Deluxe Reports Its Revenue Grew 7 Percent in the Second Quarter
ST. PAUL, MN—July 26, 2012—Deluxe Corp. announced its financial results for the second quarter ended June 30, 2012.
“We had an outstanding second quarter following an outstanding first quarter,” said Lee Schram, CEO of Deluxe. “We exceeded both our revenue and EPS outlook, with strong performance in all three segments. We continued to see a better than expected secular check decline rate while marketing solutions and other services revenue grew 30 percent and are on track to exceed our original growth expectations for the year with enhanced offerings from the OrangeSoda acquisition.”
Second Quarter 2012 Highlights:
Revenue for the quarter was $371.0 million, compared to $346.3 million during the second quarter of 2011. Revenue increased 7.1 percent compared to 2011, driven by 14.8 percent growth in Small Business Services. Marketing solutions and other services revenue increased 29.9 percent compared to 2011 and represented 17.5 percent of consolidated revenue, up from 14.4 percent in the second quarter of 2011.
Gross margin was 65.6 percent of revenue compared to 65.1 percent in 2011. Favorable impacts from price increases and the Company’s continued cost reduction initiatives more than offset increased delivery rates, material costs and performance based compensation expense in 2012.
Operating income in 2012 was $73.6 million, compared to $64.0 million in the second quarter of 2011. Restructuring and transaction-related costs were $2.3 million in 2012 vs. $5.0 million in 2011. These costs were primarily attributable to the company’s on-going cost reduction initiatives. Operating income was 19.8 percent of revenue compared to 18.5 percent in the prior year driven primarily by higher revenue per order and continued cost reductions.
Small Business Services—Revenue was $233.1 million vs. $203.1 million in 2011. Revenue was 14.8 percent higher in the quarter driven by growth in marketing solutions and other services, the Safeguard distributor and dealer channels, and checks and forms. Revenue also benefited from price increases and $10.5 million from the PsPrint and OrangeSoda acquisitions. Operating income in 2012 increased to $38.2 million from $34.3 million in 2011.
Financial Services—Revenue was $85.7 million compared to $86.7 million in 2011. The impact of check usage declines slightly exceeded the benefits of price increases, revenue from a new financial institution client, and growth in non-check revenue. Operating income in 2012 increased to $20.0 million from $13.2 million in 2011.
Direct Checks—Revenue was $52.2 million compared to $56.5 million in 2011, primarily driven by lower order volume resulting from the continued decline in check usage. Operating income in 2012 decreased to $15.4 million from $16.5 million in 2011.
Deluxe Corp. is a growth engine for small businesses and financial institutions. Over four million small business customers access Deluxe’s wide range of products and services including customized checks and forms as well as website development and hosting, search engine marketing, logo design and business networking. For financial institutions, Deluxe offers industry-leading programs in checks, customer acquisition, regulatory compliance, fraud prevention and profitability. Deluxe is also a leading printer of checks and accessories sold directly to consumers.