Deluxe Corporation · NYSE:DLX
Deluxe — Investor Day (December 2023)
97 slides from Deluxe's investor day presentation, Dec 5, 2023
Slide 1: Investor Day December 5, 2023
INVESTOR DAY D E C E M B E R 5 , 2 0 2 3
Slide 2: Brian Anderson, Strategy & Investor Relations
• Previously served as Print business CFO in addition to other corporate finance roles • Prior to Deluxe: • Finance, Strategy, & M&A leadership at Post Holdings, ADC Telecom (now part of Commscope), & General Mills • MBA from Harvard Business School • BBA from University of Minnesota Strategy & Inve
Slide 3: Agenda
AGENDA 1. Introductions & housekeeping Brian Anderson (VP Investor Relations) 2. Our strategy & execution focus via North Star Barry McCarthy (CEO) & Chip Zint (CFO) 3. Our operations & technology transformation Garry Capers Jr. (COO) & Yogs Jayaprakasam (CTDO) 4. Break 5. Line of business strategic
Slide 4: Forward-looking statements
Enabled by: • One Deluxe go-to-market model • Operational execution via North Star • Capital allocation discipline Built the foundation • Rationalized the portfolio • Modernized our infrastructure • Primed for growth: Acquired First American Statements made in this presentation concerning Deluxe, th
Slide 5: CEO Barry McCarthy
• Prior to Deluxe: • EVP & Division President at First Data (now part of Fiserv) • Other executive & general management roles at First Data, Wells Fargo, VeriSign, Procter & Gamble, & startup MagnaCash • MBA from Northwestern Kellogg CEO Barry McCarthy
Slide 6: We are not the Deluxe you once knew
P R O P O S A L WE ARE NOT THE DELUXE YOU ONCE KNEW NOW AN ORGANIC EBITDA GROWTH & DELEVERAGING STORY
Slide 7: Our strategy: 15%+ annual TSR through 2026
15%+ annual TSR through ‘26 WE ARE HERE Enabled by: 1. One Deluxe go-to-market model 2. Operational execution via North Star 3. Capital allocation discipline Profitably grow Payments & Data by leveraging the cash flow, brand, & relationships from Print & transfer value from debt to equity holders Ou
Slide 8: Deeply trusted brand with a storied history
Deeply trusted brand with a storied history Passionate employees committed to our customers Great Place to Work™ Extensive distribution reach & scale • 4,000 FIs • Millions of SMBs Great cash flows from our print businesses
Slide 9: From organic decline to driven by Payments & Data
Organic decline & disconnected portfolio • 50+ disconnected businesses • Uncoordinated go-to-market • Massive technical debt ~41% in 2019 ~(15%) Built a cohesive foundation • Rationalized portfolio • Acquired First American • Scalable product platforms • Modern, cloud-based infrastructure • One Delu
Slide 10: Have built a strong foundation and are seeing green shoots
HAVE BUILT A STRONG FOUNDATION & ARE SEEING GREEN SHOOTS Foundational actions • Rationalized portfolio • Focused on Payments businesses • Built our technology platform • Migrated to modern, cloud-based infrastructure • Built meaningful sales connectivity Resulting green shoots • 3 years of organic g
Slide 11: Our executive leadership team
OUR EXECUTIVE LEADERSHIP TEAM Chip Zint Chief Financial Officer Yogs Jayaprakasam Chief Technology and Digital Officer Jean Herrick Chief Human Resources Officer Garry Capers Chief Operations Officer Barry McCarthy Chief Executive Officer Tracey Engelhardt President Print Debra Bradford President Me
Slide 12: Deluxe today
DELUXE TODAY TAM: ~$2B TAM: ~$26B TAM: ~$25B TAM: ~$33B TAM: ~$18B • Print & deliver checks for our bank and small business partners • Checks still 40% of all business payments today • Ship over 90K packages of checks per day • Branded forms, deposit tickets, & other customized items that complement
Slide 13: Our strategy
Enabled by: 1. One Deluxe go-to-market model 2. Operational execution via North Star 3. Capital allocation discipline Our Strategy: Revitalized company & built the foundation • Rationalized the portfolio • Strong competitive position • Natural synergies • Modernized our infrastructure • Primed for g
Slide 14: Our strategy is simple: grow Payments & Data, pay down debt, cut corporate costs
• Reliable cash flows to pay down debt and re-invest in Payments & Data businesses • Large installed base of FIs & SMBs Merchant Services PAYMENTS & DATA BUSINESSESLEGACY PRINT BUSINESSES B2B Payments DataCheck Promotional Products Corporate CORPORATE Secular growth markets • Merchant: Deep vertical
Slide 15: Enabled by One Deluxe go-to-market model
Enabled by: 1. One Deluxe go-to-market model Our Strategy: Revitalized company & built the foundation • Rationalized the portfolio • Strong competitive position • Natural synergies • Modernized our infrastructure • Primed for growth: acquired First American Profitably grow Payments & Data by leverag
Slide 16: We listen to our customers' needs
WE LISTEN TO OUR CUSTOMERS NEEDS & BRING THE BEST OF DELUXE TO SOLVE THEIR PROBLEMS Tangible impact to our clients and to Deluxe • Deeper relationships with our clients • Shift from transactional vendor to trusted partner • As the relationship deepens, we uncover new opportunities for growth OUR FI
Slide 17: The power of One Deluxe
THE POWER OF ONE DELUXE • Major enterprise wins & cross-sales • Growing our Merchant bank partnerships by nearly 3x vs. 2020 • Key new FI logos in Data (nearly 200 new logos) • Added SMB marketing messages for Merchant Services into our Checks marketing campaigns every week • Cross-sales of Check an
Slide 18: Operational execution via North Star
Enabled by: 2. Operational execution via North Star Our Strategy: Revitalized company & built the foundation • Rationalized the portfolio • Strong competitive position • Natural synergies • Modernized our infrastructure • Primed for growth: acquired First American Profitably grow Payments & Data by
Slide 19: Enterprise-wide transformation program
ENTERPRISE-WIDE TRANSFORMATION PROGRAM… • Aligned to enterprise strategy & shareholder value • Contains highest priority growth & cost initiatives • Portfolio of 12+ workstreams • Comprehensive in scale OUR NORTH STAR INTEGRATED EXECUTION PLAN +$100MM incremental run-rate FCF +$80MM Incr. comp. adj.
Slide 20: North Star plan: focused on execution rigor
Revenue generation Planning & execution Cost reduction 2023 2024 2025 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Org simplification NORTH STAR PLAN: FOCUSED ON EXECUTION RIGOR IN CRITICAL REVENUE INITIATIVES & COST TAKEOUT Price and revenue capture Balance Sheet Real estate Procurement Process improvement and
Slide 21: North Star will drive significant value
NORTH STAR WILL DRIVE SIGNIFICANT VALUE OVER THE NEXT 3 YEARS 2023 2024 2025 $40MM Total program value target: $130MM RUN-RATE VALUE UNLOCKED 1. Financial calculations assume a discount rate of 15% 2. Already incurred $35MM during FY 2023 3. Not incremental vs. current CAPEX spend Key financials1: •
Slide 22: Investing in our people and culture
• UPGRADED TECH, PRODUCT, & SAAS SALES TALENT • STRATEGIC ALIGNMENT AMONG TOP LEADERSHIP • ACCOUNTABILITY & RIGOR IN EXECUTION • TRANSPARENCY & COMMUNICATION • CULTURE PRIMED FOR GROWTH FOR SUSTAINED PERFORMANCE BEYOND 2026 INVESTING IN OUR PEOPLE & CULTURE FOR SUSTAINED PERFORMANCE
Slide 23: Capital allocation discipline
Enabled by: 2. Operational execution via North Star 3. Capital allocation discipline Our Strategy: Revitalized company & built the foundation • Rationalized the portfolio • Strong competitive position • Natural synergies • Modernized our infrastructure • Primed for growth: acquired First American Pr
Slide 24: Three clear capital allocation priorities
WE HAVE THREE CLEAR CAPITAL ALLOCATION PRIORITIES: Strengthen the balance sheet • Target 3x net leverage by 2026 by: • Growing EBITDA • Paying down debt with incr. FCF Invest in profitable organic growth • Invest in high-return (e.g., 15%+ risk adjusted IRR) profitable organic growth in line with ou
Slide 25: Annual capital planning process
ANNUAL CAPITAL PLANNING PROCESS Phase 1: Outside-in view • Outside-in market analysis • TSR maximizing enterprise capital priorities & strategic roadmap Phase 2: Inside-out view • 3-year LoB investment roadmaps • Prioritize all potential investments by TSR Phase 3: Rigorous annual plan • Full busine
Slide 26: Our strategy: 15%+ annual TSR through 2026
15%+ annual TSR through ‘26 Enabled by: 1. One Deluxe go-to-market model 2. Operational execution via North Star 3. Capital allocation discipline Our Strategy: Revitalized company & built the foundation • Rationalized the portfolio • Strong competitive position • Natural synergies • Modernized our i
Slide 27: Clear 3-year value creation algorithm
Drive profitable organic growth in Payments and Data Keep efficiency focus on Print & Corporate Increase our free cash flow by improving leverage ratio & reducing restructuring charges post-2024 Drive focused execution through North Star plan Maintain our dividend: continue to return capital to shar
Slide 28: CFO Chip Zint
• Prior to Deluxe: • 14 years at NCR, spanning leadership roles in Treasury, Corporate FP&A, and as a Divisional CFO • MBA from Georgia Tech • BA from University of Georgia Chief Financial Officer Chip Zint
Slide 29: Our operations & technology transformation
OUR OPERATIONS & TECHNOLOGY TRANSFORMATION
Slide 30: COO Garry Capers
• Previously led Deluxe's Data and Promo businesses • Prior to Deluxe: • 20 years leading businesses embarked on transformations at ADP, Equifax, Bain & Company • MBA from The Wharton School at UPenn • BA from Morehouse College Chief Operations Officer Garry Capers
Slide 31: The role of our operations
THE ROLE OF OUR OPERATIONS Data PAYMENTS AND DATA BUSINESSES LEGACY PRINT BUSINESSES Merchant Services B2B Payments Check Promotional Solutions Consolidation & Efficiency of shared functions Customer & business insights to drive growth
Slide 32: 3 key operations objectives through 2026
$5MM+ potential savings $10MM+ revenue upside $5MM+ potential savings 01 02 03 Consolidation & footprint optimization Smarter customer targeting & sales ▪ Reduce ops & manufacturing site costs ▪ Improve customer service Process Efficiency ▪ Maximize ROAS via upgraded mktg. capabilities ▪ Improve sal
Slide 33: Print on demand
Consolidation Process Efficiency Customer Experience Rationalizing our manufacturing footprint by replacing multiple printer types Faster run time, cheaper to print (~$3-5MM annual savings), & less wasteful Continuing to offer our customers the same choice BEFORE PRINT ON DEMAND AFTER PRINT ON DEMAN
Slide 34: Our mission: operations support our investment thesis
P R O P O S A L OUR MISSION Efficiency first, always in the service of our customers & business partners OUTCOMES Return cash to shareholders & Invest in our Payments & Data businesses OPERATIONS SUPPORT OUR INVESTMENT THESIS
Slide 35: CTDO Yogs Jayaprakasam
• Prior to Deluxe: • 20 years of leadership at American Express (LoB CIO), Cognizant, GE • CTO Certification from UCal Berkeley • Masters in Computer Applications from Bharathidasan University • BSc in Physics from University of Madras Chief Technology & Digital Officer Yogs Jayaprakasam
Slide 36: Technology is our product in Payments and Data
Merchants Helping our clients accept online, mobile, and in-person payments from their customers B2B Payments SaaS solutions to help businesses manage their payments Data Using GenAI to analyze billions of data points allows our clients to better market their products TECHNOLOGY IS OUR PRODUCT IN PA
Slide 37: We have been on a technology journey
Building the foundation ✓ Managing tech debt & security risks ✓ Modernizing core infrastructure ✓ Investing in Pmts & Data products ✓ Cloud migration ✓ Building talent Deluxe tech spend ($MM) Deluxe tech spend (% of revenue) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024F 2025F 2026F OUR FOCUS &
Slide 38: Our technology priorities
OUR TECHNOLOGY PRIORITIES Investment in Our Products • Continue focusing tech spend on growth products (doubled Merchant tech dev investment) • Maintain margins, reduce costs in Print & Corporate via automation. Digital-first Platform • Majority of apps cloud- native • Reusable components: 200+ APIs
Slide 39: Go-forward ecosystem: cloud native, reusable components
Outcomes • $20-30MM lower technology cost by 2026 • Better products • Significantly cut time to market • Compete w/ digital natives on customer experience GO-FORWARD ECOSYSTEM: CLOUD NATIVE, BEST IN CLASS, REUSABLE COMPONENTS
Slide 40: Example: Deluxe.Connect frictionless customer connections
API (Application Programming Interface) SDK (Software Developer Kit) File Feed EXAMPLE | DELUXE.CONNECT: FRICTIONLESS CUSTOMER CONNECTIONS Code that allows Deluxe software to communicate with a customer’s software Deluxe packages code, libraries, & documentation for customers to use Deluxe sends str
Slide 41: Technology is our product in Payments and Data
Merchants Helping our clients accept online, mobile, and in-person payments from their customers B2B Payments SaaS solutions to help businesses manage their payments Data Using GenAI to analyze billions of data points allows our clients to better market their products TECHNOLOGY IS OUR PRODUCT IN PA
Slide 42: Agenda
AGENDA 1. Introductions & housekeeping Brian Anderson (VP Investor Relations) 2. Our strategy & execution focus via North Star Barry McCarthy (CEO) & Chip Zint (CFO) 3. Our operations & technology transformation Garry Capers Jr. (COO) & Yogs Jayaprakasam (CTDO) 4. Break 5. Line of business strategic
Slide 43: Break
dlx BREAK
Slide 44: Agenda
AGENDA 1. Introductions & housekeeping Brian Anderson (VP Investor Relations) 2. Our strategy & execution focus via North Star Barry McCarthy (CEO) & Chip Zint (CFO) 3. Our operations & technology transformation Garry Capers Jr. (COO) & Yogs Jayaprakasam (CTDO) 4. Break 5. Line of business strategic
Slide 45: Merchant Services
dlx MERCHANT SERVICES
Slide 46: Debra Bradford, President Merchant Services
• Joined First American Payment Systems by Deluxe in 2001; President since 2008 • Prior to Deluxe: • Leadership roles at ACE Cash Express and IPS Card Solutions • BA from University of Texas at Austin • Licensed CPA in Texas President, Merchant Services Debra Bradford
Slide 47: We help businesses and governments accept digital payments
WE HELP BUSINESSES & GOVERNMENTS ACCEPT DIGITAL PAYMENTS FROM CONSUMERS Cardholder Buys goods / services Pays 100% Merchant Provides goods / services Receives ~97.50% Acquirer/ Processor Enables pmt. acceptance Receives ~0.40% Network Routes payment among issuing and acquiring banks Receives ~0.15%
Slide 48: Our focus is on small and medium-sized businesses
Notes: Based on revenues (Enterprise >$50M, Small & Medium $1-250M, Micro <$1M); Omnichannel includes Merchants operating via online and offline channels, while Pure Online includes Merchants operating only. Figures representative of US market only Merchant Acquiring TAM: $25B (2022, $B, % 2022 grow
Slide 49: We compete against other vertically-focused acquirers
WE COMPETE AGAINST OTHER VERTICALLY-FOCUSED ACQUIRERS Vertically-focused Acquirers • Target: mid-market and SMBs • Specialized expertise in defensible verticals • Higher margins Growing Traditional, Large-Scale Acquirers • Target: enterprise • Compete on cost & ability to serve bespoke merchants • B
Slide 50: Positioned in defensible verticals
POSITIONED IN DEFENSIBLE VERTICALS WHERE WE SEE FUTURE GROWTH Auto & Repair Svcs Retail1 Other 2 Business Svcs3 Health Restaurants & hotels Housing & utilities Gov. Personal & Field Svcs Food and non- alcoholic bev Education Alcoholic bev, tobacco Total ~$40B Deluxe Merchant Services $ volume by ver
Slide 51: Example: auto repair shops
Auto Repair Shop NetworksAcquirers 1 2 3 Acquirer 1 … to a unified DLX solution, saving time & money Networks EXAMPLE | AUTO REPAIR SHOPS From multiple terminals & processors…
Slide 52: Example: government vertical
EXAMPLE – GOVERNMENT VERTICAL Auto & Repair Svcs Retail1 Other 2 Business Svcs3 Health Restaurants & hotels Housing & utilities Gov. Personal & Field Svcs Food and non- alcoholic bev Education Alcoholic bev, tobacco Total ~$40B Deluxe Merchant Services $ volume by vertical 1. Includes Miscellaneous
Slide 53: What drives our success?
WHAT DRIVES OUR SUCCESS? • Long-tenured industry experts operating in a culture of continuous improvement • Best-in-class service: won ATSI Call Center Excellence Award for 11 years Our people Our infrastructure Our relationships • Owning our technology gives us scalability in our margin structure •
Slide 54: Merchant Services: financial outlook & business drivers
Base business drivers: • Consumer spending • Merchant base growth • Growth in FI channel • Cross-sell via DLX's brand and FI relationships • Ongoing move to digital commerce & electronic payments Upside business drivers: • Growth of integrated software channel • Additional omnichannel features • Emb
Slide 55: B2B Payments
dlx B2B PAYMENTS
Slide 56: Mike Reed, President B2B Payments
• Prior to Deluxe: • Global Payment Acceptance & Product MD at Barclays, Bank of America Merchant Services • United States Air Force veteran • BA from University of New Orleans President, B2B Payments Mike Reed
Slide 57: Paying others and getting paid is messy and complex
PAYING OTHERS & GETTING PAID IS A MESSY, COMPLEX PROCESS FOR BUSINESSES Thousands of Electricians Trying to manage their own cash flow Millions of Consumers All paying for jobs at different times Significant complexity for electrical supply company Struggles to match payments, dates, amounts, invoic
Slide 58: A market with massive white space
…in a market with massive white space AR & AP SaaS TAM: ~$33B ~66% Not vended ~34% Vended 01 02 03 Experience solving the most difficult part of AR and AP: the reconciliation of paper-based and electronic payments Established credibility & scale leveraging our large customers & bank partners Clear c
Slide 59: Electrical supply company example
ELECTRICAL SUPPLY COMPANY EXAMPLE: BENEFITS FROM OUR SOLUTIONS 100% 90% 10% Before using DLX software w/ DLX software Manual Fully automated Our electrical supply customer used our software to reconcile 90% of payments without any manual intervention … … and redeployed two-thirds of their cash appli
Slide 60: We are building robust AR & AP solutions
Greatest business pain point & deep historical knowledge 01 Commercializing today 02 Building in next wave (‘24-’25) 03 ~40% Check Reconciliation/ cash application Order to Cash Management • Deductions mgmt. • Collections • Credit mgmt INVOICES … enabling us to expand our TAM to high-growth SaaS sol
Slide 61: As we evolve offerings, we shift our competitor set
SaaS automation Products AS WE EVOLVE OUR OFFERINGS DUE TO CUSTOMER DEMAND, WE SHIFT OUR COMPETITOR SET Item Processing Receivables 360+ ~$5B TAM DIGITAL AR AUTOMATION: ~$10B TAM DIGITAL AP AUTOMATION: ~$18B TAM SIMILAR PATH TO MANY OTHER AR/AP SAAS PLAYERS…BUT DLX STARTS WITH SCALE, CUSTOMERS, & EM
Slide 62: B2B Payments: financial outlook & business drivers
Revenue & Adj. EBITDA margin: Assuming stable macro & consumer spending Revenue 21 22 23F 24F 25F 26F $258MM Adj. EBITDA margin 16% 22-25% EV / Adj. EBITDA1 6-10x 8-12x +600-900 bps +3-7% B2B PAYMENTS: FINANCIAL OUTLOOK & BUSINESS DRIVERS Base business drivers: • Continued expansion of current Integ
Slide 63: Data
dlx DATA
Slide 64: Kris Lazzaretti, President Data
• Co-founded FMCG Direct (data & analytics agency of First Manhattan Consulting Group) after joining firm in 2006 • BA from Princeton University, Summa Cum Laude President, Data Kris Lazzaretti
Slide 65: We blend top-tier data and talent
Massive data lake & scalable infrastructure Leading talent & analytics Class-leading customer acquisition WE BLEND TOP-TIER DATA AND TALENT TO CRAFT CLIENT ACQUISITION CAMPAIGNS Rich data assets unified via large language models in scalable cloud-based infrastructure Highly-educated data scientists
Slide 66: Client example: consumer deposits campaign
CLIENT EXAMPLE: CONSUMER DEPOSITS CAMPAIGN CONSUMER BANKS VERY FOCUSED ON ACQUIR ING DEPOSITS IN H IGH RATE, COMPETIT IVE LANDSCAPE • Fast campaign deployment • More targeted • Better data • Better outcomes
Slide 67: Our clients support the view that we are best-in-class
OUR CLIENTS SUPPORT THE VIEW THAT WE ARE BEST-IN-CLASS • Average likelihood to recommend rating of 9.7 • No rating lower than 9 • 100% indicated they are 'extremely likely' to work with us again in next 12 months • Service quality • Deep industry expertise Our clients highly recommend us: Our key di
Slide 68: Client testimonials
“ ” Everything about your approach has benefited our business. Your data analytics is second to none. Your quality of service and attention to detail is unbelievable. The best strategic partner I have worked with in 20 years The Deluxe program outperforms pretty much every other customer acquisition
Slide 69: Our core TAM is large, growing, with few competitors
Few competitors truly serve our core market 2020 2021 2022 DLX Data Revenue $6.4B $6.9B $7.1B CAGR: 6% CAGR: ~21% We're growing in a $7B+ market OUR CORE TAM IS LARGE, GROWING & WE HAVE FEW COMPETITORS
Slide 70: Aggressively pursuing multiple expansion pathways
Expand into credit card marketing TAM ~$7B ~$5B ~$6B Key industry vertical dynamics • Still significant whitespace • Deep understanding of needs • Large prospect pool, with potential for warm DLX leads • High right to win given existing data & expertise in this space • Opportunity for cross-selling
Slide 71: Data: financial outlook & business drivers
DATA: FINANCIAL OUTLOOK & BUSINESS DRIVERS Base business drivers: • Growth in core verticals • Grow, develop & retain top data scientists and marketers • Continued evolution of our data assets Upside business drivers: • Expansion in B2B marketing (e.g., telco & business services) & credit card marke
Slide 72: Print: Checks & Promo
dlx PRINT: CHECKS & PROMO
Slide 73: Tracey Engelhardt, President Checks & Promotional Products
• 30+ years at Deluxe, including leadership positions in sales, marketing, eCommerce, and operations • BS from Northwestern University President, Checks & Promotional Products Tracey Engelhardt
Slide 74: Our leadership in check printing shows in our results
…giving us confidence in the durability of our cash flows over the medium-term OUR LEADERSHIP IN CHECK PRINTING SHOWS IN OUR RESULTS Our Checks revenue has beaten industry declines by ~800bps over the past three years… 2021 2022 2023F 2024F 2025F 2026F CAGR: ~(7)% CAGR: ~1% DLX checks revenue (actua
Slide 75: Why we lead in checks and supporting products
WHY WE LEAD IN CHECKS & SUPPORTING PRODUCTS 01 02 03 04 05 Accuracy and security features (error rate better than Six Sigma) Quality of service (e.g., including 100% satisfaction guarantee) Customer experience via managed wholesale program for FIs Defensible moat with long-standing FI customer relat
Slide 76: Beyond checks: promotional products
BEYOND CHECKS: DEEPENING RELATIONSHIPS WITH PROMOTIONAL PRODUCTS …that meet supplementary FI & Enterprise needs 2 product sets Value to Print Drive customer engagement (e.g., synergy with bank branding programs) High-margin, "ride-along" products that naturally complement check orders Branded forms
Slide 77: Maximizing cash via customer and GTM overlap
MAXIMIZING CASH VIA CUSTOMER & GTM OVERLAP • Focus on products, deals, and channels that maximize cash flow • Amplify focus on efficiency • System & process simplification • Streamlined customer & employee experience • Manufacturing & distribution • Infrastructure rationalization Key advantages of m
Slide 78: Print businesses: financial outlook & business drivers
Base business drivers: • Continued share gain with FI customers • Stable margins via investments in print efficiencies & process improvements • Prioritization of higher-margin Promo products that more specifically complement Checks Upside business drivers: • Slower-than-expected secular decline in C
Slide 79: Financial projections
dlx FINANCIAL PROJECTIONS
Slide 80: Forecast 5-7% comp. adj. EBITDA growth through 2026
FORECAST 5-7% COMP. ADJ. EBITDA GROWTH THROUGH 2026 1. Reported EBITDA and reported revenue for 2021 and 2022 include the performance of divested or expected to be divested business units (e.g., Payroll and Hosting businesses). 2. 2026 figures are illustrative based on our preliminary outlook provid
Slide 81: $80MM incremental comp. adj. EBITDA in 2026
$80MM INCREMENTAL COMP. ADJ. EBITDA IN ‘26 VIA $130MM NORTH STAR VALUE (~$70MM) ~$30MM ~$120MM ~$470MM 2023F Divestitures ~$10MM 2023F Comp. Adj. EBITDA Forecast secular decline of print Add’l base growth of the business North Star program value 2026 Target Comp. Adj. EBITDA (~$25MM) $380-395MM $405
Slide 82: Shift revenue and EBITDA mix by 2026
…while EBITDA mix will shift to 40% growth WE WILL SHIFT REVENUE & EBITDA MIX SIGNIFICANTLY BY ‘26 1. Includes MyCorp and Banker's Dashboard. 2. Includes Fraud & Security, reported in earnings as part of Payments 3. Percentages in righthand chart exclude Corporate's negative Adj. EBITDA. Revenue mix
Slide 83: Leverage ratio of 3x by 2026
ADJ. EBITDA INCREASE ENABLES A LEVERAGE RATIO OF 3X BY ‘26 Leverage ratio = net debt / Adj. EBITDA 2022 2023F 2024F 2025F 2026F $0.0B $0.5B $1.0B $1.5B $2.0B 4.0x 3.8x 3.7x ~3x3.3x Net debt Adj. EBITDA
Slide 84: $100MM incremental FCF by 2026
…AND $100MM INCREMENTAL FCF BY 2026 Incremental Comp. Adj. EBITDA Lower Interest Expense Lower Restructuring Costs Other Offsets Incremental Free Cash Flow +$80MM ~$15-20MM ~$30-40MM (~$25-30MM) +~$100MM 2026 Target: 30+% 2022 (pre-NS): 21% FCF Conversion (as a % of EBITDA)
Slide 85: 2024 preliminary guidance
2024 PRELIMINARY GUIDANCE 1. Divestiture of our Hosting business and anticipated divestiture of our Payroll business expected to result in a $55MM revenue impact, $25MM EBITDA impact, and $0.20 EPS impact to our comparable adjusted figures Note: All figures are approximate, and subject to, among oth
Slide 86: Recap: clear 3-year value creation algorithm
Drive profitable organic growth in Payments and Data Keep efficiency focus on Print & Corporate Increase our free cash flow by improving leverage ratio & reducing restructuring charges post-2024 Drive focused execution through North Star plan Maintain our dividend: continue to return capital to shar
Slide 87: Our execution roadmap is clear
OUR EXECUTION ROADMAP IS CLEAR Our Strategy: 15%+ annual TSR through ‘26 Revitalized company & built the foundation • Rationalized the portfolio • Strong competitive position • Natural synergies • Modernized our infrastructure • Primed for growth: acquired First American Enabled by: 1. One Deluxe go
Slide 88: Deluxe is a compelling investment proposition
• Robust payments & data assets well positioned for secular growth • Leading print businesses that generate stable, durable cash flows • Transfer value from debt to equity holders DELUXE IS A COMPELLING INVESTMENT PROPOSITION • Multiple large enterprise wins from cross-portfolio relationships • Join
Slide 89: Thank you to every Deluxer
THANK YOU TO EVERY DELUXER FOR YOUR HARD WORK AND FANTASTIC CONTRIBUTIONS
Slide 90: Q&A
dlx Q&A
Slide 91: Appendix
dlx APPENDIX
Slide 92: No near-term maturity concerns and strong liquidity
NO NEAR-TERM MATURITY CONCERNS & STRONG LIQUIDITY POSITION 2023 2024 2025 2026 2027+ Unamortized discount & debt issuance costs Total debt Cash equivalents Net debt $22MM $87MM $101MM $961MM $475MM ($12MM) ~$1.63B ($42MM) ~$1.59B The large majority of our debt does not mature until 2026+… Note: Figu
Slide 93: Non-GAAP outlook reconciliation note
The company has not reconciled adjusted EBITDA, comparable adjusted EBITDA, adjusted EPS, free cash flow or net leverage outlook guidance for 2023 through 2026 to the directly comparable GAAP financial measures because the company does not provide outlook guidance for the reconciling items between n
Slide 94: Reconciliation of Adjusted EBITDA
Adjusted EBITDA and Adjusted EBITDA margin in millions (Unaudited) 2018 2019 2020 2021 2022 Net income (loss) $149.6 ($223.8) $5.3 $62.8 $65.5 Non-controlling interest — — (0.1) (0.1) (0.1) Interest expense 27.1 34.7 23.1 55.6 94.4 Income tax provision 63.0 8.0 21.5 31.0 18.9 Depreciation and amorti
Slide 95: Comparable adjusted revenue and EBITDA reconciliation
Data Solutions Comparable Adjusted Revenue in millions (Unaudited) Actual 2021 2022 2023 Outlook Data Solutions: Total revenue $262.3 $267.5 $236 Less: Business exits (86.3) (70.5) (27) Comparable adjusted revenue $176.0 $197.0 $209 Comparable Adjusted EBITDA in millions (Unaudited) 2023 Outlook Tot
Slide 96: Net debt to adjusted EBITDA reconciliation
Net Debt to Adjusted EBITDA (Net Leverage) in millions (Unaudited) December 31, 2022 Total debt $1,644.2 Cash and cash equivalents (40.4) Net debt $1,603.8 12 Months Ended December 31, 2022 Net income $65.5 Non-controlling interest (0.1) Interest expense 94.4 Income tax provision 18.9 Depreciation a
Slide 97: Deluxe
deluxe