Deluxe Corporation · NYSE:DLX

Deluxe — Q2 2023 Earnings Presentation

34 slides from Deluxe's earnings presentation, Aug 3, 2023

  1. Slide 1: Second Quarter 2023 Earnings

    Second Quarter 2023 Earnings August 3, 2023 © 2023 Deluxe Corporation

  2. Slide 2: Brian Anderson

    Brian Anderson Vice President, Strategy & Investor Relations 2

  3. 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

  4. 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

  5. Slide 5: Barry McCarthy

    Barry McCarthy President and Chief Executive Officer 5

  6. Slide 6: Second Quarter 2023 Highlights

    Second Quarter 2023 Highlights (in millions) +1.5% +2.6% -25.8% +6.6% +7.2% 6

  7. Slide 7: 2Q23 Segment Highlights

    2Q23 Segment Highlights Revenue and EBITDA increases across all segments Data • Comparable adjusted revenue increased Payments • Revenue increased 1.9% year-over- year 8.4% year-over-year • Merchant Services increased 1.3%, • Data-Driven Marketing business delivered noting improving trends later in

  8. Slide 8: Chip Zint

    Chip Zint Chief Financial Officer 8

  9. Slide 9: 2Q23 Summary

    2Q23 Summary • Total revenue was $571.7 million, up 1.5% compared to 2Q22; comparable adjusted revenue increased 2.6% • GAAP net income was $16.4 million, or $0.37 per share on a diluted basis • Adjusted EBITDA was $108.4 million, up 6.6% compared to 2Q22; comparable adjusted EBITDA increased 7.2% •

  10. Slide 10: Payments

    Payments (in millions) +1.9% +3.7% • Adjusted EBITDA margin was 20.8%, up 40 basis points year-over-year driven primarily via operational improvements within Lockbox Payments Merchant Services Receivables as Payables as Payroll & HR Management a Service a Service Solutions 10

  11. Slide 11: Data Solutions

    Data Solutions (in millions) +5.1% +1.7% • On a comparable adjusted basis, revenue increased 8.4% and Adjusted EBITDA increased 3.5% • Adjusted EBITDA margin of 24.7%, 80 basis points lower, driven primarily by product mix Data Solutions Data Analytics SaaS Solutions 11

  12. Slide 12: Promotional Solutions

    Promotional Solutions (in millions) -0.4% +45.2% • Revenue increased 2.2% on a comparable adjusted basis • Adjusted EBITDA margin was 15.3%, up 480 basis points year-over-year, as pricing actions and operational improvements continued to drive results Promotional Solutions Support Rapidly Turn-Key M

  13. Slide 13: Checks

    Checks (in millions) +1.4% +1.3% • Revenue improvement driven by some Q1 timing impacts • Strong EBITDA margins of 44.8% down 10bps year-over-year Checks Strong cash flow self funds growth Cost-effective lead generation to investments, and generates healthy return drive cross-selling existing of cap

  14. Slide 14: 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 6/30/23 03/31/23 Variance 6/30/23 6/30/22 Variance Cash Provided by Net Debt $1,628.1 $1,662.1 ($34.0) Operati

  15. Slide 15: 2023 Guidance

    2023 Guidance Well-positioned for sustainable growth • Revenue of $2.18 to $2.22 billion • Adjusted EBITDA of $400 to $415 million • Adjusted EPS of $3.10 to $3.40 • Free cash flow of $80 to $100 million • Additional modeling assumptions: ◦ Interest expense of $120 to $125 million ◦ Adjusted tax rat

  16. Slide 16: Q&A

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

  17. Slide 17: Brian Anderson

    Brian Anderson Vice President of Strategy & Investor Relations 17

  18. Slide 18: Upcoming Conferences

    Upcoming Conferences Date Event September 18, 2023 CL King's 21st Annual Best Ideas Conference September 20, 2023 Sidoti Virtual Small Cap Conference 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, 2023 2022 2023 2022 Product revenue $323.8 $322.2 $634.1 $639.4 Service revenue 247.9 240.8 483.0 479.6 Total revenue 571.7 563.0 1,117.1 1,119.0 Cost of pro

  21. Slide 21: Segment Information

    Segment Information in millions (Unaudited) Quarter Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenue: Payments $174.4 $171.2 $346.4 $337.4 Data Solutions 72.1 68.6 130.7 138.1 Promotional Solutions 138.8 139.3 274.9 272.5 Checks 186.4 183.9 365.1 371.0 Total $571.7 $563.0 $1,117.

  22. Slide 22: Segment Information (continued)

    Segment Information (continued) in millions (Unaudited) Quarter Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Comparable Adjusted Revenue: Payments $174.4 $171.2 $346.4 $337.4 Data Solutions 72.1 66.5 130.7 129.9 Promotional Solutions 138.8 135.8 274.9 261.7 Checks 186.4 183.9 365.1 3

  23. Slide 23: 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, 2023 2022 2023 2022 Net income $16.4 $22.1 $19.2 $31.8 Non-controlling interest — — (0.1) (0.1) Interest expense 31.9 21.4 61.9 41.7

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

    Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - Q2 2023 dollars and shares in millions, except per share amounts (Unaudited) Gain on Restructuring sale of Income tax Q2 2023 Acquisition and integration Share-based Certain legal- businesses impact of Q2 2023 GAAP amortization costs

  25. Slide 25: 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 and integration Share-based related businesses impact of Q2 2022 GAAP amortizati

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

    Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - June YTD 2023 dollars and shares in millions, except per share amounts (Unaudited) Gain on June YTD Restructuring Certain legal- sale of Income tax June YTD 2023 Acquisition and integration Share-based related businesses impact of 20

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

    Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS - June YTD 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 and integration Share-based transaction related

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

    Reconciliation of GAAP to Non-GAAP Measures Comparable Adjusted Revenue in millions (Unaudited) Quarter Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Total Company: Total revenue $571.7 $563.0 $1,117.1 $1,119.0 Business exits — (5.6) — (19.0) Comparable adjusted revenue $571.7 $557.4

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

    Reconciliation of GAAP to Non-GAAP Measures Comparable Adjusted EBITDA in millions (Unaudited) Quarter Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Total Company: Adjusted EBITDA $108.4 $101.7 $208.8 $201.3 Business exits — (0.6) — (1.9) Comparable adjusted EBITDA $108.4 $101.1 $208.

  30. Slide 30: 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

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

    Reconciliation of GAAP to Non-GAAP Measures Net Debt to Adjusted EBITDA in millions (Unaudited) June 30, March 31, 2023 2023 Total debt $1,667.2 $1,686.7 Cash and cash equivalents (39.1) (24.6) Net debt $1,628.1 $1,662.1 TRAILING 12 MONTHS ADJUSTED EBITDA: 12 Months Ended 12 Months Ended June 30, 20

  32. Slide 32: Reconciliation of GAAP to Non-GAAP Measures

    Reconciliation of GAAP to Non-GAAP Measures Free Cash Flow in millions (Unaudited) Quarter Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net cash provided by operating activities $54.1 $37.9 $47.3 $72.2 Purchases of capital assets (30.4) (24.4) (55.9) (45.3) Free cash flow $23.7 $13.5

  33. Slide 33: 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

  34. Slide 34: Deluxe

    deluxe

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