- Reported revenue decreased 1.9%, while comparable adjusted
revenue increased 1.2%, excluding the impact from
divestitures.
- Net income was $10.8 million, improving from $2.8 million in
2023, on stronger operating results and realized gain on 2023
business exit.
- First quarter GAAP diluted EPS was $0.24 while comparable
adjusted diluted EPS improved 4.3% to $0.72.
- Comparable adjusted EBITDA increased 7% to $96.9 million.
- Increasing FY’24 free cash flow guidance; affirming guide for
the balance of 2024 metrics.
Deluxe (NYSE: DLX), a modern Payments and Data company, today
reported operating results for its first quarter ended March 31,
2024.
“We reported a strong start to 2024 highlighted by increases
across all of our comparable adjusted metrics,” said Barry
McCarthy, President and CEO of Deluxe. “Comparable adjusted EBITDA
expanded at a rate significantly faster than revenue, demonstrating
the scaling profitability of our business.”
“Beyond expanding profits, we were particularly pleased to
deliver a significant year-over-year increase in cash flows. Our
continued strong execution enables us to increase our free cash
flow guidance range for the full year,” said Chip Zint, Senior Vice
President and Chief Financial Officer of Deluxe. “We are proud of
our progress on our North Star plan and our disciplined capital
allocation, further building confidence in our earnings growth
trajectory.”
First Quarter 2024 Financial
Highlights
(in millions, except per share
amounts)
1st Quarter
2024
1st Quarter
2023
% Change
Revenue
$
535.0
$
545.4
(1.9
%)
Comparable Adjusted Revenue
$
529.0
$
522.7
1.2
%
Net Income
$
10.8
$
2.8
n/m
Comparable Adjusted EBITDA
$
96.9
$
90.6
7.0
%
Diluted EPS
$
0.24
$
0.06
n/m
Comparable Adjusted Diluted EPS
$
0.72
$
0.69
4.3
%
————
n/m - not meaningful
- Revenue for the first quarter decreased 1.9% from the previous
year. Comparable adjusted revenue, reflecting the removal of
business exits, increased 1.2% compared to the previous year.
- Net income of $10.8 million was up from $2.8 million in the
first quarter of 2023, primarily reflecting gains on business exits
and expense management.
- Comparable adjusted EBITDA margin was 18.3%, up 100 basis
points from the prior year.
- Comparable adjusted diluted EPS of $0.72 was up 4.3% year over
year.
Outlook
The Company now expects the following for full-year 2024,
reflecting the removal of business exits, and all figures are
approximate:
- Revenue of $2.14 to $2.18 billion
- Adjusted EBITDA of $400 to $420 million
- Adjusted diluted EPS of $3.10 to $3.40
- Free cash flow of $80 to $100 million
The guidance outlined above is subject to, among other things,
prevailing macroeconomic conditions, global unrest, labor supply
issues, inflation, and the impact of business exits.
Capital Allocation and Dividend
The Board of Directors recently approved a regular quarterly
dividend of $0.30 per share. The dividend will be payable on June
3, 2024, to shareholders of record as of market closing on May 20,
2024.
Earnings Call Information
Deluxe management will host a conference call today at 5:00 p.m.
ET (4:00 p.m. CT) to review the financial results. Listeners can
access the call by dialing 1-888-210-4748 (access code 7092711).
The audio and accompanying slides will be available via a
simultaneous webcast on the investor relations website at
www.investors.deluxe.com. Alternatively, an audio replay will be
available after 11:30 a.m. ET through midnight on May 8, 2024, by
dialing 1-800-770-2030 (access code 7092711).
About Deluxe Corporation
Deluxe, a modern Payments and Data company, champions business
so communities thrive. Our solutions help businesses pay, get paid,
and grow. For more than 100 years, Deluxe customers have relied on
our solutions and platforms at all stages of their lifecycle, from
start-up to maturity. Our powerful scale supports millions of small
businesses, thousands of vital financial institutions and hundreds
of the world’s largest consumer brands, while processing more than
$2 trillion in annual payment volume. Our reach, scale and
distribution channels position Deluxe to be our customers’ most
trusted business partner. To learn how we can help your business,
visit us at www.deluxe.com, www.linkedin.com/company/deluxe, or
www.twitter.com/deluxe.
Forward-Looking Statements
Statements made in this release concerning Deluxe, the company’s
or management’s intentions, expectations, outlook or predictions
about future results or events are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements reflect management’s current intentions or
beliefs and are subject to risks and uncertainties that could cause
actual results or events to vary from stated expectations, which
variations could be material and adverse. Factors that could
produce such a variation include, but are not limited to, the
following: potential continuing negative impacts from pandemic
health issues, such as the coronavirus / COVID-19, along with the
impact of related government restrictions or similar directives on
our future results of operations and our future financial
condition; changes in local, regional, national and international
economic or political conditions, including those resulting from
heightened inflation, rising interest rates, a recession, or
intensified international hostilities, and the impact they may have
on the company, its customers or demand for the company’s products
and services; the effect of proposed and enacted legislative and
regulatory actions affecting the company or the financial services
industry as a whole; continuing cost increases and/or declines in
the availability of materials and other services; the company’s
ability to execute its transformational strategy and to realize the
intended benefits; the inherent unreliability of earnings, revenue
and cash flow predictions due to numerous factors, many of which
are beyond the company’s control; declining demand for the
company’s checks, check-related products and services and business
forms; risks that the company’s strategies intended to drive
sustained revenue and earnings growth, despite the continuing
decline in checks and forms, are delayed or unsuccessful; intense
competition; continued consolidation of financial institutions
and/or bank failures, thereby reducing the number of potential
customers and referral sources and increasing downward pressure on
the company’s revenue and gross profit; risks related to
acquisitions, including integration-related risks and risks that
future acquisitions will not be consummated; risks that any such
acquisitions do not produce the anticipated results or synergies;
risks that the company’s cost reduction initiatives will be delayed
or unsuccessful; risks related to any divestitures contemplated or
undertaken by the company; performance shortfalls by one or more of
the company’s major suppliers, licensors or service providers;
continuing supply chain and labor supply issues; unanticipated
delays, costs and expenses in the development and marketing of
products and services, including web services and financial
technology and treasury management solutions; the failure of such
products and services to deliver the expected revenues and other
financial targets; risks related to security breaches, computer
malware or other cyber-attacks; risks of interruptions to the
company’s website operations or information technology systems; and
risks of unfavorable outcomes and the costs to defend litigation
and other disputes. The company’s forward-looking statements speak
only as of the time made, and management assumes no obligation to
publicly update any such statements. Additional information
concerning these and other factors that could cause actual results
and events to differ materially from the company’s current
expectations are contained in the company’s Form 10-K for the year
ended December 31, 2023, and other filings made with the SEC. The
company undertakes no obligation to update or revise any
forward-looking statements to reflect subsequent events, new
information or future circumstances.
DELUXE CORPORATION
CONSOLIDATED CONDENSED
STATEMENTS OF INCOME
(in millions, except per share
amounts)
(Unaudited)
Quarter Ended March
31,
2024
2023
Product revenue
$
300.4
$
310.3
Service revenue
234.6
235.1
Total revenue
535.0
545.4
Cost of products
(114.4
)
(118.5
)
Cost of services
(137.1
)
(132.2
)
Total cost of revenue
(251.5
)
(250.7
)
Gross profit
283.5
294.7
Selling, general and administrative
expense
(234.1
)
(247.7
)
Restructuring and integration
expense
(13.8
)
(12.9
)
Gain on sale of businesses and
long-lived assets
8.6
—
Operating income
44.2
34.1
Interest expense
(30.8
)
(30.0
)
Other income
3.0
2.4
Income before income taxes
16.4
6.5
Income tax provision
(5.6
)
(3.7
)
Net income attributable to
Deluxe
$
10.8
$
2.8
Weighted average dilutive
shares
44.5
43.7
Diluted earnings per share
$
0.24
$
0.06
Adjusted diluted earnings per
share
0.76
0.80
Comparable adjusted diluted earnings
per share
0.72
0.69
Capital expenditures
20.4
25.5
Depreciation and amortization
expense
41.7
43.5
EBITDA
88.9
80.0
Adjusted EBITDA
100.5
100.4
Comparable adjusted EBITDA
96.9
90.6
DELUXE CORPORATION
CONSOLIDATED CONDENSED BALANCE
SHEETS
(dollars and shares in
millions)
(Unaudited)
March 31, 2024
December 31,
2023
Cash and cash equivalents
$
23.5
$
72.0
Other current assets
406.7
689.0
Property, plant & equipment
111.1
116.5
Operating lease assets
55.1
59.0
Intangibles
374.0
391.7
Goodwill
1,430.6
1,430.6
Other non-current assets
327.6
321.8
Total assets
$
2,728.6
$
3,080.6
Current portion of long-term
debt
$
21.6
$
86.2
Other current liabilities
423.1
732.9
Long-term debt
1,538.5
1,506.7
Non-current operating lease
liabilities
55.4
58.8
Other non-current liabilities
81.6
91.4
Shareholders' equity
608.4
604.6
Total liabilities and shareholders'
equity
$
2,728.6
$
3,080.6
Net debt
$
1,536.6
$
1,520.9
Shares outstanding
44.0
43.7
DELUXE CORPORATION
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Quarter Ended March
31,
2024
2023
Cash provided (used) by:
Operating activities:
Net income
$
10.8
$
2.8
Depreciation and amortization of
intangibles
41.7
43.5
Gain on sale of businesses and
long-lived assets
(8.6
)
—
Prepaid product discount
payments
(10.5
)
(7.4
)
Other
(6.8
)
(45.6
)
Total operating activities
26.6
(6.7
)
Investing activities:
Purchases of capital assets
(20.4
)
(25.5
)
Other
(0.2
)
—
Total investing activities
(20.6
)
(25.5
)
Financing activities:
Net change in debt, including debt
issuance costs
(34.6
)
41.6
Dividends
(14.0
)
(13.6
)
Net change in customer funds
obligations
(272.8
)
(145.6
)
Other
(5.2
)
(4.7
)
Total financing activities
(326.6
)
(122.3
)
Effect of exchange rate change on cash,
cash equivalents, restricted cash and restricted cash
equivalents
(2.6
)
0.6
Net change in cash, cash equivalents,
restricted cash and restricted cash equivalents
(323.2
)
(153.9
)
Cash, cash equivalents, restricted cash
and restricted cash equivalents, beginning of year
458.0
337.4
Cash, cash equivalents, restricted cash
and restricted cash equivalents, end of period
$
134.8
$
183.5
Free cash flow
$
6.2
($
32.2
)
DELUXE CORPORATION
SEGMENT INFORMATION
(In millions)
(Unaudited)
Quarter Ended March
31,
2024
2023
Revenue:
Merchant Services
$
96.5
$
89.1
B2B Payments
69.4
75.2
Data Solutions
59.7
44.4
Print
303.4
314.0
Business exits(1)
6.0
22.7
Total
$
535.0
$
545.4
Comparable Adjusted Revenue
$
529.0
$
522.7
Adjusted EBITDA:
Merchant Services
$
21.4
$
18.4
B2B Payments
13.3
13.5
Data Solutions
14.9
10.2
Print
91.0
95.2
Business Exits(1) / Corporate
(40.1
)
(36.9
)
Total
$
100.5
$
100.4
Comparable Adjusted EBITDA
$
96.9
$
90.6
Adjusted EBITDA Margin:
Merchant Services
22.2
%
20.7
%
B2B Payments
19.2
%
18.0
%
Data Solutions
25.0
%
23.0
%
Print
30.0
%
30.3
%
Total
18.8
%
18.4
%
Comparable Adjusted EBITDA
18.3
%
17.3
%
(1) Includes the North American web
hosting and logo design businesses, which were sold in June 2023,
and the payroll and human resources services business, which the
company is currently exiting.
Effective January 1, 2024, the company realigned its
organization structure to better reflect its portfolio mix and
offerings, and it will be updating its reportable segments to
correspond with these changes effective with the company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.
The company did not operate under the new segment structure during
2023. Prior period segment information reported here has been
recast to reflect the revised reportable segments. The methodology
utilized to determine segment operating performance did not change,
and information regarding this methodology is provided in the Notes
to Consolidated Financial Statements included in the company's
Annual Report on Form 10-K for the year ended December 31,
2023.
DELUXE CORPORATION RECONCILIATION OF
GAAP TO NON-GAAP MEASURES (in millions) (Unaudited)
Note that the company has not reconciled the comparable adjusted
revenue, comparable adjusted EBITDA or comparable adjusted diluted
EPS outlook guidance for 2024 to the directly comparable GAAP
measures. The outlook excludes the payroll and human resources
services business, which the company is currently in the process of
exiting. Revenue from this business is decreasing as its customers
convert to other service providers, and as such, the company is
unable to predict the results for this business in 2024. In
addition, the company has not reconciled the adjusted comparable
EBITDA, adjusted comparable diluted EPS or free cash flow outlook
for 2024 to the directly comparable GAAP financial measures because
the company does not provide outlook guidance for the reconciling
items between net income, adjusted net income and adjusted EBITDA,
and certain of these reconciling items impact cash flows from
operating activities. Because of the substantial uncertainty and
variability surrounding certain of these forward-looking
reconciling items, including: asset impairment charges,
restructuring and integration expense, gains and losses on sales of
businesses and long-lived assets, and certain legal-related
expenses, a reconciliation of the outlook for these non-GAAP
financial measures to the corresponding GAAP measures is not
available without unreasonable effort. The probable significance of
certain of these reconciling items is high and, based on historical
experience, could be material.
EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA
MARGIN
Management discloses EBITDA, adjusted EBITDA and adjusted EBITDA
margin because it believes they are useful in evaluating the
company's operating performance, as the calculations eliminate the
effect of interest expense, income taxes, the accounting effects of
capital investments (i.e., depreciation and amortization) and in
the case of adjusted EBITDA and adjusted EBITDA margin, certain
items, as presented below, that may not be indicative of current
period operating performance. In addition, management utilizes
these measures to assess the operating results and performance of
the business, to perform analytical comparisons and to identify
strategies to improve performance. Management also believes that an
increasing EBITDA and adjusted EBITDA depict an increase in the
value of the company. Management does not consider EBITDA and
adjusted EBITDA to be measures of cash flow, as they do not
consider certain cash requirements, such as interest, income taxes,
debt service payments or capital investments. Management does not
consider EBITDA, adjusted EBITDA or adjusted EBITDA margin to be
substitutes for operating income or net income. Instead, management
believes that these amounts are useful performance measures that
should be considered in addition to GAAP performance measures.
Quarter Ended March
31,
2024
2023
Net income
$
10.8
$
2.8
Interest expense
30.8
30.0
Income tax provision
5.6
3.7
Depreciation and amortization expense
41.7
43.5
EBITDA
88.9
80.0
Restructuring and integration expense
14.8
14.1
Share-based compensation expense
5.1
5.9
Certain legal-related expense
0.3
0.4
Gain on sale of businesses and long-lived
assets
(8.6
)
—
Adjusted EBITDA
$
100.5
$
100.4
Adjusted EBITDA as a percentage of total
revenue (adjusted EBITDA margin)
18.8
%
18.4
%
DELUXE CORPORATION RECONCILIATION OF
GAAP TO NON-GAAP MEASURES (continued) (in millions, except per
share amounts) (Unaudited)
ADJUSTED DILUTED EPS AND COMPARABLE ADJUSTED
DILUTED EPS
Adjusted diluted EPS and comparable adjusted diluted EPS are key
financial performance metrics used to assess the operating results
and performance of the business and to identify strategies to
improve performance. By excluding the impact of non-cash items or
items that may not be indicative of current period operating
performance, management believes that adjusted diluted EPS provides
useful comparable information to assist in analyzing the company's
current and future operating performance. It is reasonable to
expect that one or more of the excluded items will occur in future
periods, but the amounts recognized may vary significantly.
Comparable adjusted diluted EPS also excludes the impact of
business exits, allowing management to evaluate comparable results
on a year-over-year basis. Management does not consider adjusted
diluted EPS or comparable adjusted diluted EPS to be substitutes
for GAAP performance measures, but believes that they are useful
performance measures that should be considered in addition to GAAP
performance measures.
Quarter Ended March
31,
2024
2023
Net income
$
10.8
$
2.8
Acquisition amortization
14.8
21.3
Accelerated amortization
3.1
—
Restructuring and integration expense
14.8
14.1
Share-based compensation expense
5.1
5.9
Certain legal-related expense
0.3
0.4
Gain on sale of businesses and long-lived
assets
(8.6
)
—
Adjustments, pre-tax
29.5
41.7
Income tax provision impact of pretax
adjustments(1)
(6.5
)
(9.6
)
Adjustments, net of tax
23.0
32.1
Adjusted income attributable to Deluxe
available to common shareholders (A)
33.8
34.9
Business exits, pretax
(2.2
)
(6.7
)
Income tax provision impact of business
exits(1)
0.6
1.8
Business exits, net of tax
(1.6
)
(4.9
)
Comparable adjusted income attributable to
Deluxe available to common shareholders (B)
$
32.2
$
30.0
Weighted-average dilutive shares (C)
44.5
43.7
Adjusted Diluted EPS (A) / (C)
$
0.76
$
0.80
Comparable Adjusted Diluted EPS (B) /
(C)
$
0.72
$
0.69
(1) The tax effect of the pretax
adjustments considers the tax treatment and related tax rate(s)
that apply to each adjustment in the applicable tax
jurisdiction(s). Generally, this results in a tax impact that
approximates the U.S. effective tax rate for each adjustment.
However, the tax impact of certain adjustments, such as share-based
compensation expense, depends on whether the amounts are deductible
in the respective tax jurisdictions and the applicable effective
tax rate(s) in those jurisdictions.
DELUXE CORPORATION RECONCILIATION OF
GAAP TO NON-GAAP MEASURES (continued) (in millions)
(Unaudited)
COMPARABLE ADJUSTED REVENUE, COMPARABLE
ADJUSTED EBITDA AND COMPARABLE ADJUSTED EBITDA MARGIN
Management views the measures of comparable adjusted revenue,
comparable adjusted EBITDA and comparable adjusted EBITDA margin,
which exclude the impact of business exits, as important indicators
when assessing and evaluating the performance of the business and
when identifying strategies to improve performance. By excluding
the impact of business exits, management is able to evaluate
comparable results on a year-over-year basis. These measures are
utilized by management to compare operational performance across
fiscal periods when acquisitions or business exits occur.
Quarter Ended March
31,
2024
2023
Total revenue
$
535.0
$
545.4
Business exits
(6.0
)
(22.7
)
Comparable adjusted revenue
$
529.0
$
522.7
Adjusted EBITDA(1)
$
100.5
$
100.4
Business exits
(3.6
)
(9.8
)
Comparable adjusted EBITDA
$
96.9
$
90.6
Comparable adjusted EBITDA margin
18.3
%
17.3
%
(1) The reconciliation of adjusted EBITDA
to net income can be found on a preceding page.
NET DEBT
Management believes that net debt is an important measure to
monitor leverage and to evaluate the balance sheet. In calculating
net debt, cash and cash equivalents are subtracted from total debt
because they could be used to reduce the company’s debt
obligations. A limitation associated with using net debt is that it
subtracts cash and cash equivalents, and therefore, may imply that
management intends to use cash and cash equivalents to reduce
outstanding debt. In addition, net debt suggests that our debt
obligations are less than the most comparable GAAP measure
indicates.
March 31, 2024
December 31,
2023
Total debt
$
1,560.1
$
1,592.9
Cash and cash equivalents
(23.5
)
(72.0
)
Net debt
$
1,536.6
$
1,520.9
DELUXE CORPORATION RECONCILIATION OF
GAAP TO NON-GAAP MEASURES (continued) (in millions)
(Unaudited)
FREE CASH FLOW
Management defines free cash flow as net cash provided by
operating activities less purchases of capital assets. Management
believes that free cash flow is an important indicator of cash
available for debt service and for shareholders, after making
capital investments to maintain or expand the company’s asset base.
A limitation of using the free cash flow measure is that not all of
the company’s free cash flow is available for discretionary
spending, as the company may have mandatory debt payments and other
cash requirements that must be deducted from its cash available for
future use. Free cash flow is not a substitute for GAAP liquidity
measures. Instead, management believes that this measurement
provides an additional metric to compare cash generated by
operations on a consistent basis and to provide insight into the
cash flow available to fund items such as dividends, mandatory and
discretionary debt reduction, acquisitions or other strategic
investments, and share repurchases.
Quarter Ended March
31,
2024
2023
Net cash provided (used) by operating
activities
$26.6
($6.7)
Purchases of capital assets
(20.4)
(25.5)
Free cash flow
$6.2
($32.2)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240501399271/en/
Brian Anderson, VP, Strategy & Investor Relations
651-447-4197 brian.anderson@deluxe.com Keith Negrin, VP,
Communications 612-669-1459 keith.negrin@deluxe.com
Deluxe (NYSE:DLX)
過去 株価チャート
から 8 2024 まで 9 2024
Deluxe (NYSE:DLX)
過去 株価チャート
から 9 2023 まで 9 2024