Good morning and welcome to the Pitney Bowes First Quarter 2016 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. Adam David, Vice President-Investor Relations. Mr. David 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 2015 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? Marc Bradley Lautenbach - President, Chief Executive Officer & Director: Thank you, Adam, and thanks, everyone for joining this morning for our first quarter earnings conference call. Last week, we made one of the most consequential announcements in Pitney Bowes' history. We introduced the Pitney Bowes Commerce Cloud along with several SaaS-based products and solutions. This aligns our physical and digital capabilities, along with our mobile, location and e-commerce technologies, with all the end-to-end requirements that drive commerce. To my mind, this was more than a product announcement. This is the foundation for all of our future products and solutions, adding digital capabilities and web-based solutions that span all of our business units. It is also a demonstration of how…

Thank you. And we'll go the line of Kartik Mehta with Northcoast Research. Please go ahead.

Hey. Good morning, Marc and Mike. Marc, I just wanted to ask you a little bit more about the Software business. It seems like you have confidence that the business can turnaround, but it's not performed up to your expectations the last couple of quarters. I'm wondering what gives you the confidence that that can turnaround? Or what changes have been made that you can talk about that would give others confidence that that business could turnaround? Marc Bradley Lautenbach - President, Chief Executive Officer & Director: Thanks for the question, Kartik and I think it's an excellent question, one we've obviously thought a lot about. So, let me start with the market. If you look at the market in the first quarter, business investment in the United States was down 6%. If you look at several of the large technology companies they had, I would say, similar results, some might have heard. It's not a great market. And as you know, our long-term aspirations for this business are exactly that, long-term, so they transcend any one quarter. That being said, I still think we can do better than the market here. And let me kind of give you a little bit of texture on the kinds of execution issues that we talked about. So, there is different buckets. The first and Mike mentioned it, one of the places where we've been working, and this by the way, isn't the last three months or four months, this is the last several years, is to build an indirect channel with systems integrators. We're making progress on that, albeit, it's much slower than I would like. And by systems integrators, it's the large technology systems integrators that you'd be familiar with. Another change that we're making, our services attach rate to our…

Marc, just, the Software business, over the last couple of years, have you made changes to sales comp that you think could have resulted in this issue or have there been changes in the sales force that maybe as a result are taking a little bit longer for you to see the results you want. Could any of those issues have impacted the business? Marc Bradley Lautenbach - President, Chief Executive Officer & Director: I would say we've fine-tuned the comp model. We've fine-tuned it in 2013, 2014 and 2015; that's kind of what I would say is a ongoing process. I don't personally consider any of those changes that they made the last several years that material. In terms of things that take longer, it does take longer to build an indirect sales channel. These arrangements with systems integrators take a while to land. Candidly they've taken longer than I would've hoped. I've now personally interjected myself in those conversations, reaching out to my peers at these firms to see if we can accelerate it. And finally moving resources to white space are something that I'm highly confident will pay off over the long-term takes a while. So you've got new folks calling on new clients, they've got to establish those relationship, they've got to reintroduce Pitney Bowes to these clients and it underlines why the advertising campaign is so important. The advertising campaign is important for multiple different reasons, but as you're trying to break into new markets, whether that be systems integrators or other aspects of indirect channel or new customers, having a degree of air cover so that we spend a little bit less time explaining who we are and the technology that we have and more time focusing on the client issues is a good thing

And then, Mike, I just wanted to get your perspective on the second quarter. I know you gave some remarks about how you think second quarter outlook is going to be, but I just want to make sure that we're on the same page here. As you look at the second quarter and some of the expenses related, were your comments more intended to say that second quarter earnings would mirror first quarter or were you saying that second quarter for this year would be equivalent to second quarter last year? Michael Monahan - Chief Operating & Financial Officer, Executive VP: I was just using year-over-year comparisons to highlight where there are differences. So to the extent that people look at prior year to extrapolate from a given quarter, what I was highlighting is the fact that on a year-over-year basis there is about $0.04 of incremental expenses specifically related to marketing and ERP that was not a comparison to the first quarter, only a comparison on a year-over-year basis in the second quarter.

And then just last question, Mike. Obviously the first quarter didn't start off like you wanted to, but you seem confident about the full year, at least from a guidance standpoint, and I'm wondering why the confidence. Is it the pipeline of business that you see or something else? Is it just greater cost savings than you anticipated? I guess maybe what are the things that make you comfortable with the guidance? Michael Monahan - Chief Operating & Financial Officer, Executive VP: Yes, in terms of what makes us comfortable, I think are all the same things that we talked about really at our Analyst Day and when we gave guidance originally. So you do have a first quarter versus the rest of the year or first half, second half where we have significantly higher marketing costs related to our advertising campaign in the first half versus the second half. We have higher ERP expenses because of the launch of our ERP program in North America and in sort of settling that out. That kind of reverses itself in the second half where the expenses related to build and all begin to come down, and then the benefits start to accrue to us. In addition to that, we fully expect to get the full amount of synergies in our e-commerce business that we had outlined and that's part of our confidence as well. So a number of things, as well as obviously we would expect as we talked about improvements in the underlying operations of the business in line with the comments you heard.

Thank you very much. Michael Monahan - Chief Operating & Financial Officer, Executive VP: Thank you.

And we'll go to the line of George Tong with Piper Jaffray. Please go ahead. George K. F. Tong - Piper Jaffray & Co. (Broker): Hi. Thanks. Good morning. With the U.S. dollar weaker in 1Q, can you discuss how much of a lift that provided to cross-border e-commerce volumes and highlight factors that may have prevented e-commerce revenue growth from accelerating above 4Q levels? Marc Bradley Lautenbach - President, Chief Executive Officer & Director: So, first of all, we did as you point out, George, see the strengthening of other currencies vis-à-vis the dollar, and we noticed that almost immediately in our business. Predominately we realized the benefits more in March than we did in the first two months. It is one of the things that gives us confidence as we get into the balance – the rest of the year, a particular interest is the Canadian dollar and the Australian currency and both of those strengthened vis-à-vis the dollar. So we think that turns from what has been a headwind for the last several quarters to something that potentially can help us more in the back half of the year. We'll see how it unfolds. A lot of people have guessed on currencies over the last couple of years and a lot of people have lost. So while couple months doesn't make a trend, we'd like this currency environment to stay this way and continue to move. But it's going to be predicated on what happens with interest rates in the United States and around the world and that's hard to call. Michael Monahan - Chief Operating & Financial Officer, Executive VP: George, I would just say relative to the fourth quarter, obviously, there is some seasonality that plays into that as well. Fourth quarter is always the…

And our next question will come from Ananda Baruah with Brean Capital. Please go ahead.

Hey. Thanks for taking the question, guys. Yeah, actually I'd like to congratulate you on a pretty solid operational quarter. And I guess I'd kind of like to start, Marc, and my questions from there. The headline EPS obviously is a bit of a miss, but operationally the revs were just 3% off the Street and software explains all of that. And the EBIT was just 3% off the Street and the software explains all of that. So our math, Marc, completely aligns with your comments. And, I guess, what was a little bit different in our model aside from software would be interest tax and other income. So I would love to get, Mike, maybe just kind of thoughts around how we should think about that, the non-operational stuff going forward. And then I have a couple quick follow-ups. Thanks. Michael Monahan - Chief Operating & Financial Officer, Executive VP: Sure. On interest, as I mentioned, we're year-over-year about $178 million lower in average debt outstanding in the quarter. So that's a factor. We have a little bit more of a mix because we did some term loans of floating rate versus fixed rate, which has driven the overall interest rate down. So we would expect interest expense to continue to have some favorability on a year-over-year basis. With respect to taxes, we had a higher-than-projected full-year tax rate in the first quarter in large part because of the concentration of our earnings in the U.S., which has a higher average tax rate. So to the extent that we start to see a little better mix of earnings outside the U.S., and software being 50% outside the U.S. is part of that factor as well, we're still projecting a annualized tax rate in the 32% to 35% range, albeit we might be trending a little bit towards the higher-end than the midpoint.

Got it. That's helpful. And so it sounds like some mitigation on tax as we go through the year, but interest expense, should we think of as being relatively stable from a dollar perspective as we move through the year? Michael Monahan - Chief Operating & Financial Officer, Executive VP: Yeah. Obviously, it'll all depend on any changes in our overall debt levels, but I think the factors I described of lower average interest rate, which you saw is now at about 4.66% versus 5% plus last year and the lower average balances should keep interest expense down on a year-over-year basis.

Okay, great. And then, Marc, just going back to sort of what's been I guess the success in the core metering business over the last few quarters, I believe this might be the third quarter in a row where you've had equipment sales growth and it sounds like you feel pretty good about the potential for, I guess, maybe than the growth as a whole for the near-term. I'd love to just get your view on how you'd like us to think about not just the sustainability of what's been the equipment sales dynamic and how that manifested into the revenue growth dynamic, but also where maybe guys feel that you are holistically sort of in the saturation of the inside sales force. I don't think you're quite there yet. In Europe, what you sort of announced this week ties into the web-based aspect. Is that the entirety of the web-based dynamic, the interfacing, or is there more to go there? And I guess just the comments on the call you made about St. Louis expansion, an increase in First Class mail volume, I'd love to just get your sort of holistic view on that so we can dimension that appropriately. I know that's a lot, but sort of talk about it. Thanks. Marc Bradley Lautenbach - President, Chief Executive Officer & Director: That's heck of a question. So I continue to think about our SMB and Mailing business in the same dimensions that I always have. We can get that business stabilized. That market is between minus 2% to minus 4% or minus 3%ish in the first quarter. Clearly, with equipment sales 6% that means streams will catch up with that, and you're right that's been for the last several quarters. So we've explained that that takes a year…

That's great. That's good context and I appreciate it. And just to finish that out, just the remarks about St. Louis expansion and increase in First Class mails that were in the prepared remarks...? Marc Bradley Lautenbach - President, Chief Executive Officer & Director: Sorry, I forgot. I'll let Mike do that one. Michael Monahan - Chief Operating & Financial Officer, Executive VP: Yes, sure. So, in terms of Presort, we continue to have a very solid growth in that business, a 5% top line growth that really was driven by increasing First Class mail volumes, and the reference to St. Louis is we continue to see opportunities for expansion of the network given our ability to process mail and move it across the country. So we'll continue to look at other market opportunities for the Presort business to leverage the efficiency of that network.

I got it. Okay, great. Thanks a lot. Michael Monahan - Chief Operating & Financial Officer, Executive VP: Thank you.

And our next question will come from Shannon Cross with Cross Research.

Thank you very much. Mike, a question for you. Just trying to go back to the EPS, given the EPS miss relative to expectations this quarter, at least relative to what Street was at, I'm trying to figure out, how to think about second quarter, and I understand, you have incremental expense related to ERP and the marketing, which is $0.04, tax looks like it will be on a year-over-year basis somewhat negative and then you have some benefit from share repurchase. So I'm just looking at this Street at $0.46 and looking at the fact that you did $0.34 this quarter and trying to think about where we should all, in your mind, come out given the puts and takes. So maybe if you can just walk us through again, because I'd rather not see another quarter like this where we obviously were off relative to where your expectations were given the underlying strength in your business. So anything you can give us just sort of walk through that would be really helpful. Michael Monahan - Chief Operating & Financial Officer, Executive VP: Sure. So very specifically I would say where we modified our guidance was in the timing of marketing expense. So where we indicated last quarter that we expected the first quarter and fourth quarters to be the highest for marketing spend, we shifted that. We're continuing some of our advertising spend into the second quarter. We're supporting our Commerce Cloud launch. So we've increased that marketing spend anticipation. So, as I said, the marketing expense second quarter versus second quarter last year we expect to be $0.03 higher. ERP now that we're out live with the U.S. in April, we're now in that, what we call, hyper-care period where we really are going through and invest in all the training and those types of things. We said that's a $0.05 or so higher than the prior year. I think those are two things that are specific guidance adjustments that we've made in terms of timing of expenses now knowing that we've got the system out and knowing what we want to do in terms of support a Commerce Cloud and advertising. Beyond that I think the biggest variable from the first quarter is what the questions were about, which is the performance of the software business. And as Marc said, we expect to continue to see some improvement in there, but it's not quite where we wanted to be yet. So I would say those were the major variables on a year-over-year basis.

Okay, thank you. And then can you talk a bit about as the revenue comes through from the commerce cloud, what segments we should expect to see it because it's SMB and probably tied somewhat to the mail meters, but also I think there are parts of it that are commerce and parts of it that are software. So how should we think about it as it ramps through your business? Michael Monahan - Chief Operating & Financial Officer, Executive VP: Yes, so in terms of the Commerce Cloud, as you saw there were five different solutions that were announced initially and there will be additional as we go forward. Some of those will accrue, particularly the software and ecommerce related ones will accrue to the DCS businesses, ecommerce and software businesses, location intelligence in the software business where you'll see some accruing to the SMB business will be particularly around SendPro, which is the multicarrier shipping solution. There are add-on products around SendPro, so we have something called a SendKit that provides scale and other solutions for label printer for using the SendPro application, and then we've included the SendPro application in our high end metered series as well, so it's accessible through that, so in that case it accrues as basically a subscription added on to that equipment sale. So those are the main ways that it will affect the SMB business. To Marc's earlier comment, in most all of these cases it will generate levels of recurring revenue that will help further mitigate the declines we've seen in some of our recurring revenue streams. Marc Bradley Lautenbach - President, Chief Executive Officer & Director: Hey, Shannon, can I just build on your question for a second, because it's one we're thinking about a lot as this business evolves, I mean how it is that we portray ourselves in a way that we're easily understandable. But one of the points that we've made for a while is the import of our digital capabilities transcends our Software segment. So, a lot of these capabilities are things that were – capabilities that were born or nested within our Software business per se, other businesses are accruing the benefits of those. So, it's an important question to Michael, it's an important question how we present ourselves. But, it's also I think an important question in terms of how it is that we amortize its capabilities over the breadth of the business.

Great. Thank you. And then, maybe, Marc, if you can talk a bit about – and now I just absolutely lost my question, but can you hold on for a second, because I did write it down. Marc Bradley Lautenbach - President, Chief Executive Officer & Director: Yeah.

If you can talk a bit about any more divestitures, and you've done a good job of cleaning the business up. I mean, there have been a number of things that have moved and clearly we understand going indirect in some of the countries that you're going indirect in this quarter. But, as you look at sort of the assets you have right now, do you think we're kind of through that period. And so, we won't have some of these where you got to pull revenue out, even though it's sort of business is still ongoing? And then, also are there any other areas where you think you might want to augment more, and of course I'm getting back to my usual use of cash question here at the end of this. So, just any discussion about that, and then also you're kind of getting through the end of the share repurchase. Any more thoughts on what your board is thinking with regard to return of cash to shareholders? Thanks. Marc Bradley Lautenbach - President, Chief Executive Officer & Director: Sure. So, again, a great question. So, the way I think about the portfolio broadly is the portfolio needs to be congruent with three basic principles. They got to be leaders in their businesses, they've got to be strategically coherent, and they have to cover their return on investor capital. The problem with answering your question is those dynamics move, so as value continues to move in different segments then that equation changes. So, we will continue to evaluate the portfolio in context of what we think is the best decision for our shareholders and best way to create value. So, in the end, I like all the businesses, I'm wed to none of them. And we will continue…

All right. Thank you very much. Michael Monahan - Chief Operating & Financial Officer, Executive VP: Thank you.

And our next question will come from the line of Glenn Mattson with Ladenburg Thalmann. Please go ahead. Glenn G. Mattson - Ladenburg Thalmann & Co., Inc. (Broker): Yeah. Hi, good morning. I would echo Ananda's comments that the quarter was pretty good ex-Software. But I would add that the SG&A expense is a little higher than expected, about $7 million. And given the fact that you shifted the expense throughout the year from kind of a barbell approach to more frontend loaded, Mike, can you just give us an update if you include the cost savings expected this year from less expense on ERP netted with the higher marketing expense, kind of what the SG&A would be year-over-year for the full year? Michael Monahan - Chief Operating & Financial Officer, Executive VP: Yeah. What I would say is, we have not changed our annual outlook obviously for earnings per share and quite frankly on these expense items, so in aggregate, they're still in line with what we outlined for the full year. It's really more of a timing related issue. So those are kind of baked into our assumptions with the higher expenses in the first half of the year and those coming down in the second half of the year. From a marketing perspective, full year, we did talk to the fact that we had higher year-over-year total expense for the year and then we're trying to give some greater clarity on the timing of it. ERP, highest in the first half and then declining in the second half as we begin to ramp down, we still have some smaller markets to implement, but the bulk of the big build done and then beginning to get the benefits. So, in aggregate, on the year we don't expect to…

And our next question in line will come from (1:01:12) with Northeast Investors. Please go ahead.

Hi. Good morning. I know that you haven't talked over, but I'm wondering if you can address the PBIH preferreds and what your plans are for them? Michael Monahan - Chief Operating & Financial Officer, Executive VP: Yeah. We continue to evaluate the largest on those and (1:1:33) whether we do a similar type of PBIH offering or if we were to replace it with a traditional PBI debt, but we have an ongoing evaluation of the market.

So it sounds like you'll probably do something with them, not extend them in October. Michael Monahan - Chief Operating & Financial Officer, Executive VP: I would say it's very probable we will do something with them rather than extend them because the rate on those goes up quite a bit.

Right. Great. Thank you. Michael Monahan - Chief Operating & Financial Officer, Executive VP: Thank you.

And our next question will come from the line of Allen Klee with Sidoti. Please go ahead. Allen Klee - Sidoti & Co. LLC: Yes. Good morning. In the prior two years, if we look at the first quarter versus the second quarter, we've seen a jump up of $0.04 to $0.05 in EPS sequentially. Could you remind us of what's been behind that and if there's any reason that – anything's changed on that? Michael Monahan - Chief Operating & Financial Officer, Executive VP: Yeah. There is always seasonality. First quarter is generally always, particularly for the mailing business, the lightest revenue quarter, and fourth quarter tends to be the greatest, but the second quarter and third quarter are usually bigger than the first quarter. There is also some seasonality in some of the other businesses, particularly in the Software business as well, which generally has its largest quarter in the fourth quarter and its lightest quarter in the first quarter. So a lot of that's related to just client buying cycles and that generally gets better in the second quarter and third quarter relative to the first quarter. Allen Klee - Sidoti & Co. LLC: Okay, great. And then on Software, I had two questions and I don't know if I missed this, but first have you said anything or any thoughts about a growth rate for the year? And, second, it seems like in the last couple of quarters, the competitive environment has gotten tougher I would imagine and can you comment on that also? Thank you. Michael Monahan - Chief Operating & Financial Officer, Executive VP: In terms of the growth rate, we haven't given a growth rate specific to the Software business. We do expect the DCS business as a whole to be a double-digit grower and that incorporate Software, so that's within that context. Marc Bradley Lautenbach - President, Chief Executive Officer & Director: In terms of competitive environment, I don't think anything has materially changed in the competitive environment over the last couple of quarters. I mean these have been and continue to be competitive marketplaces. There's a lot of great companies in there. That being said, we've evaluated the competitive dynamics of all of these segments and businesses that we're in and we're comfortable we can manage them. Allen Klee - Sidoti & Co. LLC: Okay. Thank you.

And currently we have no further question in queue. Marc Bradley Lautenbach - President, Chief Executive Officer & Director: Great. So out of deference to everyone's time let me wrap up. Before I close I'd like to acknowledge Charlie McBride. As you all know, we announced Adam David as our new Vice President of Investor Relations. Consequently, this would be Charlie's last call with all of us. Charlie has been a longstanding and important contributor to Pitney Bowes. He has been here for 42 years. He has been in this particular role for 19 years, that's 76 quarters. For those of you who think of life in that context as I do, and I can't tell you how important he has been to our transformation and to me personally. Charlie has been a tireless advisor. He has helped us in what has been a very difficult transition over the last couple of years, and I personally will miss him and I want to take this opportunity to acknowledge and thank Charlie for all that he has done for our company for the last over four decades, which is hard to even contemplate. So, Charlie, I will miss you and thank you for all that you've done. Let me now close. It's easy to get lost and amazed with numbers, but the bottom line is we continue to make good progress in transforming our business. Our advertising campaign to reintroduce PB to the world, the deployment of our totally reengineered business processes and technology for 80% of our business, setting the stage for substantial benefit realization, resumption of equipment sales, our cash generation machine in North America, and finally the introduction of PB Commerce Cloud opening up a whole new set of opportunities to our 1.5 million clients. Bottom line, we are creating a foundation for our company to be successful well into the future. I have never been more confident about our ability to deliver long-term strategic value to our shareholders. As I've said a countless times before, transformations are not a straight line. We admittedly have some things that we need to clean up, but I think as we talked about, if you look at the body of work that we are undertaking, the problems have become very isolated into a single dimension. That's not to say that we won't have future problems in different places, but as we contemplate our transformation, we're now down to a fairly narrow set of problems that I think are manageable. We've got a lot more to do, but we've created the foundation for those companies to be successful well unto the future. So we'll talk again in 90 days. Thank you for your attention this morning.