Oct 29, 2026 earnings call — PCI exit boosts Presort volume
Management raised the midpoints of revenue and adjusted free cash flow guidance.
Revenue $0.5B (est $0.5B) · EPS $0.42 (est $0.35)
Key quotes
"Presort picked up significant volume late in the quarter as a result of PCI's exit from the market."
"That said, the previously mentioned termination of a noncore contract during Q4 will create a headwind for this business during 2027."
"Generally, we see the payback is 2 to 3 years. Sometimes it can be a little bit longer, but on average, it's about 2 to 3 years."
Analyst Q&A 7
Sources of Presort volume gains
Q (Aaron Kimson · Citizens): How much of the new Presort volume came from PCI versus new or returning customers, and how will PCI volume flow into the network over coming quarters? Also, what is the payback and initial capital outlay for the sortation equipment refresh?
A: They said they don't have detailed split numbers but that the majority of the volume gain was tied to PCI. On the equipment refresh, they expect a payback of about 2 to 3 years and will put out capital this year and next.
"I'd just say the majority of the volume gain was tied to gains from PCI." — Kurt Wolf (CEO)
Industry pricing, margins and PCI impact
Q (Curtis Nagle · BofA): How big is the opportunity after PCI exited, how much business can PBI win, will there be near-term pricing investments, and how does the current underpricing affect long-term margins?
A: They said a July 2024 rate case enlarged work share discounts and prompted aggressive pricing across the industry, and PCI priced too aggressively and exited. They absorbed roughly 14% to 15% more volume, which caused short-term overtime and suboptimal operations, and they expect industry pricing to rise so margins can reach sustainable ROI while they integrate PCI volumes and cut costs.
"Our expectation is that based on where competitors and us stand in terms of margin that pricing should start to go up just to get players to sufficient ROI to justify continuing to operate in the space." — Kurt Wolf (CEO)
SendTech contract loss and Presort price pressure
Q (Keen Fai Tong · Goldman Sachs): How much revenue is the noncore SendTech contract that is winding down, and if excluded what does 2027 revenue look like? Also, why did Presort revenue per piece fall and will that pressure persist?
A: They said the noncore SendTech contract is about $60 million to $80 million of revenue and that its loss is a large hit; absent that contract they believe they would be in growth for 2027. For Presort, they said ingesting PCI volumes (about 15% of volume) lowered revenue per piece and that pricing should mean-revert over time as they optimize.
"It's -- think of it in the $60 million to $80 million range in terms of revenue." — Kurt Wolf (CEO)
Margins on large customers and growth confidence
Q (Jasper Bibb · Truist): What incremental margin do you expect on the PCI volumes or on rising Presort volumes generally? And what gives you increased confidence that the company returns to growth by end of 2028, especially for SendTech? Also please comment on Q4 seasonal guidance framing.
A: They said large customers typically carry lower pricing and lower margins, so the added PCI volumes will be lower margin and that effect will persist. On growth, they said they are broadening their initiatives across Presort, SendTech and the bank, using data and pilots, and that having many ideas increases confidence but is not a guarantee; on Q4 Paul said they are comfortable with the annual guidance and noted Q4 has more accounting variability and last year had a roughly $5 million equipment revaluation benefit.
"The larger a customer is the -- typically the lower the pricing, the lower the margin." — Kurt Wolf (CEO)
Can PBI lead pricing and when margins recover
Q (David Witzke · Sidoti): With PCI exited and PBI stronger in sortation, can you be a price leader and what timing do you expect for pricing and margin improvement given costs like diesel and driver shortages?
A: They said they are not a pricing leader but will act to protect their business, and that margins are low industry-wide. They expect pricing to rise over time because competitors face the same cost pressures, and they are looking at fuel surcharges and contract economics where diesel has risen sharply.
"I would argue we're not a leader in terms of pricing, but we are going to do what's right for our business." — Kurt Wolf (CEO)
Return to 30% margins and corporate expense trend
Q (Anthony Lebiedzinski · Sidoti): Do you think Presort can get back to the high-20s or low-30s EBIT margins seen previously? Also, why did corporate expenses rise sequentially and what is the outlook for corporate SG&A?
A: They said getting back sustainably into the 30s is unlikely and mid-20s, maybe a little above, is more reasonable. Paul said Q3 included about a $10 million reclass and that long-term corporate SG&A should decline as they find efficiencies and allocate costs more to the business.
"I think mid-20s on margin is probably mid -- I think maybe even a little above mid-20s." — Kurt Wolf (CEO)
SendTech margins after customer loss; free cash flow drivers
Q (Kartik Mehta · Northcoast): Will SendTech margins be pressured in 2027 after the noncore customer leaves, and can costs be reduced to sustain margins? Also, how much of the higher free cash flow is sustainable versus driven by one-time working capital benefits?
A: They said losing the noncore business will be negative for margin because shared costs become stranded, and they are investing in growth while pursuing efficiency improvements; also, if the bank is broken out, SendTech reported margin will change. On free cash flow, Paul said they realized working capital benefits and cost-structure gains and that 2027 likely won't be as high as 2026; Kurt added working capital tailwinds may reverse and they expect higher CapEx for sorter refresh plus overlap of lease payments in the near term.
"First of all, losing this noncore piece of business, it will be negative for margin just because you sort of -- you lose some of the leverage." — Kurt Wolf (CEO)