Deluxe Corporation · NYSE:DLX
Deluxe — Q1 2022 Earnings Presentation
29 slides from Deluxe's earnings presentation, May 5, 2022
Slide 1: First Quarter 2022 Earnings
First Quarter 2022 Earnings May 5, 2022 © 2022 Deluxe Corporation
Slide 2: Tom Morabito
Tom Morabito Vice President, Investor Relations 2
Slide 3: Today's Presenters
Today’s Presenters Barry McCarthy Scott Bomar Tom Morabito President and Senior Vice President and Vice President, Chief Executive Officer Chief Financial Officer Investor Relations 3
Slide 4: Cautionary Statement
Cautionary Statement 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 stat
Slide 5: Barry McCarthy
Barry McCarthy President and Chief Executive Officer 5
Slide 6: Strong Start to 2022
Solid 1Q22 Strong Start to 2022 • Top line growth clearly shows success of One Deluxe strategy • All four segments showed sales-driven growth during the quarter • Payments benefited from First American and core business growth • Cloud led by strength in data-driven marketing (DDM) • Promotional Solu
Slide 7: 1Q22 Highlights
1Q22 Highlights (in millions, except per share amounts) +26.0% +10.1% -60.1% 7
Slide 8: 1Q22 Segment Highlights
1Q22 Segment Highlights Strong Execution of One Deluxe Strategy • Revenue increased 11.7% year-over year Cloud Payments • Revenue increased 109% year- • Cloud’s performance benefited from over-year; up 4.3% excluding First meaningful relationship expansion with key American clients, sales wins, and
Slide 9: Scott Bomar
Scott Bomar Chief Financial Officer 9
Slide 10: 1Q22 Summary
1Q22 Summary • Total revenue was $556.0 million, up 26.0% compared to 1Q21 ◦ First American contributed $83.3 million in revenue • GAAP net income was $9.7 million, or $0.22 per share ◦ Includes $12.7 million in acquisition amortization, and increased interest expense associated with the First Ameri
Slide 11: Payments
Payments (in millions) +109.1% +98.9% • Adjusted EBITDA margin was 21.9%, down 110 basis points year-over-year due primarily to continued product investments and inflationary pressure, partially offset by price increases. Payments Merchant Services Receivables as Payables as Payroll & HR Management
Slide 12: Cloud Solutions
Cloud Solutions (in millions) +11.7% +0.6% • Adjusted EBITDA margin of 24.9% in 1Q, down 280 basis points due to changes in product mix resulting from strong revenue growth in the DDM business. Cloud Solutions Data Analytics SaaS Solutions Web Hosting 12
Slide 13: Promotional Solutions
Promotional Solutions (in millions) +7.0% -4.0% • Adjusted EBITDA margin was 12.8%, down 140 basis points year-over-year largely due to increased paper and delivery costs, as well as product mix, partially offset by pricing. Promotional Solutions Support Rapidly Turn-Key Managed Web Storefront Platf
Slide 14: Checks
Checks (in millions) +6.9% -1.0% • Adjusted EBITDA margin was 44.3%, down 340 basis points year-over-year largely driven by the addition of lower margin new customers, and inflationary pressures, most notably related to delivery expenses and input materials that were largely offset by price increase
Slide 15: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • Net debt is $1.65B due to funding of the First Free Cash Flow (in millions) American transaction in 2Q21 • Net debt/Adjusted EBITDA ratio of 4.0x For the Quarter Ending ◦ Long-term strategic target of 3.0x 3/31/22 3/31/21 Variance • Delivered 1Q22 free cash flow of $13.
Slide 16: 2022 Guidance
2022 Guidance Well-positioned for sustainable growth • Revenue growth of 8 to 10%, including a full year of First American • Adjusted EBITDA margin of approximately 20% for the full year • Interest expense of $90 million • Adjusted tax rate of 26% • Depreciation and amortization of $180 million, of
Slide 17: Q&A
Q&A © Deluxe Financial Services, LLC. Proprietary and Confidential. 17
Slide 18: Tom Morabito
Tom Morabito Vice President of Investor Relations 18
Slide 19: Upcoming Conferences
Upcoming Conferences Date Event May 17, 2022 17th Annual Needham Technology & Media Conference June 1, 2022 Cowen’s 50th Annual Technology, Media, and Telecom Conference June 2, 2022 Loop Capital Markets Investor Conference June 8, 2022 Baird’s Consumer, Technology, and Services Conference 19
Slide 20: Appendix
Appendix 20
Slide 21: Consolidated Condensed Statements of Income
Consolidated Condensed Statements of Income in millions, except per share amounts (Unaudited) Quarter Ended March 31, 2022 2021 Product revenue $317.3 $299.1 Service revenue 238.7 142.2 Total revenue 556.0 441.3 Cost of products (114.4) (107.3) Cost of services (134.8) (71.2) Total cost of revenue (
Slide 22: Segment Information
Segment Information in millions (Unaudited) Quarter Ended March 31, 2022 2021 Revenue: Payments $166.2 $79.5 Cloud Solutions 69.5 62.2 Promotional Solutions 133.2 124.5 Checks 187.1 175.1 Total $556.0 $441.3 Adjusted EBITDA: Payments $36.4 $18.3 Cloud Solutions 17.3 17.2 Promotional Solutions 17.0 1
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) Management discloses EBITDA, Adjusted EBITDA and Adjusted Quarter Ended March 31, EBITDA margin because it believes they are useful in evaluating the company's operating performan
Slide 24: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS dollars and shares in millions, except per share amounts (Unaudited) Quarter Ended March 31, 2022 2021 By excluding the impact of non-cash items or items that may not be Net income $9.7 $24.3 indicative of ongoing operations, managemen
Slide 25: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Revenue Excluding First American in millions (Unaudited) Because of the magnitude of the First American acquisition, TOTAL COMPANY: management views the measure of revenue growth, excluding the Quarter Ended March 31, First American acquisition, as an impo
Slide 26: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures in millions (Unaudited) NET DEBT Management believes that net debt is an important measure to monitor leverage and to evaluate March 31, Dec. 31, March 31, the balance sheet. In calculating net debt, cash and cash equivalents are subtracted from total 2022
Slide 27: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures 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
Slide 28: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures We have not reconciled our adjusted EBITDA margin or adjusted tax rate outlook guidance for 2022 to the directly comparable GAAP financial measures because we do not provide outlook guidance for net income or the reconciling items between net income and ad
Slide 29: deluxe. trusted payments & business technology
deluxe. trusted payments & business technology