Deluxe Corporation · NYSE:DLX

Deluxe — Q2 2022 Earnings Presentation

33 slides from Deluxe's earnings presentation, Aug 4, 2022

  1. Slide 1: Second Quarter 2022 Earnings

    Second Quarter 2022 Earnings August 4, 2022 © 2022 Deluxe Corporation

  2. Slide 2: Tom Morabito, Vice President, Investor Relations

    Tom Morabito Vice President, Investor Relations 2

  3. 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

  4. 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 sta

  5. Slide 5: Barry McCarthy, President and Chief Executive Officer

    Barry McCarthy President and Chief Executive Officer 5

  6. Slide 6: 2Q22 Highlights

    2Q22 Highlights (in millions) +17.7% +4.3% +82.6% 6

  7. Slide 7: 2Q22 Segment Highlights

    2Q22 Segment Highlights Strong Execution of One Deluxe Strategy Cloud • Revenue increased 0.7% year-over year; up Payments • Revenue increased 65.7% year- over-year; up 6.7% excluding the 7.0% excluding business exits First American acquisition • Cloud’s performance was driven by strong • Strong qua

  8. Slide 8: Scott Bomar, Chief Financial Officer

    Scott Bomar Chief Financial Officer 8

  9. Slide 9: 2Q22 Summary

    2Q22 Summary • Total revenue was $563.0 million, up 17.7% compared to 2Q21 ◦ First American contributed $61.0 million in incremental revenue • GAAP net income was $22.1 million, or $0.50 per share ◦ Gains of $17.5 million from the sale of the Australian web hosting business and a call center facilit

  10. Slide 10: Payments

    Payments (in millions) +65.7% +65.1% • Adjusted EBITDA margin was 20.4%, down 10 basis points year-over-year. Payments Merchant Services Receivables as Payables as Payroll & HR Management a Service a Service Solutions 10

  11. Slide 11: Cloud Solutions

    Cloud Solutions (in millions) +0.7% -6.9% • Adjusted EBITDA margin of 25.5% in 2Q, down 210 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 11

  12. Slide 12: Promotional Solutions

    Promotional Solutions (in millions) +3.2% -31.8% • Adjusted EBITDA margin was 10.5%, down 540 basis points year-over-year largely due to inflationary pressures and lower revenue in high margin products due to supply chain disruptions. Promotional Solutions Support Rapidly Turn-Key Managed Web Storef

  13. Slide 13: Checks

    Checks (in millions) +7.0% +2.9% • Adjusted EBITDA margin was 44.9%, down 180 basis points year-over-year largely driven by the addition of lower margin new customers. Checks Strong cash flow self funds growth Cost-effective lead generation to investments, and generates healthy return drive cross-se

  14. Slide 14: Balance Sheet and Cash Flow

    Balance Sheet and Cash Flow • Net debt is $1.63B due to funding of the First Free Cash Flow (in millions) American transaction in 2Q21 • Net debt/Adjusted EBITDA ratio of 3.9x For the Quarter Ending ◦ Long-term strategic target of 3.0x 6/30/22 6/30/21 Variance • Delivered 2Q22 free cash flow of $13.

  15. Slide 15: 2022 Guidance

    2022 Guidance Well-positioned for sustainable growth • Revenue growth of 10% to 12% excluding the impact of business exits; or 8% to 10% as reported • Adjusted EBITDA margin of 18.5% to 19.0%, with the fourth quarter rate being higher than the third quarter due to our normal seasonality pattern • In

  16. Slide 16: Q&A

    Q&A © Deluxe Financial Services, LLC. Proprietary and Confidential. 16

  17. Slide 17: Tom Morabito, Vice President of Investor Relations

    Tom Morabito Vice President of Investor Relations 17

  18. Slide 18: Upcoming Conferences

    Upcoming Conferences Date Event August 5, 2022 SIG 2022 Get Carded: A Payments and Fintech Conference August 9, 2022 Wells Fargo 7th Annual Fintech & Technology Services Forum September 12, 2022 CL King Best Ideas Conference 2022 18

  19. Slide 19: Appendix

    Appendix 19

  20. Slide 20: Consolidated Condensed Statements of Income

    Consolidated Condensed Statements of Income in millions, except per share amounts (Unaudited) Quarter Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Product revenue $322.2 $306.2 $639.4 $605.3 Service revenue 240.8 172.0 479.6 314.2 Total revenue 563.0 478.2 1,119.0 919.5 Cost of produ

  21. Slide 21: Segment Information

    Segment Information in millions (Unaudited) Quarter Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenue: Payments $171.2 $103.3 $337.4 $182.8 Cloud Solutions 68.6 68.1 138.1 130.3 Promotional Solutions 139.3 135.0 272.5 259.5 Checks 183.9 171.8 371.0 346.9 Total $563.0 $478.2 $1,119

  22. Slide 22: 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 June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net income $22.1 $12.1 $31.8 $36.5 Non-controlling interest — — (0.1) (0.1) Interest expense 21.4 9.5 41.7 14.1

  23. Slide 23: Reconciliation of GAAP to Non-GAAP Measures

    Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - Q2 2022 dollars and shares in millions, except per share amounts (Unaudited) Gain on Restructuring, Certain legal- sale of Income tax Q2 2022 Acquisition integration and Share-based related businesses impact of Q2 2022 GAAP amortizat

  24. Slide 24: Reconciliation of GAAP to Non-GAAP Measures

    Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - Q2 2021 dollars and shares in millions, except per share amounts (Unaudited) Restructuring, Acquisition Certain legal- Income tax Q2 2021 Acquisition integration and Share-based transaction related impact of Q2 2021 GAAP amortization

  25. Slide 25: Reconciliation of GAAP to Non-GAAP Measures

    Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - June Year-to-Date 2022 dollars and shares in millions, except per share amounts (Unaudited) Gain on June YTD Restructuring, Acquisition Certain legal- sale of Income tax June YTD 2022 Acquisition integration and Share-based transacti

  26. Slide 26: Reconciliation of GAAP to Non-GAAP Measures

    Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - June Year-to-Date 2021 dollars and shares in millions, except per share amounts (Unaudited) June YTD Restructuring, Acquisition Certain legal- Income tax June YTD 2021 Acquisition integration and Share-based transaction related impac

  27. Slide 27: Reconciliation of GAAP to Non-GAAP Measures

    Reconciliation of GAAP to Non-GAAP Measures Revenue Excluding First American Acquisition and Business Exits in millions (Unaudited) TOTAL COMPANY: Quarter Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Total revenue $563.0 $478.2 $1,119.0 $919.5 Less: Incremental First American revenue

  28. Slide 28: Reconciliation of GAAP to Non-GAAP Measures

    Reconciliation of GAAP to Non-GAAP Measures Revenue Excluding Business Exits in millions (Unaudited) CLOUD SOLUTIONS: Quarter Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Cloud Solutions revenue $68.6 $68.1 $138.1 $130.3 Less: Business exit — (4.0) — (4.0) Cloud Solutions revenue exc

  29. Slide 29: Reconciliation of GAAP to Non-GAAP Measures

    Reconciliation of GAAP to Non-GAAP Measures Revenue Outlook Excluding Business Exits in millions (Unaudited) TOTAL COMPANY 2022 Outlook 2021 Actual Total revenue $2,184 - $2,224 $2,022 Less: Business exits — (34) Revenue excluding business exits $2,184 - $2,224 $1,988 Revenue growth excluding busine

  30. Slide 30: Reconciliation of GAAP to Non-GAAP Measures

    Reconciliation of GAAP to Non-GAAP Measures Net Debt / Net Debt to Adjusted EBITDA in millions (Unaudited) June 30, Dec. 31, June 30, 2022 2021 2021 Total debt $1,675.7 $1,683.0 $1,833.4 Cash and cash equivalents (43.3) (41.2) (163.3) Net debt $1,632.4 $1,641.8 $1,670.1 TRAILING 12 MONTHS ADJUSTED E

  31. Slide 31: Reconciliation of GAAP to Non-GAAP Measures

    Reconciliation of GAAP to Non-GAAP Measures Free Cash Flow / Liquidity in millions (Unaudited) Quarter Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net cash provided by operating activities $37.9 $44.2 $72.2 $83.8 Purchases of capital assets (24.4) (24.9) (45.3) (46.6) Free cash flow

  32. Slide 32: 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

  33. Slide 33: deluxe. trusted payments & business technology

    deluxe. trusted payments & business technology

Deluxe — Q2 2022 Earnings Presentation on 6ix