Deluxe Posts Spike in Net Income on More Modest Revenue Increase

Operating income in 2012 was $78.0 million compared to $67.5 million in the first quarter of 2011. Restructuring related costs were $1.9 million in 2012 vs. $1.5 million in 2011. These costs were primarily attributable to the Company’s on-going cost reduction initiatives. Operating income was 20.6 percent of revenue compared to 19.3 percent in the prior year driven primarily by higher revenue per order, favorable product mix, and continued cost reductions.

Segment Highlights:

Small Business Services
Revenue was $229.6 million vs. $200.0 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 the PsPrint acquisition. Operating income in 2012 increased to $38.8 million from $35.8 million in 2011.

Financial Services
Revenue was $90.6 million compared to $88.0 million in 2011. The impact of price increases, growth in non-check revenue and revenue from a new financial institution client more than offset the impact of check usage declines. Operating income in 2012 increased to $21.9 million from $15.7 million in 2011.

Direct Checks
Revenue was $57.8 million compared to $61.8 million in 2011, primarily driven by lower order volume resulting from the continued decline in check usage. Operating income in 2012 increased to $17.3 million from $16.0 million in 2011.

Other Highlights
Cash provided by operating activities for the first quarter of 2012 totaled $52.0 million, a decrease of $9.1 million compared to 2011. Improved operating performance and the discontinuation of payments to our defined contribution pension plan were more than offset by planned contributions to our VEBA trust for future medical costs, and higher contract acquisition and interest payments.

About Deluxe
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.