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Shares of Stamps.com Inc. plunged Thursday at the end of the session, dropping nearly 50% after the company announced that an exclusive deal with the US postal service would not be renewed.
Stamps.com
STMP, -2.00%
Predicts a sharp decline in its financial performance in 2019 with its report on fourth quarter results Thursday afternoon, then explained why during a conference call. Citing the need to work with other parcel and mail carriers such as United Parcel Service Inc.
UPS + 0.62%
, FedEx Corp.
FDX, + 0.20%
and Amazon.com Inc.
AMZN, -0.16%
, the executives stated that its customers were demanding and demanding shipping options beyond what the post office was able to offer, so that the exclusive nature of their contract was no longer effective.
"Our customers can no longer survive solely through USPS, and we do not see this as a viable option for the next five years," said Executive Director Kenneth McBride during the conference call. "Basically, it was our principle, that's how this company can no longer be exclusive given the trends in the shipping market."
In its announcement, the company expects its profits to be halved and its turnover starting in 2018, largely because of the end of the sharing agreement. income with the post office. Stamps.com executives said during the call for results that their negotiations with the USPS had failed about the issuance of Stamps.com exclusively selling postal shipping products . Because Stamps.com insisted on being able to sell competing products, the post office said it would kill the deal.
"This is a problem for us unless the exclusivity is removed from the table because we now have to accept other carriers, we can not afford to continue to limit ourselves to USPS," McBride said. during his call for results. "This is simply not in the interest of our customers. If our customers can not receive the best solution or the best offer in the market, they will leave us and in the end we will lose what. "
Read: Why was the US Postal Service presented to CES?
McBride said at the conference call that the company had not completely broken off relations with USPS and would still sell stamps and other services. Stamps.com planned to continue working with the Post "in the market segments where they offer a solution that serves the best interests of the customer," he said. As part of this plan, the company wants to collaborate with operators such as Amazon and others to build a "portfolio" of 40 US operators and 450 operators worldwide.
McBride stated that Stamps.com was closely correlated with e-commerce trends and that once agreements were reached with new carriers, the company's growth and revenues would reflect the entire e-commerce sector.
"So, if you're looking at the long term, once we have additional revenue arrangements in place, regardless of these economic factors, the growth and revenue that will drive growth and revenue will be the patterns of trade. electronic. and these seem to be strong enough at the systemic level, "McBride said at the conference call.
Related: Stamps.com was one of the first small-cap stock picks for 2019 among Wall Street analysts
The online mail supply company said the adjusted earnings for 2019 is expected to be between $ 540 million and $ 570 million per share, on a revenue of $ 540 million to $ 6.15, a strong down from adjusted earnings of $ 11.78 per share The average adjusted earnings expected for 2019 of $ 10.79 per share on a $ 689.1 million business turnover before Thursday's report, according to FactSet.
Stamps.com reported a profit of $ 42.7 million in the fourth quarter, or $ 2.30 per share, for a turnover of $ 170.2 million, up from 132.5 million dollars last year. After adjustments for stock-based compensation and other effects, the company posted earnings of $ 3.73 per share, well above the average analyst estimate of an adjusted profit of 2 , $ 90 per share and sales of $ 160 million, according to FactSet.
Before the decline after Thursday afternoon, Stamps.com shares had gained 7.1% over the past year, while the S & P 500 index
SPX, -0.35%
increased by 2.7%. Its shares have never fallen by more than 25.4% in one session.
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