Slide 1: First Quarter 2023 Earnings
First Quarter 2023 Earnings May 4, 2023 © 2023 Deluxe Corporation
Slide 2: Tom Morabito, Vice President, Investor Relations
Tom Morabito Vice President, Investor Relations 2
Slide 3: Today's Presenters
Today’s Presenters Barry McCarthy Chip Zint Tom Morabito President and Chief Senior Vice President and Vice President, Executive Officer Chief Financial Officer Investor Relations 3
Slide 4: Cautionary Statement
Cautionary Statement Statements made in this presentation 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
Slide 5: Barry McCarthy, President and Chief Executive Officer
Barry McCarthy President and Chief Executive Officer 5
Slide 6: First Quarter 2023 Highlights
First Quarter 2023 Highlights (in millions) -1.9% +0.5% -71.1% +0.8% 6
Slide 7: 1Q23 Segment Highlights
1Q23 Segment Highlights Strong Execution of One Deluxe Strategy Data • Comparable adjusted revenue declined 7.7% Payments • Revenue increased 3.5% year-over- year year-over-year • Merchant Services improved 7.0% • Difficult comps and the shift of campaigns from 1Q23 to 4Q22 affected results • Receiv
Slide 8: Chip Zint, Chief Financial Officer
Chip Zint Chief Financial Officer 8
Slide 9: 1Q23 Summary
1Q23 Summary • Total revenue was $545.4 million, down 1.9% compared to 1Q22; comparable adjusted revenue increased 0.5% • GAAP net income was $2.8 million, or $0.06 per share on a diluted basis • Adjusted EBITDA was $100.4 million, up 0.8% compared to 1Q22; comparable adjusted EBITDA increased 2.1%
Slide 10: Payments
Payments (in millions) +3.5% +0.3% • Adjusted EBITDA margin was 21.2%, down 70 basis points year-over-year mostly driven by volume and cost pressures related to site closures within Lockbox. Payments Merchant Services Receivables as Payables as Payroll & HR Management a Service a Service Solutions 1
Slide 11: Data Solutions
Data Solutions (in millions) -15.7% -11.6% • On a comparable adjusted basis, revenue decreased 7.7% and adjusted EBITDA decreased 5.6% year-over-year. • Adjusted EBITDA margin of 26.1%, up 120 basis points largely due to product mix and disciplined expense management. Data Solutions Data Analytics S
Slide 12: Promotional Solutions
Promotional Solutions (in millions) +2.2% +10.6% • On a comparable adjusted basis, revenue increased 8.1% and adjusted EBITDA increased 11.9% year-over-year. • Adjusted EBITDA margin was 13.8%, up 100 basis points year-over-year, as we benefited from continued pricing actions and improvements in ope
Slide 13: Checks
Checks (in millions) -4.5% -7.6% • Adjusted EBITDA margin was 42.8%, down 150 basis points year-over-year due to ERP-related challenges. Checks Strong cash flow self funds growth Cost-effective lead generation to investments, and generates healthy return drive cross-selling existing of capital to sh
Slide 14: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Declared regular dividend of $0.30 per share Net Debt to Adjusted EBITDA Free Cash Flow (in millions) (in millions) For the 12 Months Ended For the Quarter Ended 3/31/23 12/31/22 Variance 3/31/23 3/31/22 Variance Cash Provided by Net Debt $1,662.1 $1,603.8 $58.3 Operating
Slide 15: 2023 Guidance
2023 Guidance Well-positioned for sustainable growth • Revenue of $2.145 to $2.210 billion • Adjusted EBITDA of $390 to $405 million • Adjusted EPS of $2.90 to $3.25 • Free cash flow of $80 to $100 million • Additional modeling assumptions: ◦ Interest expense of $120 to $125 million ◦ Adjusted tax r
Slide 16: Q & A
Q&A © Deluxe Financial Services, LLC. Proprietary and Confidential. 16
Slide 17: Tom Morabito, Vice President of Investor Relations
Tom Morabito Vice President of Investor Relations 17
Slide 18: Upcoming Conferences
Upcoming Conferences Date Event May 18, 2023 18th Annual Needham Technology & Media Conference May 31, 2023 Cowen's 51st Annual TMT Conference June 15, 2023 Sidoti Virtual Small Cap Conference 18
Slide 19: Appendix
Appendix 19
Slide 20: Consolidated Condensed Statements of Income
Consolidated Condensed Statements of Income in millions, except per share amounts (Unaudited) Quarter Ended March 31, 2023 2022 Product revenue $310.3 $317.3 Service revenue 235.1 238.7 Total revenue 545.4 556.0 Cost of products (118.5) (114.4) Cost of services (132.2) (134.8) Total cost of revenue
Slide 21: Segment Information
Segment Information in millions (Unaudited) Quarter Ended March 31, 2023 2022 Revenue: Payments $172.0 $166.2 Data Solutions 58.6 69.5 Promotional Solutions 136.1 133.2 Checks 178.7 187.1 Total $545.4 $556.0 Adjusted EBITDA: Payments $36.5 $36.4 Data Solutions 15.3 17.3 Promotional Solutions 18.8 17
Slide 22: Segment Information (continued)
Segment Information (continued) in millions (Unaudited) Quarter Ended March 31, 2023 2022 Comparable Adjusted Revenue: Payments $172.0 $166.2 Data Solutions 58.6 63.5 Promotional Solutions 136.1 125.9 Checks 178.7 187.1 Total $545.4 $542.7 Comparable Adjusted EBITDA: Payments $36.5 $36.4 Data Soluti
Slide 23: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures EBITDA, Adjusted EBITDA and Adjusted EBITDA margin in millions (Unaudited) Quarter Ended March 31, 2023 2022 Net income $2.8 $9.7 Non-controlling interest — (0.1) Interest expense 30.0 20.3 Income tax (benefit) provision 3.7 2.9 Depreciation and amortizati
Slide 24: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - Q1 2023 dollars and shares in millions, except per share amounts (Unaudited) Restructuring Certain legal- Income tax Q1 2023 Acquisition and integration Share-based related impact of Q1 2023 GAAP amortization costs compensation expen
Slide 25: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - Q1 2022 dollars and shares in millions, except per share amounts (Unaudited) Restructuring Acquisition Certain legal- Income tax Q1 2022 Acquisition and integration Share-based transaction related impact of Q1 2022 GAAP amortization
Slide 26: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Comparable Adjusted Revenue in millions (Unaudited) Quarter Ended March 31, 2023 2022 Total Company: Total revenue $545.4 $556.0 Business exits — (13.3) Comparable adjusted revenue $545.4 $542.7 Payments: Total revenue $172.0 $166.2 Data Solutions: Total r
Slide 27: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Comparable Adjusted EBITDA in millions (Unaudited) Quarter Ended March 31, 2023 2022 Total Company: Adjusted EBITDA $100.4 $99.6 Business exits — (1.3) Comparable adjusted EBITDA $100.4 $98.3 Payments: Adjusted EBITDA $36.5 $36.4 Data Solutions: Adjusted E
Slide 28: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Comparable Adjusted Revenue / Comparable Adjusted EBITDA Outlook (Unaudited) Promotional Total Year Data Solutions Solutions 2023 Outlook 2022 Actual 2022 Actual 2022 Actual (in billions) Total revenue $2.145 - $2.210 $2.238 $0.268 $0.563 Less: Business ex
Slide 29: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Net Debt to Adjusted EBITDA in millions (Unaudited) Mar. 31, Dec. 31, 2023 2022 Total debt $1,686.7 $1,644.2 Cash and cash equivalents (24.6) (40.4) Net debt $1,662.1 $1,603.8 TRAILING 12 MONTHS ADJUSTED EBITDA: 12 Months Ended Total Year Mar. 31, 2023 202
Slide 30: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Free Cash Flow in millions (Unaudited) Quarter Ended March 31, 2023 2022 Net cash provided by operating activities ($6.7) $34.3 Purchases of capital assets (25.5) (20.8) Free cash flow ($32.2) $13.5 30
Slide 31: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures We have not reconciled the adjusted EBITDA, comparable adjusted EBITDA, adjusted EPS, free cash flow or adjusted tax rate outlook guidance for 2023 to the directly comparable GAAP financial measures because we do not provide outlook guidance for the reconc
Slide 32: deluxe
deluxe