Deluxe Corporation · NYSE:DLX
Deluxe — Q1 2024 Earnings Presentation
34 slides from Deluxe's earnings presentation, May 1, 2024
Slide 1: First Quarter 2024 Earnings
First Quarter 2024 Earnings May 1, 2024 © 2024 Deluxe Corporation
Slide 2: Brian Anderson, Vice President, Strategy & Investor Relations
Brian Anderson Vice President, Strategy & Investor Relations 2
Slide 3: Today's Presenters
Today’s Presenters Barry McCarthy Chip Zint Brian Anderson President and Senior Vice President and Vice President, Chief Executive Officer Chief Financial Officer Strategy & Investor Relations 3
Slide 4: Cautionary Statement
Cautionary Statement Statements made in this presentation 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. Suc
Slide 5: Barry McCarthy
Barry McCarthy President and Chief Executive Officer 5
Slide 6: Q1'24 Financial Overview - Investing to drive growth in Payments and Data
Q1'24 Financial Overview - Investing to drive growth in Payments and Data 6
Slide 7: North Star Progress & Timelines
North Star Progress & Timelines 7
Slide 8: Q1'24 Highlights
Q1'24 Highlights (in millions) -1.9% +1.2% n/m +0.1% +7.0% n/m = not meaningful 8
Slide 9: Q1'24 Segment Highlights
Q1'24 Segment Highlights Merchant Services Data Solutions ◦ Revenue increased 8.3% vs Q1'23, on strong ◦ Revenue grew 34.5% vs Q1'23 on strong demand across go-to-market channels demand for data-driven-marketing offerings ◦ Adjusted EBITDA margin expanded 150 bps, ◦ Adjusted EBITDA growth of 46.1% v
Slide 10: Long-term Value Creation Algorithm
Long-term Value Creation Algorithm 10
Slide 11: Chip Zint
Chip Zint Chief Financial Officer 11
Slide 12: Q1'24 Financial Summary
Q1'24 Financial Summary TOTAL REVENUE NET INCOME Adjusted EBITDA Adj. EBITDA margin Adjusted EPS $535.0M $10.8M $96.9M 18.3% $0.72 Down 1.9% Or $0.24 per share Increased 7.0% Increased 100 Up 4.3% compared to '23; on a diluted basis; compared to '23 basis points versus Q1'23 Comparable Up from $2.8M
Slide 13: Merchant Services
Merchant Services Payment Processing & Omnichannel Payments Terminals & Devices Reporting (in millions) +8.3% +16.3% Adjusted EBITDA margin was 22.2%, up 150 basis points year-over- year on strong processing volumes and revenue growth 13
Slide 14: B2B Payments
B2B Payments Treasury Management B2B/Digital Payments Fraud & Security Receivables as a Service Payables as a Service Protection (in millions) -7.7% -1.5% Adjusted EBITDA margin was 19.2%, up 120 basis points year-over- year driven primarily by operational efficiencies across the business 14
Slide 15: Data Solutions
Data Solutions Data Driven Marketing Data Analytics and SMB SaaS Solutions (in millions) +34.5% +46.1% Adjusted EBITDA margin was 25.0%, up 200 basis points year-over-year driven primarily by strong revenue growth 15
Slide 16: Print
Print Consumer and Extensive range of Web Storefront Platform Business Essentials for Branded Products Business Checks Promotional offerings (in millions) -3.4% -4.4% Adjusted EBITDA margin was 30.0%, down 30 basis points year-over-year driven primarily by seasonally lower promotional revenues 16
Slide 17: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Net Debt to Adjusted EBITDA Free Cash Flow (in millions) (in millions) For the 12 Months Ended For the Quarter Ended 3/31/2024 12/31/2023 Variance 3/31/2024 03/31/2023 Variance Cash Provided by Net Debt $1,536.6 $1,520.9 $15.7 $26.6 ($6.7) $33.3 Operating Activities LTM A
Slide 18: Capital Structure - Debt maturity ladder
Capital Structure - Debt maturity ladder Material debt maturities in mid-2026 and 2029… … significant portion of revolving credit remains unused 18
Slide 19: 2024 Guidance
2024 Guidance Declared regular dividend of $0.30 per share Additional modeling assumptions: ◦ Interest expense of approximately $120 - $125 million ◦ Adjusted tax rate of 26% ◦ Depreciation and amortization of $150 million, of which acquisition amortization is approximately $55 million ◦ Average out
Slide 20: Long-term Value Creation Algorithm
Long-term Value Creation Algorithm 20
Slide 21: dlx
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Slide 22: Brian Anderson, Vice President, Strategy & Investor Relations
Brian Anderson Vice President, Strategy & Investor Relations 22
Slide 23: Upcoming Conferences/Events
Upcoming Conferences/Events 23
Slide 24: Appendix
Appendix dlx
Slide 25: Consolidated Condensed Statements of Income
Consolidated Condensed Statements of Income in millions, except per share amounts (Unaudited) Quarter Ended March 31, 2024 2023 Product revenue $300.4 $310.3 Service revenue 234.6 235.1 Total revenue 535.0 545.4 Cost of products (114.4) (118.5) Cost of services (137.1) (132.2) Total cost of revenue
Slide 26: Segment Information
Segment Information in millions (Unaudited) Quarter Ended March 31, 2024 2023 Effective January 1, 2024, the company Revenue: realigned its organization structure to Merchant Services $96.5 $89.1 better reflect its portfolio mix and B2B Payments 69.4 75.2 offerings, and it updated its reportable Dat
Slide 27: Reconciliation of GAAP to Non-GAAP Measures: Adjusted EBITDA
Reconciliation of GAAP to Non-GAAP Measures EBITDA, Adjusted EBITDA and Adjusted EBITDA margin in millions (Unaudited) Quarter Ended March 31, 2024 2023 Net income $10.8 $2.8 Interest expense 30.8 30.0 Income tax provision 5.6 3.7 Depreciation and amortization expense 41.7 43.5 EBITDA 88.9 80.0 Rest
Slide 28: Reconciliation of GAAP to Non-GAAP Measures: Adjusted Diluted EPS Q1 2024
Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - Q1 2024 dollars and shares in millions, except per share amounts (Unaudited) Gain on Acquisition and Restructuring sale of Income tax Q1 2024 accelerated and integration Share-based businesses/ impact of Q1 2024 GAAP amortization exp
Slide 29: Reconciliation of GAAP to Non-GAAP Measures: Adjusted Diluted EPS Q1 2023
Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - Q1 2023 dollars and shares in millions, except per share amounts (Unaudited) Income tax Q1 2023 Acquisition Restructuring and Share-based Certain legal- impact of Q1 2023 GAAP amortization integration expense compensation related exp
Slide 30: Reconciliation of GAAP to Non-GAAP Measures: Comparable Adjusted Revenue and EBITDA
Reconciliation of GAAP to Non-GAAP Measures Comparable Adjusted Revenue / Comparable Adjusted EBITDA / Comparable Adjusted EBITDA Margin in millions (Unaudited) Quarter Ended March 31, 2024 2023 Total revenue $535.0 $545.4 Business exits (6.0) (22.7) Comparable adjusted revenue $529.0 $522.7 Adjuste
Slide 31: Reconciliation of GAAP to Non-GAAP Measures: 2024 Outlook
Reconciliation of GAAP to Non-GAAP Measures Comparable Adjusted Revenue / Comparable Adjusted EBITDA / Comparable Adjusted EPS Outlook (Unaudited) Total Year 2024 Outlook 2023 Actual (in billions) Total revenue $2.140 - $2.180 $2.192 Less: Business exits — (0.056) Comparable adjusted revenue $2.140
Slide 32: Reconciliation of GAAP to Non-GAAP Measures: Net Debt to Adjusted EBITDA
Reconciliation of GAAP to Non-GAAP Measures Net Debt to Adjusted EBITDA dollars in millions (Unaudited) December 31, March 31, 2024 2023 Total debt $1,560.1 $1,592.9 Cash and cash equivalents (23.5) (72.0) Net debt $1,536.6 $1,520.9 TRAILING 12 MONTHS ADJUSTED EBITDA: 12 Months Ended 12 Months Ended
Slide 33: Reconciliation of GAAP to Non-GAAP Measures: Free Cash Flow
Reconciliation of GAAP to Non-GAAP Measures Free Cash Flow in millions (Unaudited) Quarter Ended March 31, 2024 2023 Net cash provided (used) by operating activities $26.6 ($6.7) Purchases of capital assets (20.4) (25.5) Free cash flow $6.2 ($32.2) 33
Slide 34: deluxe
deluxe