Deluxe Corporation · NYSE:DLX
Deluxe — Q4 2021 Earnings Presentation
30 slides from Deluxe's earnings presentation, Feb 3, 2022
Slide 1: Fourth Quarter and Full-Year 2021 Earnings
Fourth Quarter and Full-Year 2021 Earnings February 3, 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 4Q21
Strong 4Q21 Strong Progress on Transformation into Trusted Payments and Business Technology Company • Full year reported sales-driven growth for the first time in nearly 10 years • All four segments showed sales-driven growth during the quarter • Payments benefited from First American and core busin
Slide 7: 4Q21 Highlights
4Q21 Highlights (in millions, except per share amounts) +25.5% -44.1% +23.4% 7
Slide 8: Full Year 2021 Highlights
Full Year 2021 Highlights (in millions, except per share amounts) +12.9% n/m +11.9% n/m - not meaningful 8
Slide 9: 4Q21 Segment Highlights
4Q21 Segment Highlights Strong Execution of One Deluxe Strategy • Revenue increased 114% year-over- • Revenue increased nearly 6% year-over year; up over 5% excluding First Cloud Payments American year; up 11% excluding business exits • Strong quarter led by DDM as economy • Strong quarter for First
Slide 10: Scott Bomar
Scott Bomar Chief Financial Officer 10
Slide 11: 4Q21 Summary
4Q21 Summary Strong finish in 2021 • Total revenue was $570.6 million, up 25.5% compared to 4Q20 ◦ First American contributed $85.1 million in revenue • GAAP net income was $13.8 million, or $0.32 per share ◦ Includes $13.7 million in acquisition amortization, and increased interest expense associat
Slide 12: Payments
Payments (in millions) +114.5% +93.8% • Adjusted EBITDA margin was 20.6%, down 220 basis points year-over-year due to inflationary pressure in the Lockbox business partially offset by price increases, as well as increased investments in IT, sales and marketing Payments Merchant Services Receivables
Slide 13: Cloud Solutions
Cloud Solutions (in millions) +5.6% +11% excluding (6.2)% 2020 divestitures • Adjusted EBITDA margin of 24.2% in 4Q, down 300 basis points due to product mix, planned investments to drive future growth, and the impact from business exits Cloud Solutions Data Analytics SaaS Solutions Web Hosting 13
Slide 14: Promotional Solutions
Promotional Solutions (in millions) +8.8% +42.3% • Adjusted EBITDA margin was 18.3%, up 430 basis points year-over-year due to sales- driven operating leverage, merchandising optimization, and seasonal factors. Promotional Solutions Support Rapidly Turn-Key Managed Web Storefront Platform Business C
Slide 15: Checks
Checks (in millions) +6.2% (0.1%) • Adjusted EBITDA margin was 45.2%, down 290 basis points year-over-year largely driven by expenses related to the onboarding new customers, inflation, and planned investments including print-on-demand technology Driving Value Strong cash flow self funds growth Cost
Slide 16: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • Net debt is $1.64B 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 12/31/21 12/31/20 Variance • Delivered 4Q21 free cash flow of $3
Slide 17: 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 $85 million • An adjusted tax rate of 26% • Depreciation and amortization of $180 million,
Slide 18: Q&A
Q&A © Deluxe Financial Services, LLC. Proprietary and Confidential. 18
Slide 19: Tom Morabito
Tom Morabito Vice President of Investor Relations 19
Slide 20: Upcoming Conference
Upcoming Conference Date Event March 23, 2022 Sidoti Spring Small Cap Conference 20
Slide 21: Appendix
Appendix 21
Slide 22: Consolidated Condensed Statements of Income
Consolidated Condensed Statements of Income in millions, except per share amounts (Unaudited) Quarter Ended December 31, Year Ended December 31, 2021 2020 2021 2020(1) Product revenue $336.9 $322.5 $1,244.5 $1,230.7 Service revenue 233.7 132.0 777.7 560.1 Total revenue 570.6 454.5 2,022.2 1,790.8 Co
Slide 23: Segment Information
Segment Information in millions (Unaudited) Quarter Ended December 31, Year Ended December 31, 2021 2020 2021 2020 Revenue: Payments $167.3 $78.0 $510.4 $301.9 Cloud Solutions 62.5 59.2 262.3 252.8 Promotional Solutions 156.7 144.0 546.5 529.6 Checks 184.1 173.3 703.0 706.5 Total $570.6 $454.5 $2,02
Slide 24: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (EBITDA and Adjusted EBITDA) in millions (Unaudited) Quarter Ended Year Ended December 31, December 31, Management discloses EBITDA and Adjusted EBITDA because it believes they are useful in evaluating the company's operating 2021 2020 2021 2020(1) perform
Slide 25: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Quarter Ended Year Ended Adjusted Diluted EPS December 31, December 31, dollars and shares in millions, except per share amounts (Unaudited) 2021 2020 2021 2020(1) Net income $13.8 $24.7 $62.8 $5.3 By excluding the impact of non-cash items or items that ma
Slide 26: 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, Quarter Ended Year Ended management views the measure of revenue growth, excluding the December 31, December 31, First American acquisition
Slide 27: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Quarter Ended Year Ended Payments Revenue Excluding First American December 31, December 31, in millions (Unaudited) 2021 2020 2021 2020 Total revenue $167.3 $78.0 $510.4 $301.9 Less: First American revenue (85.1) — (195.0) — Revenue excluding First Americ
Slide 28: 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 Dec. 31, Dec. 31, the balance sheet. In calculating net debt, cash and cash equivalents are subtracted from total 2021 2020 debt
Slide 29: 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 30: deluxe. trusted payments & business technology
deluxe. trusted payments & business technology