Deluxe Corp 8-K, filed Mar 23, 2022
Deluxe Corp (DLX)
8-K
2022-03-23
For: 2022-03-23
View Original
Added on
April 04, 2026
About this 8-K
Deluxe Corp filed this 8-K on March 23, 2022.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
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): March 23, 2022
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction | (Commission | (I.R.S. Employer | ||||||
| of incorporation) | File Number) | Identification No.) | ||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
(651 ) 483-7111
Registrant's telephone number, including area code
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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
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).
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 7 - Regulation FD
Item 7.01 Regulation FD Disclosure.
The following information is being “furnished” in accordance with General Instruction B.2. of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing:
Furnished herewith as Exhibit 99.1 and incorporated by reference herein is certain unaudited historical financial information of the Company that is provided on the Company's website, www.deluxe.com/investor-relations. The content of the Company’s website is not incorporated by reference in this Current Report on Form 8-K.
Furnished herewith as Exhibit 99.2 and incorporated by reference herein is a copy of a presentation entitled "Deluxe Investor Presentation.”
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 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.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: March 23, 2022
| DELUXE CORPORATION | ||||||||
| /s/ Jeffrey L. Cotter | ||||||||
| Jeffrey L. Cotter | ||||||||
| Senior Vice President, Chief | ||||||||
| Administrative Officer and | ||||||||
| General Counsel | ||||||||
3
DELUXE CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS) (unaudited / dollars and shares in millions, except per share amounts) FY 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 FY 2019 FY 2018 Product revenue $1,244.5 $336.9 $302.3 $306.2 $299.1 $1,230.7 $322.5 $298.8 $278.7 $330.7 $1,409.1 $1,451.8 Service revenue 777.7 233.7 229.8 172.0 142.2 560.1 132.0 140.7 131.7 155.7 599.6 546.2 Total revenue 2,022.2 570.6 532.1 478.2 441.3 1,790.8 454.5 439.5 410.4 486.4 2,008.7 1,998.0 Cost of products (450.9) (120.1) (111.0) (112.6) (107.3) (458.7) (125.8) (108.4) (102.9) (121.5) (531.3) (547.6) Cost of services (433.4) (135.0) (133.1) (94.0) (71.2) (272.1) (66.2) (66.1) (59.4) (80.5) (281.6) (244.1) Total cost of revenue (884.3) (255.1) (244.1) (206.6) (178.5) (730.8) (192.0) (174.5) (162.3) (202.0) (812.9) (791.7) Gross profit 1,137.9 315.5 288.0 271.6 262.8 1,060.0 262.5 265.0 248.1 284.4 1,195.8 1,206.3 Selling, general and administrative expense (941.0) (255.4) (239.3) (233.8) (212.5) (841.7) (207.0) (198.9) (198.5) (237.2) (891.7) (854.1) Restructuring and integration expense (54.7) (16.7) (12.3) (11.4) (14.3) (75.9) (18.9) (18.9) (20.4) (17.7) (71.2) (19.7) Asset impairment charges - - - - - (101.7) - (2.8) (4.9) (94.1) (421.1) (101.3) Operating income (loss) 142.2 43.4 36.4 26.4 36.0 40.7 36.6 44.4 24.3 (64.6) (188.2) 231.2 Interest expense (55.6) (20.0) (21.5) (9.5) (4.5) (23.1) (4.9) (5.1) (6.1) (7.0) (34.7) (27.1) Other income 7.2 0.7 2.3 2.1 2.0 9.2 0.7 2.2 1.8 4.5 7.2 8.5 Income (loss) before income taxes 93.8 24.1 17.2 19.0 33.5 26.8 32.4 41.5 20.0 (67.1) (215.7) 212.6 Income tax (provision) benefit (31.0) (10.3) (4.7) (6.9) (9.2) (21.5) (7.7) (12.1) (5.1) 3.4 (8.1) (63.0) Net income (loss) 62.8 13.8 12.5 12.1 24.3 5.3 24.7 29.4 14.9 (63.7) (223.8) 149.6 Non-controlling interest (0.2) - - - - (0.1) - - - - - - Net income (loss) attributable to Deluxe $62.6 $13.8 $12.5 $12.1 $24.3 $5.2 $24.7 $29.4 $14.9 ($63.7) ($223.8) $149.6 Weighted-average dilutive shares 42.8 43.1 43.0 42.7 42.5 42.1 42.2 42.0 41.9 42.1 43.0 47.0 Diluted earnings (loss) per share $1.45 $0.32 $0.28 $0.28 $0.57 $0.11 $0.58 $0.70 $0.35 ($1.53) ($5.20) $3.16 Adjusted diluted earnings per share* 4.88 1.26 1.10 1.25 1.26 5.08 1.38 1.47 1.15 1.08 6.82 6.88 Capital expenditures 109.1 28.1 34.5 24.9 21.7 62.6 19.9 15.6 12.8 14.3 66.6 62.2 Depreciation and amortization expense 148.8 45.8 41.9 33.2 27.8 110.8 27.7 28.0 26.7 28.4 126.0 131.1 EBITDA* 298.0 89.9 80.6 61.7 65.8 160.6 65.0 74.6 52.8 (31.7) (55.0) 370.8 Adjusted EBITDA* 407.8 117.1 102.7 97.5 90.5 364.5 94.9 102.5 83.8 83.3 480.9 509.3 Note: Quarterly amounts may not sum to annual amounts due to immaterial rounding differences. * Represents a non-GAAP financial measure. See the reconciliation to the most comparable GAAP financial measure provided.
DELUXE CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited / dollars and shares in millions) Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 March 31, 2021 Dec. 31, 2020 Sept. 30, 2020 June 30, 2020 March 31, 2020 Dec. 31, 2019 Dec. 31, 2018 Cash and cash equivalents $41.2 $121.1 $163.3 $125.4 $123.1 $310.4 $372.0 $310.1 $73.6 $59.7 Other current assets 579.3 446.5 440.0 379.1 383.5 367.5 344.3 376.1 398.6 390.4 Property, plant and equipment 126.0 129.7 96.4 87.8 88.7 80.7 77.9 94.3 96.5 90.3 Operating lease assets 58.2 58.4 62.4 41.3 35.9 40.5 45.0 43.9 44.4 - Intangibles 510.7 515.9 521.5 254.2 246.8 234.8 230.7 240.0 276.1 360.0 Goodwill 1,430.1 1,435.5 1,439.3 703.0 703.0 703.0 702.9 702.8 774.4 1,160.6 Other non-current assets 328.9 299.1 294.6 269.8 261.2 239.5 258.1 246.5 250.8 244.1 Total assets $3,074.4 $3,006.2 $3,017.5 $1,860.6 $1,842.2 $1,976.4 $2,030.9 $2,013.7 $1,914.4 $2,305.1 Current portion of long-term debt 57.2 57.2 $57.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Other current liabilities 626.2 483.7 470.1 404.6 411.8 378.9 358.5 358.7 407.9 392.0 Long-term debt 1,625.8 1,719.0 1,776.3 840.0 840.0 1,040.0 1,140.0 1,140.0 883.5 911.1 Non-current operating lease liabilities 56.4 49.8 52.9 34.3 28.3 30.9 34.2 32.7 33.6 - Other non-current liabilities 134.2 138.6 108.8 50.3 48.7 42.6 40.3 35.8 42.4 86.6 Shareholders' equity 574.6 557.9 552.3 531.4 513.4 484.0 457.9 446.5 547.0 915.4 Total liabilities and shareholders' equity $3,074.4 $3,006.2 $3,017.5 $1,860.6 $1,842.2 $1,976.4 $2,030.9 $2,013.7 $1,914.4 $2,305.1 Net debt* $1,641.8 $1,655.1 $1,670.1 $714.6 $716.9 $729.6 $768.0 $829.9 $809.9 $851.4 Shares outstanding 42.7 42.6 42.5 42.1 42.0 41.9 41.9 41.7 42.1 44.6 Number of employees 6,313 6,389 6,443 5,893 6,185 6,388 6,623 6,739 6,352 6,701 * Represents a non-GAAP financial measure. See the reconciliation to the most comparable GAAP financial measure provided.
DELUXE CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited / dollars in millions) FY 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 FY 2019 FY 2018 Cash provided (used) by: Operating activities: Net income (loss) $62.8 $13.8 $12.5 $12.1 $24.3 $5.3 $24.7 $29.4 $14.9 ($63.7) ($223.8) $149.6 Depreciation and amortization of intangibles 148.8 45.8 41.9 33.2 27.8 110.8 27.7 28.0 26.7 28.4 126.0 131.1 Asset impairment charges - - - - - 101.7 - 2.8 4.9 94.1 421.1 101.3 Prepaid product discount payments (40.9) (13.9) (8.0) (9.5) (9.6) (33.6) (8.7) (9.1) (8.5) (7.3) (25.6) (23.8) Other 40.1 15.9 19.0 8.4 (2.9) 33.4 7.0 6.1 45.2 (25.0) (11.0) (18.9) Total operating activities 210.8 61.6 65.4 44.2 39.6 217.6 50.7 57.2 83.2 26.5 286.7 339.3 Investing activities: Payments for acquisitions, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired (958.5) (1.8) - (956.7) - - - - - - (8.2) (191.9) Purchases of capital assets (109.1) (28.1) (34.5) (24.9) (21.7) (62.6) (19.9) (15.6) (12.8) (14.3) (66.6) (62.2) Proceeds from sale of facilities 2.6 - 2.6 - - 9.7 - 9.7 - - - - Other (1.6) (0.3) 0.2 (1.2) (0.2) (3.2) (4.5) (0.5) 1.5 0.4 2.4 1.1 Total investing activities (1,066.6) (30.2) (31.7) (982.8) (21.9) (56.1) (24.4) (6.4) (11.3) (13.9) (72.4) (253.0) Financing activities: Net change in debt, net of debt issuance costs 836.8 (94.4) (58.7) 989.9 - (43.5) (200.0) (100.0) - 256.5 (26.5) 201.2 Proceeds from issuing shares 16.8 0.8 1.2 14.2 0.7 3.7 0.7 0.6 0.7 1.7 3.2 7.5 Dividends (51.6) (13.0) (12.8) (12.9) (12.9) (50.7) (12.7) (12.6) (12.8) (12.7) (51.7) (56.7) Share repurchases - - - - - (14.0) - - - (14.0) (118.5) (200.0) Net change in customer funds obligations 126.7 111.8 9.4 3.9 1.7 (0.2) 9.2 22.0 (11.9) (19.4) 12.6 20.3 Other (15.7) (3.9) (3.6) (4.7) (3.7) (5.9) (1.1) (2.3) (1.6) (1.0) (9.3) (34.5) Total financing activities 913.0 1.3 (64.5) 990.4 (14.2) (110.6) (203.9) (92.3) (25.6) 211.1 (190.2) (62.2) Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents (1.1) (0.3) (4.2) 1.8 1.6 3.7 7.0 3.2 6.2 (12.7) 5.4 (7.6) Net change in cash, cash equivalents, restricted cash and restricted cash equivalents 56.1 32.4 (35.0) 53.6 5.1 54.6 (170.6) (38.3) 52.5 211.0 29.5 16.5 Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period 229.4 253.1 288.1 234.5 229.4 174.8 400.0 438.3 385.8 174.8 145.3 128.8 Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period $285.5 $285.5 $253.1 $288.1 $234.5 $229.4 $229.4 $400.0 $438.3 $385.8 $174.8 $145.3 Free cash flow* $101.7 $33.5 $30.9 $19.3 $17.9 $155.0 $30.8 $41.6 $70.4 $12.2 $220.1 $277.1 Note: Quarterly amounts may not sum to annual amounts due to immaterial rounding differences. * Represents a non-GAAP financial measure. See the reconciliation to the most comparable GAAP financial measure provided.
DELUXE CORPORATION SEGMENT RESULTS (unaudited / dollars in millions) FY 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 FY 2019 FY 2018 Revenue: Payments $510.4 $167.3 $160.3 $103.3 $79.5 $301.9 $78.0 $74.7 $72.2 $77.0 $269.6 $224.5 Cloud Solutions 262.3 62.5 69.5 68.1 62.2 252.8 59.2 63.8 53.9 76.0 318.4 307.6 Promotional Solutions 546.5 156.7 130.3 135.0 124.5 529.6 144.0 124.9 117.9 142.8 640.9 658.4 Checks 703.0 184.1 172.0 171.8 175.1 706.5 173.3 176.1 166.4 190.6 779.8 807.5 Total $2,022.2 $570.6 $532.1 $478.2 $441.3 $1,790.8 $454.5 $439.5 $410.4 $486.4 $2,008.7 $1,998.0 Adjusted EBITDA: Payments $105.6 $34.5 $31.6 $21.2 $18.3 $68.1 $17.8 $16.7 $15.6 $18.0 $74.4 $59.0 Cloud Solutions 70.2 15.1 19.0 18.8 17.2 61.6 16.1 16.4 14.1 14.9 77.2 70.0 Promotional Solutions 85.4 28.6 17.7 21.4 17.7 66.6 20.1 21.5 13.9 11.2 101.3 105.6 Checks 324.2 83.2 77.2 80.2 83.6 341.7 83.3 85.0 82.7 90.7 402.7 415.2 Corporate (177.6) (44.3) (42.8) (44.1) (46.3) (173.5) (42.4) (37.1) (42.5) (51.5) (174.7) (140.5) Total $407.8 $117.1 $102.7 $97.5 $90.5 $364.5 $94.9 $102.5 $83.8 $83.3 $480.9 $509.3 Adjusted EBITDA Margin: Payments 20.7% 20.6% 19.7% 20.5% 23.0% 22.6% 22.8% 22.4% 21.6% 23.4% 27.6% 26.3% Cloud Solutions 26.8% 24.2% 27.3% 27.6% 27.7% 24.4% 27.2% 25.7% 26.2% 19.6% 24.2% 22.8% Promotional Solutions 15.6% 18.3% 13.6% 15.9% 14.2% 12.6% 14.0% 17.2% 11.8% 7.8% 15.8% 16.0% Checks 46.1% 45.2% 44.9% 46.7% 47.7% 48.4% 48.1% 48.3% 49.7% 47.6% 51.6% 51.4% Total 20.2% 20.5% 19.3% 20.4% 20.5% 20.4% 20.9% 23.3% 20.4% 17.1% 23.9% 25.5% Note: Quarterly amounts may not sum to annual amounts due to immaterial rounding differences. The segment information reported here was calculated utilizing the methodology outlined in the Notes to Consolidated Financial Statements included in the company's Form 10-K for the year ended December 31, 2021. Consolidated Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. See the reconciliation to the most comparable GAAP financial measure provided.
DELUXE CORPORATION RECONCILIATION OF GAAP TO NON-GAAP MEASURES EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (unaudited / dollars in millions) FY 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 FY 2019 FY 2018 Net income (loss) $62.8 $13.8 $12.5 $12.1 $24.3 $5.3 $24.7 $29.4 $14.9 ($63.7) ($223.8) $149.6 Non-controlling interest (0.2) - - - - (0.1) - - - - - - Interest expense 55.6 20.0 21.5 9.5 4.5 23.1 4.9 5.1 6.1 7.0 34.7 27.1 Income tax provision (benefit) 31.0 10.3 4.7 6.9 9.2 21.5 7.7 12.1 5.1 (3.4) 8.1 63.0 Depreciation and amortization expense 148.8 45.8 41.9 33.2 27.8 110.8 27.7 28.0 26.7 28.4 126.0 131.1 EBITDA 298.0 89.9 80.6 61.7 65.8 160.6 65.0 74.6 52.8 (31.7) (55.0) 370.8 Asset impairment charges - - - - - 101.7 - 2.8 4.9 94.1 421.1 101.3 Restructuring, integration and other costs 59.0 17.9 13.9 12.0 15.2 80.7 21.6 18.9 20.5 19.7 79.5 21.2 CEO transition costs - - - - - - - - 0.2 (0.2) 9.4 7.2 Share-based compensation 29.5 7.7 7.4 7.6 6.7 21.8 6.5 6.2 5.4 3.6 19.2 11.7 Acquisition transaction costs 18.9 0.1 0.2 15.9 2.8 - - - - - 0.2 1.7 Certain legal-related expense (benefit) 2.4 1.5 0.6 0.3 - (2.1) - - - (2.2) 6.4 10.5 Loss (gain) on sales of businesses and customer lists - - - - - 1.8 1.8 - - - 0.1 (15.6) Loss on debt retirement - - - - - - - - - - - 0.5 Adjusted EBITDA $407.8 $117.1 $102.7 $97.5 $90.5 $364.5 $94.9 $102.5 $83.8 $83.3 $480.9 $509.3 Adjusted EBITDA as a percentage of total revenue (Adjusted EBITDA margin) 20.2% 20.5% 19.3% 20.4% 20.5% 20.4% 20.9% 23.3% 20.4% 17.1% 23.9% 25.5% Note: Quarterly amounts may not sum to annual amounts due to immaterial rounding differences. Management discloses EBITDA, Adjusted EBITDA and Adjusted EBITDA margin because it believes they are useful in evaluating the company's operating performance, as the calculations eliminate the effect of interest expense, income taxes, the accounting effects of capital investments (i.e., depreciation and amortization) and in the case of Adjusted EBITDA and Adjusted EBITDA margin, certain items, as presented below, that may not be indicative of current period operating performance. In addition, management utilizes Adjusted EBITDA and Adjusted EBITDA margin to assess the operating results and performance of the business, to perform analytical comparisons and to identify strategies to improve performance. Management also believes that an increasing EBITDA and Adjusted EBITDA depict an increase in the value of the company. Management does not consider EBITDA or Adjusted EBITDA to be measures of cash flow, as they do not consider certain cash requirements, such as interest, income taxes, debt service payments or capital investments. Management does not consider EBITDA or Adjusted EBITDA to be substitutes for operating income or net income. Instead, management believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are useful performance measures that should be considered in addition to GAAP performance measures.
DELUXE CORPORATION RECONCILIATION OF GAAP TO NON-GAAP MEASURES ADJUSTED DILUTED EPS (unaudited / dollars and shares in millions, except per share amounts) FY 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 FY 2019 FY 2018 Net income (loss) $62.8 $13.8 $12.5 $12.1 $24.3 $5.3 24.7 $29.4 $14.9 ($63.7) ($223.8) $149.6 Non-controlling interest (0.2) - - - - (0.1) - - - - - - Net income (loss) attributable to Deluxe 62.6 13.8 12.5 12.1 24.3 5.2 24.7 29.4 14.9 (63.7) (223.8) 149.6 Asset impairment charges - - - - - 101.7 - 2.8 4.9 94.1 421.1 101.3 Acquisition amortization 82.9 27.2 25.2 17.3 13.2 55.9 13.8 13.7 13.7 14.8 70.7 78.6 Restructuring, integration and other costs 59.0 17.9 13.9 12.0 15.2 80.7 21.6 18.9 20.5 19.7 79.5 21.2 CEO transition costs - - - - - - - - 0.2 (0.2) 9.4 7.2 Share-based compensation expense 29.5 7.7 7.4 7.6 6.7 21.8 6.5 6.2 5.4 3.6 19.2 11.7 Acquisition transaction costs 18.9 0.1 0.2 15.9 2.8 - - - - - 0.2 1.7 Certain legal-related expense (benefit) 2.4 1.5 0.6 0.3 - (2.1) - - - (2.2) 6.4 10.5 Loss (gain) on sales of businesses and customer lists - - - - - 1.8 1.8 - - - 0.1 (15.6) Loss on debt retirement - - - - - - - - - - - 0.5 Adjustments, pretax 192.7 54.4 47.3 53.1 37.9 259.8 43.7 41.6 44.7 129.8 606.6 217.1 Income tax provision impact of pretax adjustments (1) (45.8) (13.7) (12.0) (11.7) (8.5) (50.1) (10.2) (9.4) (11.2) (19.4) (88.1) (39.8) Impact of federal tax reform - - - - - - - - - - - (1.7) Adjustments, net of tax 146.9 40.7 35.3 41.4 29.4 209.7 33.5 32.2 33.5 110.4 518.5 175.6 Adjusted net income attributable to Deluxe 209.5 54.5 47.8 53.5 53.7 214.9 58.2 61.6 48.4 46.7 294.7 325.2 Income allocated to participating securities (0.2) - (0.1) (0.1) - (0.1) - - - (0.1) (0.4) (1.3) Re-measurement of share-based awards classified as liabilities (0.4) (0.1) (0.3) - - (0.8) - - - (0.8) 0.1 (0.5) Adjusted income attributable to Deluxe available to common shareholders $208.9 $54.4 $47.4 $53.4 $53.7 $214.0 $58.2 $61.6 $48.4 $45.8 $294.4 $323.4 Weighted-average dilutive shares 42.8 43.1 43.0 42.7 42.5 42.1 42.2 42.0 41.9 42.1 43.0 47.0 Adjustment (2) - (0.1) - - - - - - - 0.1 0.2 - Adjusted weighted-average dilutive shares 42.8 43.0 43.0 42.7 42.5 42.1 42.2 42.0 41.9 42.2 43.2 47.0 GAAP Diluted EPS $1.45 $0.32 $0.28 $0.28 $0.57 $0.11 $0.58 $0.70 $0.35 ($1.53) ($5.20) $3.16 Adjustments, net of tax 3.43 0.94 0.82 0.97 0.69 4.97 0.80 0.77 0.80 2.61 12.02 3.72 Adjusted Diluted EPS $4.88 $1.26 $1.10 $1.25 $1.26 $5.08 $1.38 $1.47 $1.15 $1.08 $6.82 $6.88 Note: Quarterly amounts may not sum to annual amounts due to immaterial rounding differences. By excluding the impact of non-cash items or items that may not be indicative of current period operating performance, management believes that Adjusted Diluted EPS provides useful comparable information to assist in analyzing the company's current and future operating performance. As such, Adjusted Diluted EPS is one of the key financial performance metrics used to assess the operating results and performance of the business and to identify strategies to improve performance. It is reasonable to expect that one or more of the excluded items will occur in future periods, but the amounts recognized may vary significantly. Management does not consider Adjusted Diluted EPS to be a substitute for GAAP performance measures, but believes that it is a useful performance measure that should be considered in addition to GAAP performance measures. (1) The tax effect of the pretax adjustments considers the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). Generally, this results in a tax impact that approximates the U.S. effective tax rate for each adjustment. However, the tax impact of certain adjustments, such as asset impairment charges and share-based compensation expense, depends on whether the amounts are deductible in the respective tax jurisdictions and the applicable effective tax rate(s) in those jurisdictions. (2) The total of weighted-average shares and potential common shares outstanding used in the calculations of Adjusted Diluted EPS differs from the GAAP calculations due to differences in the amount of dilutive shares in each calculation.
DELUXE CORPORATION RECONCILIATION OF GAAP TO NON-GAAP MEASURES NET DEBT (unaudited / dollars in millions) Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 March 31, 2021 Dec. 31, 2020 Sept. 30, 2020 June 30, 2020 March 31, 2020 Dec. 31, 2019 Dec. 31, 2018 Total debt $1,683.0 $1,776.2 $1,833.4 $840.0 $840.0 $1,040.0 $1,140.0 $1,140.0 $883.5 $911.1 Cash and cash equivalents (41.2) (121.1) (163.3) (125.4) (123.1) (310.4) (372.0) (310.1) (73.6) (59.7) Net debt $1,641.8 $1,655.1 $1,670.1 $714.6 $716.9 $729.6 $768.0 $829.9 $809.9 $851.4 Management believes that net debt is an important measure to monitor leverage and to evaluate the balance sheet. In calculating net debt, cash and cash equivalents are subtracted from total debt because they could be used to reduce the company’s debt obligations. A limitation associated with using net debt is that it subtracts cash and cash equivalents, and therefore, may imply that management intends to use cash and cash equivalents to reduce outstanding debt. In addition, net debt suggests that our debt obligations are less than the most comparable GAAP measure indicates.
DELUXE CORPORATION RECONCILIATION OF GAAP TO NON-GAAP MEASURES FREE CASH FLOW (unaudited / dollars in millions) FY 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 FY 2019 FY 2018 Net cash provided by operating activities $210.8 $61.6 $65.4 $44.2 $39.6 $217.6 $50.7 $57.2 $83.2 $26.5 $286.7 $339.3 Purchases of capital assets (109.1) (28.1) (34.5) (24.9) (21.7) (62.6) (19.9) (15.6) (12.8) (14.3) (66.6) (62.2) Free cash flow $101.7 $33.5 $30.9 $19.3 $17.9 $155.0 $30.8 $41.6 $70.4 $12.2 $220.1 $277.1 Note: Quarterly amounts may not sum to annual amounts due to immaterial rounding differences. Management defines free cash flow as net cash provided by operating activities less purchases of capital assets. Management believes that free cash flow is an important indicator of cash available for debt service and for shareholders, after making capital investments to maintain or expand the company’s asset base. Free cash flow is limited and not all of the company’s free cash flow is available for discretionary spending, as the company may have mandatory debt payments and other cash requirements that must be deducted from its cash available for future use. Free cash flow is not a substitute for GAAP liquidity measures. Instead, management believes that this measurement provides an additional metric to compare cash generated by operations on a consistent basis and to provide insight into the cash flow available to fund items such as dividends, mandatory and discretionary debt reduction, acquisitions or other strategic investments, and share repurchases.
© 2022 Deluxe Corporation Investor Presentation March 2022
2 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 statements reflect management’s current intentions, expectations or beliefs and are subject to risks and uncertainties that could cause actual results or events to vary from those stated, which variations could be material and adverse. Factors that could produce such variations include, but are not limited to, the following: potential continuing negative impacts from pandemic health issues, such as the coronavirus / COVID-19, along with the impact of government restrictions or similar directives on our business or financial condition; the impact that further deterioration or prolonged softness in the economy may have on demand for our products and services; our ability to execute our transformational strategy and to realize the intended benefits; the inherent unreliability of earnings, revenue and cash flow predictions due to numerous factors, many of which are beyond our control; declining demand for our checks and check-related products and services and business forms; risks that our strategies intended to drive sustained revenue and earnings growth, despite the continuing decline in checks and forms, are delayed or unsuccessful; intense competition; continued consolidation of financial institutions and/or additional bank failures, thereby, among other things, reducing the number of potential customers and referral sources; risks related to our acquisition and integration of First American Payment Systems; risks that future acquisitions will not be consummated; risks that any such acquisitions do not produce the anticipated results or synergies; risks that our cost reduction initiatives will be delayed or unsuccessful; risks related to any divestitures; performance shortfalls by one or more of our major suppliers, licensors or service providers; unanticipated delays, costs and expenses in the development and marketing of products and services, including web services and financial technology and treasury management solutions; the failure of such products and services to deliver the expected revenues and other financial targets; risks related to security breaches, computer malware or other cyber-attacks; risks of interruptions to our website operations or information technology systems; risks of unfavorable outcomes and the costs to defend litigation and other disputes; and the impact of governmental laws, regulations or investigations. These statements speak only as of the time made, and management assumes no obligation to publicly update any such statements. Additional information concerning these and other factors that could cause actual results and events to differ materially from current expectations are contained in the company’s Form 10-K for the year ended December 31, 2021 and other filings made with the SEC. Neither the company nor management undertakes any obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances. Any references to non-GAAP financial measures are reconciled to the comparable GAAP financial measures in this presentation.
3 Deluxe Platforms Help Businesses Succeed in 3 Core Areas Personal Check Automated Ordering Systems Easy automated process for check-ordering for customers 1. Pay with Ease 2. Get Paid Faster Data-Driven Marketing Actionable data, analytics and campaign solutions Promotional Solutions Accelerate growth, brand management through integrated platform Banker’s Dashboard Anywhere, anytime access to financial performance for FIs Incorporation Services Incorporation and licensing services and logo design along with other new business set-up services Payables as a Service (Deluxe Payment Exchange - DPX) Send digital payouts and remittance data without friction Security and Protection Fraud-prevention services for digital payments and checks Receivables as a Service Automate payment processing and cash application for all receivables Merchant Services End-to-end omni-channel payment acceptance Lockbox Services Reliable, secure and scalable check processing solutions Payroll and HR services Digital hiring and onboarding and payroll and benefit administration Remote Deposit Capture trusted payments & business technology™ company 3. Grow Profitably
4 Scale & Growth in Big Markets: Payments and Data 30+ proprietary insight scores OUR SOLUTIONS Receivables as a Service (RaaS) Automate payment processing and cash application WHERE & HOW WE WIN Selling to SMBs and Enterprises through FIs WHY WE WIN » All-in-one AR cloud solution » Intelligent matching » 360-degree view of all data Merchant Services End-to-end omni-channel payment acceptance Selling to SMBs, directly, through FIs, ISV & partners » Scaled and leading acquirer » Vertical specialty » ISV and bank strength Payables as a Service (DPX) Send digital payouts and remittance data without friction Selling to Enterprises and SMBs directly and through FIs and industry-specific partners. » Non-disruptive to AP » Payment choice flexibility » Expanding use cases Payroll and HR Pay employees and streamline HR processes – all in one place Selling to SMBs directly, through FIs, resellers, acquirers and ISVs » Trusted partner to SMBs » Next-Gen self-onboarding » Automated HR workflows 2. Get Paid Faster 1. Pay with Ease 3. Grow Profitably Data-Driven Marketing (DDM) Acquire, grow, and retain customers with strategic campaigns using sourced data Selling to FIs and Enterprise Verticals directly » Full-service, omnichannel, B2B & B2C marketing » Multi-sourced data assets » Specialized campaign strategy + execution $8.8B managed payroll funds1 $24B in disbursements $27B in card processing volume $3.0T in receivables processed2 CURRENT SCALE 1 Includes US and Canada 2 Includes processed directly in outsourced model and indirectly through partners using our software
5 4 Clear Segments: Payments | Cloud | Promo | Checks Diversification, Growth, and Strong, Predictable Cash Flow $436M 2021 Proforma Adjusted EBITDA1 Growth Drivers Focused investments on innovation in Payments and Data Increasing recurring revenue model Scaled distribution model and channels Continued cross-sell opportunities drives strong pipeline 1 Assumes the acquisition occurred on January 1, 2020, and calculated utilizing the methodology described in the Company’s Form 8-K/A filed on August 10, 2021. See Reconciliations for the reconciliation of Pro Forma Adjusted EBITDA to Pro Forma Net Income. Payments, 30% $645M Checks, 33% $703M Cloud, 12% $262M Promo, 25% $546M DLX Diversified Revenue 2021 Proforma ~80% Recurring Payments Revenue (proforma) ~35% Total Business Recurring Revenue (proforma) $2.2B 2021 Proforma Revenue1 +3.6% year-over-year
6 4,000 financial institution partners Preferred partner for 180 of the top 200 banks Business partners Vertical-Specific Affiliates and Independent Sales Organizations (ISOs), who market and sell First American by Deluxe solutions Direct-to-business 4M Small-Medium Business customers and more than 200 enterprise customers through an extensive inside and national field sales team of more than 150 reps Marketplaces and platform integrations Embedding solutions into all-digital partner experiences and marketplaces 100+ integrated software providers Integrated payment functionality into various vertical-specific solutions Power of One Deluxe Model: Exceptional Reach Targeting Enterprises and Small Businesses One Deluxe Model = Powerful Cross-Selling Engine Solve customer problems with multiple Deluxe Solutions – not peddling one solution at a time.
7 » 30-year customer - 1 product: Check » Listened to customer needs » Delivered solutions to meet challenges » >4 products sold - from each segment » Multi-year customer - 1 product: Data » Listened to customer needs » Delivered solutions to meet challenges » Largest sale in company history One Deluxe Results & Opportunity » Sales-driven growth in FY 2021 - first time in nearly a decade » Sold 13 of largest 20 deals of the last decade, and largest in company history - during COVID » First American acquisition • Tripled new bank deals within first 180 days • Accelerated growth from historically low single to double digits Opportunity: Repeat with our 4,000 FI, 4 Million SMBs & 100s of global brands
8 Driving Innovation Through Robust Technology Platforms Fast Deployments Integrated APIs to enable speedy implementations and access to infrastructure in minutes Elastic Easily add or remove capabilities as needed Accessible Easily access front and back-end portals anytime, anywhere Secure A collection of tools to protect data and privacy Scalable Access to effectively limitless capability Connected Interfaces Content, user interfaces, collaboration, communication, and identify management into single user experiences Technology Platforms Pay with Ease Get Paid Faster Grow Profitably Strategic, cloud-based platforms support and enable our growth initiatives
9 Successfully Executing Growth Strategy Four Pillars Driving Future Growth Sales Growth Businesses Promotional Solutions Profitability Checks • Unified Go-To-Market sales approach • Cross-sell to new and existing customers • Continue to expand distribution model via sell- through partners • Focus on growing Payments and Data • Continue to innovate new products and services • Continue moving to recurring revenue model • Continue to improve distribution cost model • Continue moving to recurring revenue model • Capture new market share • Executing on investments to optimize the business • Driving strong cash flow to invest in Payments and Cloud • Strong lead generation One Deluxe = trusted payments & business technology™ company
10 Positioned for Long-Term Growth Established Strong Foundation Built sales organization • Unified view of the customer • Leverage existing customers to cross-sell additional products • One Deluxe approach continues to drive new wins What’s Next Continue to scale distribution model • Sell-through partners • Expand into new verticals • Added customer success Scaled and modernized technology • Implemented new infrastructure • Technology supports distribution Drive technology platform scale • Increased efficiencies after ERP • Building API capabilities Product Innovation • Established Innovation & Customer Experience Center • Rolled out new products such as Digital Payments and HR/Payroll • Implemented design thinking Sustained Innovation • Payments and Data focused initiatives • New products and features
11 Appendix
12 Payments Growth Fueled by Innovation » Fastest Growing Segment in Strong Secular Growth Industry Enabling Businesses of all Sizes to Pay, Get Paid, and Grow Profitably 12Expecting long-term high-single digit revenue growth Our Solutions Receivables as a Service Automate payment processing and cash application Where We Win Partnering with banks to help businesses optimize liquidity and working capital Why We Win » All-in-one AR cloud solution » Intelligent matching » 360-degree view of all data » Scaled lockbox operation Merchant Services End-to-end omni-channel payment acceptance Powering payments for small and large merchants through diversified distribution » Scaled and leading acquirer » Vertical specialty » ISV and bank strength G e t P a id F a s te r 2021 Proforma Revenue1 $645M 2021 % Proforma Company Revenue 30% 2021 Adjusted EBITDA Margin 21% Expected LT Growth High-single digit Payables as a Service (DPX) Send digital payouts and remittance data without friction Seamlessly converting ad-hoc B2B and B2C disbursements from paper to digital » Non-disruptive to AP » Payment choice flexibility » Expanding use cases Payroll and HR Pay employees and streamline HR processes – all in one place Helping small businesses take back time-starved days with a complete hire-to-retire solution » Trusted partner to SMBs » Next-Gen self-onboarding » Automated HR workflows P a y w it h E a s e 1 Assumes the acquisition occurred on January 1, 2020, and calculated utilizing the methodology described in the Company’s Form 8-K/A filed on August 10, 2021 Payments
13 Differentiation: Leading With Technology and Distribution $3.0T receivables transactions1 $27B+ processing volume $25B+ payments disbursed 4,000 financial institution partners » Unrivaled scale » End-to-end automation » Digital and paper receivables Platform Scale Distribution Scale » Top 10 non-bank acquirer » 160,000 merchants » Omnichannel capabilities » 3 million suppliers and consumers paid » 5 million employees paid » 180 of the top 200 banks » One-to-many distribution » Natural product cross-selling » Additional partners and verticals » Internal sales force 1 Includes processed directly in outsourced model and indirectly through partners using our software Payments
14 Strong Market Position Winning Against Point Solutions Providers Deluxe Payments Optimizing how businesses pay, get paid, and grow profitably Payables as a Service (DPX) Payroll and HR Receivables as a Service Merchant Services Lockbox Services A partner-first strategy with Financial Institutions unlike other Fintechs Strong market momentum with expansion into adjacent areas and new use cases A compelling product portfolio showing a clear end vision for customers Our Competitors Selected Key Competitors – Not Exhaustive Payments
15 Market: Underpenetrated and Massive Opportunity Receivables as a Service Automating payment processing and cash application for all receivables is a Merchant Services End-to-end omni-channel payment acceptance is a Pay with Ease Get Paid Faster Sources: Billtrust, Blackline, Blueweave, Versaypay, YayPay and Sidetrade for Receivables. PaymentsJournal Paper Checks Jul 2019, Aite B2C Disbursements Feb 2019, Mastercard, Deloitte B2B for Payables. Credit Suisse Payments 2021 for Merchant Services $5-10B addressable market $19B+ addressable market Payables as a Service $25T B2B payments volume addressable market Payroll and HR Pay employees and streamline HR processes is a $11T B2C payments volume addressable market Convert paper to digital payouts and evolve to integrated payables for $9B addressable market Payments
16 Transforming Into a Scaled Payments Company TRANSACTION HIGHLIGHTS The largest acquisition in Deluxe’s 100+ year history All Cash Transaction Expected to double Deluxe’s Payments business Scaled payment processor that provides partners and merchants with a full suite of payment solutions: In-store Online Mobile 2x Driving meaningful revenue synergies to help Payments’ revenue equal Checks by end of 2022 Management Talent with Extensive Payments Experience Recurring Revenue & Platform for Future M&A End-to-End Payments Technology Platform & Proprietary Back- End Processing Cross-Sell Opportunities through Diversified Distribution Channels (Integrated Payments, Partner, Direct) Expansion into Attractive High-Growth Adjacent Markets FAPS was selected out of 60+ potential acquisition targets analyzed $959M ACQUISITION RATIONALE Payments
17 2019 Deluxe Pro Forma 2021 Deluxe including First American22019 Deluxe Pro Forma 2021 Deluxe including First American2 Payments Becoming a Larger Portion of Revenue and Adjusted EBITDA Payments revenue expected to equal Checks by the end of 2022 Revenue Total Segment Adjusted EBITDA1 Payments is ~30% of DLX Pro Forma 2021 Revenue Payments is ~22% of DLX Pro Forma 2021 Total Segment Adjusted EBITDA 1 Segment information calculated utilizing the methodology outlined in the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 where the reconciliation of Total Segment Adjusted EBITDA to Income before income taxes is also provided 2 Assumes the acquisition occurred on January 1, 2020, and calculated utilizing the methodology described in the Company’s Form 8-K/A filed on August 10, 2021. See Reconciliations for reconciliation of Total Segment Pro Forma Adjusted EBITDA to Pro Forma Income Before Income Taxes 30% 12% 25% 33% 13% 16% 32% 39% Payments Cloud Promotional Checks 22% 11% 14% 53% 11% 12% 16%61% Payments
18 Cloud Solutions: Data-Driven Growth » Moderate Growth Segment to Grow Enterprises and Start / Manage SMBs Our Solutions SaaS Solutions DIY and DIFM models. Incorporation, logo, web design services, etc. Web Hosting Online presence supporting commerce Where We Win SMBs and FIs Increasing need for digital tools and support to effectively set up and manage business operations SMBs, Web developers and Internet Providers Significant interest in public cloud coupled with desire for complementary digital customer engagement solutions Why We Win • Easy to use • Easy to find on-line • Competitively priced • Potential product bundling • Bundled by resellers • Low-cost acquisition Data Analytics Full-service, omni-channel, B2B & B2C marketing FIs and Enterprises Shifting to highly targeted campaigns & digital integration for customer acquisition. Improving through new data sources. • Sophisticated AI tools • Proprietary Data; custom solutions • Pay-for-Performance and/or Pay-For-Service Expecting long-term mid- to high single-digit revenue growth largely driven by Data 2021 Revenue $262M 2021 % Proforma Company Revenue1 12% 2021 Adjusted EBITDA Margin 27% Expected LT Growth Mid-to high- single digit 1 Assumes the acquisition occurred on January 1, 2020, and calculated utilizing the methodology described in the Company’s Form 8-K/A filed on August 10, 2021 Cloud Solutions
19 Promotional Solutions: Tech-Driven Platform » Modest growth segment helping businesses manage their brand and physical corporate-branded merchandise Our Solutions Manufacturing Traditional Business Essentials • Branded forms • Branded direct mailing pieces • Branded physical products Market Growth Why We Win Platform to Manage a Business’s Physical Brand Impression • Customized • Ease of access • Reporting insights • Self-service platform • Omni-channel distribution • Well-curated selection • Rapid innovation Turn-Key Business-Branded Product/Inventory Management • Managed Service • Branded merchandising • Recurring revenue streams Support Rapidly Changing Market Demands • Rapid prototyping • Deep sources of supply • Meet unique needs • Ease of access • Reporting insights Where We Win Easy and Fast Cross-Sell to Existing Customers 2021 Revenue $546M 2021 % Proforma Company Revenue1 25% 2021 Adjusted EBITDA Margin 16% Expected LT Growth Low-single digit 1 Assumes the acquisition occurred on January 1, 2020, and calculated utilizing the methodology described in the Company’s Form 8-K/A filed on August 10, 2021 Promo • SMBs • Enterprises • Global Brands • Flat • Continue to increase scale
20 Checks: Trusted, Long-Term Relationships Drive Cross-Sells » Rich Cash-Generating Segment Funding Deluxe’s Overall Growth Strong cash flow organically funds growth AND generates healthy return of capital to shareholders Lead generation source for cost-effective cross-selling other DLX solutions to existing customers No Substitutes for B2B Use Cases – Billions Written Annually – Continue for Many Years Foundation for Strong, Predictable Cash Generation Where We Win Why We Win Growing market share among FIs and other resellers of all sizes • Superior Product – appropriate continued investment; design and customization options • Superior Service – dedicated customer/account teams Solutions 2021 Revenue $703M 2021 % Proforma Company Revenue1 33% 2021 Adjusted EBITDA Margin 46% Expected LT Decline Mid- single digit • Superior Quality – minimal COVID-19 downtime/lost production • Trust – 106-year history • Balance Sheet – DLX is financially sound, driving material competitive advantage 1 Assumes the acquisition occurred on January 1, 2020, and calculated utilizing the methodology described in the Company’s Form 8-K/A filed on August 10, 2021 Checks
21 Deluxe Competitive Landscape Payments Cloud Promotional Products Checks • Fiserv, FIS, Global Payments • Paychex, ADP, Paycor, Gusto, Intuit, OnPay, Paylocity • Bill.com, AvidExchange, Mineral Tree, Biller Genie, PaySimple • Square, PayPal, Zelle, Transcard • High Radius, Emagia, VersaPay, Rimilia, Exela Technologies, Esker • LegalZoom, BizFilings, IncNow • Cimpress/VistaPrint, DesignMantic, Tailor Brands, Logoworks, Logobee, 99designs, DesignCrowd • MailChimp, Aweber, Sendgrid, GoDaddy, iContact • 1+1, Go Daddy, Web.com, Endurance, BlueHost, Wix, Weebly • Gannett/ ReachLocal, HubSpot, Boostability, Web.com • Haberfeld, Epsilon, Acxiom, Merkle, Harte Hanks, Palantir, Infogroup, LiveRamp • SNL Banker • Web to Print and Local Printers • Ennis, RR Donnelley, Quad Graphics, Taylor Corp, Costco, Sam’s Club, Uline, Webb Mason, Broadridge, FMG Suite, Proforma, InnerWorkings, American Solutions for Business • Staples, Office Depot, FedEx • 4imprint, HALO, VistaPrint, BDA, Cimpress, • Amazon • Harland Clarke, Main Street • Bradford Exchange, Current, Carousel, WalMart, Costco, Intuit, Cimpress, Ennis, Finastra Checks Promotional Products CloudPayments
22 Investor Contact Tom Morabito Vice President, Investor Relations tom.morabito@deluxe.com
23 Reconciliations
24 Consolidated Condensed Statements of Income in millions, except per share amounts (Unaudited)
25 Segment Information in millions (Unaudited) The segment information reported here was calculated utilizing the methodology outlined in the Notes to Consolidated Financial Statements included in the company's Annual Report on Form 10-K for the year ended December 31, 2021.
26 Reconciliation of GAAP to Non-GAAP Measures EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin in millions (Unaudited)
27 Reconciliation of GAAP to Non-GAAP Measures Adjusted Diluted EPS dollars and shares in millions, except per share amounts (Unaudited)
28 Reconciliation of GAAP to Non-GAAP Measures Pro Forma Adjusted EBITDA In millions (Unaudited)
