarter. Our SMB business in North America performed consistent with the last several quarters. If you double click on that business, you would find that our new channels in…

Thank you, Marc, and good morning. As you've seen, currency had a meaningful impact on our reported results for the quarter, adjusting for currency and the businesses we divested in Europe last year, revenue was flat. We were able to grow EBIT 5% and improved EBIT margin to 20% for our operational excellence efforts. Despite a higher tax rate and currency impacts, we delivered earnings per share in line with our expectations. Changes in currencies are having a significant impact on reported results for global companies. While our international exposure is not as great as other companies, we are not immune to the effects, particularly the strengthening of the U.S. dollar. During the quarter currency translation adversely impacted our revenue comparisons by $34 million or nearly 4% and our earnings per share by $0.01. As Mark referenced, we did see positive results in many areas of the business, Digital Commerce Solutions revenue growth was still solid this quarter, EBIT expanded nicely, despite the strengthening U.S. dollar’s dampening effect on our e-commerce package volumes from the U.S. and the slower rate of software revenue growth. Our Presort Services business continued to grow both revenue and EBIT margin. Production mail revenue was flat, excluding the changes in currency and EBIT margin was also grew. Our North American Mailing business continued to have trends in line with the prior three quarters for revenue and EBIT margin continued to improve year-over-year. We experienced some disruption in our European Mailing Equipment sales particularly in France as we transition our go-to-market model there. As a reminder, last year we announced that we exited a non-core product line in Norway and moved to a dealer network in six smaller European markets. Note that these strategic actions were not reclassified as discontinued operations. As a result, our year-over-year…

Thank you. [Operator Instructions] And our first question is from Ananda Baruah from Brean Capital. Please go ahead.

Hey. Good morning, guys. Congratulations on putting up solid results in a tough environment. A few if I could. I guess the first three for Marc. Could you just go into a little bit more depth with regards to where you are both in North America mailing and the international mailing? I guess, France, you mentioned is a little bit more acute. Where you are guys are in the process, just put some more context around it in each of the regions and give us a little more detail, that would be great.

Sure. So North America, as we have previously indicated, we finished off the go-to market changes last year. As I indicated in my remarks, we saw good performance and a different kind of performance in our new channels in the first quarter and we are very gratified by that, which in fact is a very good sign. The overall SMB business in North America, ironically was affected by some lost deals that we left on the table with our field sales. So that will happen. Some of our large deals kind of, will flop from one quarter to another. Then international, so in Europe if you kind of unlayer it, as Mike has indicated, before you got to look at it on a country basis. We are done in U.K. I would note in the UK we had good performance, not just overall but as well in our new channels. Again, we see that as a very positive sign. We are done in Germany. German performed as we would have expected given the disruptions and I would say we are in the early innings in France in terms of working our way through the process with the works councils. Importantly, we have begun the process in Asia. So, I would say, you have to look at this now on a country-by-country basis. In a couple of the majors in Europe, we are done. France will take a some bit of time to work our way through and we are going through the process in Asia.

That’s great, Marc. Thanks. That’s helpful. And then I guess as a follow-on to that. I believe part of the process is also kind of getting the indirect guys or the inside guys trained to sell up the stack, so to speak. Where are you in that process and in which parts, I guess which countries, which regions have you gained traction in?

I would say, we’re continuing to go through that. I mean, so if you look at the United States as a place we are the furthest long. We had very strong. And by the way, part of this ongoing process, you always try to improve the skills of your team. But United States particularly focuses end of lease and trying to become more sophisticated about providing the right offers at the right times. I would say our marketing team is providing great insight into that. You can discern by U.K. that their pipeline is in a pretty good shape based on their performance and I will say the other geographies are coming up to curve. But to your point, these are still relatively new challenge. So if you think about putting the new channel in place, in substance over a 12 or 18 months and getting reasonable performance, I find that to be a very important point of evidence.

Got it. Thanks. And then just last one for me for now. Mike, you mentioned that you are now expecting to see greater investment from the investments you've been talking about in the second quarter and the third quarter. So does that -- does that sounds like that could suggest that sort of EPS might be in the context of your guidance? It might be more skewed towards the December quarter than it typically might be. I just want to confirm that and if so, is there any, I guess context you can give us, any guidance I guess and how we should think about sort of the EPS layering in through the year just so we can appropriately set our models?

Yeah. So, I guess, if you look at it just in the context of the incremental impacts of ERP and the marketing spend, we identified $0.15 to $0.18 incrementally. As you can tell by what I gave before, incrementally in the first quarter was only a penny plus. And therefore, the majority of that will come into the second and third quarter. We probably saw a little bit more capitalization of ERP in the first quarter than we had baked into our original outlook. But all-in-all, the program continues to be within our overall roadmap for it in terms of total spend. This is really more just a timing shift, with the concentration of that being more so in the second and third quarter.

Okay. Great. Thanks a lot.

Thank you. Our next question is from the line of George Tong from Piper Jaffray. Please go ahead.

Hi. Thanks. Good morning. I'd like to drill into the North American SMB business a bit more. If the contracts left on the table were booked in the quarter as opposed to shifted into Q2, could you help us understand what declines would have been and could you provide your latest views on if and when you expect declines to return to the low-single digits?

I’m sorry. George, make sure I understand your question about the…

What were the? George, you’re asking what the impact of -- had those deals that slipped into the second quarter been recorded in the first quarter, what would have been the impact in North American mailing?

Yes. And from a timing perspective, when you expect declines to return to the low-single digits?

Sure. So in terms of those deals, I think as we mentioned, the equipment sales in the U.S. was down in the mid-single digits. And so the deals that were on the table, potentially would take that closer to flat. But it will see how much of that we are getting in total of the opportunity, but certainly we saw some of them come in early in the year. So the key drivers behind bring that closer to level is equipment sales. We saw very good performance again in recurring revenue streams, financing income down just 1%, actually slightly less than 1%. Rental comparisons continued to improve. So I think, as Marc outlined, the channel maturity is really the key driver to that as we go forward. And in the first quarter that inside sales what Marc referred to as the new channels achieved our objectives in the quarter. So, we continued to move in the right direction. And obviously, this is the last quarter since we’ve made the big changes last year, so we begin to have comparisons on an apples-to-apples basis going forward.

So just to dimensionalize the question a second, so if you look at the North American overall, I believe was $365 million bucks or something like that, so that’s minus four. So I mean, low-single digits in absolute dollars, George is $5 million to $10 million bucks. I mean, you can define your own low-single digit meaning but in absolute dollars it’s a fairly small number in the context of a $1 billion -- almost a $1 billion of the sales.

Got it. And turning to the EU, can you help us quantify the impact you expect to see as you adopt your shifts and go-to market strategy and as you increase the number of countries that will be transitioning, what that impact will go to?

Sure. What marc outlined really are the three big ones, right, the U.K., France and Germany. The U.K. transitioned through that well. If you take all the noise out of the system, in other words, look at the international mailing revenue performance this quarter, nearly half of that was currency related and then another 5 percentage points was related to the comparison for the businesses that we exited last year that gets you down to a negative 7%. Most all of that was related to Germany in terms of -- I’m sorry, to France, related to their comparison year-over-year. So if you look at a very low-single digit, 1% or 2% decline year-on-year ex those factors, that’s very much in the range of the performance of plus or minus 2% we’ve seen in Europe over the last several quarters, not several years. And so we think the impacts are fairly isolated. We know what we have left to complete in that process. Other markets beyond those big three become quite a bit smaller. Once you get passed, U.K., France, Germany, and in North America, Canada as international market, which is already through the processes well than the rest are relatively small. We don’t expect big measurable impacts from them going through the transformation.

Got it. And then last question. Could you further describe the impact of the stronger dollars having on U.S. outbound e-commerce volumes and how much of an offset you expect from new country penetration and also your new U.K. outbound service?

Well, I think as you see in the results, e-commerce continue to be the driver of our earnings -- I’m sorry, of our growth in digital commerce. I would say that the U.K. expansion and growth was a good contributor to that. We clearly saw some slowdown in volumes in the U.S. reflected in that but still in terms of packed volume growth some growth there, but clearly not at the level. Each market depends upon what the particular currency changes are and sort of the depth and speed at which those currencies change tend to have a greater impact. So a market like Russia that had a fairly steep devaluation, we saw a much greater impact and decline in volumes versus other markets where we saw slowing in the growth.

Got it. Thank you.

Thank you.

Thank you. And our next question is from Kartik Mehta from Northcoast Research. Please go ahead.

Hi. Good morning. Marc, I wanted to ask a little bit about the North American Mailing business and the margins you're seeing there -- in that business, they're improving even though revenues are declining? And is it the trend you would expect, do you think margins now stabilize even if we continue to evidence low single-digit revenue in there or is it an opportunity for you to continue improving margin in that segment even in that trend?

Well, as Mike often says, the quest of productivity, you are always in the seventh inning. So we will continue to be working on productivity. I would expect, overtime, the opportunities for SG&A reductions to moderate, that's how we’ll continue to work for continued opportunities. ERP provides impact, the things we’ve talked about provides another opportunity to begin to realize those benefits in 2017. So I would say, the major productivity improvement that we have seen or either landed in the cost in the terms of the go-to-market or in flight in terms of impact, I mean, just a kind of again to dimensionalize the ERP benefits, we’ve said, that $100 million to $125 million those benefits will principally accrue to the largest businesses read that as North American SMB, so there’s more to do.

And then Mike, just thoughts on free cash flow. I know first quarter ‘15 was less than first quarter of ‘14. Any thoughts on, does that put you kind of lower end of guidance or the higher or is this kind of in line with what you expected?

Yeah. In terms of what we saw on free cash flow, one of the key drivers in it was really the timing of payables and accrued benefits and related. And that often will vary from quarter end to quarter end based on the number of days of accrued payroll and other things like that. So we continue to view our annual cash flow guidance range is appropriate for outlook. The variables at the end of the day will be any incremental investment in CapEx and that type of thing that we do. But, all-in-all, we continue to view the guidance as appropriate.

And then just one last question, Marc, I wanted to go back to a comment you made about cap allocation and having comfort with that as the balance sheet gets better. As you look at your balance sheet in relation to capital allocation? Are you comfortable with where the debt level is or would you like to see it lower than where it is now or what will the strategy be for you to get comfortable with better -- giving more capital back to shareholders?

I would say, broadly speaking, I’m comfortable with where the debt levels are, our focus of the debt events going forward is more on the timing of those than trying to get the overall levels in a different place. As you get further into the transformation than I think it does become clear what the options are in terms of capital allocation and that increases our -- not just our flexibility but candidly our conviction about how and when we return money back to shareholders. So the question now is more when than anything else.

Thanks, Marc. I appreciate it.

Thank you.

Thank you. Our next question is from Alan Cleave from Sidoti. Please go ahead.

Yes. Hello. Could you elaborate on comments you made of a strategic opportunity to distribute more of a business through the SMB channel?

Yeah. I could, I would be glad to. Thank you for the question. So if you look at one of the great opportunities that Pitney Bowes has had, it’s those 1.5 million clients that we have in our SMB base. If you looked at our core of our Digital Commerce business it’s really an enterprise class clients. Shipping business and principally Shipping Software is actually the intersection of those two circles. So what we are starting to see is real take up of our Shipping business our Shipping Software in the SMB client base. That is a tremendously exciting opportunity because it gives you a chance to really leverage the legacy of Pitney Bowes with some of our new opportunities. And then that business now is getting to the point where overtime it can make a difference.

Okay. Thank you. And then just following up on the capital allocation, I guess, a similar question that was just asked. But in terms of last quarter you announced $100 million authorization of a buyback, so how do you think about that as a priority and maybe also acquisitions in how you use capital?

Yeah. So, again the context is, how we think about capital allocation for total shareholder return. So just kind of keep that in mind. I would say that we are -- we now have clear visibility of the potential acquisitions and while that changes overtime, I think we’ve got a pretty clear view of it. We’ve dimensionalize that. So it does begin to allow you to make more informed decisions about how you approach capital allocation debt retirement money back to shareholders, et cetera, and anymore clear in certain way.

Okay. Great. Thank you so much.

Thank you.

Thank you. [Operator Instructions] And we’ll go to the line of Shannon Cross from Cross Research. Please go ahead.

Thank you very much for taking my question. My first question is just with regard to Software. Can you talk -- you made a number of changes sort of in sales and some leadership over the last two quarters? Can you talk about where you think your Software business is and if there are any areas that you might want to augment via acquisition or maybe an expansion of organic development and then I have a follow up? Thank you.

I would say the Software business it have put us in context of where we were in 2013 when we first begin to talk about versus now. We made tremendous progress. I mean, we grew high-single digits constant currency at a licensed level in the first quarter that's off of the fourth quarter where we think we grew 20% or 30% in terms of license revenue. To kind of look at that from where we started that's pretty impressive. We have -- I would say at this point a fairly stable leadership team in North America. We have a newer leadership team outside of the North America. I would expect as those leaders get in place, they will continue to make judgments about what they need to do. So I mean, I would say that business has come a long way in a couple of years. The software business pipe definition is a little bit lumpy. So it will ebb and flow over the course of the year and have large transaction that can make a difference in a given quarter and we’ll continue to work our way through those quarters. In terms of potential acquisitions I know you wouldn’t, Shannon, think that I would portray a particular thought beyond saying that each of the product businesses now in software gone through the five year. Product roadmaps have a very clear view of the capability as they need in order to retain leadership, are in the process now in making make versus buy decision. I would reiterate that all that needs to be in the context of total shareholder return. So we’ve set for ourselves to be very stringent criteria around acquisition in terms of IRR and when they need to be accretive and etc cetera. So that’s kind of where we’re in the movie and we’ll continue to execute. I would say again people often ask me, do you see the need for transformational type of acquisition. I like the spaces where we’re in. I think there’s plenty of opportunity to execute in the domains that we’ve chosen.

Great. Thank you. I guess just along the lines of as you continue to dig through the portfolio, do you think you're pretty much done with divestitures or shifts like we saw in the last couple of quarters or do you think there are more to come? Thank you.

Again, you won’t expect that I make specific comments on that. As I’ve indicated before, the portfolio is an evolving subject. So we put pretty strict criteria around how you stay in the portfolio. It’s given acceptable returns, so being a leader in your relative segment and strategic coherence and those things obviously evolve overtime. So obviously, the portfolio something is that, okay now we’re done. The portfolio will continue to evolve as the business evolves.

Okay. Great. And then my last question is just Mike, as you look at the ERP implementation, can you give us is some idea of any, I mean, has anything sort of changed in terms of timing or as you're going through have you identified anything? I'm just kind of curious if you could give us sort of an overview of where you are, what you've seen and thoughts. I know it’s been sort of an ongoing process?

Sure. I would say, we continue to operate the plan basically the high level where I look at this is ‘14 was really the planning and designing phase, ‘15 is the build phase, ‘16 is more or less the implementation phase and ‘17 is one we get bulk of the benefits. And to drill down the level, we’re far along in the build phase now. We will look to at least get a pilot going before the end of the year. And then as I said ‘16 is likely the bigger year for implementation, the biggest year of implementation. So we’re tracking along to the plan. We’ve maintained a very high level of out of box meaning utilizing the standard system configurations and minimizing amount of customization we’re doing. That said it’s the big program with lots of people involved across the organization, but we see a lot of benefits that will come from being able to streamline business. Some of it as Marc mentioned earlier benefits in our traditional businesses and I think the other big benefit is it will be a robust platform. We can grow our Digital Commerce businesses as well. So steady as she goes as they say and we’ll continue to update you as we go forward.

Thank you very much.

Thank you.

Thank you. And at this time, there are no further questions in queue. Please continue.

So let me close. As many of you perhaps noticed last week, we celebrated our 95th anniversary. That’s a tremendous accomplishment, no matter how you want to look at it. It really speaks to the outstanding work of generations of employees, decades of market defined innovation and relentless focus on the success of our clients. It’s an important milestone in our history but it just not a milestone. We’re in a multi-year journey to transform this company. And well we’ve made significant progress in the last 30 months, and we’ve got a heck of lot more to do. I closed our year end conference, in February by saying that’s hard to know precisely what 2015 was going to bring. I think that’s turned out to be a true. I don’t think with particular impressions at the time but it is a choppy market environment. I also said, however, that I like our position. I like the handle we've got. I like the opportunities that are in front of us. And importantly, we’re not building this company for a quarter for even a year. We’re mindful that we've been around for 95 years and we’re really trying to create the foundation for our future and to build a bridge, not just for the next five years, but to our second century. We’re going to move forward with a very disciplined focus. You see that in our results. You see it in how we manage expenses, you see it in how we manage the capital and again, all that's for the long-term success of the company. I appreciate everyone's interest in the story. I appreciate your questions this morning. Talk to you in 90 days. Thank you.