Deluxe First Quarter 2019 Financial Results Impacted by Continued Decline of Printed Checks and Forms
Deluxe Corporation, a trusted, technology-enabled solutions provider, announced its financial results for the first quarter ended March 31, 2019. Revenue was within the Company’s previously disclosed outlook range of $490 to $505 million. Adjusted diluted EPS, calculated consistently with our prior year methodology, was $1.14, compared to the outlook range of $1.05 to $1.15.
First Quarter 2019 Highlights
- Financial Services (FS) revenue increased 9.8% compared to the prior year driven by the results of the REMITCO acquisition in August 2018. FS revenue was negatively impacted by the continuing decline in checks, as well as a decline in treasury management revenue, excluding the impact of the acquisition.
- Small Business Services (SBS) revenue declined 1.0% compared to the prior year driven by the continuing decline in checks and forms and the impact of one less business day this year. SBS revenue benefited from the results of three tuck-in acquisitions in 2018 and price increases.
- Direct Checks revenue decreased 9.7% year-over-year driven by the continuing decline in check usage.
- Marketing services and other solutions (MOS) accounted for 43.0% of total revenue, checks accounted for 40.3% of total revenue, and forms and accessories accounted for 16.7% of total revenue.
- Net income decreased $22.1 million year-over-year. Adjusted EBITDA decreased $7.9 million year-over-year due primarily to the continuing decline in checks and forms, partly offset by our continued focus on cost reductions, as well as SBS price increases.
- Diluted EPS decreased $0.38 per share year-over-year. Adjusted diluted EPS decreased 3.8% year-over-year driven by the decline in Adjusted EBITDA and higher interest expense, partly offset by lower shares outstanding this year.
- Cash provided by operating activities for 2019 was $45.4 million, a decrease of $35.4 million compared to 2018 driven by the payment of certain legal-related expenses, the timing of accounts payable payments, and the continuing decline in checks and forms, partly offset by benefits from our cost savings initiatives and lower income tax payments.
- The Company repurchased common stock in open market transactions during the first quarter for total consideration of $50.0 million.
- At the end of the first quarter, the Company had $946.0 million of total debt outstanding under its revolving credit facility.
“I am pleased with our first quarter performance which was in-line with our expectations,” said Barry McCarthy, President and CEO of Deluxe. “We have made substantial progress in evaluating our operations to ensure Deluxe is well positioned for the future. What is clear is that Deluxe has an impressive base of existing customers, extensive catalog of products and services and a strong financial structure, all of which we expect will drive our revenue growth. Today we are announcing our strategic framework to transform Deluxe into a trusted, technology-enabled solutions provider. We believe that the combination of our compelling core competencies and assets, with our new go-to-market strategy will deliver significant shareholder value over the long-term.”
McCarthy continued, “We are excited about transforming the Company from a check and forms printer into a “New Deluxe” and are focused on driving improved operating performance and financial results. Later in the year, we will begin realigning our business into four primary areas: payments, cloud, promotional products and checks, which will provide us with opportunities in the enterprise, small business and financial services spaces. As we move forward, we intend to maintain our recurring revenue streams, scalable business model, attractive cost structure and data rich-businesses. With our new go-to-market strategy and integrated operations, we will run a more streamlined and efficient sales process, resulting in more cross-sell opportunities across the organization.”
The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within do not directly express the thoughts opinions of Printing Impressions.