Deluxe Corporation · NYSE:DLX
Deluxe — Investor Presentation (June 2017)
24 slides from Deluxe's investor presentation, Jun 5, 2017
Slide 1: Deluxe Corporation Investor Presentation – June 2017
Deluxe Corporation Investor Presentation – June 2017
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements This presentation contains forward-looking statements based upon information available to management as of the date hereof and management assumes no obligation to update or revise any such forward-looking statements. All estimates and projections are subject to risks and
Slide 3: Deluxe Investor Contacts
3 Lee Schram Chief Executive Officer Keith Bush Chief Financial Officer and Senior Vice President Ed Merritt Treasurer and Vice President of Investor Relations Deluxe Investor Contacts
Slide 4: About Deluxe… Did You Know?
4 About Deluxe… Did You Know? • Majority of revenue recurring through diversified base of products & services; faster growing Marketing Solutions & Other Services (MOS) expected to represent 38% of revenue in 2017 and 40% in 2018 • Increased revenue from sources other than checks to over 53% • 4.4 m
Slide 5: Deluxe Overview
5 39% 29% 32% Deluxe Overview Financial Services (FS) Small Business Services (SBS) Direct Checks (DC) Leading provider of products & services to financial institutions • ~5,600 customers • Adjusted operating margin 21.4% America’s leading direct-to-consumer check supplier • ~5.5 million customers •
Slide 6: Financial Highlights
6 $1,344 $1,402 $1,418 $1,515 $1,585 $1,674 $1,773 $1,849 $1,945 to $1,975 $2.44 $3.18 $3.11 $3.53 $3.87 $4.20 $4.59 $4.97 $5.15 to $5.30 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 800 1,000 1,200 1,400 1,600 1,800 2,000 2009 2010* 2011 2012 2013 2014 2015 2016 2017 R e ve n u e $ (i n m ill io
Slide 7: Growth Driven by Diversified Product Mix
7 Growth Driven by Diversified Product Mix Revenue by Category Revenue Penetration by Category $ in millions $854 $897 $872 $890 $885 $871 $873 $865 $328 $317 $323 $339 $357 $376 $368 $367 $162 $188 $223 $286 $343 $427 $532 $617 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2009 2010 2011 20
Slide 8: Key Transformative Actions & Drivers
8 Grow MOS Velocity • 6-7% expected base 2017 revenue growth; 19-22% overall • Small-to-medium sized acquisitions Categories • Small Business Marketing • Web Services • FS Data Driven Marketing • Treasury Management Solutions • Fraud, Security, Risk Management, & Operational Services Gain Check Shar
Slide 9: MOS Mix Shift Evolution Timeline
9 MOS Mix Shift Evolution Timeline Total Company MOS Revenue $162M $427M $532M $617M ~$735M to $755M Continued Growth MOS % of Segment Small Business Services 16% • Primarily check & form printing 28% • Continue to grow marketing & web services 30% • Continue to grow channels • Add eChecks • Add c
Slide 10: Marketing Solutions & Other Services Categories
10 Marketing Solutions & Other Services Categories 2016 Actual Revenue $ (% of Total) 2017 Outlook Revenue $ (% of Total) 2017 by Segment Expected Revenue Growth Rates Directional Annual EBITDA% v. 2017 Estimated Total Company EBITDA% Estimated Annual Recurring Revenue Key Revenue Growth Initiatives
Slide 11: 2017 Key Strategic Focus Areas
11 Drive check retention rates + gain share Drive SB Payments / Marketing Solutions Scale Web Services Drive FS Data Driven Marketing Solutions Scale Treasury Management Solutions 2017 Key Strategic Focus Areas Financial Services Small Business Services
Slide 12: Drive SB Payments / Marketing Solutions Focus Areas
12 Focus Areas Solutions / Channel / Vertical Focus Drive Check Customer Retention & Acquisition Profitably Scale Marketing on Demand Solutions in Select Verticals • Web-to-Print • Full Color • Promo / Apparel • Retail Packaging • Marketing / Other Solutions Scale eChecks, eDeposit, & Other Payment
Slide 13: Scale Web Services
13 Scale Web Services Domains PROMOTING OPERATING Social Media SEM/SEO Services Email Marketing Other Operating Fraud / Security Payroll Services Web Hosting Web Design SELLING Small Business Workflow Grow digital marketing services targeting 28M SBs thru improved customer experience & cross sell in
Slide 14: Drive FS Data Driven Marketing Solutions
14 Drive FS Data Driven Marketing Solutions Data Upmarket Focus Omnichannel Delivery Analytics & Measurement We want data you can only get here Biggest banks require sophistication that we can deliver Digital & Omnichannel messaging part of everything we do Turn data into insight, & insight into res
Slide 15: Scale Treasury Management Solutions
15 Scale Treasury Management Solutions Integrated Receivables: • Manages multiple in-bound payment types via single reporting hub to speed cash flow & support real-time business decisions Remote Deposit Capture: • Accelerating deposits & payments securely & across multiple channels; improves retenti
Slide 16: Competitors by Segment
16 Business Services Financial Services Direct Checks Checks • Harland Clarke • Intuit • Cimpress • Ennis • DH Corporation • Harland Clarke • Main Street • Harland Clarke • Bradford Exchange • Current • Carousel • Wal-Mart • Costco Marketing Solutions & Other Services • Cimpress, 123 Print, Zazzle,
Slide 17: Deluxe Longer-Term Goals
17 Deluxe Longer – Term Goals Revenue • Expected base revenue growth in mid-single digits augmented by small to-medium-sized acquisitions • MOS represented 33% of revenue in 2016; expected to account for approximately 40% percent of revenue in 2018 • Forms, Accessories & Other revenue represented 20
Slide 18: Positioning Deluxe for Long-Term Growth
18 Positioning Deluxe for Long-Term Growth • Management team has continued to deliver improving results • 2017 revenue outlook is for 8th consecutive year of growth • Grow MOS at double-digit rates & expect MOS to be 40% of revenue in 2018 • Existing customer base provides foundation for growth of n
Slide 19: Appendix Reconciliations
19 Appendix Reconciliations
Slide 20: Adjusted EPS Reconciliation
20 Adjusted EPS Reconciliation Reconciliation to reported EPS – Diluted Year Ended December 31, 2017 Outlook* 2016 2015 2014 2013 2012 2011 2010 2009 Adjusted Diluted EPS $5.06 – $5.21 $4.97 $4.59 $4.20 $3.87 $3.53 $3.11 $3.18 $2.44 Restructuring-related costs - (0.10) (0.08) (0.12) (0.14) (0.13) (0
Slide 21: EBITDA & Adjusted EBITDA Reconciliation
21 EBITDA & Adjusted EBITDA Reconciliation Reconciliation from net income to adjusted EBITDA $ in millions Year Ended December 31, 2016 as a % of revenue Total Revenue $1,849.1 ADJUSTED EBITDA $474.9 25.7% Restructuring-related costs (7.8) (0.4%) Loss on debt extinguishment (7.9) (0.4%) Transaction-
Slide 22: Adjusted Operating Income Reconciliation
22 Adjusted Operating Income Reconciliation Adjusted operating income reconciliation to reported operating income 2016 Annual Operating Income Small Business Services Financial Services Direct Checks Consolidated $ in millions Operating Income % of Revenue Operating Income % of Revenue Operating Inc
Slide 23: Revenue Growth Reconciliation
23 Revenue Growth Reconciliation Revenue Growth reconciliation from GAAP to Non-GAAP Summarized 2017 Outlook* 2016 2015 2014 2013 Adjusted Organic Growth / Decline (0.5%) (1.9%) (2.0%) (0.7%) 0.2% Acquisitions 9.4% 6.4% 8.9% 6.7% 4.9% Exited Business (1.5%) (0.1%) (0.5%) 0.0% 0.0% Other (incl. FX an
Slide 24: Investor Contact
24 Investor Contact Ed Merritt Treasurer and Vice President of Investor Relations ed.merritt@deluxe.com Tel: 651-787-1370