Deluxe Corp. Provides Update on Acquisitions and Revenue and EPS Outlook for Q2 and Full Year
ST. PAUL, Minn. - June 19, 2018 - Deluxe Corp. announced that it has entered into a definitive agreement to acquire the treasury management business which was initially referenced by management during the first quarter earnings call on April 26, 2018. Original expectations were that this transaction would close in the second quarter and would deliver approximately $46 million of revenue for the full year. The Company does not expect there to be any regulatory issues. The Company expects to receive regulatory approval to complete the acquisition in the third quarter. With the delayed completion date, management has revised revenue expectations for this acquisition to provide full year revenue of approximately $36 million. The transaction is subject to customary closing conditions, including applicable regulatory approval. Additional information on this acquisition will be provided after closing.
Separately, Deluxe recently completed an acquisition in the web hosting services space which is expected to deliver approximately $7 million of revenue for the full year 2018 and was included in the previous revenue outlook. Additional information on this acquisition will be provided on the second quarter earnings call.
“We are excited with our progress on these acquisitions as they add capabilities in both the treasury management and web services spaces and they are completely aligned with our pivot for faster growth strategy,” said Lee Schram, CEO of Deluxe Corp. “We have adjusted our revenue outlook in light of the delayed completion date, but remain confident that we will complete the treasury management transaction. Given these acquisitions, we continue to make tremendous progress transforming Deluxe into a financial services and small business services provider.”
As a result of the timing of the treasury management acquisition, management is revising the revenue outlook downward for the second quarter by $7 million and the full year by $10 million. Management now expects total second quarter revenue to be in the range of $485 to $492 million from $492 to $499 million and full year revenue to be in the range of $2.055 to $2.075 billion from $2.065 to $2.085 billion. Management anticipates that the delay in closing the acquisition will have no impact on full year earnings, but will affect the timing of acquisition costs, moving approximately $0.03 per share out of the second quarter and into the third quarter.
Management originally provided a new acquisition revenue target of approximately $90 million for the full year 2018. Taking into consideration the delay in the treasury management acquisition, management has lowered the full year new acquisition revenue target to approximately $80 million. This $80 million is comprised of $16 million from the previously announced LogoMix acquisition, $36 million from the pending treasury management acquisition and $7 million from the recently completed web hosting acquisition. The remaining $21 million of targeted new acquisition revenue will be discussed on the second quarter earnings call in late July.
Diluted EPS Reconciliation
Management believes that adjusted diluted EPS provides useful additional information for investors because it provides better comparability of ongoing performance to prior periods given that it excludes the impact of certain items (restructuring and integration, transaction costs, asset impairment charges, losses on debt retirement and tax reform) that impact the comparability of reported net income and which management believes to be non-indicative of ongoing operations. It is reasonable to expect that one or more of these excluded items will occur in future periods, but the amounts recognized can vary significantly from period to period and may not directly relate to the Company’s ongoing operations. The presentation below is not intended as an alternative to results reported in accordance with generally accepted accounting principles (GAAP) in the United States of America. Instead, the Company believes that this information is a useful financial measure to be considered in addition to GAAP performance measures.
Reported EPS reconciles to adjusted EPS as follows:
The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within do not directly reflect the thoughts or opinions of Printing Impressions.