Deluxe Corporation · NYSE:DLX
Deluxe — Q3 2019 Earnings Presentation
24 slides from Deluxe's earnings presentation, Oct 25, 2019
Slide 1: Third Quarter Earnings Call October 24, 2019
Third Quarter Earnings Call October 24, 2019
Slide 2: Ed Merritt, Treasurer and VP of Investor Relations
ED MERRITT TREASURER AND VICE PRESIDENT OF INVESTOR RELATIONS 2
Slide 3: Today's Presenters
TODAYS PRESENTERS Barry McCarthy Keith Bush Ed Merritt President and Chief Financial Officer and Treasurer and Vice President Chief Executive Officer Senior Vice President of Investor Relations 3
Slide 4: Cautionary Statement
CAUTIONARY STATEMENT 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 subject t
Slide 5: Barry McCarthy, President and Chief Executive Officer
BARRY McCARTHY PRESIDENT AND CHIEF EXECUTIVE OFFICER 5
Slide 6: Agenda for Today
AGENDA FOR TODAY • Strong third quarter operating performance • Met revenue commitment, exceeded adjusted diluted EPS outlook • Executing well on new strategy • Reinvigorating the culture • Driving equity ownership • Implementing modern technology infrastructure • Signing new contracts at an unprece
Slide 7: Keith Bush, Chief Financial Officer and Senior Vice President
KEITH BUSH CHIEF FINANCIAL OFFICER AND SENIOR VICE PRESIDENT 7
Slide 8: Third Quarter Performance
THIRD QUARTER PERFORMANCE • Delivered solid third quarter • Total revenue was $494 million, within outlook range, strong operating cash flow • Making progress and acting with urgency to transform into four new focus areas • Payments • Cloud • Promotional Products • Checks • Marketing solutions and o
Slide 9: EPS & Non-Cash Asset Impairment
EPS & NON-CASH ASSET IMPAIRMENT • GAAP diluted loss per share, $7.49 • Includes non-cash impairment charge • Employee severance costs • Facility closure costs • Non-Cash Asset Impairment: • Softness in web services and data-driven marketing • Exiting certain customer contracts • Sustained decline in
Slide 10: 3rd Quarter 2019 Results
3rd QUARTER 2019 RESULTS Better/ 2019 2018 $ in millions except EPS data (Worse) Revenue: Small Business Services $310.2 $315.6 $(5.4) Financial Services 154.6 146.8 7.8 Direct Checks 28.8 30.8 (2.0) Consolidated $493.6 $493.2 $0.4 Product Revenue: MOS $216.9 $209.9 $7.0 Check Revenue 192.8 198.6 (5
Slide 11: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW Total Debt Free Cash Flow (Cash provided by operating activities less capital expenditures) $ in millions Nine Months $ in millions $924.0$946.0 * $911.9$911.9 Ended Sept 30, 2019 2018 Cash Provided by Operating Activities $208.0 $219.1 Less Capital Expenditures (49.7) (4
Slide 12: Share Buybacks and Affirming Outlook
SHARE BUYBACKS AND AFFIRMING OUTLOOK Share Buybacks • Purchased $39.7 million of stock in third quarter • $118.5 million in share buybacks year-to-date • Have $301 million of authorization remaining at the end of the quarter • Plan to opportunistically make purchases Affirming Full Year Outlook • To
Slide 13: Barry McCarthy, President and Chief Executive Officer
BARRY McCARTHY PRESIDENT AND CHIEF EXECUTIVE OFFICER 13
Slide 14: Transformation Progress
TRANSFORMATION PROGRESS • Making progress on transformation, deep sense of urgency • Strategy focused on profitable revenue growth in two key areas: • Payments • Cloud • Aiming for nice growth in Promotional Products • 2023 targets, approximately $2.3 billion revenue, low-to-mid 20’s margins • Great
Slide 15: Strong Foundation of Assets
STRONG FOUNDATION OF ASSETS • Nearly 5 million small business customers • 4.5 million hosted small business websites (directly and indirectly) • +4,600 financial institution customers • Our customers want to do more with us, we need to make that easier • We are changing our go-to-market strategy 15
Slide 16: Four Primary Areas of Focus Going Forward
FOUR* PRIMARY AREAS OF FOCUS GOING FORWARD A Company of Products GROWTH AREA VALUE AREA PromotionalPromotional PaymentsPayments CloudCloud ChecksChecks ProductsProducts Treasury Management Solutions Hosted Solutions • business forms • printed checks • lockbox • digital engagement • accessories • oth
Slide 17: Focus Business Update
FOCUS BUSINESS UPDATE • Payments: Treasury Management winning new customers, Payroll starting to sell through financial institutions, eChecks continues to grow, new leader expected to be announced in the coming weeks • Cloud-based solutions: Growth through new reseller relationships, new business wi
Slide 18: New Day Technology Initiatives
NEW DAY TECHNOLOGY INITIATIVES • Salesforce (CRM), Barry to speak at Dreamforce event in San Francisco • Workday (HR), expect to go-live January 1st, 2020 • S4/Hana selected as ERP solution, IBM selected as implementation partner 18
Slide 19: Focus Areas: The New Deluxe Focus Areas
FOCUS AREAS: The New Deluxe Focus Areas • Chris Thomas, Chief Revenue Officer • “Everyone Sells” program SALES • Salesforce – Enterprise-wide CRM platform • Telesales improvements • Key enterprise wins; Ingram Micro, Vodaphone India & more • We have a single leader for product development PRODUCT AN
Slide 20: Questions & Answers
QUESTIONS & ANSWERS
Slide 21: In Summary
IN SUMMARY 1) Momentum continues to build - Many examples of early client wins utilizing our new go- to-market strategy that will begin to bear greater fruit in 2020. 2) Strategy: Payments, Cloud, Promotional Products and Checks – Continue to gain traction in the market. 3) Technology - Continue to
Slide 22: Future Management Presentations
FUTURE MANAGEMENT PRESENTATIONS DATE EVENT CITY November 19 Salesforce Dreamforce Event San Francisco December 3-4 Wells Fargo TMT Summit Las Vegas Early December Roadshows with Investors TBD January 14-15, 2020 Needham Growth Conference New York mid-February (date TBD) Deluxe Analyst Day New York 2
Slide 23: Replay of This Call
REPLAY OF THIS CALL • Audio replay available through October 31 • Dial: 1-404-537-3406 • Access code: 9170599 • Presentation slides: • Deluxe’s investor relations website at deluxe.com/investor 23
Slide 24: Investor Relations
Investor Relations Tel: 651-787-1370 ed.merritt@deluxe.com