Deluxe Corporation · NYSE:DLX
Deluxe — Q3 2023 Earnings Presentation
38 slides from Deluxe's earnings presentation, Nov 2, 2023
Slide 1: Third Quarter 2023 Earnings
Third Quarter 2023 Earnings November 2, 2023 © 2023 Deluxe Corporation
Slide 2: Brian Anderson
Brian Anderson Vice President, Strategy & Investor Relations 2
Slide 3: Today's Presenters
Today’s Presenters Barry McCarthy Chip Zint Brian Anderson President and Chief Senior Vice President and Vice President, 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. Such
Slide 5: Barry McCarthy
Barry McCarthy President and Chief Executive Officer 5
Slide 6: Third Quarter 2023 Highlights
Third Quarter 2023 Highlights (in millions) -3.1% Flat n/m -2.6% +3.0% n/m - not meaningful 6
Slide 7: 3Q'23 Segment Highlights
3Q'23 Segment Highlights Comparable Adjusted EBITDA grew 3% vs 3Q'22 Data • Data-Driven Marketing comparable adjusted Payments • B2B Payments declined 2.5% driven revenue increased 24.5% year-over-year by Lockbox volume softness, challenging prior-year comparable • Core FI marketing campaign demand,
Slide 8: Project North Star
Project North Star dix
Slide 9: Introducing Project North Star
Introducing Project North Star Enterprise-wide Transformation … accelerating execution against core Program… DLX goals & drivers of shareholder return • Aligned to existing • Prioritizing rapid cash- enterprise strategy & +$100 million generation & payback stated capital allocation of incremental ru
Slide 10: Chip Zint
Chip Zint Chief Financial Officer 10
Slide 11: 3Q'23 Summary
3Q'23 Summary • Total revenue was $537.8 million, down 3.1% compared to 3Q22; comparable adjusted revenue was flat • GAAP net loss was $8.0 million, or $0.18 per share on a diluted basis • Adjusted EBITDA was $101.9 million, down 2.6% compared to 3Q22; comparable adjusted EBITDA increased 3.0% • Adj
Slide 12: Payments
Payments (in millions) -0.2% +3.9% • Adjusted EBITDA margin was 22.2%, up 90 basis points year-over-year driven primarily via operational improvements within Lockbox Payments Treasury Management B2B/Digital Payments Merchant Services Receivables as Payables as a Service a Service 12
Slide 13: Data Solutions
Data Solutions (in millions) +24.5% +47.1% • On a reported basis, revenue of $64.0 million decreased 4.0% from $66.7 million in the prior year • Adjusted EBITDA of $15.3 million decreased 4.4%,including the impact of current- and prior-year business exits, from $16.0 million in 2022 Data Solutions D
Slide 14: Promotional Solutions
Promotional Solutions (in millions) -7.5% -8.8% • On a reported basis, revenue of $124.3 million decreased 8.7% from $136.1 million in 2022 • Adjusted EBITDA of $16.6 millions decreased 9.3% from $18.3 million in the prior year Promotional Solutions Turn-Key Managed Web Storefront Platform Extensive
Slide 15: Checks
Checks (in millions) -1.3% +1.1% • Revenue decline slower than the market and in-line with our expectations • Strong EBITDA margin of 45.2% up 110 bps year-over-year Checks Strong cash flows fund growth Long-standing customer investments, and generate healthy return relationships drive cross-selling
Slide 16: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Declared regular dividend of $0.30 per share Net Debt to Adjusted EBITDA Free Cash Flow (in millions) (in millions) For the 12 Months Ended For the Quarter Ended 9/30/23 06/30/23 Variance 9/30/23 9/30/22 Variance Cash Provided by Net Debt $1,590.2 $1,628.1 ($37.9) Operati
Slide 17: Project North Star
Project North Star dix
Slide 18: Introducing Project North Star
Introducing Project North Star Enterprise-wide Transformation … accelerating execution against core Program… DLX goals & drivers of shareholder return • Aligned to existing • Prioritizing rapid cash- enterprise strategy & +$100 million generation & payback stated capital allocation of incremental ru
Slide 19: 2023 Guidance
2023 Guidance Well-positioned for sustainable growth • Revenue of $2.18 to $2.22 billion • Adjusted EBITDA of $405 to $420 million • Adjusted EPS of $3.20 to $3.45 • Free cash flow of $60 to $80 million • Additional modeling assumptions: ◦ Interest expense of approximately $125 million ◦ Adjusted ta
Slide 20: Q&A
Q&A © Deluxe Financial Services, LLC. Proprietary and Confidential. 20
Slide 21: Brian Anderson
Brian Anderson Vice President of Strategy & Investor Relations 21
Slide 22: Upcoming Conferences/Events
Upcoming Conferences/Events Date Event November 15, 2023 Stephens Annual Investment Conference, Nashville, TN December 5, 2023 Deluxe Investor Day, 8:30 am ET, Lotte New York Palace Hotel 22
Slide 23: Appendix
Appendix 23
Slide 24: Consolidated Condensed Statements of (Loss) Income
Consolidated Condensed Statements of (Loss) Income in millions, except per share amounts (Unaudited) Quarter Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Product revenue $304.8 $317.2 $938.9 $956.7 Service revenue 233.0 237.8 716.0 717.3 Total revenue 537.8 555.0 1,654.9 1
Slide 25: Segment Information
Segment Information in millions (Unaudited) Quarter Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenue: Payments $169.5 $169.8 $515.8 $507.2 Data Solutions 64.0 66.7 194.8 204.8 Promotional Solutions 124.3 136.1 399.2 408.6 Checks 180.0 182.4 545.1 553.4 Total $537.8 $55
Slide 26: Segment Information (continued)
Segment Information (continued) in millions (Unaudited) Quarter Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Comparable Adjusted Revenue: Payments $169.5 $169.8 $515.8 $507.2 Data Solutions 64.0 51.4 194.8 181.4 Promotional Solutions 124.3 134.4 399.2 396.1 Checks 180.0 18
Slide 27: 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 September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net (loss) income ($8.0) $14.7 $11.2 $46.5 Non-controlling interest — — (0.1) (0.1) Interest expense
Slide 28: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - Q3 2023 dollars and shares in millions, except per share amounts (Unaudited) Loss on sale of Restructuring Certain legal- businesses Income tax Q3 2023 Acquisition and integration Share-based related and long- impact of Q3 2023 GAAP
Slide 29: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - Q3 2022 dollars and shares in millions, except per share amounts (Unaudited) Gain on sale of businesses/ long-lived assets & Restructuring Acquisition Certain legal- gain on Income tax Q3 2022 Acquisition and integration Share-based
Slide 30: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - Sept YTD 2023 dollars and shares in millions, except per share amounts (Unaudited) Gain on sale of Sept YTD Restructuring Certain legal- businesses Income tax Sept YTD 2023 Acquisition and integration Share-based related and long- im
Slide 31: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - Sept YTD 2022 dollars and shares in millions, except per share amounts (Unaudited) Gain on sale of businesses/l ong-lived Sept YTD Restructuring Acquisition assets & Income tax Sept YTD 2022 Acquisition and integration Share-based tr
Slide 32: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Comparable Adjusted Revenue in millions (Unaudited) Quarter Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Total Company: Total revenue $537.8 $555.0 $1,654.9 $1,674.0 Business exits — (17.0) — (35.9) Comparable adjusted revenue $5
Slide 33: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Comparable Adjusted EBITDA in millions (Unaudited) Quarter Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Total Company: Adjusted EBITDA $101.9 $104.6 $310.7 $305.9 Business exits — (5.7) — (7.6) Comparable adjusted EBITDA $101.9 $
Slide 34: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Comparable Adjusted Revenue / Comparable Adjusted EBITDA Outlook (Unaudited) Total Year Data Solutions Promotional Solutions 2023 Outlook 2022 Actual 2022 Actual 2022 Actual (in billions) Total revenue $2.18 - $2.22 $2.238 $0.268 $0.563 Less: Business exit
Slide 35: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Net Debt to Adjusted EBITDA in millions (Unaudited) Sept. 30, June 30, 2023 2023 Total debt $1,632.4 $1,667.2 Cash and cash equivalents (42.2) (39.1) Net debt $1,590.2 $1,628.1 TRAILING 12 MONTHS ADJUSTED EBITDA: 12 Months Ended 12 Months Ended Sept. 30, 2
Slide 36: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Free Cash Flow in millions (Unaudited) Quarter Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net cash provided by operating activities $67.6 $51.2 $114.9 $123.4 Purchases of capital assets (24.9) (28.2) (80.8) (73.4) Free cash flo
Slide 37: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures We have not reconciled the adjusted EBITDA, comparable adjusted EBITDA, adjusted EPS, free cash flow or adjusted tax rate outlook guidance for 2023 to the directly comparable GAAP financial measures because we do not provide outlook guidance for the reconc
Slide 38: deluxe
deluxe