Deluxe Corporation · NYSE:DLX
Deluxe — Investor Day (February 2020)
141 slides from Deluxe's investor day presentation, Feb 25, 2020
Slide 1: 2020 Analyst & Investor Day
2020 Analyst &Operations Investor Day February 25, 2020 © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 2: Ed Merritt, Vice President, Corporate Finance & Treasurer
Ed Merritt, Vice President, Corporate Finance & Treasurer MY EXPERIENCE 6 Years 2
Slide 3: Forward Looking Statements
Forward Looking Statements Comments made today regarding financial estimates, projections, and management’s intentions and expectations regarding the Company's future performance, are forward-looking in nature as defined in the Private Securities Litigation Reform Act of 1995. These comments are sub
Slide 4: Non-GAAP Financial Measures & Business Re-segmentation
Non-GAAP Financial Measures & Business Re-segmentation References to non-GAAP financial measures are reconciled to the comparable GAAP financial measures as part of this presentation when necessary. We announced as part of our One Deluxe strategy that we would realign the Company into four new segme
Slide 5: Additional Information
Additional Information Information regarding the Company's new segment structure can be found in the Company's Current Report on Form 8-K furnished to the SEC on February 25, 2020. The reconciliation of Adjusted EBITDA for 2019 to net income can be found in the Company's Annual Report on Form 10-K f
Slide 6: Meeting Logistics
deluxe. Meeting Logistics
Slide 7: Please silence your cellphones
Please silence your cellphones 7
Slide 8: deluxe. trusted business technology
deluxe. trusted business technology
Slide 9: One Deluxe
2020 ANALYST & INVESTOR DAY One DeluxeNeed B Barry McCarthy President & CEO 9
Slide 10: Barry McCarthy, President & Chief Executive Officer
Barry McCarthy, President & Chief Executive Officer MY EXPERIENCE 15 months 10
Slide 11: Leveraging Our Incredible Assets as One Deluxe
Leveraging Our Incredible Assets as One Deluxe THE OLD DELUXE THE NEW DELUXE » Company of companies » Company of products » Growth exclusively from » Focus on sales-driven acquisitions growth » Acquired 50 companies » Supplement with over 7 years, none of strategic acquisitions which were integrated
Slide 12: Today's Speakers
Todays Speakers Chris Thomas Michael Reed Garry Capers Tom Riccio CHIEF REVENUE OFFICER GENERAL MANAGER, GENERAL MANAGER, GENERAL MANAGER, PAYMENTS CLOUD SOLUTIONS PROMOTIONAL SOLUTIONS Tracey Engelhardt Pete Godich Michael Mathews Keith Bush GENERAL MANAGER, SVP, CHIEF OF OPERATIONS SVP, CHIEF INFO
Slide 13: Agenda
Agenda One Deluxe: Barry McCarthy Customer: Chris Thomas Payments: Michael Reed Cloud Solutions: Garry Capers Promotional Solutions: Tom Riccio Checks: Tracey Engelhardt Operations: Pete Godich IT: Michael Mathews Financial Overview: Keith Bush 13
Slide 14: Customers Build Their Businesses on Deluxe Platforms and Technology
Customers Build Their Businesses on Deluxe Platforms and Technology Purpose-Built to Help Our Customers Succeed 14
Slide 15: Deluxe is a Fintech Company with Unparalleled Scale
Deluxe is a Fintech Company with Unparalleled Scale EXISTING RELATIONSHIPS WITH NEARLY: 4,000 ~4.5M ~4M Financial Institutions SMBs Consumers $2.8T 400K 150K Annual payments volume New SMBs added each year Packages shipped each day 15
Slide 16: Business Lifecycle
Business Lifecycle START YOUR BRAND YOUR GROW YOUR OPTIMIZE YOUR BUSINESS BUSINESS BUSINESS BUSINESS Payroll Digital Checks Forms Website & Solutions Payments Hosting Retail Data-Driven Licenses Packaging and IDs Print Marketing TM Marketing Trademark Merchant Filings Services Logo Promotional Remot
Slide 17: Four Business Segments
Four Business Segments The New Deluxe: A Company of Products Payments Cloud Solutions Promotional Solutions Checks Growth Area Growth Area Potential Growth Area Value Area Treasury Management Solutions Hosted Solutions » Business Forms » Printed Checks » Lockbox » Digital Engagement » Accessories »
Slide 18: Now a Company of Products
Now a Company of Products » Temporarily suspended acquisitions to upgrade infrastructure and integrate previous acquisitions » Acquisitions will be part of longer- term playbook, but no longer the ONLY source of growth » Robust asset review to maximize shareholder value Expanding through sales-drive
Slide 19: Path to Sales-Driven Growth
Path to Sales- Driven Growth » Expect to return to consistent sales-driven revenue growth in 2020 » Expect total revenue of at least $2.3 billion, net of expected declines in checks, in 2023 » Expect to maintain adjusted EBITDA margins in the low- to mid-twenties in 2023 19
Slide 20: The New Deluxe is Already Winning
The New Deluxe is Already Winning Won 3 out of the 10 Partnered with Vodafone largest deals of the India and Ingram Micro decade signed in Q4’19 Won major BPO Entered Canadian check outsourcing contracts in market with CIBC treasury management contract Made every North Successfully launched American
Slide 21: A Compelling Investment Opportunity
A Compelling Investment Opportunity Fundamentally changing Leverage existing Plan to compete in four Continue our how Deluxe goes to customer base, core primary areas; commitment to returning market and operates — competencies and assets Payments; Cloud capital to shareholders “One Deluxe” strategy
Slide 22: Strong Return On Invested Capital (ROIC)
Strong Return On Invested Capital (ROIC) Mid-single digit Adjusted EBITDA revenue growth margins low-mid 20s 22
Slide 23: We Are Delivering Value Now
We Are Delivering Value Now » Eliminating silos to improve structural efficiencies » Managingg and optimizing portfolio » Capitalizing on low cost of customer acquisition » Converting millions of our annual contacts into leads Deluxe’s businesses help each other deliver greater value 23
Slide 24: Our Future Has Never Been Brighter
Our Future Has Never Been Brighter » New, successful go-to-market strategy and sales team » New partnership agreements » New major BPO contracts wins » New entrance into Canadian bank market » New IT systems and tools implementations Tremendous progress in transformation journey, delivering record r
Slide 25: deluxe. trusted business technology
deluxe. trusted business technology
Slide 26: World-Class Sales and Marketing
2020 ANALYST & INVESTOR DAY World-Class Sales andNeed B Marketing Chris Thomas Chief Revenue Officer 26
Slide 27: Chris Thomas, Chief Revenue Officer
Chris Thomas, Chief Revenue Officer MY EXPERIENCE 219 Days
Slide 28: Sales and Marketing Transformation
Sales and Marketing Transformation Q32019 Q42019 Q12020 Decentralized sales and marketing Created CRO organization First ever enterprise Sales Kick Off organization Launched Sales Excellence program Comprehensive sales incentive strategy Sales leaders had never met each Launched Deluxe Top 10 Deal l
Slide 29: roewuxe“/f
SS roewuxe“/f © ) EXCHANGE SS >
Slide 30: This is the New Deluxe
THIS IS THE NEW DELUXE OOEUWIEE trusted business technology
Slide 31: A Culture of Selling — Everyone Sells!
A Culture of Selling — Everyone Sells! Everyone Sells Program Portfolio Management Agile Mindset ONE Knowledge Management Focused to Drive Service Excellence Organic Growth Demand Generation New Talent
Slide 32: Go-To-Market Priorities
Go-To-Market Priorities NEW CAPABILITIES THAT WILL DRIVE INCREMENTAL ORGANIC GROWTH Demand Enterprise Account Strategic Small Business Generation Management Alliances Advisory Model
Slide 33: Business Lifecycle
Business Lifecycle START YOUR BRAND YOUR GROW YOUR OPTIMIZE YOUR BUSINESS BUSINESS BUSINESS BUSINESS Payroll Checks Forms Digital Website & Solution Payments Hosting Retail Data-Driven Licenses Packaging Print Marketing and IDs TM Marketing Trademark Merchant Filings Services Logo Promotional Remote
Slide 34: 2020 Sales Progress
2020 Sales Progress New Sold Revenue $100 $80.0 $83 $67 $54.0 $50 $33 $17 $6.6 Q3 – 2019 Q4 – 2019 Q1 – 2020 Q2 – 2020 Q3 – 2020 Q4 – 2020 Target Actual New Revenue 6 months ahead of 2020 plan for new revenue sold
Slide 35: Expected Sales Increase 2020
Expected Sales Increase 2020 $2,040 $20 $20 $10 $1,990 Factored Pipeline $2,009 ~ average annual GTM Priorities Sales Excellence decline = 5% $80 New Revenue $1,910 Sold to Date Revenue ($Millions) Revenue 2019 2020 New Revenue Sold to Date Sales Excellence GTM Priorities Factored Pipeline Revenue R
Slide 36: Summary
Summary Fantastic Sales Momentum Everyone Sells! Sales Culture is in Place Pipeline is up 15% QTD ONE Cross-Selling is Happening Now Focused to Drive Sales Strategy and Tools are in Place Organic Growth Top Talent has Arrived Growth Right Here, Right Now under One Deluxe!
Slide 37: deluxe. trusted business technology
deluxe. trusted business technology
Slide 38: Payments
2020Operations ANALYST & INVESTOR DAY Payments Michael Reed General Manager, Payments 38
Slide 39: Michael Reed, General Manager, Payments
Michael Reed, General Manager, Payments MY EXPERIENCE 93 Days 39
Slide 40: Before One Deluxe, the Payments Portfolio Was Siloed
Before One Deluxe, the Payments Portfolio Was Siloed Treasury Digital Payments Payroll Fraud and Security Management Integrated Receivables eCheck Payroll Services Check Fraud Protection Remote Deposit Capture eDeposit Tracking and Onboarding Identity Theft Protection Payment Processing Print and Ma
Slide 41: Comprehensive Payment Technology
As an Integrated Business, We Offer Comprehensive Payment Technology Receiving Payments Security and protection Receivables as a Service (RaaS) Fraud Protection Aggregate all payments in an Identity Protection integrated hub to automate cash New Account Screening application through artificial intel
Slide 42: Two Key Customer Focus Areas Within Payments
Two Key Customer Focus Areas Within Payments Enterprise Customers Small Business Market Digital and analytics-based Cash management solutions services to meet receivables and for small businesses, include payables needs of enterprise incoming and outgoing customers and financial payments, along with
Slide 43: Multiple Payment Methods Require Separate, Manual Processes
Multiple Payment Methods Require Separate, Manual Processes to Integrate Receivables Individual payment files are Payments from different payment Separate payment files manually integrated and consolidated using sources come in separately. entered or uploaded by internal staff. additional BI tools.
Slide 44: Receivables as a Service
Receivables as a Service Intelligently Matches All Payment Options into a Single Dashboard Receive payments of any type from Automate cash application using Artificial Gain integrated insights and visibility any source. All payment options are Intelligence. Match remittances to open from a single po
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Slide 46: We Help Businesses Pay and Get Paid
We Help Businesses Pay and Get Paid START YOUR BRAND YOUR GROW YOUR OPTIMIZE YOUR BUSINESS BUSINESS BUSINESS BUSINESS Payroll Digital Checks Forms Solutions Website & Payments Hosting Retail Data-Driven Licenses Packaging Print Marketing and IDs TM Marketing Trademark Merchant Filings Processing Pro
Slide 47: Enabling Digital Payment Platform Capabilities
Enabling Digital Payment Platform Capabilities Digital payouts for receivers without sender disruption SENDER RECEIVER AP System Payment choice Debit Credit Check Cash Deluxe Payment Exchange AND OTHERS COMING SOON ACH RTP PayPal P2P No change to sender’s The switch that routes the payment Receiver
Slide 48: Provider Payments in Health Insurance
Provider Payments in Health Insurance Send explanation PROVIDER HEALTH PLAN SENDER of payment (EOP) with the funds Payment choice Virtual Card ACH Check Deluxe Payment Exchange Nearly $1B 40K+ $20B 500K in 2019 payment volume Providers paid in Forecasted to facilitate in Forecasted providers paid ne
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Slide 50: Property & Casualty Payments in Insurance
Property & Casualty Payments in Insurance P&C INSURANCE COMPANIES PAY …AND BOTH PARTIES FEEL THE PAIN CONSUMERS BY CHECK TODAY… P&C Insurance Sender: Claimant Receiver: Check payment value 2019 » Costly disbursement method » No choice on payment type $ » Low claimant (customer) » No choice on speed
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Slide 52: Key Takeaways
Key Takeaways To support sales-driven growth, we will: • Leverage the company’s assets • Implement an agile delivery model • Remain laser-focused on innovation that matters We will focus on growth and innovation in the following areas: • Receivables as a Service (RaaS) • Cash management solutions fo
Slide 53: deluxe. trusted business technology
deluxe. trusted business technology
Slide 54: Cloud Solutions
2020 ANALYST & INVESTOR DAY Cloud Solutions Garry Capers General Manager, Cloud Solutions © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential. 54
Slide 55: Garry Capers, General Manager, Cloud Solutions
Garry Capers, General Manager, Cloud Solutions MY EXPERIENCE 148 Days 55
Slide 56: Business Lifecycle
Business Lifecycle START YOUR BRAND YOUR GROW YOUR OPTIMIZE YOUR BUSINESS BUSINESS BUSINESS BUSINESS Checks & Payroll Forms Website & Solution ePayments Hosting Retail Data-Driven Licenses Packaging and IDs Marketing TM Print Trademark Marketing Merchant Filings Processing Logo Promotional Remote De
Slide 57: Cloud SaaS Solutions
Cloud SaaS Solutions DIY and DIFM models for customers of all sizes and sophistication CUSTOMER PROFILES OFFERINGS ~$ SMBs 35B » MyCorporation Market Size* Increasing use of digital marketing; typically remain loyal to service providers » Logo / Web Design » Digital Marketing % FIs +5-10 Increasing
Slide 58: Cloud Web Hosting Solutions
Cloud Web Hosting Solutions Online commerce driving demand for online presence CUSTOMER PROFILES OFFERINGS ~$ SMBs 30B » Shared Hosting Services Market Size* Seeking to move to public cloud and need provider for infrastructure operations » Managed / Cloud Services » Colocation Services % Web develop
Slide 59: Cloud Data-Driven Marketing Solutions
Cloud Data-Driven Marketing Solutions Trusted provider of full-service, omni-channel for B2B and B2C CUSTOMER PROFILES OFFERINGS ~$ FIs 19B » Datamyx Market Size* Shifting spend to digital marketing, increasing focus on B2B marketing » Deluxe Marketing Solutions Enterprises » Deluxe Performance Mana
Slide 60: Business Accelerator Concept
Business Accelerator Concept 60
Slide 61: Business Accelerator Prototype
Business Accelerator Prototype 1 2 FEATURES 1. Behavioral profile of entrepreneur drives tailored experience 2. Step-by-step guidance on where to focus to build startup 3 4 3. Educational content and community 4. Artificial intelligence chatbot provides instant access to deep expertise 61
Slide 62: Cloud Solutions Differentiators
Cloud Solutions Differentiators CUSTOMERS ARE OUR CURRENCY Deluxe Powers BILLIONS of Data Events Every Month Base with more than 4.5M SMBs and 4K FIs: Attracts potential partners, source of valuable data 6M 4M Check & Transactions DATA ARE THE NEW OIL print client processed Directly observed and mea
Slide 63: Cloud Solutions Go-To-Market Strategy
Cloud Solutions Go-To-Market Strategy SMBs OPPORTUNITY » Telesales Embed into more ecosystems through » Online / Digital which customers procure technology » Technology, Service Provider and services Channel Partners FIs & ENTERPRISES » Field Sales » Technology, Service Provider Channel Partners 63
Slide 64: Cloud Solutions Has Promising Opportunities For Growth
Cloud Solutions Has Promising Opportunities For Growth Use data/insights to Grow Enhance offerings, generate new business interactions/transactions to increase stickiness value (product, targeting, enrich customer data and efficiencies) generate insights Execute with speed, Invest in sales & channel
Slide 65: Cloud Solutions Digital Data Use Case #1
Cloud Solutions Digital Data Use Case #1 Web Hosting Data (Email Marketing) RTE EXPERIENCE AUTOMATED TRIGGER-BASED MARKETING : Customer hasn’t logged in 3-month performance across 3 periods Day 6 IMPROVEMENT 40.2% Logged into Portal 18.9% 112% Don’t wait to get online! 20.9% Accessed Websites 11.5%
Slide 66: Cloud Solutions Digital Data Use Case #2
Cloud Solutions Digital Data Use Case #2 Web Hosting Data (Email Marketing) DIGITAL IDENTITIES A 2.2M record list was sold to a B2B marketing data aggregator: » Nearly one-third of email addresses and 15% of URLs were new additions to its file » Remaining data were used to match and validate its rec
Slide 67: 2020 Analyst &Operations Investor Day February 25, 2020 Proprietary and .
2020 Analyst &Operations Investor Day February 25, 2020 © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 68: 2020 Analyst &Operations Investor Day February 25, 2020 Proprietary and .
2020 Analyst &Operations Investor Day February 25, 2020 © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 69: 2020 Analyst &Operations Investor Day February 25, 2020 Proprietary and .
2020 Analyst &Operations Investor Day February 25, 2020 © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 70: 2020 Analyst &Operations Investor Day February 25, 2020 Proprietary and .
2020 Analyst &Operations Investor Day February 25, 2020 © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 71: Promotional Solutions
2020 ANALYST & INVESTOR DAY Promotional Solutions Tom Riccio General Manager, Promotional Solutions © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 72: Tom Riccio, General Manager, Promotional Solutions
Tom Riccio, General Manager, Promotional Solutions MY EXPERIENCE 148 Days
Slide 73: Business Lifecycle
Business Lifecycle START YOUR BRAND YOUR GROW YOUR OPTIMIZE YOUR BUSINESS BUSINESS BUSINESS BUSINESS Payroll Checks Forms Digital Website & Solutions Payments Hosting Retail Data-Driven Licenses Packaging and IDs Print Marketing TM Marketing Trademark Merchant Filings Services Logo Promotional Remot
Slide 74: Promotional Solutions Overview
Promotional Solutions Overview Consumers: » ~$50B market; single digit growth rate » Highly competitive and fragmented 80% market Have an immediate reaction when they receive promo from companies they have » Key underlying trends of digital never heard of transformation, technology innovation, and c
Slide 75: Promotional Solutions $642M in Annual Revenue
Promotional Solutions $642M in Annual Revenue Wearables 5.6% Drinkware 6.3% Writing 6.6% Travel 35.8% Technology 8.4% Quality Broad Competitive Outstanding Fast Custom Design Mailing Products Assortment Pricing Service Turnaround Quotes Services Services
Slide 76: Vision
Vision Enabling Customers To Use Technology To Easily Build Their Business Brand Where We Have To Win Omni-channel retailer of products & B2B Product Distribution Best-in-Class Distribution Tech Production / Merchant Mindset GTM Enhancement Pricing Capabilities Optimization Capacity Optimization Str
Slide 77: Promotional Customer Touch Points
Promotional Customer Touch Points Field Sales/ E-Commerce Inside Sales Cross Sell Distribution Will Call Mobile Experience
Slide 78: Positioned to Win
Positioned to Win » Enabling customers to use technology platform to build their brand identities in an easy way » Bundle solutions (physical & digital) / cross-sell managed services » Drive transition to digital solutions as Healthcare Hospitality customer needs evolve » Develop platform solutions
Slide 79: Deluxe Differentiation
Deluxe Differentiation Customized Web Storefronts Personalized Reporting Supply Chain Management Easy for customers to access, personalize Deluxe’s robust analytics and user With easy-to-use configuration settings, we and order promotional & marketing engagement tools provide an intelligent can cont
Slide 80: Current Customer — Annual Sales CAGR = 25%+
Current Customer — ANNUAL SALES CAGR = 25%+ » Doubled sales in 5 years » Improved mix from 40% services / 60% product to 75% services / 25% product 2016 2017 2018 2019 2020 Mktg Printing Stationery Platform Creative SVC Product Platform & Creative Services
Slide 81: Key Takeaways
Key Takeaways » Opportunity to cross sell Promotional Solutions to nearly 60% of current customers » Web Storefronts & Reporting Insights are key differentiators » Investments in our strategic enablers help build a growth business » “Product-Based Sale” pivoting to “Managed Services” offering to gen
Slide 82: deluxe. trusted business technology
deluxe. trusted business technology
Slide 83: Checks
2020Operations ANALYST & INVESTOR DAY Checks Tracey Engelhardt General Manager, Checks © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential. 83
Slide 84: Tracey Engelhardt, General Manager, Checks
Tracey Engelhardt, General Manager, Checks Since 2006, has managed components of Check Business: » Call Centers » Websites 25 » Marketing Years » Sales
Slide 85: Sizeable Opportunity for Checks
Sizeable Opportunity for Checks Checks are still the only universally accepted payment method besides cash 2020 REVENUE EST. CHANNEL & CUSTOMER $750MM to $760MM Financial Institutions Wholesale and Retail Distributors and Large Retailers % Sell directly to consumers and SMBs 80.8% 80.8 of all busine
Slide 86: Deluxe: The Trusted Check Brand, Then and Now
Deluxe: The Trusted Check Brand, Then and Now One Deluxe renews focus 3.5M on the customer and on organic revenue growth Inbound phone calls from customers each year Deluxe invents the checkbook and founds the modern payment system 1915 2020
Slide 87: Checks Market Trends
Checks Market Trends MARKET ASSESSMENT » 16 billion checks written per year » Deluxe market share ~40% » Checks: Integral part of financial operations of SMBs » 61% of SMBs are “very” or “extremely” satisfied with checks as payment* *Source: PYMNTS / Mastercard B2B Payments Tipping Point, Sept. 2018
Slide 88: Business Lifecycle
Business Lifecycle START YOUR BRAND YOUR GROW YOUR OPTIMIZE YOUR BUSINESS BUSINESS BUSINESS BUSINESS Payroll Forms Digital Checks Website & Solutions Hosting Payments Retail Data-Driven Licenses Packaging and IDs Print Marketing TM Marketing Trademark Merchant Filings Services Logo Promotional Remot
Slide 89: The One Deluxe Difference
The One Deluxe Difference » Trusted brand that has delivered quality product for over 100 years » Proprietary data helps FIs better serve SMBs » Optimized ordering process reduces costs for FIs while helping retain customers
Slide 90: New Eco- and User-Friendly Packaging
New Eco- and User-Friendly Packaging “The new designed check booklet is great for keeping booklets in numerical order. They are also very handy to “I like that it is store in small places and more green than find when needed. Love it!” the plastic covers” “I love it; it’s easy to use and store”
Slide 91: Technology Initiatives
Technology Initiatives » Partnering with Salesforce to make converting to Deluxe check printing easier for FIs » Making APIs available to clients to ensure security and ease of ordering from a mobile device » Working with FIs to transition ordering online
Slide 92: Integrated API and Superior Reporting Platform
Integrated API and Superior Reporting Platform Deluxe’s ‘Vaya’ reporting solution (platform) is Bank XYZ user friendly and gives a great snapshot of program performance. In comparing Deluxe’s ‘Vaya’ against their major competitor’s tool, I find ‘Vaya’ delivers a greater level of detail allowing fina
Slide 93: Checks Remain Relevant
Checks Remain Relevant Deluxe Checks typically outperforms the market Helps customers gain efficiencies by reducing number of vendors Checks’ strong cash flow generation supports higher growth businesses and One Deluxe’s capital allocation priorities Rich pasture to cross-sell other products and ser
Slide 94: deluxe. trusted business technology
deluxe. trusted business technology
Slide 95: Operations
2020Operations ANALYST & INVESTOR DAY Operations Pete Godich SVP, Chief of Operations © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 96: Pete Godich, SVP, Chief of Operations
Pete Godich, SVP, Chief of Operations MY EXPERIENCE Previous roles include: » VP, Customer Care » VP, Sales & Marketing Operations » VP, Manufacturing and Supply Chain 33 » SVP, Fulfillment Years » SVP, Financial Services
Slide 97: Proven Record of Achieving Greater Efficiencies
Proven Record of Achieving Greater Efficiencies CUMULATIVE Savings $ in millions 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 98: Customer First
Customer First Process Improvement Manufacturing Client Data Operations Engineering Supply Chain Operations/ Warehousing Professional Remittance Services Processing Customer Care
Slide 99: Customer First
Customer First Process Improvement Manufacturing Client Data Operations Customers Engineering Supply Chain Operations/ Warehousing Client Remittance Services Processing Customer Care
Slide 100: Business Lifecycle
Business Lifecycle START YOUR BRAND YOUR GROW YOUR OPTIMIZE YOUR BUSINESS BUSINESS BUSINESS BUSINESS Payroll Checks Forms Digital Website & Solutions Payments Hosting Retail Data-Driven Licenses Packaging and IDs Print Marketing TM Marketing Trademark Merchant Filings Services Logo Promotional Remot
Slide 101: Key Focus Areas for Operations
Key Focus Areas for Operations » Technology Platforms: » Payment Processing » Contact Center » Warehouse Operations » Evaluation of real estate footprint » Service excellence program
Slide 102: deluxe. trusted business technology
deluxe. trusted business technology
Slide 103: Technology
2020Operations ANALYST & INVESTOR DAY Technology Michael Mathews SVP, Chief Information Officer © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 104: Michael Mathews, SVP, Chief Information Officer
Michael Mathews, SVP, Chief Information Officer MY EXPERIENCE 7 Years
Slide 105: Deluxe: Recognized as a Trusted Company
Deluxe: Recognized as a Trusted Company Deluxe named runner up for Twin Cities Global CIO of The Global Transformation of the Year in 2019 the Year Award in 2018
Slide 106: IT Serves our Customers, CRO and General Managers
IT Serves our Customers, CRO and General Managers Innovate and Run, Protect & Transform Enable The Business Customers Deliver Commitments Integrate and with Quality Optimize
Slide 107: Key Takeaways
Key Takeaways » Delivering best-in-class technology to enable organic growth » Innovating and creating new solutions and services for our customers » Technology is at the core of everything we do and is instrumental to our future One Deluxe is a Fintech company
Slide 108: Business Lifecycle
Business Lifecycle START YOUR BRAND YOUR GROW YOUR OPTIMIZE YOUR BUSINESS BUSINESS BUSINESS BUSINESS Payroll Checks Forms Digital Website & Solutions Payments Hosting Retail Data-Driven Licenses Packaging and IDs Print Marketing TM Marketing Trademark Merchant Filings Services Logo Promotional Remot
Slide 109: The One Deluxe Transformation
The One Deluxe Transformation 109
Slide 110: Enabling an Integrated Look to Drive Greater Productivity and Revenue
Enabling an Integrated Look to Drive Greater Productivity and Revenue “Collaboration “People “Execution “Financial “Data “Planning Culture Engine” Engine” Engine” Engine” Engine” Engine” Product Customer HCM ERP Enterprise Planning Communication Experience Platform Platform Platform Data Platform Pl
Slide 111: Deluxe's Proprietary Technology Solutions
Deluxe’s Proprietary Technology Solutions Handling Massive Data Volume $2.8 Trillion in transactions The Federal Reserve’s flow through Deluxe’s check reconciliation is done using Technology is at and payment platforms our adjudication software the core of everything we do and is instrumental Lockbo
Slide 112: Key Takeaways
Key Takeaways » Delivering best-in-class technology to enable organic growth » Innovating and creating new solutions and services for our customers » Technology is at the core of everything we do and is instrumental to our future
Slide 113: deluxe. trusted business technology
deluxe. trusted business technology
Slide 114: Financials
2020 ANALYST & INVESTOR DAY Financials Keith Bush SVP, Chief Financial Officer © 2020 Deluxe Corporation. Proprietary and Confidential.
Slide 115: Keith Bush, SVP, Chief Financial Officer
Keith Bush, SVP, Chief Financial Officer MY EXPERIENCE 3 Years 115
Slide 116: Record Revenue in 2019
Record Revenue in 2019 2019 HIGHLIGHTS DEEPER DIVE » Revenue >$2.0B, all time record » Cloud Computing Arrangements » Last 120 days 3 of top 10 wins in decade » Margins and Capital Allocation » Returned $170M to shareholders; invested in transformation; and paid down debt » Delivered adjusted dilute
Slide 117: Changes to New Day Investment Accounting — CCA
Changes to New Day Investment Accounting — CCA NEW DAY INVESTMENTS ACCOUNTING TREATMENT Accounting Change Pre CCA CCA Adopted 1/1/2020 2019 2020E Total Costs During Implementation 30 70 Recognized as Expense 30 20 Capitalized Set-Up — 50 Ongoing Operating Expense of SaaS Platforms under New CCA Subs
Slide 118: Sales-Driven, Product-Focused, Efficient Enterprise Model: Adjusted EBITDA Margin
Sales-Driven, Product-Focused, Efficient Enterprise Model ADJUSTED EBITDA MARGIN 2019-2023E low to mid 20s 118
Slide 119: Sales-Driven, Product-Focused, Efficient Enterprise Model: Capital Allocation
Sales-Driven, Product-Focused, Efficient Enterprise Model CAPITAL ALLOCATION 2015-2020E and Beyond Dollars in Millions 276 Capital 253 Expenditures 62 Acquisitions 46 208 214 75-100 78 70 67 70 11 2015-2017 2018 2019 2020E Beyond 2020E (Average) 119
Slide 120: High Revenue Businesses with Attractive Adjusted EBITDA Margins
High Revenue Businesses with Attractive Adjusted EBITDA Margins FY 2019* Revenue Adj. EBITDA Adj. EBITDA Segment ($ millions) ($ millions) Margin % DLX Total 2,009 481 23.9 Payments 270 74 27.5 Cloud 318 82 25.9 Promotional 641 100 15.6 Checks 780 399 51.2 Cost Segment % of Revenue ($ millions) Corp
Slide 121: Expect 2020 Total Revenue of $2.00 to $2.04 Billion
Expect 2020 Total Revenue of $2.00 to $2.04 Billion Q1 2020E FY 2020E Revenue Adj. EBITDA Revenue Adj. EBITDA ($ millions) ($ millions) ($ millions) ($ millions) DLX Total 490 to 505 85 to 95 DLX Total 2,000 to 2,040 410 to 435 Midpoint Midpoint Revenue Adj. EBITDA Margin Revenue Adj. EBITDA Margin
Slide 122: Expect 2023 Total Revenue of $2.3 Billion
Expect 2023 Total Revenue of $2.3 Billion with Adjusted EBITDA Margins in Low-to-Mid 20s ADJUSTED Revenue Mix + Margin Expansion REVENUE REVENUE MIX CAGR EBITDA MARGIN Will Drive Growth: Upper- 13% 16% Mid-to-High » Projected growth in revenue across Teens to 20s Payments, Cloud, and Promotional Mid
Slide 123: Consolidate Corporate Cost Center and Implement Common Processes
Consolidate Corporate Cost Center and Implement Common Processes to Enable Efficiency and Drive Scale FY 2019* FY 2020 Guidance FY 2023E % of % % 8.5% Mid-single Revenue 8.7 7.5 MIDPOINT 9.5% digits Technology Real Estate Sourcing Efficiency to be achieved Infrastructure by eliminating redundancy an
Slide 124: Path to Success
Path to Success » Each segment produces 100s of millions of dollars in revenue…with healthy margins » Payments, Cloud & Promotions to produce scalable revenue and profit expansion » Large customer base = low cost to acquire quality revenue growth » Growth segments positioned to outpace decline of ch
Slide 125: New Deluxe: Positioned for Success and Already Delivering Results
New Deluxe: Positioned for Success and Already Delivering Results STRONG FINANCIAL POSITIONED FOR ALREADY DELIVERING HEALTH SUCCESS RESULTS » Attractive quarterly » Prospects in clear growth » Transformation well on its dividend markets way » Bought back $320M of » High growth businesses » Right str
Slide 126: deluxe. trusted business technology
deluxe. trusted business technology
Slide 127: One Deluxe
2020 ANALYST & INVESTOR DAY OperationsOne Deluxe Barry McCarthy President and Chief Executive Officer © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 128: The New Deluxe: A Company of Products
The New Deluxe: A Company of Products Payments Cloud Solutions Promotional Solutions Checks Growth Area Growth Area Potential Growth Area Value Area Treasury Management Hosted Solutions » Business Forms » Printed Checks Solutions » Digital Engagement » Accessories » Other » Lockbox » Logo Design » R
Slide 129: Business Lifecycle
Business Lifecycle START YOUR BRAND YOUR GROW YOUR OPTIMIZE YOUR BUSINESS BUSINESS BUSINESS BUSINESS Checks Payroll Digital Forms Website & Solutions Payments Hosting Retail Data-Driven Licenses Packaging and IDs Print Marketing TM Marketing Trademark Merchant Filings Services Logo Promotional Remot
Slide 130: Deluxe's Key Differentiators
Deluxe’s Key Differentiators TRUSTED BRAND AND EXISTING RELATIONSHIPS UNPARALLELED REACH AND SCALE INCREDIBLE CUSTOMER BASE 4,000 ~4.5M ~4M Financial Institutions SMBs Consumers
Slide 131: CRO Creation and Transformation
CRO Creation and Transformation Accelerated customer education Established go-to-market strategy Built experienced sales team Implemented “Everyone Sells” program to over 6,000 employees
Slide 132: Payments
Payments Solutions enable customers to make payments to any payee, including employees $2.8 Trillion in transactions Simplify payor processes Give payee control over through Deluxe’s check and and reduce costs how they are paid payment platforms With automation and intelligent matching, the system l
Slide 133: Cloud Solutions
Cloud Solutions Using AI and proprietary data to offer differentiated SaaS applications CUSTOMER PROFILES OFFERINGS ~$ SMBs 35B » MyCorporation Market Size* Increasing use of digital marketing; typically remain loyal to service providers » Logo / Web Design » Digital Marketing % FIs +5-10 Increasing
Slide 134: Promotional Solutions
Promotional Solutions Investments in our strategic enablers help build a growth business Own the process from Deliver a best-in-class Understand our start to finish pricing experience customers Enhance our world Maximize our capacity class supply chain
Slide 135: Checks
Checks Retaining existing customers while transitioning to technology-based payment offerings Checks’ strong cash flow generation supports higher growth businesses and One Deluxe’s capital allocation priorities Rich pasture to cross-sell other products and services
Slide 136: Time is Now: Exceptional Opportunity For One Deluxe
Time is Now: Exceptional Opportunity For One Deluxe
Slide 137: Operations Q&A
Operations Q&A Please wait until a microphone comes to you © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 138: deluxe. trusted business technology
deluxe. trusted business technology
Slide 139: 2020 Analyst & Investor Day
2020 Analyst &Operations Investor Day February 25, 2020 © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 140: 2020 Analyst & Investor Day
2020 Analyst &Operations Investor Day February 25, 2020 © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.
Slide 141: 2020 Analyst & Investor Day
2020 Analyst &Operations Investor Day February 25, 2020 © 2020 Deluxe Enterprise Operations, Inc. Proprietary and Confidential.