8-K
DELUXE CORP (DLX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 30, 2020
DELUXE CORPORATION
(Exact name of registrant as specified in its charter)
| MN | 1-7945 | 41-0216800 | |
|---|---|---|---|
| (State or other jurisdiction | (Commission | (I.R.S. Employer | |
| of incorporation) | File Number) | Identification No.) | |
| 3680 Victoria St. N. | Shoreview | MN | 55126-2966 |
| --- | --- | --- | --- |
| (Address of principal executive offices) | (Zip Code) |
(651) 483-7111
Registrant's telephone number, including area code
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, par value $1.00 per share | DLX | NYSE |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition.
As described in the Deluxe Corporation Form 10-Q for the quarter ended March 31, 2020, the Company reorganized its reportable business segments, effective January 1, 2020, to align with structural and management reporting changes in support of its growth strategy. The Company now operates 4 reportable business segments: Payments, Cloud Solutions, Promotional Solutions and Checks.
This Current Report includes supplemental unaudited historical information relative to segment revenue and segment adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) on both an annual and quarterly basis for the years ended December 31, 2019 and 2018 (furnished hereunder as Exhibit 99.1 and incorporated herein by reference). Exhibit 99.1 includes a reconciliation of total segment adjusted EBITDA to consolidated income (loss) before income taxes. The Company did not operate under this structure during any of these prior periods. The information presented in Exhibit 99.1 is consistent with the segment results reported in the Company's Form 10-Q for the quarter ended March 31, 2020, in accordance with Accounting Standards Codification 280.
The information contained in this Current Report shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br><br>Number | Description |
|---|---|
| 99.1 | Supplemental unaudited historical information relative to business segment changes effected during the first quarter of 2020 (furnished pursuant to Item 2.02 hereof) |
| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH | XBRL Taxonomy Extension Schema Document |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover page interactive data file (formatted as Inline XBRL and contained in Exhibit 101) |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 30, 2020
| DELUXE CORPORATION |
|---|
| /s/ Jeffrey L. Cotter |
| Jeffrey L. Cotter |
| Senior Vice President, Chief |
| Administrative Officer and |
| General Counsel |
3
Exhibit
Exhibit 99.1
DELUXE CORPORATION
SUPPLEMENTAL UNAUDITED BUSINESS SEGMENT INFORMATION
BASED ON SEGMENT STRUCTURE IN EFFECT
AS OF JANUARY 1, 2020
(in thousands)
| REVENUE | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total Year | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Payments: | ||||||||||
| 2019 | $ | 65,150 | $ | 64,104 | $ | 64,634 | $ | 75,685 | $ | 269,573 |
| 2018 | 49,357 | 47,613 | 54,748 | 72,828 | 224,546 | |||||
| Cloud Solutions: | ||||||||||
| 2019 | 78,288 | 78,914 | 79,976 | 81,205 | 318,383 | |||||
| 2018 | 74,461 | 77,364 | 81,394 | 74,370 | 307,589 | |||||
| Promotional Solutions: | ||||||||||
| 2019 | 155,829 | 155,545 | 156,835 | 172,683 | 640,892 | |||||
| 2018 | 157,632 | 160,437 | 159,298 | 180,991 | 658,357 | |||||
| Checks: | ||||||||||
| 2019 | 199,798 | 195,423 | 192,148 | 192,498 | 779,867 | |||||
| 2018 | 210,464 | 202,830 | 197,750 | 196,488 | 807,533 | |||||
| Total segment: | ||||||||||
| 2019 | $ | 499,065 | $ | 493,986 | $ | 493,593 | $ | 522,071 | $ | 2,008,715 |
| 2018 | 491,914 | 488,244 | 493,190 | 524,677 | 1,998,025 | |||||
| ADJUSTED EBITDA | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total Year | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Payments: | ||||||||||
| 2019 | $ | 16,867 | $ | 17,972 | $ | 17,199 | $ | 22,346 | 74,384 | |
| 2018 | 13,761 | 12,240 | 13,628 | 19,387 | 59,016 | |||||
| Cloud Solutions: | ||||||||||
| 2019 | 17,060 | 19,086 | 20,216 | 20,837 | 77,199 | |||||
| 2018 | 16,292 | 16,744 | 20,210 | 16,730 | 69,976 | |||||
| Promotional Solutions: | ||||||||||
| 2019 | 23,590 | 22,288 | 22,909 | 32,507 | 101,293 | |||||
| 2018 | 24,385 | 24,476 | 24,612 | 32,113 | 105,586 | |||||
| Checks: | ||||||||||
| 2019 | 102,234 | 99,871 | 98,782 | 101,776 | 402,662 | |||||
| 2018 | 108,727 | 108,541 | 101,259 | 96,694 | 415,221 | |||||
| Total segment: | ||||||||||
| 2019 | $ | 159,751 | $ | 159,217 | $ | 159,106 | $ | 177,466 | $ | 655,538 |
| 2018 | 163,165 | 162,001 | 159,709 | 164,924 | 649,799 |
Note that the quarterly amounts may not sum to the total year amounts due to immaterial rounding differences. Information regarding the Company's segment reporting can be found under the caption "Note 14: Business Segment Information" in the Condensed Notes to Unaudited Consolidated Financial Statements appearing in the Company's Form 10-Q for the quarter ended March 31, 2020.
The following tables present the reconciliation of total segment adjusted EBITDA to consolidated income (loss) before income taxes:
| 2019 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total Year | ||||||||||
| Total segment adjusted EBITDA | $ | 159,751 | $ | 159,217 | $ | 159,106 | $ | 177,466 | $ | 655,538 | |||||
| Corporate operations | (46,043 | ) | (41,732 | ) | (39,770 | ) | (47,129 | ) | (174,672 | ) | |||||
| Deprecation and amortization | (32,419 | ) | (32,517 | ) | (30,494 | ) | (30,606 | ) | (126,036 | ) | |||||
| Interest expense | (9,301 | ) | (9,239 | ) | (8,710 | ) | (7,432 | ) | (34,682 | ) | |||||
| Asset impairment charges | — | — | (390,980 | ) | — | (390,980 | ) | ||||||||
| Restructuring, integration and other costs | (6,283 | ) | (17,693 | ) | (29,723 | ) | (25,812 | ) | (79,511 | ) | |||||
| CEO transition costs | (5,488 | ) | (1,906 | ) | (1,145 | ) | (851 | ) | (9,390 | ) | |||||
| Share-based compensation expense | (3,291 | ) | (5,369 | ) | (5,356 | ) | (5,122 | ) | (19,138 | ) | |||||
| Acquisition transaction costs | (177 | ) | (3 | ) | (13 | ) | (22 | ) | (215 | ) | |||||
| Certain legal-related expenses | (412 | ) | (6,005 | ) | — | (3 | ) | (6,420 | ) | ||||||
| (Loss) gain on sales of businesses and customer lists | (99 | ) | — | (125 | ) | 100 | (124 | ) | |||||||
| Income (loss) before income taxes | $ | 56,238 | $ | 44,753 | $ | (347,210 | ) | $ | 60,589 | $ | (185,630 | ) | |||
| 2018 | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total Year | ||||||||||
| Total segment adjusted EBITDA | $ | 163,165 | $ | 162,001 | $ | 159,709 | $ | 164,924 | $ | 649,799 | |||||
| Corporate operations | (41,614 | ) | (36,742 | ) | (31,142 | ) | (31,004 | ) | (140,502 | ) | |||||
| Deprecation and amortization | (31,141 | ) | (32,376 | ) | (33,406 | ) | (34,177 | ) | (131,100 | ) | |||||
| Interest expense | (5,579 | ) | (6,130 | ) | (7,244 | ) | (8,159 | ) | (27,112 | ) | |||||
| Asset impairment charges | (2,149 | ) | — | (99,170 | ) | — | (101,319 | ) | |||||||
| Restructuring, integration and other costs | (2,322 | ) | (6,371 | ) | (5,104 | ) | (7,406 | ) | (21,203 | ) | |||||
| CEO transition costs | — | (1,530 | ) | (2,622 | ) | (3,058 | ) | (7,210 | ) | ||||||
| Share-based compensation expense | (2,963 | ) | (2,354 | ) | (3,100 | ) | (3,272 | ) | (11,689 | ) | |||||
| Acquisition transaction costs | (457 | ) | (600 | ) | (51 | ) | (611 | ) | (1,719 | ) | |||||
| Certain legal-related expenses | (297 | ) | (631 | ) | (1,805 | ) | (7,769 | ) | (10,502 | ) | |||||
| Gain on sales of businesses and customer lists | 7,228 | 3,862 | 1,765 | 2,786 | 15,641 | ||||||||||
| Loss on debt retirement | (453 | ) | — | — | — | (453 | ) | ||||||||
| Income (loss) before income taxes | $ | 83,418 | $ | 79,129 | $ | (22,170 | ) | $ | 72,254 | $ | 212,631 |
Note that the quarterly amounts may not sum to the total year amounts due to immaterial rounding differences.