DLX - Deluxe Corporation (DLX) Q1 2024 Earnings Call Transcript

2024-05-01 20:40:26 ET

Deluxe Corporation (DLX)

Q1 2024 Results Conference Call

May 01, 2024 05:00 PM ET

Company Participants

Brian Anderson - Vice President, Strategy and Investor Relations

Barry McCarthy - President and Chief Executive Officer

Chip Zint - Chief Financial Officer

Conference Call Participants

Kartik Mehta - Northcoast Research

Jonnathan Navarrete - TD Cowen, Inc

Charlie Strauzer - CJS Securities

Marc Riddick - Sidoti

Presentation

Brian Anderson

[Call Starts Abruptly] Before we begin and as seen on the current slide, I'd like to remind everyone that comments made today regarding management's intentions, projections, financial estimates, and expectations of the Company's future strategy or performance are forward-looking in nature as defined in the Private Securities Litigation Reform Act of 1995. Additional information about factors that may cause our actual results to differ from projections is set forth in the press release we furnished this afternoon, in our Form 10-K for the year ended December 31, 2023, and in other company SEC filings.

On the call today, we will discuss non-GAAP financial measures, including comparable adjusted revenue, adjusted and comparable adjusted EBITDA and EBITDA margin, adjusted and comparable adjusted EPS and free cash flow. In our press release, today's presentation and our filings with the SEC, you'll find additional disclosures regarding the non-GAAP measures, including reconciliation of these measures to the most comparable measures under U.S. GAAP. Within the materials, we are also providing reconciliations of GAAP EPS to comparable adjusted EPS, which may assist with your modeling.

Finally, as an important additional note, this evening's presentation reflects results aligned to our updated segment reporting structure, as outlined in our filings concurrent with our December Investor Day presentation and today's 8-K filing, which provides unaudited recast business segment revenue and adjusted EBITDA information for both 2022 and 2023, including quarterly details for 2023. Updated operating segment figures are reported excluding any results from exited businesses for the respective periods, which results from such activities reported separately within the filed materials and detailed further within our segment information and reconciliation of GAAP to non-GAAP measure slides in the appendix of today's presentation materials. Chip will add some detail regarding these updates during his comments this evening.

And with that, I'll turn it over to Barry.

Barry McCarthy

Thanks, Brian, and good evening, everyone. Two things before I get started. First, today, I'll be discussing comparable adjusted results for the quarter, which we believe best reflect our ongoing business performance. Later, Chip will discuss our reported consolidated and comparable adjusted figures to give even more perspective. Second, as Brian just mentioned, this is the first time we're reporting on our new segments. We'll also be happy to have follow-up conversations that answer questions that you may have on these updates.

We think this new segmentation provides better insight into the Company and our future. Our strategy is clear; invest on relationships, trust and brand built in our Print business to grow the Payments and Data businesses. Very simply, Payments and Data are our growth drivers, and Print is our cash generator, helping drive Payments and Data's success. On this chart, you can see Print was 57% of revenue, with Payments and Data combined delivering 43% for the quarter.

With Q1 combined Payments and Data revenue of $226 million, growing 8.1% with margins of 22%, this is an attractive portfolio of businesses that we think is often overlooked. Our new operating segments should help highlight these businesses. Over the longer term, we expect the combined Payments and Data businesses to reach revenue parity with Print and expect to provide updates annually....

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