Document
Document - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 08, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 1-7945 | ||
Entity Registrant Name | DELUXE CORPORATION | ||
Entity Central Index Key | 0000027996 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Incorporation, State or Country Code | MN | ||
Entity Tax Identification Number | 41-0216800 | ||
Entity Address, Address Line One | 801 S. Marquette Ave. | ||
Entity Address, City or Town | Minneapolis | ||
Entity Address, State or Province | MN | ||
Entity Address, Postal Zip Code | 55402-2807 | ||
City Area Code | 651 | ||
Local Phone Number | 483-7111 | ||
Title of 12(b) Security | Common Stock, par value $1.00 per share | ||
Trading Symbol | DLX | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 753,760,362 | ||
Common Stock, Shares Outstanding | 43,850,076 | ||
Documents Incorporated by Reference | Portions of our definitive proxy statement to be filed within 120 days after our fiscal year-end are incorporated by reference in Part III. | ||
Auditor Name | PricewaterhouseCoopers LLP | ||
Auditor Location | Minneapolis, Minnesota | ||
Auditor Firm ID | 238 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents, including securities carried at fair value of $22,000 and $5,000, respectively | $ 71,962 | $ 40,435 |
Trade accounts receivable, net of allowance for credit losses | 191,005 | 206,617 |
Inventories and supplies, net of reserve | 42,088 | 52,267 |
Funds held for customers, including securities carried at fair value of $8,126 as of December 31, 2022 | 383,134 | 302,291 |
Prepaid expenses | 30,116 | 36,642 |
Revenue in excess of billings | 26,107 | 38,761 |
Other current assets | 16,576 | 27,024 |
Total current assets | 760,988 | 704,037 |
Deferred income taxes | 8,694 | 1,956 |
Long-term investments | 61,924 | 47,783 |
Property, plant and equipment, net of accumulated depreciation | 116,539 | 124,894 |
Operating lease assets | 58,961 | 47,132 |
Intangibles, net of accumulated amortization | 391,744 | 458,979 |
Goodwill | 1,430,590 | 1,431,385 |
Other non-current assets | 251,182 | 260,354 |
Total assets | 3,080,622 | 3,076,520 |
Current liabilities: | ||
Accounts payable | 154,863 | 157,055 |
Funds held for customers | 386,622 | 305,138 |
Accrued liabilities | 191,427 | 218,404 |
Current portion of long-term debt | 86,153 | 71,748 |
Total current liabilities | 819,065 | 752,345 |
Long-term debt | 1,506,698 | 1,572,528 |
Operating lease liabilities | 58,840 | 48,925 |
Deferred income taxes | 22,649 | 45,510 |
Other non-current liabilities | 68,754 | 52,988 |
Commitments and contingencies (Notes 10, 14 and 15) | ||
Shareholders' equity: | ||
Common shares $1 par value (authorized: 500,000 shares; outstanding: December 31, 2023 - 43,743; December 31, 2022 - 43,204) | 43,743 | 43,204 |
Additional paid-in capital | 99,141 | 79,234 |
Retained earnings | 491,238 | 518,635 |
Accumulated other comprehensive loss | (30,028) | (37,264) |
Non-controlling Interest | 522 | 415 |
Total shareholders' equity | 604,616 | 604,224 |
Total liabilities and shareholders' equity | $ 3,080,622 | $ 3,076,520 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Cash and cash equivalents, fair value | $ 22,000 | $ 5,000 |
Funds held for customers, securities carried at fair value | $ 8,126 | |
Common stock, par value (per share) | $ 1 | $ 1 |
Common stock, shares authorized | 500,000 | 500,000 |
Common stock, shares outstanding | 43,743 | 43,204 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Total revenue | $ 2,192,260 | $ 2,238,010 | $ 2,022,197 |
Total cost of revenue | (1,029,577) | (1,032,116) | (884,270) |
Gross profit | 1,162,683 | 1,205,894 | 1,137,927 |
Selling, general and administrative expense | (956,068) | (993,250) | (941,023) |
Restructuring and integration expense | (78,245) | (62,529) | (54,750) |
Gain on sale of businesses and long-lived assets | 32,421 | 19,331 | 0 |
Operating income | 160,791 | 169,446 | 142,154 |
Interest expense | (125,643) | (94,454) | (55,554) |
Other income, net | 4,651 | 9,386 | 7,203 |
Income before income taxes | 39,799 | 84,378 | 93,803 |
Income tax provision | (13,572) | (18,848) | (31,031) |
Net income | 26,227 | 65,530 | 62,772 |
Net income attributable to non-controlling interest | (107) | (135) | (139) |
Net income attributable to Deluxe | $ 26,120 | $ 65,395 | $ 62,633 |
Basic earnings per share | $ 0.60 | $ 1.52 | $ 1.48 |
Diluted earnings per share | $ 0.59 | $ 1.50 | $ 1.45 |
Product [Member] | |||
Total revenue | $ 1,257,600 | $ 1,286,197 | $ 1,244,529 |
Total cost of revenue | (486,029) | (470,237) | (450,880) |
Service [Member] | |||
Total revenue | 934,660 | 951,813 | 777,668 |
Total cost of revenue | $ (543,548) | $ (561,879) | $ (433,390) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 26,227 | $ 65,530 | $ 62,772 | |
Postretirement benefit plans: | ||||
Net actuarial gain (loss) arising during the year | 6,263 | (11,235) | 6,194 | |
Less reclassification of amounts to net income: | ||||
Amortization of prior service credit | (1,037) | (1,042) | (1,050) | |
Amortization of net actuarial loss | 1,822 | 836 | 1,381 | |
Postretirement benefit plans | 7,048 | (11,441) | 6,525 | |
Interest rate swaps: | ||||
Unrealized (loss) gain arising during the year | (524) | 4,869 | 2,067 | |
Reclassification of realized (gain) loss to net income | (2,355) | (15) | 1,023 | |
Interest rate swaps | (2,879) | 4,854 | 3,090 | |
Debt securities: | ||||
Unrealized holding loss arising during the year | (183) | (571) | (254) | |
Reclassification of realized loss to net income | 1,092 | 6 | 0 | |
Debt securities | 909 | (565) | (254) | |
Foreign currency translation adjustment: | ||||
Unrealized foreign currency translation gain (loss) arising during the year | 1,295 | (4,170) | 580 | |
Reclassification of foreign currency translation loss to net income | [1] | 863 | 5,550 | 0 |
Foreign currency translation adjustment | 2,158 | 1,380 | 580 | |
Other comprehensive income (loss) | 7,236 | (5,772) | 9,941 | |
Comprehensive income | 33,463 | 59,758 | 72,713 | |
Comprehensive income attributable to non-controlling Interest | (107) | (135) | (139) | |
Comprehensive income attributable to Deluxe | 33,356 | 59,623 | 72,574 | |
Postretirement benefit plans: | ||||
Net actuarial gain (loss) arising during the year | (2,298) | 4,090 | (2,186) | |
Less reclassification of amounts to net income: | ||||
Amortization of prior service credit | 384 | 379 | 371 | |
Amortization of net actuarial loss | (451) | (64) | (248) | |
Postretirement benefit plans | (2,365) | 4,405 | (2,063) | |
Interest rate swaps: | ||||
Unrealized (loss) gain arising during the year | 194 | (1,771) | (731) | |
Reclassification of realized (gain) loss to net income | 872 | 5 | (361) | |
Interest rate swaps | 1,066 | (1,766) | (1,092) | |
Debt securities: | ||||
Unrealized holding loss arising during the year | 63 | 197 | 88 | |
Reclassification of realized loss to net income | (376) | (2) | 0 | |
Debt securities | (313) | 195 | 88 | |
Total net tax (expense) benefit | $ (1,612) | $ 2,834 | $ (3,067) | |
[1]Relates to the sale of our web hosting businesses. Further information can be found in Note 6 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common shares par value [Member] | Additional paid-in capital [Member] | Retained earnings [Member] | Accumulated other comprehensive loss [Member] | Non-controlling interest [Member] |
Accumulated other comprehensive loss | $ (41,433) | |||||
Balance, beginning of year at Dec. 31, 2020 | $ 513,392 | $ 41,973 | $ 17,558 | $ 495,153 | $ (41,433) | $ 141 |
Balance, shares at Dec. 31, 2020 | 41,973 | |||||
Net income attributable to Deluxe | $ 62,633 | 62,633 | ||||
Net income attributable to non-controlling Interest | 139 | 139 | ||||
Net income | 62,772 | |||||
Cash dividends ($1.20 per share) | (52,023) | (52,023) | ||||
Common shares issued, net of tax withholding | $ 11,242 | 706 | 10,536 | |||
Common shares issued, net of tax withholding, shares | 706 | |||||
Employee share-based compensation | $ 29,274 | 29,274 | ||||
Other comprehensive income (loss) | 9,941 | 9,941 | ||||
Balance, end of year at Dec. 31, 2021 | $ 574,598 | 42,679 | 57,368 | 505,763 | (31,492) | 280 |
Balance, shares at Dec. 31, 2021 | 42,679 | |||||
Accumulated other comprehensive loss | $ (31,492) | |||||
Net income attributable to Deluxe | 65,395 | 65,395 | ||||
Net income attributable to non-controlling Interest | 135 | 135 | ||||
Net income | 65,530 | |||||
Cash dividends ($1.20 per share) | (52,523) | (52,523) | ||||
Common shares issued, net of tax withholding | $ (1,917) | 525 | (2,442) | |||
Common shares issued, net of tax withholding, shares | 525 | |||||
Employee share-based compensation | $ 24,308 | 24,308 | ||||
Other comprehensive income (loss) | (5,772) | (5,772) | ||||
Balance, end of year at Dec. 31, 2022 | $ 604,224 | 43,204 | 79,234 | 518,635 | (37,264) | 415 |
Balance, shares at Dec. 31, 2022 | 43,204 | |||||
Retained earnings | $ 518,635 | |||||
Accumulated other comprehensive loss | (37,264) | |||||
Net income attributable to Deluxe | 26,120 | 26,120 | ||||
Net income attributable to non-controlling Interest | 107 | 107 | ||||
Net income | 26,227 | |||||
Cash dividends ($1.20 per share) | (53,517) | (53,517) | ||||
Common shares issued, net of tax withholding | $ 239 | 539 | (300) | |||
Common shares issued, net of tax withholding, shares | 539 | |||||
Employee share-based compensation | $ 20,207 | 20,207 | ||||
Other comprehensive income (loss) | 7,236 | 7,236 | ||||
Balance, end of year at Dec. 31, 2023 | $ 604,616 | $ 43,743 | $ 99,141 | $ 491,238 | $ (30,028) | $ 522 |
Balance, shares at Dec. 31, 2023 | 43,743 | |||||
Retained earnings | $ 491,238 | |||||
Accumulated other comprehensive loss | $ (30,028) |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parentheticals) - $ / shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends per share | $ 1.20 | $ 1.20 | $ 1.20 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities | |||
Net income | $ 26,227 | $ 65,530 | $ 62,772 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 23,426 | 25,997 | 25,625 |
Amortization of intangibles | 146,277 | 146,555 | 123,142 |
Amortization of prepaid product discounts | 33,370 | 34,400 | 31,784 |
Employee share-based compensation expense | 20,525 | 23,676 | 29,477 |
Operating lease expense | 18,811 | 20,480 | 17,485 |
Amortization of cloud computing arrangement implementation costs | 15,743 | 11,307 | 5,979 |
Gain on sale of businesses and long-lived assets | (32,421) | (19,331) | 0 |
Deferred income taxes | (31,876) | (28,529) | 17,758 |
Other non-cash items, net | 35,682 | 20,091 | 11,217 |
Changes in assets and liabilities, net of effect of acquisition: | |||
Trade accounts receivable | 7,359 | (13,672) | (8,857) |
Inventories and supplies | 6,347 | (19,062) | (1,842) |
Payments for cloud computing arrangement implementation costs | (9,118) | (18,649) | (41,547) |
Other current and non-current assets | 7,272 | (26,258) | (27,041) |
Accounts payable | 4,933 | 6,015 | 22,794 |
Prepaid product discount payments | (28,535) | (30,603) | (40,920) |
Other accrued and non-current liabilities | (45,655) | (6,416) | (17,005) |
Net cash provided by operating activities | 198,367 | 191,531 | 210,821 |
Cash flows from investing activities: | |||
Purchases of capital assets | (100,747) | (104,598) | (109,140) |
Payments for acquisition, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired | 0 | 0 | (958,514) |
Proceeds from sale of businesses and facility | 53,635 | 25,248 | 2,648 |
Proceeds from customer funds debt securities | 8,006 | 4,077 | 93 |
Other | (4,199) | (5,052) | (1,688) |
Net cash used by investing activities | (43,305) | (80,325) | (1,066,601) |
Cash flows from financing activities: | |||
Proceeds from issuing long-term debt and swingline loans | 583,500 | 640,000 | 1,884,850 |
Payments on long-term debt and swingline loans | (638,688) | (680,613) | (1,029,876) |
Payments for debt issuance costs | 0 | 0 | (18,153) |
Net change in customer funds obligations | 79,063 | 56,426 | 126,703 |
Proceeds from issuing shares | 2,715 | 3,112 | 16,843 |
Cash dividends paid to shareholders | (53,325) | (52,647) | (51,654) |
Other | (10,944) | (14,879) | (15,752) |
Net cash (used) provided by financing activities | (37,679) | (48,601) | 912,961 |
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents | 3,235 | (10,681) | (1,099) |
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents | 120,618 | 51,924 | 56,082 |
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year | 337,415 | 285,491 | 229,409 |
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of year (Note 3) | $ 458,033 | $ 337,415 | $ 285,491 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | Nature of operations – We help our customers deepen their customer relationships through trusted, technology-enabled solutions, including merchant services, marketing services and data analytics, treasury management solutions, promotional products, and fraud and security solutions, as well as customized checks and forms. We are also a leading provider of checks and accessories sold directly to consumers. Consolidation – The consolidated financial statements include the accounts of Deluxe Corporation and its wholly-owned subsidiaries. All intercompany accounts, transactions and profits have been eliminated. In addition, we are the primary beneficiary of a variable interest entity, MedPayExchange LLC, doing business as Medical Payment Exchange ("MPX"), which delivers payments to healthcare providers from insurance companies and other payers. Our partner's interest in MPX is reported as non-controlling interest in the consolidated balance sheets within equity, separate from our equity. Net income and comprehensive income are attributed to us and the non-controlling interest. The amounts attributable to the non-controlling interest were not material to our consolidated financial statements. Comparability – The consolidated statements of cash flows for the years ended December 31, 2022 and 2021 have been modified to conform to the current year presentation. Within net cash provided by operating activities, other current and other non-current assets have been combined. In addition, amortization of cloud computing arrangement implementation costs is presented separately. Previously, this amount was included in other non-cash items, net. Within net cash used by investing activities, purchases of customer lists are included in other. Previously, these amounts were presented separately. The consolidated statements of shareholders' equity for the years ended December 31, 2022 and 2021 have also been modified to conform to the current year presentation. Common shares retired are included in common shares issued, net of tax withholding. Previously, these amounts were presented separately. Use of estimates – We have prepared the accompanying consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"). In this process, it is necessary for us to make certain estimates and assumptions affecting the amounts reported in the consolidated financial statements and related notes. We base our estimates on historical experience and on various other factors and assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of our assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Actual results may differ significantly from our estimates and assumptions. Foreign currency translation – The financial statements of our foreign subsidiaries are measured in the respective subsidiaries' functional currencies, primarily Canadian dollars, and are translated into U.S. dollars. Assets and liabilities are translated using the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average exchange rates during the year. The resulting translation gains and losses are reflected in accumulated other comprehensive loss in the shareholders' equity section of the consolidated balance sheets. Foreign currency transaction gains and losses are recorded in other income, net on the consolidated statements of income. Cash and cash equivalents – We consider all cash on hand and other highly liquid investments with original maturities of 3 months or less to be cash and cash equivalents. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents approximate fair value. Checks issued by us but not presented to the banks for payment may create negative book cash balances. These book overdrafts are included in accounts payable on the consolidated balance sheets and were not material as of December 31, 2023 or December 31, 2022. Trade accounts receivable – Trade accounts receivable are initially recorded at the invoiced amount upon the sale of goods or services to customers, and also include amounts due for products shipped and services rendered, but for which invoices have not yet been issued due to timing (i.e., unbilled receivables). Our trade accounts receivable are not interest-bearing. They are stated net of the allowance for credit losses, a valuation account that is deducted from an asset's amortized cost basis to present the net amount expected to be collected. Amounts are charged off against the allowance when we believe the uncollectibility of an account is confirmed. The point at which uncollected accounts are written off varies by type of customer, but generally does not exceed 1 year from the due date of the receivable. In calculating the allowance, we utilize a combination of aging schedules with reserve rates applied to both current and aged receivables and roll-rate reserves using historical loss rates and changes in current or projected conditions. Changes in the allowance for credit losses are included in selling, general and administrative ("SG&A") expense on the consolidated statements of income. Further information regarding our allowance for credit losses can be found in Note 3. Inventories and supplies – Inventories are stated at the lower of cost or net realizable value. Cost is calculated using moving average and standard costs, which approximates the first-in, first-out basis. We periodically review our inventory quantities and record a provision for excess and/or obsolete inventory based on our historical usage and forecasts of future demand. It is possible that additional reserves above those already established may be required if there is a significant change in the timing or level of demand for our products compared to forecasted amounts. This would require a change in the reserve for excess or obsolete inventory, resulting in a charge to net income during the period of the change. Charges for inventory write-downs are included in cost of products on the consolidated statements of income. Once written down, inventories are carried at this lower cost basis until sold or scrapped. Supplies consist of items not used directly in the production of goods, such as maintenance and other supplies utilized in the production area. Funds held for customers – Our merchant services business temporarily holds funds collected from credit card networks and internet transaction processing on behalf of certain merchants. Our treasury management cash receipt processing business remits a portion of cash receipts to our clients the business day following receipt, and our payroll services business collects funds from clients to pay their payroll and related taxes. We hold these funds temporarily until payments are remitted to the clients' employees and the appropriate taxing authorities. Certain of our customer contracts include legal restrictions regarding the use of these funds. All of these funds, consisting of cash and, at times, available-for-sale debt securities, are reported as funds held for customers on the consolidated balance sheets. The corresponding liability for these obligations is also reported as funds held for customers on the consolidated balance sheets. The available-for-sale debt securities are carried at fair value, with unrealized gains and losses included in accumulated other comprehensive loss on the consolidated balance sheets. Earnings on funds held for customers are included in revenue on the consolidated statements of income and were not material during the past 3 years. Long-term investments – Long-term investments consist primarily of cash surrender values of company-owned life insurance policies. Certain of these policies fund amounts due under our deferred compensation plan and our inactive supplemental executive retirement plan (Note 12). Property, plant and equipment – Property, plant and equipment, including leasehold and other improvements that extend an asset's useful life or productive capabilities, are stated at historical cost less accumulated depreciation. Buildings have been assigned useful lives of 40 years and machinery and equipment are generally assigned useful lives ranging from 1 year to 11 years, with a weighted-average useful life of 7 years as of December 31, 2023. Buildings are depreciated using the 150% declining balance method, and machinery and equipment is depreciated using the sum-of-the-years' digits method. Leasehold and building improvements are depreciated on the straight-line basis over the estimated useful life of the property or the life of the lease, whichever is shorter. Amortization of assets that are recorded under finance leases is included in depreciation expense. Maintenance and repairs are expensed as incurred. Fully depreciated assets are retained in property, plant and equipment until disposal. Gains or losses resulting from the disposition of property, plant and equipment are included in SG&A expense on the consolidated statements of income, unless presented separately as a component of gain or loss on sale of businesses and long-lived assets. Leases – We determine if an arrangement is a lease at inception by considering whether a contract explicitly or implicitly identifies assets deployed in the arrangement and whether we have obtained substantially all of the economic benefits from the use of the underlying assets and direct how and for what purpose the assets are used during the term of the contract. Lease expense is recognized on the straight-line basis over the lease term and is included in total cost of revenue and in SG&A expense on the consolidated statements of income. Interest on finance leases is included in interest expense on the consolidated statements of income. Operating leases are included in operating lease assets, accrued liabilities and operating lease liabilities on the consolidated balance sheets. Finance leases are included in property, plant and equipment, accrued liabilities and other non-current liabilities on the consolidated balance sheets. Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We have elected to exclude leases with original terms of 1 year or less from lease assets and liabilities, and we separate nonlease components, such as common area maintenance charges and utilities, from the associated lease component for real estate leases, based on their estimated fair values. As our lease agreements typically do not provide an implicit rate, we use our incremental borrowing rate, based on information available at the lease commencement date, in determining the present value of lease payments. Certain of our lease agreements include options to extend or terminate the lease. The lease term takes into account these options to extend or terminate the lease when it is reasonably certain that we will exercise the option. Intangibles – Intangible assets are stated at historical cost less accumulated amortization. Amortization expense is generally determined on the straight-line basis, with the exception of customer lists, which are generally amortized using accelerated methods that reflect the pattern in which we receive the economic benefit of the asset. Intangibles have been assigned useful lives ranging from 1 year to 15 years, with a weighted-average useful life of 7 years as of December 31, 2023. Each reporting period, we evaluate the remaining useful lives of our amortizable intangibles to determine whether events or circumstances warrant a revision to the remaining period of amortization. If our estimate of an asset's remaining useful life is revised, the remaining carrying amount of the asset is amortized prospectively over the revised remaining useful life. Gains or losses resulting from the disposition of intangibles are included in SG&A expense on the consolidated statements of income, unless presented separately as a component of gain or loss on sale of businesses and long-lived assets. We capitalize costs of software developed or obtained for internal use, including website development costs, once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project, and (3) interest costs incurred, when significant, while developing internal-use software. Costs incurred in populating websites with information about the company or products are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. The carrying value of internal-use software is reviewed in accordance with our policy on impairment of long-lived assets and amortizable intangibles. We incur costs in connection with the development of certain software products that we sell to our customers. Costs for the development of software products to be sold are expensed as incurred until technological feasibility is established, at which time, such costs are capitalized until the product is available for general release to customers. Business combinations – We periodically complete business combinations that align with our business strategy. The identifiable assets acquired and liabilities assumed are recorded at their estimated fair values, and the results of operations of each acquired business are included in our consolidated statements of income from their acquisition dates. The purchase price for each acquisition is equivalent to the fair value of the consideration transferred, including any contingent consideration. Goodwill is recognized for the excess of the purchase price over the net fair value of the assets acquired and liabilities assumed. While we use our best estimates and assumptions in estimating the fair values of the assets acquired and liabilities assumed, our fair value estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to 1 year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Any adjustments required after the measurement period are recorded in the consolidated statements of income. Transaction costs related to acquisitions are expensed as incurred and are included in SG&A expense on the consolidated statements of income. Impairment of long-lived assets and amortizable intangibles – We evaluate the recoverability of property, plant, equipment and amortizable intangibles not held for sale whenever events or changes in circumstances indicate that an asset group's carrying amount may not be recoverable. Such circumstances could include, but are not limited to, (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used or in its physical condition, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of an asset. We compare the carrying amount of the asset group to the estimated undiscounted future cash flows associated with it. If the sum of the expected future net cash flows is less than the carrying value of the asset group being evaluated, an impairment loss is recognized. The impairment loss is calculated as the amount by which the carrying value of the asset group exceeds its estimated fair value. As quoted market prices are not available for the majority of our assets, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. We evaluate the recoverability of property, plant, equipment and intangibles held for sale by comparing the asset group's carrying amount with its estimated fair value less costs to sell. If the estimated fair value less costs to sell is less than the carrying value of the asset group, an impairment loss is recognized. The impairment loss is calculated as the amount by which the carrying value of the asset group exceeds its estimated fair value less costs to sell. The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset group being evaluated. These assumptions require judgment and actual results may differ from assumed and estimated amounts. Impairment of goodwill – We evaluate the carrying value of goodwill as of July 31 st of each year and between annual evaluations if events occur or circumstances change that may indicate a possible impairment. Such circumstances could include, but are not limited to, (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) an adverse change in market conditions that is indicative of a decline in the fair value of the assets, (4) a change in our business strategy, or (5) an adverse action or assessment by a regulator. Information regarding the results of our goodwill impairment analyses can be found in Note 8. To analyze goodwill for impairment, we must assign our goodwill to individual reporting units. Identification of reporting units includes an analysis of the components that comprise each of our operating segments, which considers, among other things, the manner in which we operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form a reporting unit if the components have similar economic characteristics. We periodically review our reporting units to ensure that they continue to reflect the manner in which we operate our business. When completing our annual goodwill impairment analysis, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after this qualitative assessment, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary. When performing a quantitative analysis of goodwill, we calculate the estimated fair value of the reporting unit and compare this amount to the carrying amount of the reporting unit's net assets, including goodwill. We utilize a discounted cash flow model to calculate the estimated fair value of a reporting unit. This approach is a valuation technique under which we estimate future cash flows using the reporting unit's financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we project revenue and apply our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows. A terminal value is then applied to the projected cash flow stream. Future estimated cash flows are discounted to their present value to calculate the estimated fair value. The discount rate used is the market-value-weighted average of our estimated cost of capital derived using both known and estimated customary market metrics. In determining the estimated fair values of our reporting units, we are required to estimate a number of factors, including revenue growth rates, terminal growth rates, direct costs, the discount rate and the allocation of shared and corporate items. When completing a quantitative analysis for all of our reporting units, the summation of our reporting units' fair values is compared to our consolidated fair value, as indicated by our market capitalization, to evaluate the reasonableness of our calculations. If the carrying amount of a reporting unit's net assets exceeds its estimated fair value, an impairment loss is recorded for the difference, not to exceed the carrying amount of goodwill. Assets held for sale – We record assets held for sale at the lower of their carrying value or estimated fair value less costs to sell. Assets are classified as held for sale on our consolidated balance sheets when all of the following conditions are met: (1) management has the authority and commits to a plan to sell the assets; (2) the assets are available for immediate sale in their present condition; (3) there is an active program to locate a buyer and the plan to sell the assets has been initiated; (4) the sale of the assets is probable within 1 year; (5) the assets are being actively marketed at a reasonable sales price relative to their current fair value; and (6) it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made. As of December 31, 2023 and December 31, 2022, there were no disposal groups classified as held for sale on the consolidated balance sheets. Prepaid product discounts – Certain of our financial institution contracts require prepaid product discounts in the form of upfront cash payments or accruals for amounts owed to financial institution clients. These prepaid product discounts are included in other non-current assets on the consolidated balance sheets and are generally amortized as reductions of revenue on the straight-line basis over the contract term. These amounts are currently being amortized over periods of up to 14.5 years, with a weighted-average period of 6 years as of December 31, 2023. Whenever events or changes occur that impact the related contract, including significant declines in the anticipated profitability, we evaluate the carrying value of prepaid product discounts to determine if they are impaired. Should a financial institution cancel a contract prior to the agreement's termination date, or should the volume of orders realized through a financial institution fall below contractually-specified minimums, we generally have a contractual right to a refund of the remaining unamortized prepaid product discount. Loans and notes receivable from distributors – We have, at times, provided loans to certain of our Promotional Solutions distributors to allow them to purchase the operations of other small business distributors. We have also sold distributors and small business customer lists that we own in exchange for notes receivable. These loans and notes receivable are included in other current assets and other non-current assets on the consolidated balance sheets. Interest rates on these receivables generally range from 6% to 7% and reflect market interest rates at the time the transactions were executed. Interest is accrued as earned. Accrued interest included in loans and notes receivable was not material as of December 31, 2023 or December 31, 2022. In determining the allowance for credit losses related to loans and notes receivable, we utilize a loss-rate analysis based on historical loss information, current delinquency rates, the credit quality of the loan recipients and the portfolio mix to determine an appropriate credit risk measurement, adjusted to reflect current loan-specific risk characteristics and changes in environmental conditions affecting our small business distributors. Changes in conditions that may affect our distributors include, but are not limited to, general economic conditions, changes in the markets for their products and services and changes in governmental regulations. In completing our analysis, we utilize a reversion methodology for periods beyond the reasonable and supportable forecast period, as many of our loans and notes receivable have longer terms. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. Further information regarding our allowance for credit losses can be found in Note 3. We generally withhold commissions payable to the distributors to settle the monthly payments due on the receivables, thereby mitigating the risk that the receivables will not be collected. Our notes receivable also generally allow us to acquire a distributor's customer list in the case of default. As of December 31, 2023 and December 31, 2022, past due amounts and receivables placed on non-accrual status were not material. The determination to place receivables on non-accrual status or to resume the accrual of interest is completed on a case-by-case basis, evaluating the specifics of each situation. Cloud computing arrangements – Implementation costs incurred in a hosting arrangement that is a service contract are recorded as non-current assets on the consolidated balance sheets. Implementation costs include activities such as integrating, configuring and customizing the related software. In evaluating whether our cloud computing arrangements include a software license, we consider whether we have the contractual right to take possession of the software at any time during the hosting period without significant penalty and whether it is feasible for us to either run the software on our own hardware or contract with another party unrelated to the vendor to host the software. If we determine that a cloud computing arrangement includes a software license, we account for the software license element of the arrangement consistent with the acquisition of other software licenses. If we determine that a cloud computing arrangement does not include a software license, we account for the implementation costs as non-current assets. In both cases, the remaining elements of the arrangement are accounted for as a service contract. The capitalized cloud computing implementation costs are amortized on the straight-line basis over the fixed, non-cancellable term of the associated hosting arrangement plus any reasonably certain renewal periods. We apply the same impairment model to these assets as we use to evaluate internally-developed software for impairment. Advertising costs – We expense non-direct response advertising costs as incurred. Advertising costs qualifying for deferral were not material to our consolidated financial statements. The total amount of advertising expense was $32,673 in 2023, $38,731 in 2022 and $47,461 in 2021. Litigation – We are party to legal actions and claims arising in the ordinary course of business. We record accruals for legal matters when the expected outcome of these matters is either known or considered probable and can be reasonably estimated. Our accruals do not include related legal and other costs expected to be incurred in defense of legal actions. These costs are expensed as incurred. Further information regarding litigation can be found in Note 15. Income taxes – We estimate our income tax provision based on the various jurisdictions where we conduct business. We estimate our current tax liability and record deferred income taxes resulting from temporary differences between the financial reporting basis of assets and liabilities and their respective tax reporting bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences reverse. Net deferred tax assets are recognized to the extent that realization of such benefits is more likely than not. To the extent that we believe realization is not likely, we establish a valuation allowance against the net deferred tax assets. We are subject to tax audits in numerous domestic and foreign tax jurisdictions. Tax audits are often complex and can require several years to complete. In the normal course of business, we are subject to challenges from the Internal Revenue Service ("IRS") and other tax authorities regarding the amount of taxes due. These challenges may alter the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. We recognize the benefits of tax return positions in the financial statements when they are more likely than not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50% likely to be realized. Accrued interest and penalties related to unrecognized tax positions is included in our provision for income taxes on the consolidated statements of income. Derivative financial instruments – We have outstanding interest rate swaps related to our variable-rate debt. Further Information regarding these derivative financial instruments can be found in Note 7. We do not use derivative financial instruments for speculative or trading purposes. Our policy is that all derivative transactions must be linked to an existing balance sheet item or firm commitment, and the notional amount cannot exceed the value of the exposure being hedged. We recognize all derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. Changes in the fair value of derivative financial instruments are recognized periodically either in income or in shareholders' equity as a component of accumulated other comprehensive loss, depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it qualifies as a fair value hedge or a cash flow hedge and whether the hedge is effective. Generally, changes in the fair value of derivatives accounted for as fair value hedges are recorded in income along with the portion of the change in the fair value of the hedged items that relate to the hedged risk. Changes in the fair value of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in accumulated other comprehensive loss, net of tax. We classify the cash flows from derivative instruments that have been designated as fair value or cash flow hedges in the same category as the cash flows from the items being hedged. Changes in the fair value of derivatives not qualifying as hedges and the ineffective portion of hedges are included in net income. Revenue recognition – Product revenue is recognized when control of the goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods. In most cases, control is transferred when products are shipped. We have elected to account for shipping and handling activities that occur after the customer has obtained control of the product as fulfillment activities and not as separate performance obligations. We recognize the vast majority of our service revenue as services are provided. The majority of our contracts are for the shipment of tangible products or the delivery of services that have a single performance obligation or include multiple performance obligations where control is transferred at the same time. Revenue is presented on the consolidated statements of income net of rebates, discounts, amortization of prepaid product discounts, and taxes collected concurrent with revenue-producing activities. Many of our check supply contracts with financial institutions provide for rebates on certain products. We record these rebates as reductions of revenue and as accrued liabilities on the consolidated balance sheets when the related revenue is recognized. Amounts billed to customers for shipping and handling are included in revenue, while the related shipping and handling costs are reflected in cost of products and are accrued when the related revenue is recognized. When another party is involved in providing goods or services to a customer, we must determine whether our obligation is to provide the specified good or service itself (i.e., we are the principal in the transaction) or to arrange for that good or service to be provided by the other party (i.e., we are an agent in the transaction). When we are responsible for satisfying a performance obligation, based on our ability to control the product or service provided, we are considered the principal and revenue |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | Accounting Standards Adopted During 2023 ASU No. 2022-02 – In March 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2022-02, Troubled Debt Restructurings and Vintage Disclosures . This standard modifies the accounting for troubled debt restructurings by creditors and modifies certain disclosure requirements. We adopted this standard on January 1, 2023 and elected to apply it prospectively to modifications occurring on or after January 1, 2023. Adoption of this standard did not impact our financial position as of December 31, 2023 or our results of operations for the year ended December 31, 2023. Reference rate reform – In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate ("LIBOR") or by another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No 2021-01, Reference Rate Reform (Topic 848): Scope , which clarified the scope and application of the original guidance. Effective March 20, 2023, we modified our existing credit facility and our September 2022 interest rate swap agreement (Note 7) to utilize the Secured Overnight Financing Rate ("SOFR") as the reference rate in the agreements. In accounting for these modifications, we adopted the reference rate reform guidance on a prospective basis as allowed under the provisions of ASU No. 2022-06, Deferral of the Sunset Date of Topic 848. Adoption of these standards did not have a material impact on our consolidated financial statements. Accounting Standards Not Yet Adopted ASU No. 2023-07 – In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures. which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. We are currently evaluating the potential impact of adopting this new guidance on the related disclosures within our consolidated financial statements. ASU No. 2023-09 – In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures, which modifies the required income tax disclosures to include specific categories in the income tax rate reconciliation and to require the disclosure of income tax payments by jurisdiction, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The standard should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on the related disclosures within our consolidated financial statements. |
SUPPLEMENTAL BALANCE SHEET AND
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2023 | |
Supplemental balance sheet and cash flow information [Abstract] | |
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | Trade accounts receivable – Net trade accounts receivable was comprised of the following at December 31: (in thousands) 2023 2022 Trade accounts receivable – gross (1) $ 197,546 $ 210,799 Allowance for credit losses (6,541) (4,182) Trade accounts receivable – net $ 191,005 $ 206,617 (1) Includes unbilled receivables of $43,673 as of December 31, 2023 and $43,902 as of December 31, 2022. Changes in the allowance for credit losses for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Balance, beginning of year $ 4,182 $ 4,130 $ 6,428 Bad debt expense 7,045 4,185 223 Write-offs and other (4,686) (4,133) (2,521) Balance, end of year $ 6,541 $ 4,182 $ 4,130 Inventories and supplies – Inventories and supplies were comprised of the following at December 31: (in thousands) 2023 2022 Finished and semi-finished goods $ 34,194 $ 40,715 Raw materials and supplies 17,339 17,952 Reserve for excess and obsolete items (9,445) (6,400) Inventories and supplies, net of reserve $ 42,088 $ 52,267 Changes in the reserve for excess and obsolete items for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Balance, beginning of year $ 6,400 $ 5,132 $ 11,748 Amounts charged to expense 4,105 2,940 3,513 Write-offs and sales (1,060) (1,672) (10,129) Balance, end of year $ 9,445 $ 6,400 $ 5,132 Available-for-sale debt securities – Available-for-sale debt securities were comprised of the following: December 31, 2023 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Cash equivalents: Domestic money market fund $ 22,000 $ — $ — $ 22,000 Available-for-sale debt securities $ 22,000 $ — $ — $ 22,000 December 31, 2022 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Cash equivalents: Domestic money market fund $ 5,000 $ — $ — $ 5,000 Funds held for customers: (1) Canadian and provincial government securities 9,190 — (1,064) 8,126 Available-for-sale debt securities $ 14,190 $ — $ (1,064) $ 13,126 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2022, also included cash of $294,165. The domestic money market funds held highly liquid, short-term investments managed by the respective financial institutions. Further information regarding the fair value of available-for-sale debt securities can be found in Note 8. Revenue in excess of billings – Revenue in excess of billings was comprised of the following at December 31: (in thousands) 2023 2022 Conditional right to receive consideration $ 20,680 $ 26,520 Unconditional right to receive consideration (1) 5,427 12,241 Revenue in excess of billings $ 26,107 $ 38,761 (1) Represents revenues that are earned but not currently billable under the related contract terms. Property, plant and equipment – Property, plant and equipment was comprised of the following at December 31: 2023 2022 (in thousands) Gross carrying amount Accumulated depreciation Net carrying amount Gross carrying amount Accumulated depreciation Net carrying amount Machinery and equipment $ 314,778 $ (262,308) $ 52,470 $ 378,468 $ (307,838) $ 70,630 Buildings and improvements 123,072 (68,391) 54,681 111,916 (67,936) 43,980 Land and improvements 12,790 (3,402) 9,388 14,498 (4,214) 10,284 Property, plant and equipment $ 450,640 $ (334,101) $ 116,539 $ 504,882 $ (379,988) $ 124,894 Intangibles – Amortizable intangibles were comprised of the following at December 31: 2023 2022 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Internal-use software $ 554,825 $ (412,364) $ 142,461 $ 529,306 $ (395,514) $ 133,792 Customer lists/relationships 363,298 (235,557) 127,741 497,882 (312,986) 184,896 Technology-based intangibles 97,633 (54,251) 43,382 99,613 (47,478) 52,135 Partner relationships 74,911 (14,031) 60,880 74,682 (9,094) 65,588 Trade names 39,367 (23,792) 15,575 44,185 (26,510) 17,675 Software to be sold 36,900 (35,195) 1,705 36,900 (32,007) 4,893 Intangibles $ 1,166,934 $ (775,190) $ 391,744 $ 1,282,568 $ (823,589) $ 458,979 Based on the intangibles in service as of December 31, 2023, estimated amortization expense for each of the next five years ending December 31 is as follows: (in thousands) Estimated 2024 $ 107,127 2025 75,217 2026 48,604 2027 37,075 2028 28,806 In the normal course of business, we acquire and develop internal-use software. We also, at times, purchase customer lists and partner relationships. During 2021, we acquired other intangible assets in conjunction with the acquisition of First American Payment Systems, L.P. (Note 6). The following intangible assets were capitalized or developed during the years ended December 31: 2023 2022 2021 (in thousands) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Internal-use software $ 81,349 4 $ 74,778 3 $ 75,918 3 Customer lists/relationships — — 18,267 6 149,642 8 Partner relationships 1,385 2 1,587 3 73,095 15 Technology-based intangibles — — — — 65,000 8 Trade names — — — — 21,000 10 Intangible additions $ 82,734 4 $ 94,632 4 $ 384,655 8 Goodwill – Changes in goodwill by reportable business segment and in total were as follows: (in thousands) Payments Data Solutions (1) Promotional Solutions (1) Checks Total Balance, December 31, 2021: $ 895,338 $ 40,816 $ 59,175 $ 434,812 $ 1,430,141 Currency translation adjustment and other 1,343 — (99) — 1,244 Balance, December 31, 2022 $ 896,681 $ 40,816 $ 59,076 $ 434,812 $ 1,431,385 Currency translation adjustment and other (828) — 33 — (795) Balance, December 31, 2023 $ 895,853 $ 40,816 $ 59,109 $ 434,812 $ 1,430,590 (1) The Data Solutions and Promotional Solutions balances are net of accumulated impairment charges of $392,168 and $193,699, respectively, for each period presented. Other non-current assets – Other non-current assets were comprised of the following at December 31: (in thousands) 2023 2022 Postretirement benefit plan asset (Note 12) $ 94,939 $ 79,343 Cloud computing arrangement implementation costs 59,234 71,547 Prepaid product discounts (1) 40,376 44,824 Deferred contract acquisition costs (2) 21,103 21,300 Loans and notes receivable from distributors, net of allowance for credit losses (3) 12,443 13,259 Other 23,087 30,081 Other non-current assets $ 251,182 $ 260,354 (1) Amortization of prepaid product discounts was $33,370 for 2023, $34,400 for 2022 and $31,784 for 2021. (2) Amortization of deferred contract acquisition costs was $11,061 for 2023, $8,206 for 2022 and $4,975 for 2021. (3) Amount includes the non-current portion of loans and notes receivable. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $987 as of December 31, 2023 and $961 as of December 31, 2022. Changes in the allowance for credit losses related to loans and notes receivable from distributors for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Balance, beginning of year $ 1,024 $ 2,830 $ 3,995 Bad debt (benefit) expense (96) 1,195 (1,165) Write-offs — (2,599) — Other — (402) — Balance, end of year $ 928 $ 1,024 $ 2,830 We categorize loans and notes receivable into risk categories based on information about the ability of the borrowers to service their debt, including current financial information, historical payment experience, current economic trends and other factors. The highest quality receivables are assigned a 1-2 internal grade. Those that have a potential weakness requiring management's attention are assigned a 3-4 internal grade. The following table presents loans and notes receivable from distributors, including the current portion, by credit quality indicator and by year of origination, as of December 31, 2023. Loans and notes receivable from distributors amortized cost basis by origination year (in thousands) 2023 2020 2019 Prior Total Risk rating: 1-2 internal grade $ 342 $ 1,003 $ 370 $ 12,643 $ 14,358 3-4 internal grade — — — — — Loans and notes receivable $ 342 $ 1,003 $ 370 $ 12,643 $ 14,358 Accrued liabilities – Accrued liabilities were comprised of the following at December 31: (in thousands) 2023 2022 Employee cash bonuses, including sales incentives $ 49,446 $ 57,398 Deferred revenue (1) 35,343 47,012 Operating lease liabilities (Note 14) 13,562 12,780 Customer rebates 12,718 12,153 Interest 10,481 7,314 Restructuring and integration (Note 9) 9,689 8,528 Wages and payroll liabilities, including vacation 8,605 20,264 Prepaid product discounts due within one year 4,477 4,179 Other 47,106 48,776 Accrued liabilities $ 191,427 $ 218,404 (1) Revenue recognized for amounts included in deferred revenue at the beginning of the period was $43,624 for 2023, $47,547 for 2022 and $39,366 for 2021. Supplemental cash flow information – Supplemental cash flow information was as follows for the years ended December 31: (in thousands) 2023 2022 2021 Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets: Cash and cash equivalents $ 71,962 $ 40,435 $ 41,231 Restricted cash and restricted cash equivalents included in funds held for customers 383,134 294,165 241,488 Non-current restricted cash included in other non-current assets 2,937 2,815 2,772 Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 458,033 $ 337,415 $ 285,491 Interest paid $ 115,556 $ 87,108 $ 46,621 Income taxes paid 47,945 38,629 18,761 Non-cash investing activities: Accrued purchases of capital assets $ 11,924 $ 1,340 $ 6,477 Non-cash consideration for customer list purchases (1) — 5,096 15,528 Non-cash financing activities: Vesting of restricted stock unit awards 8,538 13,602 16,646 (1) Consists of pre-acquisition amounts owed to us by the sellers. Information regarding operating and finance leases executed in each period can be found in Note 14. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | The following table reflects the calculation of basic and diluted earnings per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive. (in thousands, except per share amounts) 2023 2022 2021 Earnings per share – basic: Net income $ 26,227 $ 65,530 $ 62,772 Net income attributable to non-controlling interest (107) (135) (139) Net income attributable to Deluxe 26,120 65,395 62,633 Income allocated to participating securities (38) (47) (46) Income attributable to Deluxe available to common shareholders $ 26,082 $ 65,348 $ 62,587 Weighted-average shares outstanding 43,553 43,025 42,378 Earnings per share – basic $ 0.60 $ 1.52 $ 1.48 Earnings per share – diluted: Net income $ 26,227 $ 65,530 $ 62,772 Net income attributable to non-controlling interest (107) (135) (139) Net income attributable to Deluxe 26,120 65,395 62,633 Income allocated to participating securities (38) (35) (26) Remeasurement of share-based awards classified as liabilities — (497) (438) Income attributable to Deluxe available to common shareholders $ 26,082 $ 64,863 $ 62,169 Weighted-average shares outstanding 43,553 43,025 42,378 Dilutive impact of potential common shares 290 285 449 Weighted-average shares and potential common shares outstanding 43,843 43,310 42,827 Earnings per share – diluted $ 0.59 $ 1.50 $ 1.45 Antidilutive options excluded from calculation 1,380 1,732 2,179 |
OTHER COMPREHENSIVE INCOME (LOS
OTHER COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Dec. 31, 2023 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
OTHER COMPREHENSIVE INCOME (LOSS) | Reclassification adjustments – Information regarding amounts reclassified from accumulated other comprehensive loss to net income was as follows: Accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affected line item in consolidated statements of income (in thousands) 2023 2022 2021 Amortization of postretirement benefit plan items: Prior service credit $ 1,421 $ 1,421 $ 1,421 Other income, net Net actuarial loss (2,273) (900) (1,629) Other income, net Total amortization (852) 521 (208) Other income, net Tax benefit (expense) 67 (315) (123) Income tax provision Amortization of postretirement benefit plan items, net of tax (785) 206 (331) Net income Debt securities: Realized loss on debt securities (1,468) (8) — Other income, net Tax benefit 376 2 — Income tax provision Realized loss on debt securities, net of tax (1,092) (6) — Net income Cash flow hedges: Realized gain (loss) on cash flow hedges 3,227 20 (1,384) Interest expense Tax (expense) benefit (872) (5) 361 Income tax provision Realized gain (loss) on cash flow hedges, net of tax 2,355 15 (1,023) Net income Foreign currency translation adjustment (1) (863) (5,550) — Gain on sale of businesses and long-lived assets Total reclassifications, net of tax $ (385) $ (5,335) $ (1,354) (1) Relates to the sale of our web hosting businesses. Further information can be found in Note 6. Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss were as follows: (in thousands) Postretirement benefit plans Net unrealized loss on debt securities Net unrealized loss on cash flow hedges Foreign currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2020 $ (21,956) $ (90) $ (5,351) $ (14,036) $ (41,433) Other comprehensive income (loss) before reclassifications 6,194 (254) 2,067 580 8,587 Amounts reclassified from accumulated other comprehensive loss 331 — 1,023 — 1,354 Net other comprehensive income (loss) 6,525 (254) 3,090 580 9,941 Balance, December 31, 2021 (15,431) (344) (2,261) (13,456) (31,492) Other comprehensive (loss) income before reclassifications (11,235) (571) 4,869 (4,170) (11,107) Amounts reclassified from accumulated other comprehensive loss (206) 6 (15) 5,550 5,335 Net other comprehensive (loss) income (11,441) (565) 4,854 1,380 (5,772) Balance, December 31, 2022 (26,872) (909) 2,593 (12,076) (37,264) Other comprehensive income (loss) before reclassifications 6,263 (183) (524) 1,295 6,851 Amounts reclassified from accumulated other comprehensive loss 785 1,092 (2,355) 863 385 Net other comprehensive income (loss) 7,048 909 (2,879) 2,158 7,236 Balance, December 31, 2023 $ (19,824) $ — $ (286) $ (9,918) $ (30,028) |
ACQUISITION AND DIVESTITURES
ACQUISITION AND DIVESTITURES | 12 Months Ended |
Dec. 31, 2023 | |
Business Combinations [Abstract] | |
ACQUISITION AND DIVESTITURES | Acquisition On June 1, 2021, we acquired all of the equity of First American Payment Systems, L.P. ("First American") in a cash transaction for $958,514, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired. First American is a large-scale payments technology company that provides partners and merchants with comprehensive in-store, online and mobile payment solutions. The transaction was funded by our revolving credit facility and additional debt we issued in June 2021 (Note 13). The acquisition resulted in goodwill, which is non-deductible for tax purposes, as First American provides an end-to-end payments technology platform that provides significant leverage to accelerate organic growth. Transaction costs related to the acquisition totaled $18,913 in 2021. The goodwill and results of operations of First American from the date of acquisition are included in the Payments segment. Information regarding goodwill by reportable business segment and the useful lives of acquired intangibles can be found in Note 3. Information regarding the calculation of the estimated fair values of the acquired intangibles can be found in Note 8. Operating results for First American for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Revenue $ 364,232 $ 347,709 $ 194,976 Net income attributable to Deluxe 14,266 5,794 1,806 The above results for the year ended December 31, 2022 include restructuring and integration expense of $5,452. Pro forma financial information (unaudited) – The following unaudited pro forma financial information summarizes our consolidated results of operations for the year ended December 31, 2021 as though the acquisition occurred on January 1, 2020: (in thousands) 2021 Revenue $ 2,156,313 Net income attributable to Deluxe 74,843 The unaudited pro forma financial information was prepared in accordance with the accounting policies described in Note 1. The pro forma information includes adjustments to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2020. The pro forma information also includes adjustments to reflect the additional interest expense on the debt we issued to fund the acquisition (Note 13), and the acquisition transaction costs we incurred during 2021 are excluded. This pro forma financial information is for informational purposes only. It does not reflect the integration of the businesses or any synergies that resulted from the acquisition. As such, it is not indicative of the results of operations that would have been achieved had the acquisition been consummated on January 1, 2020. In addition, the pro forma amounts are not indicative of future operating results. Divestitures / Business Exits During the past 2 years, we have exited certain of our businesses and facilities, allowing us to focus our resources on the key growth areas of payments and data, while allowing us to optimize our operations. 2023 divestiture / business exits – In June 2023, we completed the sale of our North American web hosting and logo design businesses for net cash proceeds of $31,230, and we recognized a pretax gain of $17,486. These businesses generated annual revenue of approximately $66,000 during 2022, primarily in our Data Solutions segment. The assets and liabilities sold were not material to our consolidated balance sheet. In September and December 2023, we executed agreements allowing for the conversion of our U.S. and Canadian payroll and human resources services customers to other service providers. During 2023, we received initial cash consideration of $15,669 under these agreements, which is included in proceeds from sale of businesses and long-lived assets on the consolidated statement of cash flows. We recognized related income of $10,700 during the fourth quarter of 2023, which is included in gain on sale of businesses and long-lived assets on the consolidated statement of income. Recognition of the remaining income will be based on actual customer conversion and retention activity, which we expect will be completed during 2024. These businesses generated annual revenue of approximately $27,000 in the Payments segment during 2023. Our U.S. and Canadian payroll and human resources businesses comprise a reporting unit that had a goodwill balance of $7,743 as of December 31, 2023. We evaluated this goodwill for impairment as of December 31, 2023, and, based on our quantitative analysis, we concluded that it was not impaired as of that date. In conjunction with our phased transition out of these businesses, we expect that this goodwill will be fully impaired in 2024, at the point when the remaining cash flows generated by these businesses in 2024 no longer support the carrying value of the reporting unit. 2023 facility sales – During the fourth quarter of 2023, we sold 2 facilities for net cash proceeds of $8,094, and we recognized a pretax gain of $3,792. 2022 divestitures – In May 2022, we completed the sale of our Australian web hosting business for net cash proceeds of $17,620, and we recognized a pretax gain of $15,166.This business generated annual revenue in our Data Solutions segment of $23,766 during 2021. The assets and liabilities sold were not material to our consolidated balance sheet. During 2022, we also sold the assets of our Promotional Solutions strategic sourcing and retail packaging businesses. These businesses generated annual revenue of approximately $29,000 during 2021. Neither the gain on these sales nor the assets and liabilities sold were material to our consolidated financial statements. 2022 facility sale – In May 2022, we sold a facility for net cash proceeds of $6,929, and we recognized a pretax gain of $2,361. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | As part of our interest rate risk management strategy, we entered into interest rate swaps, which we designated as cash flow hedges, to mitigate variability in interest payments on a portion of our variable-rate debt (Note 13). In March 2023, we modified our September 2022 interest rate swap agreement to utilize SOFR as the reference rate in the agreement. Information regarding our accounting for this modification can be found in Note 2. Our derivative instruments were comprised of the following at December 31: December 31, 2023 December 31, 2022 (in thousands) Notional amount Interest Rate Maturity Balance Sheet Location Fair Value Fair Value June 2023 amortizing interest rate swap: $ 271,659 4.249 % June 2026 Other non-current liabilities $ (2,158) $ — March 2023 interest rate swap: 200,000 4.003 % March 2026 Other non-current assets 287 — September 2022 interest rate swap: 300,000 3.990 % September 2025 Other non-current assets 1,519 2,409 July 2019 200,000 1.798 % March 2023 Other current assets — 1,184 Changes in the fair values of the interest rate swaps are recorded in accumulated other comprehensive loss on the consolidated balance sheets and are subsequently reclassified into interest expense as interest payments are made on the variable-rate debt. The fair values of the derivatives are calculated based on the applicable reference rate curve on the date of measurement. The cash flow hedges were fully effective as of December 31, 2023 and December 31, 2022, and their impact on consolidated net income and our consolidated statements of cash flows was not material. We also expect that the amount that will be reclassified to interest expense during the next 12 months will not be material. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | Goodwill impairment analyses We evaluate the carrying value of goodwill as of July 31 of each year and between annual evaluations if events occur or circumstances change that could indicate a possible impairment. Our policy on impairment of goodwill, which is included in Note 1, explains our methodology for assessing goodwill impairment. 2023 annual goodwill impairment analyses – In completing the 2023 annual goodwill impairment analysis as of July 31, 2023, we elected to perform qualitative analyses for all of our reporting units. These qualitative analyses evaluated factors, including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the most recent quantitative analyses completed in prior periods. In completing these assessments, we noted no changes in events or circumstances that indicated that it was more likely than not that the fair value of any reporting unit was less than its carrying amount. As such, no goodwill impairment charges were recorded as a result of our 2023 annual impairment analysis. 2022 annual goodwill impairment analyses – In completing the 2022 annual goodwill impairment analysis as of July 31, 2022, we elected to perform qualitative analyses for all of our reporting units, with the exception of our Data Analytics reporting unit. These qualitative analyses evaluated factors, including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the most recent quantitative analyses completed in prior periods. In completing these assessments, we noted no changes in events or circumstances that indicated that it was more likely than not that the fair value of any reporting unit was less than its carrying amount. The quantitative analysis of our Data Analytics reporting unit indicated that the estimated fair value of this reporting unit exceeded its carrying value by approximately $46,000, or by 39% above the carrying value of its net assets. As such, no goodwill impairment charges were recorded as a result of our 2022 annual impairment analysis. 2021 annual goodwill impairment analyses – In completing the 2021 annual goodwill impairment analysis as of July 31, 2021, we elected to perform qualitative analyses for all of our reporting units. These qualitative analyses evaluated factors, including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the most recent quantitative analyses completed in prior periods. In completing these assessments, we noted no changes in events or circumstances that indicated that it was more likely than not that the fair value of any reporting unit was less than its carrying amount. As such, no goodwill impairment charges were recorded as a result of our 2021 annual impairment analysis. Second quarter 2021 realignment of reporting units – As a result of changes in our financial management reporting process during the second quarter of 2021, we concluded that a realignment of our reporting units was required. These changes did not require a revision to our reportable business segments. We analyzed goodwill for impairment immediately prior to this realignment by performing qualitative analyses for the reporting units with goodwill. The qualitative analyses evaluated factors, including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the last quantitative analyses we completed. In completing these assessments, we noted no changes in events or circumstances that indicated that it was more likely than not that the fair value of any reporting unit was less than its carrying amount. The realignment of our reporting units, effective April 1, 2021, did not change the reporting units within our Data Solutions or Checks segments. Within our Payments segment, the number of reporting units increased from 1 to 4, and within our Promotional Solutions segment, the number of reporting units increased from 1 to 2. Upon completing the realignment, we reallocated the carrying value of goodwill to our new reporting units based on their relative fair values. Immediately subsequent to the realignment, we completed qualitative analyses for the reporting units that changed and to which goodwill was assigned. We determined that it was appropriate to perform qualitative assessments, given that our analysis indicated that the change in reporting units did not mask or prevent an impairment that existed at the time of the change. In completing the qualitative assessments, we noted no changes in events or circumstances that indicated that it was more likely than not that the fair value of any reporting unit was less than its carrying amount. As such, no goodwill impairment charges were recorded as a result of these analyses. Business combinations For all acquisitions, we are required to measure the fair value of the net identifiable tangible and intangible assets and liabilities acquired. Information regarding our 2021 acquisition can be found in Note 6 and information regarding the useful lives of acquired intangibles can be found in Note 3. The identifiable net assets acquired during 2021 were comprised primarily of intangible assets, accounts receivable and operating lease assets and liabilities. The fair value of the customer relationship intangibles acquired during 2021, as well as the partner relationship intangibles, was estimated using the multi-period excess earnings method. This valuation model estimates revenues and cash flows derived from the asset and then deducts portions of the cash flow that can be attributed to supporting assets, such as a trade name or fixed assets, that contributed to the generation of the cash flows. The resulting cash flow, which is attributable solely to the customer relationship or partner relationship asset, is then discounted at a rate of return commensurate with the risk of the asset to calculate a present value. Key assumptions used in all of these calculations included same-customer revenue, merchant and partner growth rates; estimated earnings; estimated customer and partner retention rates, based on the acquirees' historical information; and the discount rate. The estimated fair values of the acquired trade names and technology-based intangibles were estimated using the relief from royalty method, which calculates the cost savings associated with owning rather than licensing the assets. Assumed royalty rates were applied to projected revenue for the estimated remaining useful lives of the assets to estimate the royalty savings. Royalty rates are selected based on the attributes of the asset, including its recognition and reputation in the industry, and in the case of trade names, with consideration of the specific profitability of the products sold under a trade name and supporting assets. The estimated fair value of the acquired accounts receivable approximated the gross contractual amounts receivable and we expect to collect all acquired receivables. The fair value of the acquired operating lease liabilities was estimated as if the leases were new. As such, we reassessed the lease term, the discount rate and the lease payments. The fair value of the related operating lease assets was measured at the same amount as the lease liability, adjusted to reflect favorable or unfavorable terms of the leases as compared to market terms. Recurring fair value measurements Cash and cash equivalents and funds held for customers included available-for-sale debt securities (Note 3). These securities included domestic money market funds and, as of December 31, 2022, included a private mutual fund investment that invested in Canadian and provincial government securities. The cost of the money market funds, which were traded in an active market, approximated their fair values because of the short-term nature of the underlying investments. The mutual fund investment was not traded in an active market and its fair value was determined by obtaining quoted prices in active markets for the underlying securities held by the fund. Unrealized gains and losses, net of tax, were included in accumulated other comprehensive loss on the consolidated balance sheets. The cost of securities sold was determined using the average cost method. The loss realized on the sale of the mutual fund investment during the fourth quarter of 2023 was included in other income, net on the consolidated statement of income. The fair values of our derivative instruments (Note 7) are calculated based on the applicable reference rate curve on the date of measurement. Information regarding the fair values of our financial instruments was as follows: Fair value measurements using Balance sheet location December 31, 2023 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value Measured at fair value through comprehensive income: Available-for-sale debt securities Cash and cash equivalents $ 22,000 $ 22,000 $ 22,000 $ — $ — Derivative assets (Note 7) Other non-current assets 1,806 1,806 — 1,806 — Derivative liability (Note 7) Other non-current liabilities (2,158) (2,158) — (2,158) — Amortized cost: Cash Cash and cash equivalents 49,962 49,962 49,962 — — Cash Funds held for customers 383,134 383,134 383,134 — — Cash Other non-current assets 2,937 2,937 2,937 — — Loans and notes receivable from distributors Other current and non-current assets 13,430 13,249 — — 13,249 Long-term debt Current portion of long-term debt and long-term debt 1,592,851 1,554,028 — 1,554,028 — Fair value measurements using Balance sheet location December 31, 2022 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value Measured at fair value through comprehensive income: Available-for-sale debt securities Cash and cash equivalents $ 5,000 $ 5,000 $ 5,000 $ — $ — Available-for-sale debt securities Funds held for customers 8,126 8,126 — 8,126 — Derivative assets (Note 7) Other current and non-current assets 3,593 3,593 — 3,593 — Amortized cost: Cash Cash and cash equivalents 35,435 35,435 35,435 — — Cash Funds held for customers 294,165 294,165 294,165 — — Cash Other non-current assets 2,815 2,815 2,815 — — Loans and notes receivable from distributors Other current and non-current assets 14,220 13,315 — — 13,315 Long-term debt Current portion of long-term debt and long-term debt 1,644,276 1,574,417 — 1,574,417 — |
RESTRUCTURING AND INTEGRATION E
RESTRUCTURING AND INTEGRATION EXPENSE | 12 Months Ended |
Dec. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING AND INTEGRATION EXPENSE | Restructuring and integration expense consists of costs related to initiatives to drive earnings and cash flow growth and also includes costs related to the consolidation and migration of certain applications and processes, including our financial and sales management systems. These costs consist primarily of consulting, project management services and internal labor, as well as other costs associated with our initiatives, such as costs related to facility closures and consolidations. In addition, we have incurred employee severance costs across functional areas. Restructuring and integration expense is not allocated to our reportable business segments. We are currently pursuing several initiatives designed to support our growth strategy and to increase our efficiency, including several initiatives that we collectively refer to as our North Star program. The goal of these initiatives is to further drive shareholder value by (1) expanding our earnings before interest, taxes, depreciation and amortization ("EBITDA") growth trajectory, (2) increasing cash flow, (3) paying down debt, and (4) improving our leverage ratio. Our various initiatives include a balanced mix of structural cost reductions focused on organizational structure, processes and operational improvements, in addition to workstreams to drive revenue growth. We have already combined like-for-like capabilities, reduced management layers and consolidated core operations to run more efficiently and to create the ability to invest in high impact talent to accelerate our growth businesses of payments and data. The associated expense, which consisted primarily of consulting and severance costs, was approximately $45,000 during 2023, and we anticipate that we will incur.an additional $70,000 to $90,000 of North Star restructuring and integration expense over the next 2 years. Restructuring and integration expense is reflected on the consolidated statements of income as follows for the years ended December 31: (in thousands) 2023 2022 2021 Total cost of revenue $ 12,230 $ 607 $ 4,197 Operating expenses 78,245 62,529 54,750 Restructuring and integration expense $ 90,475 $ 63,136 $ 58,947 Restructuring and integration expense was comprised of the following for the years ended December 31: (in thousands) 2023 2022 2021 External consulting and other costs $ 52,290 $ 32,067 $ 26,676 Employee severance benefits 18,103 12,829 9,076 Internal labor 8,723 7,989 7,948 Other 11,359 10,251 15,247 Restructuring and integration expense $ 90,475 $ 63,136 $ 58,947 Our restructuring and integration accruals are included in accrued liabilities on the consolidated balance sheets and represent expected cash payments required to satisfy the remaining severance obligations to those employees already terminated and those expected to be terminated under our various initiatives. The majority of the employee reductions, as well as the related severance payments, are expected to be completed by mid-2024. Changes in our restructuring and integration accruals were as follows: (in thousands) Employee severance benefits Balance, December 31, 2020 $ 6,798 Charges 10,897 Reversals (1,821) Payments (10,202) Balance, December 31, 2021 5,672 Charges 13,782 Reversals (953) Payments (9,973) Balance, December 31, 2022 8,528 Charges 18,653 Reversals (550) Payments (16,942) Balance, December 31, 2023 $ 9,689 The charges and reversals presented in the rollforward of our restructuring and integration accruals do not include items charged directly to expense as incurred, as those items are not reflected in accrued liabilities on the consolidated balance sheets. |
INCOME TAX PROVISION
INCOME TAX PROVISION | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX PROVISION | Income before income taxes was comprised of the following for the years ended December 31: (in thousands) 2023 2022 2021 U.S. $ (7,636) $ 51,640 $ 62,361 Foreign 47,435 32,738 31,442 Income before income taxes $ 39,799 $ 84,378 $ 93,803 The components of the income tax provision were as follows for the years ended December 31: (in thousands) 2023 2022 2021 Current tax provision: Federal $ 20,999 $ 27,789 $ (61) State 6,331 8,507 2,389 Foreign 18,118 11,081 10,945 Total current tax provision 45,448 47,377 13,273 Deferred tax provision: Federal (20,357) (21,368) 15,889 State (4,389) (5,710) 1,958 Foreign (7,130) (1,451) (89) Total deferred tax provision (31,876) (28,529) 17,758 Income tax provision $ 13,572 $ 18,848 $ 31,031 The effective tax rate on pretax income reconciles to the U.S. federal statutory tax rate for the years ended December 31 as follows: 2023 2022 2021 Income tax at federal statutory rate 21.0 % 21.0 % 21.0 % Change in valuation allowances 17.5 % 7.2 % 0.1 % Tax impact of share-based compensation 6.7 % 3.2 % 0.9 % Tax on repatriation of foreign earnings 6.2 % 2.2 % 4.9 % Foreign tax rate differences 5.7 % 1.9 % 1.7 % Non-deductible executive compensation 4.1 % 2.2 % 1.7 % Return to provision adjustments 2.0 % (1.9 %) — State income tax expense, net of federal income tax benefit 2.0 % 2.7 % 2.4 % Change in state deferred income tax rates 1.7 % 0.3 % 0.1 % Non-deductible acquisition costs 0.2 % 0.1 % 1.5 % Business exits (Note 6) (30.2 %) (15.8 %) — Research and development tax credit (3.0 %) (1.2 %) (0.9 %) Other 0.2 % 0.4 % (0.3 %) Effective tax rate 34.1 % 22.3 % 33.1 % In June 2023, we completed the sale of our North American web hosting business, and in May 2022, we completed the sale of our Australian web hosting business. We recognized capital losses on these transactions for tax purposes, and we recorded valuation allowances for the portion of the capital loss carryovers that we do not currently expect to realize. In December 2023, we executed an agreement allowing for the conversion of our Canadian payroll and human resources services customers to another service provider. We recognized a capital gain on this transaction for tax purposes, which we were able to partially offset with capital loss carryforwards. The capital loss carryforwards had been previously offset with a valuation allowance, and as such, we reversed the previously recognized valuation allowance. We repatriated foreign earnings held in cash by our Canadian subsidiaries of $32,931 during 2023, $25,526 during 2022 and $85,285 during 2021. The associated tax expense included in the income tax provision was $2,168 in 2023, $1,818 in 2022 and $4,555 in 2021. We believe the accumulated and remaining cash of our Canadian subsidiaries is sufficient to meet their working capital needs. The historical unremitted Canadian earnings as of December 31, 2021 will continue to be reinvested indefinitely in the operations of those subsidiaries. Deferred income taxes have not been recognized on those earnings as of December 31, 2023. If we were to repatriate our foreign cash and cash equivalents into the U.S. at one time, the tax effects would generally be limited to foreign withholding taxes on any such distribution. As of December 31, 2023, the amount of cash and cash equivalents held by our foreign subsidiaries was $25,270, primarily in Canada. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties and the federal benefit of deductible state income tax, was as follows: (in thousands) 2023 2022 2021 Balance, beginning of year $ 2,635 $ 2,551 $ 3,361 Additions for tax positions of current year 249 250 169 Additions for tax positions of prior years 91 270 8 Reductions for tax positions of prior years — (45) (673) Settlements (303) — — Lapse of statutes of limitations (282) (391) (314) Balance, end of year $ 2,390 $ 2,635 $ 2,551 If the unrecognized tax benefits as of December 31, 2023 were recognized in the consolidated financial statements, income tax expense would decrease $2,390. Accruals for interest and penalties, excluding the tax benefits of deductible interest, were $583 as of December 31, 2023 and $731 as of December 31, 2022. Our income tax provision included expense for interest and penalties of $70 in 2023, $97 in 2022 and $84 in 2021. We believe that it is reasonably possible that a decrease of up to $1,300 in unrecognized tax benefits may be necessary within the next 12 months, primarily related to the lapse of statutes of limitations. We also believe it is reasonably possible that an increase of up to $2,000 in unrecognized tax benefits may be necessary within the next 12 months, related to potential legislative and regulatory changes in certain state and local jurisdictions. Due to the nature of the underlying liabilities and the extended time frame often needed to resolve income tax uncertainties, we cannot provide reliable estimates of the amount or timing of cash payments that may be required to settle these liabilities. The statute of limitations for federal tax assessments for 2019 and prior years has expired. In general, income tax returns for the years 2020 through 2023 remain subject to examination by federal, foreign, state and city tax jurisdictions. In the event that we have determined not to file income tax returns with a particular state or city, all years remain subject to examination by the tax jurisdiction. The ultimate outcome of tax matters may differ from our estimates and assumptions. Unfavorable settlement of any particular issue would require the use of cash and could result in increased income tax expense. Favorable resolution would result in reduced income tax expense. Tax-effected temporary differences that gave rise to deferred tax assets and liabilities as of December 31 were as follows: 2023 2022 (in thousands) Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities Goodwill $ — $ 40,572 $ — $ 30,848 Employee benefit plans — 14,482 — 11,009 Cloud computing arrangements — 10,337 — 13,969 Revenue recognition — 7,187 — 7,312 Prepaid assets — 5,385 — 5,474 Property, plant and equipment — 4,529 3,139 — Acquisition costs — 1,604 — 1,691 Operating leases 20,078 15,923 16,681 12,387 Deductible interest carryforward 34,038 — 16,403 — Net operating loss, tax credit and capital loss carryforwards 22,639 — 16,720 — Reserves and accruals 9,522 — 6,935 — Gain on payroll and human resources business exit (Note 6) 6,100 — — — Intangible assets 4,510 — — 16,901 Inventories 2,804 — 2,018 — Deferred revenue 1,406 — 2,951 — All other 670 719 954 1,768 Total deferred taxes 101,767 100,738 65,801 101,359 Valuation allowances (14,984) — (7,996) — Net deferred taxes $ 86,783 $ 100,738 $ 57,805 $ 101,359 The valuation allowances as of December 31, 2023 and December 31, 2022 related primarily to capital loss carryforwards in the U.S and net operating loss carryforwards in various state jurisdictions that we do not currently expect to fully realize. Changes in our valuation allowances for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Balance, beginning of year $ (7,996) $ (10,993) $ (11,453) Expense from change in allowances (6,979) (6,086) (65) Sale of business (Note 6) — 8,745 — Foreign currency translation (9) 338 525 Balance, end of year $ (14,984) $ (7,996) $ (10,993) As of December 31, 2023, we had the following net operating loss, deductible interest, capital loss and tax credit carryforwards: • state net operating loss carryforwards and tax credit carryforwards of $125,881 that expire at various dates between 2024 and 2050; • federal deductible interest carryforwards of $127,238 that do not expire; and • federal capital loss carryforwards of $57,096 that expire in 2027 and 2028. |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement, Noncash Expense [Abstract] | |
SHARE-BASED COMPENSATION PLANS | Our employee share-based compensation plans consist of our employee stock purchase plan and our long-term incentive plan. Effective April 27, 2022, our shareholders approved the Deluxe Corporation 2022 Stock Incentive Plan, simultaneously terminating our previous plan. Under the current plan, 2.5 million shares of common stock plus any shares released as a result of the forfeiture or termination of awards issued under our prior plan are reserved for issuance, with 2.4 million shares remaining available for issuance as of December 31, 2023. Under our current and previous plans, we have granted non-qualified stock options, restricted stock units and performance share unit awards. Our current plan also allows for the issuance of restricted stock and stock appreciation rights, none of which were outstanding as of December 31, 2023. Our policy regarding the recognition of compensation expense for employee share-based awards can be found in Note 1. The following amounts were recognized in our consolidated statements of income for share-based compensation awards for the years ended December 31: (in thousands) 2023 2022 2021 Restricted stock units $ 14,092 $ 16,632 $ 20,407 Performance share unit awards 4,127 3,840 4,338 Stock options 1,845 2,665 4,187 Employee stock purchase plan 461 539 545 Total share-based compensation expense $ 20,525 $ 23,676 $ 29,477 Income tax benefit $ (7,408) $ (6,853) $ (7,714) As of December 31, 2023, the total compensation expense for unvested awards not yet recognized in our consolidated statements of income was $22,213, net of the effect of estimated forfeitures. This amount is expected to be recognized over a weighted-average period of 1.9 years. Non-qualified stock options – All options allow for the purchase of shares of common stock at prices equal to the stock's market value at the date of grant. Options become exercisable beginning 1 year after the grant date, with one-fourth vesting each year over 4 years. Options granted under the current plan may be exercised up to 10 years following the grant date. Awards granted prior to 2019 have a 7 year life. No stock options were granted during 2023 or 2022. The weighted-average grant-date fair value of options granted was $11.57 per option for 2021. The following weighted-average assumptions were used in the Black-Scholes option pricing model to determine the fair value of these stock option grants: 2021 Risk-free interest rate 0.7 % Dividend yield 2.9 % Expected volatility 42.0 % Weighted-average option life (in years) 4.8 The risk-free interest rate for periods within the expected option life is based on the U.S. Treasury yield curve in effect at the grant date. The dividend yield is estimated over the expected life of the option based on historical dividends paid. Expected volatility is based on the historical volatility of our stock over the most recent historical period equivalent to the expected life of the option. The expected option life is the average length of time over which we expect the employee groups will exercise their options, based on historical experience with similar grants. Each option is convertible into 1 share of common stock upon exercise. Information regarding options issued under the current and all previous plans was as follows: Number of options (in thousands) Weighted-average exercise price per option Aggregate intrinsic value (in thousands) Weighted-average remaining contractual term (in years) Outstanding, December 31, 2022 1,732 $ 44.77 Forfeited or expired (352) 44.24 Outstanding, December 31, 2023 1,380 44.91 $ — 4.9 Exercisable at December 31, 2023 1,158 45.79 $ — 4.5 The intrinsic value of a stock award is the amount by which the fair value of the underlying stock exceeds the exercise price of the award. The total intrinsic value of options exercised was $510 for 2021. Restricted stock units – We grant restricted stock unit awards to all North American employees, and during 2021 and 2020, we paid a portion of employee bonuses in restricted stock units. We also grant certain other restricted stock unit awards under our long-term incentive plan. These awards generally vest over periods of 3 years or 4 years. Additionally, certain management employees have the option to receive a portion of their bonus payment in the form of restricted stock units. If employees subsequently choose to leave the company, these bonus awards are settled in cash. Cash payments to settle these awards were not material during the past 3 years. In addition to awards granted to employees, non-employee members of our board of directors can elect to receive all or a portion of their fees in the form of restricted stock units. Each restricted stock unit is convertible into 1 share of common stock upon completion of the vesting period. Information regarding our restricted stock units was as follows: Number of units (in thousands) Weighted-average grant date fair value per unit Weighted-average remaining vesting period (in years) Outstanding at December 31, 2022 1,045 $ 34.10 Granted 987 18.98 Vested (475) 35.77 Forfeited (336) 25.44 Outstanding at December 31, 2023 1,221 23.34 2.4 Of the awards outstanding at December 31, 2023, 37 thousand restricted stock units with a value of $798 were included in accrued liabilities and other non-current liabilities on the consolidated balance sheet. As of December 31, 2023, these units had a fair value of $21.45 per unit and a weighted-average remaining contractual term of 4 months. The fair market value of restricted stock units that vested was $8,538 for 2023, $13,602 for 2022 and $16,646 for 2021. Performance share unit awards – Our performance share unit awards have a 3 year vesting period. Shares will be issued at the end of the vesting period if performance targets relating to revenue and total shareholder return are achieved. If employment is terminated for any reason prior to the 1 year anniversary of the commencement of the performance period, the award is forfeited. On or after the 1 year anniversary of the commencement of the performance period, a pro-rata portion of the shares awarded at the end of the performance period is issued in the case of qualified retirement, death, disability, involuntary termination without cause or resignation for good reason, as defined in the agreement. The following weighted-average assumptions were used in the Monte Carlo simulation model in determining the fair value of market-based performance share units granted: 2023 2022 2021 Risk-free interest rate 4.4 % 1.8 % 0.3 % Dividend yield 6.1 % 3.7 % 4.4 % Expected volatility 54.3 % 54.9 % 55.6 % The risk-free interest rate for periods within the expected award life is based on the U.S. Treasury yield curve in effect at the grant date. The dividend yield is estimated over the expected life of the award based on historical dividends paid. Expected volatility is based on the historical volatility of our stock over the expected life of the award. Information regarding unvested performance share units was as follows: Performance share units (in thousands) Weighted-average grant date fair value per unit Weighted-average remaining contractual term (in years) Unvested at December 31, 2022 461 $ 34.35 Granted (1) 298 18.34 Forfeited (235) 27.12 Unvested at December 31, 2023 524 28.50 1.5 (1) Reflects awards granted assuming achievement of performance goals at target. Employee stock purchase plan – |
POSTRETIREMENT BENEFITS
POSTRETIREMENT BENEFITS | 12 Months Ended |
Dec. 31, 2023 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
POSTRETIREMENT BENEFITS | We have historically provided certain health care benefits for a large number of retired U.S. employees. Employees hired prior to January 1, 2002 become eligible for benefits if they attain the appropriate years of service and age prior to retirement. Employees hired on January 1, 2002 or later are not eligible to participate in the plan. In addition to our retiree health care plan, we also have an inactive U.S. supplemental executive retirement plan ("SERP"). This plan is not adding new participants and all of the current participants are retired. The SERP has no plan assets, but our obligation is fully funded by investments in company-owned life insurance policies. Obligations and funded status – Changes in our benefit obligation, plan assets and funded status for the years ended December 31 were as follows: (in thousands) Postretirement benefit plan Pension plan (1) Change in benefit obligation: Benefit obligation, December 31, 2021 $ 57,781 $ 3,060 Interest cost 1,069 52 Net actuarial gain (13,839) (414) Benefits paid from plan assets and company funds (5,302) (324) Benefit obligation, December 31, 2022 39,709 2,374 Interest cost 1,874 111 Net actuarial (gain) loss (785) 128 Benefits paid from plan assets and company funds (4,823) (324) Benefit obligation, December 31, 2023 $ 35,975 $ 2,289 Change in plan assets: Fair value of plan assets, December 31, 2021 $ 144,800 $ — Loss on plan assets (22,116) — Benefits paid (3,632) — Fair value of plan assets, December 31, 2022 119,052 — Return on plan assets 15,241 — Benefits paid (3,379) — Fair value of plan assets, December 31, 2023 $ 130,914 $ — Funded status, December 31, 2022 $ 79,343 $ (2,374) Funded status, December 31, 2023 $ 94,939 $ (2,289) (1) The accumulated benefit obligation equals the projected benefit obligation. The funded status of our plans was recognized on the consolidated balance sheets as of December 31 as follows: Postretirement benefit plan Pension plan (in thousands) 2023 2022 2023 2022 Other non-current assets $ 94,939 $ 79,343 $ — $ — Accrued liabilities — — 324 324 Other non-current liabilities — — 1,965 2,050 Amounts included in accumulated other comprehensive loss as of December 31 that have not been recognized as components of postretirement benefit income were as follows: (in thousands) 2023 2022 Unrecognized net actuarial loss $ (29,019) $ (39,871) Unrecognized prior service credit 7,071 8,493 Tax effect 2,124 4,506 Amount recognized in accumulated other comprehensive loss, net of tax $ (19,824) $ (26,872) Unrecognized net actuarial gains and losses result from experience different from that assumed and from changes in assumptions. The net actuarial gain recognized during 2023 was driven primarily by demographic and claims experience, partially offset by the decrease in the discount rate used to discount the benefit obligation. The net actuarial gain recognized during 2022 was driven primarily by the increase in the discount rate and a reduction in the number of plan participants. Unrecognized actuarial gains and losses for our postretirement benefit plan are amortized over the average remaining life expectancy of inactive plan participants, as a large percentage of the plan participants are classified as inactive. This amortization period is currently 12 years. The unrecognized prior service credit relates to our postretirement benefit plan and is a result of previous plan amendments that reduced the accumulated postretirement benefit obligation. A reduction is first used to reduce any existing unrecognized prior service cost, then to reduce any remaining unrecognized transition obligation. The excess is the unrecognized prior service credit. The prior service credit is amortized on the straight-line basis over the remaining life expectancy of plan participants at the time of each plan amendment. Postretirement benefit income – Postretirement benefit income for the years ended December 31 consisted of the following components: (in thousands) 2023 2022 2021 Interest cost $ 1,985 $ 1,121 $ 968 Expected return on plan assets (7,320) (7,462) (7,498) Amortization of prior service credit (1,421) (1,421) (1,421) Amortization of net actuarial losses 2,273 900 1,629 Net periodic benefit income $ (4,483) $ (6,862) $ (6,322) Actuarial assumptions – In measuring the benefit obligations as of December 31, the following discount rate assumptions were used: Postretirement benefit plan Pension plan 2023 2022 2023 2022 Discount rate 4.89 % 5.09 % 4.80 % 5.00 % In measuring net periodic benefit income for the years ended December 31, the following assumptions were used: Postretirement benefit plan Pension plan 2023 2022 2021 2023 2022 2021 Discount rate 5.09 % 2.61 % 2.16 % 5.00 % 2.26 % 1.74 % Expected return on plan assets 6.25 % 5.25 % 5.50 % — — — The discount rate assumption is based on the rates of return on high-quality, fixed-income instruments currently available whose cash flows approximate the timing and amount of expected benefit payments. In determining the expected long-term rate of return on plan assets, we utilize our historical returns and then adjust these returns for estimated inflation and projected market returns. Our inflation assumption is primarily based on analysis of historical inflation data. In measuring the benefit obligation as of December 31 for our postretirement benefit plan, the following assumptions for health care cost trend rates were used. These rates are utilized to determine our periodic benefit income for the following year. 2023 2022 2021 Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Health care cost trend rate assumed for next year 6.6 % 7.3 % 6.6 % 7.3 % 6.9 % 7.6 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.5 % 4.5 % 4.5 % 4.5 % 4.5 % 4.5 % Year that the rate reaches the ultimate trend rate 2030 2030 2030 2030 2030 2030 Plan assets – The allocation of plan assets by asset category as of December 31 was as follows: Postretirement benefit plan 2023 2022 U.S. corporate debt securities 54 % 55 % International equity securities 20 % 20 % U.S. large capitalization equity securities 18 % 17 % Mortgage-backed securities 5 % 5 % U.S. small and mid-capitalization equity securities 3 % 3 % Total 100 % 100 % Our postretirement benefit plan has assets that are intended to meet long-term obligations. In order to meet these obligations, we employ a total return investment approach that considers cash flow needs and balances long-term projected returns against expected asset risk, as measured using projected standard deviations. Risk tolerance is established through consideration of projected plan liabilities, the plan's funded status, projected liquidity needs and our financial condition. The target asset allocation percentages for our postretirement benefit plan are based on our liability and asset projections. The targeted allocation of plan assets is 59% fixed income securities, 20% international equity securities, 18% large capitalization equity securities and 3% small and mid-capitalization equity securities. Information regarding fair value measurements of plan assets was as follows as of December 31, 2023: Fair value measurements using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Investments measured at net asset value Fair value as of December 31, 2023 (in thousands) (Level 1) (Level 2) (Level 3) U.S. corporate debt securities $ — $ 71,225 $ — $ — $ 71,225 International equity securities — 26,441 — — 26,441 U.S. large capitalization equity securities — 23,143 — — 23,143 Mortgage-backed securities — 6,540 — — 6,540 U.S. small and mid-capitalization equity securities — 3,565 — — 3,565 Plan assets $ — $ 130,914 $ — $ — $ 130,914 Information regarding fair value measurements of plan assets was as follows as of December 31, 2022: Fair value measurements using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Investments measured at net asset value Fair value as of December 31, 2022 (in thousands) (Level 1) (Level 2) (Level 3) U.S. corporate debt securities $ — $ 65,700 $ — $ — $ 65,700 International equity securities — 23,835 — — 23,835 U.S. large capitalization equity securities — 20,496 — — 20,496 Mortgage-backed securities — 5,959 — — 5,959 U.S. small and mid-capitalization equity securities — 3,062 — — 3,062 Plan assets $ — $ 119,052 $ — $ — $ 119,052 The Level 2 investments relate to investment funds that publish daily net asset value ("NAV") per unit. The daily NAV is available to participants in the funds and redemptions can be made daily at the current NAV. The fair value and units are determined and published, and are the basis for current transactions. The investments are not eligible for the NAV practical expedient. However, they are measured at the published NAV because the quoted NAV per unit represents the price at which the investment would be sold in a transaction between independent market participants. Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred. Cash flows – We made no contributions to plan assets during the past 3 years. We have fully funded the SERP obligation with investments in company-owned life insurance policies. The cash surrender value of these policies is included in long-term investments on the consolidated balance sheets and totaled $7,713 as of December 31, 2023 and $7,429 as of December 31, 2022. The following benefit payments are expected to be paid during the years indicated: (in thousands) Postretirement benefit plan Pension plan 2024 $ 4,711 $ 320 2025 4,356 300 2026 3,907 280 2027 3,560 260 2028 3,277 250 2029 - 2033 13,049 910 401(k) plan – We maintain a 401(k) plan to provide retirement benefits for certain employees. The plan covers a majority of full-time employees, as well as some part-time employees. Employees generally become eligible to participate in the plan after completing 30 days of service. 401(k) contributions are made by both employees and Deluxe. Employees may contribute up to 50% of eligible wages, subject to IRS limitations and the terms and conditions of the plan. For the majority of employees, we typically match 100% of the first 1% of wages contributed and 50% of the next 5% of wages contributed. Effective April 1, 2020, we suspended the company matching contribution to maintain liquidity during the COVID-19 pandemic. The company match was reinstated on January 1, 2022. Expense recognized for the 401(k) plan matching contribution was $12,046 for 2023, $12,958 for 2022 and $763 for 2021. The expense recognized during 2021 related to First American, which was acquired on June 1, 2021 (Note 6). All employee and employer contributions are remitted to the plan's trustee. Benefits provided by the plan are paid from accumulated funds of the trust. Employees are provided a broad range of investment options to choose from when investing their 401(k) plan funds. Investing in our common stock is not one of these options, although funds selected by employees may at times hold our common stock. |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | Debt outstanding was comprised of the following at December 31: (in thousands) 2023 2022 Senior, secured term loan facility $ 877,187 $ 987,375 Senior, unsecured notes 475,000 475,000 Amounts drawn on senior, secured revolving credit facility 252,000 197,000 Total principal amount 1,604,187 1,659,375 Less: unamortized discount and debt issuance costs (11,336) (15,099) Total debt, net of discount and debt issuance costs 1,592,851 1,644,276 Less: current portion of long-term debt, net of debt issuance costs (86,153) (71,748) Long-term debt $ 1,506,698 $ 1,572,528 Maturities of long-term debt were as follows as of December 31, 2023: (in thousands) Debt obligations 2024 $ 86,625 2025 101,062 2026 941,500 2027 — 2028 — Thereafter 475,000 Total principal amount $ 1,604,187 Credit facility – In June 2021, we executed a senior, unsecured credit facility consisting of a revolving credit facility with commitments of $500,000 and a $1,155,000 term loan facility. The revolving credit facility includes a $40,000 swingline sub-facility and a $25,000 letter of credit sub-facility. Proceeds from the credit facility were used to terminate our previous credit facility agreement and to fund the acquisition of First American (Note 6). Loans under the revolving credit facility may be borrowed, repaid and re-borrowed until June 1, 2026, at which time all amounts borrowed must be repaid. The term loan facility will be repaid in equal quarterly installments of $21,656 through June 30, 2025, and $28,875 from September 30, 2025 through March 31, 2026. The remaining balance is due on June 1, 2026. The term loan facility also includes mandatory prepayment requirements related to asset sales, new debt (other than permitted debt) and excess cash flow, subject to certain limitations. No premium or penalty is payable in connection with any mandatory or voluntary prepayment of the term loan facility. Interest is payable on the credit facility at a fluctuating rate of interest determined by reference to the eurodollar rate plus an applicable margin ranging from 1.5% to 2.5%, depending on our consolidated total leverage ratio, as defined in the credit agreement. Through March 20, 2023, the eurodollar rate was derived from LIBOR. Effective March 20, 2023, we modified the credit facility to utilize SOFR as the reference rate in the agreement. Information regarding our accounting for this modification can be found in Note 2. A commitment fee is payable on the unused portion of the revolving credit facility at a rate ranging from 0.25% to 0.35%, depending on our consolidated total leverage ratio. Amounts outstanding under the credit facility had a weighted-average interest rate of 6.83% as of December 31, 2023 and 6.07% as of December 31, 2022, including the impact of interest rate swaps that effectively convert a portion of our variable-rate debt to fixed rate debt. Further information regarding the interest rate swaps can be found in Note 7. Borrowings under the credit facility are collateralized by substantially all of the present and future tangible and intangible personal property held by us and our subsidiaries that have guaranteed our obligations under the credit facility, subject to certain exceptions. The credit agreement contains customary covenants regarding limits on levels of indebtedness, liens, mergers, certain asset dispositions, changes in business, advances, investments, loans and restricted payments. The covenants are subject to a number of limitations and exceptions set forth in the credit agreement. The credit agreement also includes requirements regarding our consolidated total leverage ratio and our consolidated secured leverage ratio, as defined in the credit agreement. These ratios may not equal or exceed the following amounts during the periods indicated: Fiscal Quarter Ending Consolidated total leverage ratio Consolidated secured leverage ratio December 31, 2023 through March 31, 2024 4.50 to 1:00 3.50 to 1:00 June 30, 2024 and each fiscal quarter thereafter 4.25 to 1:00 3.50 to 1:00 In addition, we must maintain a minimum interest coverage ratio of at least 3.00 to 1.00 throughout the remaining term of the credit facility. Failure to to meet any of the above requirements would result in an event of default that would allow lenders to declare amounts outstanding immediately due and payable and would allow the lenders to enforce their interests against collateral pledged if we were unable to settle the amounts outstanding. We were in compliance with all debt covenants as of December 31, 2023. The credit agreement contains customary representations and warranties and as a condition to borrowing, requires that all such representations and warranties be true and correct in all material respects on the date of each borrowing, including representations as to no material adverse change in our business, assets, operations or financial condition. If our consolidated total leverage ratio exceeds 2.75 to 1.00, the aggregate annual amount of permitted dividends and share repurchases is limited to $60,000. As of December 31, 2023, amounts were available for borrowing under our revolving credit facility as follows: (in thousands) Total available Revolving credit facility commitment $ 500,000 Amount drawn on revolving credit facility (252,000) Outstanding letters of credit (1) (7,486) Net available for borrowing as of December 31, 2023 $ 240,514 (1) We use standby letters of credit primarily to collateralize certain obligations related to our self-insured workers' compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility. Senior unsecured notes – In June 2021, we issued $500,000 of 8.0% senior, unsecured notes that mature in June 2029. The notes were issued via a private placement under Rule 144A of the Securities Act of 1933. Proceeds from the offering, net of discount and offering costs, were $490,741, resulting in an effective interest rate of 8.3%. The net proceeds from the notes were used to fund the acquisition of First American in June 2021 (Note 6). Interest payments are due each June and December. During the quarter ended September 30, 2022, we settled $25,000 of these notes via open market purchases. We realized a pretax gain of $1,726 on these debt retirements that is included in interest expense on the consolidated statement of income. The indenture governing the notes contains covenants that limit our ability and the ability of our restricted subsidiaries to, among other things, incur additional indebtedness and liens, issue redeemable stock and preferred stock, pay dividends and distributions, make loans and investments, and consolidate or merge or sell all or substantially all of our assets. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
LEASES | We have entered into operating leases for the majority of our facilities with remaining terms of up to 11 years as of December 31, 2023. We utilize leases for these facilities to limit our exposure to risks related to ownership, such as fluctuations in real estate prices, and to maintain flexibility in our real estate utilization. We have also entered into operating leases for certain equipment, primarily production printers and data center equipment. Certain of our leases include options to extend the lease term. The impact of renewal periods was not material to the amounts recorded for operating lease assets and liabilities. We have also entered into a finance lease for our corporate headquarters and, as of December 31, 2022, we had finance leases for certain information technology hardware. Leases were reflected on the consolidated balance sheets as follows at December 31: (in thousands) 2023 2022 Operating leases: Operating lease assets $ 58,961 $ 47,132 Accrued liabilities $ 13,562 $ 12,780 Operating lease liabilities 58,840 48,925 Total operating lease liabilities $ 72,402 $ 61,705 Weighted-average remaining lease term 6 years 5 years Weighted-average discount rate 7.8 % 5.2 % Finance leases: Property, plant and equipment, gross $ 26,941 $ 33,060 Accumulated depreciation (4,188) (8,630) Property, plant and equipment, net $ 22,753 $ 24,430 Accrued liabilities $ 1,146 $ 1,050 Other non-current liabilities 26,134 27,287 Total finance lease liabilities $ 27,280 $ 28,337 Weighted-average remaining lease term 14 years 15 years Weighted-average discount rate 6.0 % 6.0 % The components of lease expense for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Operating lease expense $ 18,811 $ 20,480 $ 17,485 Finance lease expense: Amortization of right-of-use assets $ 2,067 $ 1,853 $ 1,283 Interest on lease liabilities 1,659 1,697 829 Total finance lease expense $ 3,726 $ 3,550 $ 2,112 Supplemental cash flow information related to leases for the years ended December 31 was as follows: (in thousands) 2023 2022 2021 Lease assets obtained in exchange for lease obligations: Operating leases (1) $ 26,167 $ 6,294 $ 38,630 Finance leases (2) — — 26,941 Cash paid for amounts included in lease obligations: Operating cash flows from operating leases (3) $ 19,922 $ 19,015 $ 8,444 Operating cash flows from finance leases 1,659 1,697 8 Financing cash flows from finance leases 2,715 1,290 421 (1) Operating lease assets obtained during 2021 included $24,396 acquired in conjunction with the acquisition of First American in June 2021 (Note 6). (2) Finance lease assets obtained during 2021 consisted of a lease on our corporate headquarters located in Minnesota that commenced in July 2021. (3) Cash paid for operating leases for 2021 was reduced by lease incentives received of $9,410. Maturities of lease liabilities were as follows at December 31, 2023: (in thousands) Operating lease obligations Finance 2024 $ 17,829 $ 2,743 2025 17,746 2,777 2026 16,210 2,812 2027 12,168 2,847 2028 8,882 2,881 Thereafter 19,294 26,151 Total lease payments 92,129 40,211 Less imputed interest (19,727) (12,931) Present value of lease payments $ 72,402 $ 27,280 |
OTHER COMMITMENTS AND CONTINGEN
OTHER COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
OTHER COMMITMENTS AND CONTINGENCIES | Indemnifications – In the normal course of business, we periodically enter into agreements that incorporate general indemnification language. These indemnification provisions generally encompass third-party claims arising from our products and services, including, without limitation, service failures, breach of security, intellectual property rights, governmental regulations and employment-related matters. Performance under these indemnities would generally be triggered by our breach of the terms of the contract. In disposing of assets or businesses, we often provide representations, warranties and indemnities to cover various risks including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal matters related to periods prior to disposition. We do not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However, we do not believe that any liability under these indemnities would have a material adverse effect on our financial position, annual results of operations or annual cash flows. We have recorded liabilities for known indemnifications related to environmental matters. These liabilities were not material as of December 31, 2023 or December 31, 2022. First American indemnification – Pursuant to the First American acquisition agreement, we are entitled to limited indemnification for certain expenses and losses, if any, that may be incurred after the consummation of the transaction that arise out of certain matters, including a Federal Trade Commission ("FTC") investigation initiated in December 2019 seeking information to determine whether certain subsidiaries of First American may have engaged in conduct prohibited by the Federal Trade Commission Act, the Fair Credit Reporting Act or the Duties of Furnishers of Information. As fully set forth in the merger agreement, our rights to indemnification for any such expenses and losses are limited to the amount of an indemnity holdback, which will be our sole recourse for any such losses. The First American subsidiaries entered into a Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief (the "Order") with the FTC that was approved on July 29, 2022. The parties subsequently entered into an amended Order. Pursuant to the Order, among other things, the First American defendants were required to pay $4,900 to the FTC within 7 days of the entry of the Order. The First American defendants also agreed to certain injunctive relief. The payment of the above-referenced amount was made in March 2023, and we were reimbursed for post-closing expenses that we incurred in connection with this matter. These payments did not have a material impact on our consolidated financial statements. Self-insurance – We are self-insured for certain costs, primarily workers' compensation claims and medical and dental benefits for active employees and those employees on long-term disability. The liabilities associated with these items represent our best estimate of the ultimate obligations for reported claims plus those incurred, but not reported, and totaled $9,024 as of December 31, 2023 and $9,661 as of December 31, 2022. These accruals are included in accrued liabilities and other non-current liabilities on the consolidated balance sheets. Our workers' compensation liability is recorded at present value. The difference between the discounted and undiscounted liability was not material as of December 31, 2023 or December 31, 2022. Our self-insurance liabilities are estimated, in part, by considering historical claims experience, demographic factors and other actuarial assumptions. The estimated accruals for these liabilities could be significantly affected if future events and claims differ from these assumptions and historical trends. Litigation – Recorded liabilities for legal matters, as well as related charges recorded in each of the past 3 years, were not material to our financial position, results of operations or liquidity during the periods presented, and we do not believe that any of the currently identified claims or litigation will materially affect our financial position, results of operations or liquidity upon resolution. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, it may cause a material adverse impact on our financial position, results of operations or liquidity for the period in which the ruling occurs or in future periods. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | In October 2018, our board of directors authorized the repurchase of up to $500,000 of our common stock. This authorization has no expiration date, and we have not repurchased any shares under this authorization since March 2020. As of December 31, 2023, $287,452 remained available for repurchase. During the second quarter of 2021, we issued 294 thousand shares to employees of First American in conjunction with the acquisition (Note 6), and we received cash proceeds of $13,000. |
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENT INFORMATION | As of December 31, 2023, we operated 4 reportable business segments, generally organized by product type, as follows: • Payments – This segment includes our merchant in-store, online and mobile payment solutions; treasury management solutions, including remittance and lockbox processing, remote deposit capture, receivables management, payment processing and paperless treasury management; and payroll and disbursement services, including Deluxe Payment Exchange. • Data Solutions – This segment includes data-driven marketing solutions and hosted solutions, including digital engagement, financial institution profitability reporting and business incorporation services. This segment also included web hosting and logo design services through June 2023, when we completed the sale of these businesses (Note 6). • Promotional Solutions – This segment includes business forms, accessories, advertising specialties and promotional apparel. • Checks – This segment includes printed business and personal checks. During the first quarter of 2024, we realigned our organizational structure to better reflect our portfolio mix and offerings, and we updated our reportable segments to correspond with these changes. We will complete the segment realignment effective for the quarter ending March 31, 2024, and we will provide initial disclosures based on the realigned segments in connection with our financial results for the first quarter of 2024. We did not operate under the new segment structure during 2023, and we continued to allocate resources and assess performance based on our previous reportable segment structure. Our realigned reportable segments for the quarter ending March 31, 2024 are as follows: • Merchant Services – provides electronic credit and debit card authorization and payment systems and processing services primarily to small and medium-sized retail and service businesses. • B2B Payments – provides treasury management solutions, including remittance and lockbox processing, remote deposit capture, receivables management, payment processing and paperless treasury management, and Deluxe Payment Exchange. • Data Solutions – provides data-driven marketing solutions, including digital engagement, financial institution profitability reporting and account switching tools, and business incorporation services. • Print – provides printed personal and business checks, printed business forms, business accessories and promotional products. The accounting policies of the segments are the same as those described in Note 1. We allocate corporate costs for our shared services functions to our business segments when the costs are directly attributable to a segment. This includes certain sales and marketing, human resources, supply chain, real estate, finance, information technology and legal costs. Costs that are not directly attributable to a business segment are reported as Corporate operations and consist primarily of marketing, accounting, information technology, facilities, executive management and legal, tax and treasury costs that support the corporate function. Corporate operations also includes other income. All of our segments operate primarily in the U.S., with some operations in Canada. Until the businesses were sold in June 2023, Data Solutions also had operations in portions of Europe and partners in Central and South America, and through May 2022, Data Solutions had operations in Australia. No single customer accounted for more than 10% of consolidated revenue during the past 3 years. Our chief operating decision maker (i.e., our Chief Executive Officer) reviews EBITDA on an adjusted basis for each segment when deciding how to allocate resources and to assess segment operating performance. Adjusted EBITDA for each segment excludes depreciation and amortization expense, interest expense, net income attributable to non-controlling interest, income tax expense and certain other amounts, which may include, from time to time, asset impairment charges, restructuring and integration expense, share-based compensation expense, acquisition transaction costs, certain legal-related expense, and gains or losses on sales of businesses and long-lived assets. Our Chief Executive Officer does not review segment asset information when making investment or operating decisions regarding our reportable business segments. Our segment information for the years ended December 31 was as follows: (in thousands) 2023 2022 2021 Payments: Revenue $ 690,704 $ 678,580 $ 510,359 Adjusted EBITDA 152,798 144,605 105,576 Data Solutions: Revenue 238,817 267,525 262,310 Adjusted EBITDA 55,700 68,214 70,172 Promotional Solutions: Revenue 541,650 562,917 546,473 Adjusted EBITDA 80,751 79,549 85,384 Checks: Revenue 721,089 728,988 703,055 Adjusted EBITDA 320,333 320,498 324,224 Total segments: Revenue $ 2,192,260 $ 2,238,010 $ 2,022,197 Adjusted EBITDA 609,582 612,866 585,356 The following table presents a reconciliation of total segment adjusted EBITDA to consolidated income before income taxes: (in thousands) 2023 2022 2021 Total segment adjusted EBITDA $ 609,582 $ 612,866 $ 585,356 Corporate operations (192,447) (194,736) (177,591) Depreciation and amortization (169,703) (172,552) (148,767) Interest expense (125,643) (94,454) (55,554) Net income attributable to non-controlling interest 107 135 139 Restructuring and integration expense (90,475) (63,136) (58,947) Share-based compensation expense (20,525) (23,676) (29,477) Acquisition transaction costs — (130) (18,913) Certain legal-related (expense) benefit (2,195) 730 (2,443) Loss on sale of investment securities (1,323) — — Gain on sale of businesses and long-lived assets 32,421 19,331 — Income before income taxes $ 39,799 $ 84,378 $ 93,803 The following tables present revenue disaggregated by our product and service offerings: Year Ended December 31, 2023 (in thousands) Payments Data Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 721,089 $ 721,089 Mer chant services and other payment solutions 450,384 — — — 450,384 Marketing and promotional solutions — — 278,200 — 278,200 Forms and other products — — 263,450 — 263,450 Treasury management solutions 240,320 — — — 240,320 Data-driven marketing solutions — 192,656 — — 192,656 Web and hosted solutions — 46,161 — — 46,161 Total revenue $ 690,704 $ 238,817 $ 541,650 $ 721,089 $ 2,192,260 Year Ended December 31, 2022 (in thousands) Payments Data Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 728,988 $ 728,988 Merchant services and other payment solutions 437,395 — — — 437,395 Marketing and promotional solutions — — 272,997 — 272,997 Forms and other products — — 289,920 — 289,920 Treasury management solutions 241,185 — — — 241,185 Data-driven marketing solutions — 177,598 — — 177,598 Web and hosted solutions — 89,927 — — 89,927 Total revenue $ 678,580 $ 267,525 $ 562,917 $ 728,988 $ 2,238,010 Year Ended December 31, 2021 (in thousands) Payments Data Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 703,055 $ 703,055 Merchant services and other payment solutions 276,118 — — — 276,118 Marketing and promotional solutions — — 249,480 — 249,480 Forms and other products — — 296,993 — 296,993 Treasury management solutions 234,241 — — — 234,241 Data-driven marketing solutions — 150,772 — — 150,772 Web and hosted solutions — 111,538 — — 111,538 Total revenue $ 510,359 $ 262,310 $ 546,473 $ 703,055 $ 2,022,197 The following table presents revenue disaggregated by geography, based on where items are shipped or services are performed. Substantially all of our long-lived assets reside in the U.S. Long-lived assets of our foreign subsidiaries are located primarily in Canada and are not material to our consolidated financial position. (in thousands) Payments Data Promotional Solutions Checks Consolidated Year ended December 31, 2023: U.S. $ 640,769 $ 233,090 $ 518,929 $ 694,864 $ 2,087,652 Foreign, primarily Canada 49,935 5,727 22,721 26,225 104,608 Total revenue $ 690,704 $ 238,817 $ 541,650 $ 721,089 $ 2,192,260 Year ended December 31, 2022: U.S. $ 634,945 $ 248,227 $ 537,643 $ 700,170 $ 2,120,985 Foreign, primarily Canada and Australia 43,635 19,298 25,274 28,818 117,025 Total revenue $ 678,580 $ 267,525 $ 562,917 $ 728,988 $ 2,238,010 Year ended December 31, 2021: U.S. $ 469,102 $ 227,091 $ 522,966 $ 678,229 $ 1,897,388 Foreign, primarily Canada and Australia 41,257 35,219 23,507 24,826 124,809 Total revenue $ 510,359 $ 262,310 $ 546,473 $ 703,055 $ 2,022,197 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Nature of operations | Nature of operations – We help our customers deepen their customer relationships through trusted, technology-enabled solutions, including merchant services, marketing services and data analytics, treasury management solutions, promotional products, and fraud and security solutions, as well as customized checks and forms. We are also a leading provider of checks and accessories sold directly to consumers. |
Consolidation | Consolidation – The consolidated financial statements include the accounts of Deluxe Corporation and its wholly-owned subsidiaries. All intercompany accounts, transactions and profits have been eliminated. In addition, we are the primary beneficiary of a variable interest entity, MedPayExchange LLC, doing business as Medical Payment Exchange ("MPX"), which delivers payments to healthcare providers from insurance companies and other payers. Our partner's interest in MPX is reported as non-controlling interest in the consolidated balance sheets within equity, separate from our equity. Net income and comprehensive income are attributed to us and the non-controlling interest. The amounts attributable to the non-controlling interest were not material to our consolidated financial statements. |
Comparability | Comparability – The consolidated statements of cash flows for the years ended December 31, 2022 and 2021 have been modified to conform to the current year presentation. Within net cash provided by operating activities, other current and other non-current assets have been combined. In addition, amortization of cloud computing arrangement implementation costs is presented separately. Previously, this amount was included in other non-cash items, net. Within net cash used by investing activities, purchases of customer lists are included in other. Previously, these amounts were presented separately. The consolidated statements of shareholders' equity for the years ended December 31, 2022 and 2021 have also been modified to conform to the current year presentation. Common shares retired are included in common shares issued, net of tax withholding. Previously, these amounts were presented separately. |
Use of estimates | Use of estimates – We have prepared the accompanying consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"). In this process, it is necessary for us to make certain estimates and assumptions affecting the amounts reported in the consolidated financial statements and related notes. We base our estimates on historical experience and on various other factors and assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of our assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Actual results may differ significantly from our estimates and assumptions. |
Foreign currency translation | Foreign currency translation – |
Cash and cash equivalents | Cash and cash equivalents – |
Trade accounts receivable | Trade accounts receivable – Trade accounts receivable are initially recorded at the invoiced amount upon the sale of goods or services to customers, and also include amounts due for products shipped and services rendered, but for which invoices have not yet been issued due to timing (i.e., unbilled receivables). Our trade accounts receivable are not interest-bearing. They are stated net of the allowance for credit losses, a valuation account that is deducted from an asset's amortized cost basis to present the net amount expected to be collected. Amounts are charged off against the allowance when we believe the uncollectibility of an account is confirmed. The point at which uncollected accounts are written off varies by type of customer, but generally does not exceed 1 year from the due date of the receivable. In calculating the allowance, we utilize a combination of aging schedules with reserve rates applied to both current and aged receivables and roll-rate reserves using historical loss rates and changes in current or projected conditions. Changes in the allowance for credit losses are included in selling, general and administrative ("SG&A") expense on the consolidated statements of income. Further information regarding our allowance for credit losses can be found in Note 3. |
Inventories and supplies | Inventories and supplies – Inventories are stated at the lower of cost or net realizable value. Cost is calculated using moving average and standard costs, which approximates the first-in, first-out basis. We periodically review our inventory quantities and record a provision for excess and/or obsolete inventory based on our historical usage and forecasts of future demand. It is possible that additional reserves above those already established may be required if there is a significant change in the timing or level of demand for our products compared to forecasted amounts. This would require a change in the reserve for excess or obsolete inventory, resulting in a charge to net income during the period of the change. Charges for inventory write-downs are included in cost of products on the consolidated statements of income. Once written down, inventories are carried at this lower cost basis until sold or scrapped. Supplies consist of items not used directly in the production of goods, such as maintenance and other supplies utilized in the production area. |
Funds held for customers | Funds held for customers – Our merchant services business temporarily holds funds collected from credit card networks and internet transaction processing on behalf of certain merchants. Our treasury management cash receipt processing business remits a portion of cash receipts to our clients the business day following receipt, and our payroll services business collects funds from clients to pay their payroll and related taxes. We hold these funds temporarily until payments are remitted to the clients' employees and the appropriate taxing authorities. Certain of our customer contracts include legal restrictions regarding the use of these funds. All of these funds, consisting of cash and, at times, available-for-sale debt securities, are reported as funds held for customers on the consolidated balance sheets. The corresponding liability for these obligations is also reported as funds held for customers on the consolidated balance sheets. The available-for-sale debt securities are carried at fair value, with unrealized gains and losses included in accumulated other comprehensive loss on the consolidated balance sheets. Earnings on funds held for customers are included in revenue on the consolidated statements of income and were not material during the past 3 years. |
Long-term investments | Long-term investments – Long-term investments consist primarily of cash surrender values of company-owned life insurance policies. Certain of these policies fund amounts due under our deferred compensation plan and our inactive supplemental executive retirement plan (Note 12). |
Property, plant and equipment | Property, plant and equipment – Property, plant and equipment, including leasehold and other improvements that extend an asset's useful life or productive capabilities, are stated at historical cost less accumulated depreciation. Buildings have been assigned useful lives of 40 years and machinery and equipment are generally assigned useful lives ranging from 1 year to 11 years, with a weighted-average useful life of 7 years as of December 31, 2023. Buildings are depreciated using the 150% declining balance method, and machinery and equipment is depreciated using the sum-of-the-years' digits method. Leasehold and building improvements are depreciated on the straight-line basis over the estimated useful life of the property or the life of the lease, whichever is shorter. Amortization of assets that are recorded under finance leases is included in depreciation expense. Maintenance and repairs are expensed as incurred. Fully depreciated assets are retained in property, plant and equipment until disposal. Gains or losses resulting from the disposition of property, plant and equipment are included in SG&A expense on the consolidated statements of income, unless presented separately as a component of gain or loss on sale of businesses and long-lived assets. |
Leases | Leases – We determine if an arrangement is a lease at inception by considering whether a contract explicitly or implicitly identifies assets deployed in the arrangement and whether we have obtained substantially all of the economic benefits from the use of the underlying assets and direct how and for what purpose the assets are used during the term of the contract. Lease expense is recognized on the straight-line basis over the lease term and is included in total cost of revenue and in SG&A expense on the consolidated statements of income. Interest on finance leases is included in interest expense on the consolidated statements of income. Operating leases are included in operating lease assets, accrued liabilities and operating lease liabilities on the consolidated balance sheets. Finance leases are included in property, plant and equipment, accrued liabilities and other non-current liabilities on the consolidated balance sheets. Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We have elected to exclude leases with original terms of 1 year or less from lease assets and liabilities, and we separate nonlease components, such as common area maintenance charges and utilities, from the associated lease component for real estate leases, based on their estimated fair values. As our lease agreements typically do not provide an implicit rate, we use our incremental borrowing rate, based on information available at the lease commencement date, in determining the present value of lease payments. Certain of our lease agreements include options to extend or terminate the |
Intangibles | Intangibles – Intangible assets are stated at historical cost less accumulated amortization. Amortization expense is generally determined on the straight-line basis, with the exception of customer lists, which are generally amortized using accelerated methods that reflect the pattern in which we receive the economic benefit of the asset. Intangibles have been assigned useful lives ranging from 1 year to 15 years, with a weighted-average useful life of 7 years as of December 31, 2023. Each reporting period, we evaluate the remaining useful lives of our amortizable intangibles to determine whether events or circumstances warrant a revision to the remaining period of amortization. If our estimate of an asset's remaining useful life is revised, the remaining carrying amount of the asset is amortized prospectively over the revised remaining useful life. Gains or losses resulting from the disposition of intangibles are included in SG&A expense on the consolidated statements of income, unless presented separately as a component of gain or loss on sale of businesses and long-lived assets. We capitalize costs of software developed or obtained for internal use, including website development costs, once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project, and (3) interest costs incurred, when significant, while developing internal-use software. Costs incurred in populating websites with information about the company or products are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. The carrying value of internal-use software is reviewed in accordance with our policy on impairment of long-lived assets and amortizable intangibles. We incur costs in connection with the development of certain software products that we sell to our customers. Costs for the development of software products to be sold are expensed as incurred until technological feasibility is established, at which time, such costs are capitalized until the product is available for general release to customers. |
Business combinations | Business combinations – We periodically complete business combinations that align with our business strategy. The identifiable assets acquired and liabilities assumed are recorded at their estimated fair values, and the results of operations of each acquired business are included in our consolidated statements of income from their acquisition dates. The purchase price for each acquisition is equivalent to the fair value of the consideration transferred, including any contingent consideration. Goodwill is recognized for the excess of the purchase price over the net fair value of the assets acquired and liabilities assumed. While we use our best estimates and assumptions in estimating the fair values of the assets acquired and liabilities assumed, our fair value estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to 1 year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Any adjustments required after the measurement period are recorded in the consolidated statements of income. Transaction costs related to acquisitions are expensed as incurred and are included in SG&A expense on the consolidated statements of income. |
Impairment of long-lived assets and amortizable intangibles | Impairment of long-lived assets and amortizable intangibles – We evaluate the recoverability of property, plant, equipment and amortizable intangibles not held for sale whenever events or changes in circumstances indicate that an asset group's carrying amount may not be recoverable. Such circumstances could include, but are not limited to, (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used or in its physical condition, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of an asset. We compare the carrying amount of the asset group to the estimated undiscounted future cash flows associated with it. If the sum of the expected future net cash flows is less than the carrying value of the asset group being evaluated, an impairment loss is recognized. The impairment loss is calculated as the amount by which the carrying value of the asset group exceeds its estimated fair value. As quoted market prices are not available for the majority of our assets, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. We evaluate the recoverability of property, plant, equipment and intangibles held for sale by comparing the asset group's carrying amount with its estimated fair value less costs to sell. If the estimated fair value less costs to sell is less than the carrying value of the asset group, an impairment loss is recognized. The impairment loss is calculated as the amount by which the carrying value of the asset group exceeds its estimated fair value less costs to sell. The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset group being evaluated. These assumptions require judgment and actual results may differ from assumed and estimated amounts. |
Impairment of goodwill | Impairment of goodwill – We evaluate the carrying value of goodwill as of July 31 st of each year and between annual evaluations if events occur or circumstances change that may indicate a possible impairment. Such circumstances could include, but are not limited to, (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) an adverse change in market conditions that is indicative of a decline in the fair value of the assets, (4) a change in our business strategy, or (5) an adverse action or assessment by a regulator. Information regarding the results of our goodwill impairment analyses can be found in Note 8. To analyze goodwill for impairment, we must assign our goodwill to individual reporting units. Identification of reporting units includes an analysis of the components that comprise each of our operating segments, which considers, among other things, the manner in which we operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form a reporting unit if the components have similar economic characteristics. We periodically review our reporting units to ensure that they continue to reflect the manner in which we operate our business. When completing our annual goodwill impairment analysis, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after this qualitative assessment, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary. When performing a quantitative analysis of goodwill, we calculate the estimated fair value of the reporting unit and compare this amount to the carrying amount of the reporting unit's net assets, including goodwill. We utilize a discounted cash flow model to calculate the estimated fair value of a reporting unit. This approach is a valuation technique under which we estimate future cash flows using the reporting unit's financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we project revenue and apply our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows. A terminal value is then applied to the projected cash flow stream. Future estimated cash flows are discounted to their present value to calculate the estimated fair value. The discount rate used is the market-value-weighted average of our estimated cost of capital derived using both known and estimated customary market metrics. In determining the estimated fair values of our reporting units, we are required to estimate a number of factors, including revenue growth rates, terminal growth rates, direct costs, the discount rate and the allocation of shared and corporate items. When completing a quantitative analysis for all of our reporting units, the summation of our reporting units' fair values is compared to our consolidated fair value, as indicated by our market capitalization, to evaluate the reasonableness of our calculations. If the carrying amount of a reporting unit's net assets exceeds its estimated fair value, an impairment loss is recorded for the difference, not to exceed the carrying amount of goodwill. |
Assets held for sale | Assets held for sale – We record assets held for sale at the lower of their carrying value or estimated fair value less costs to sell. Assets are classified as held for sale on our consolidated balance sheets when all of the following conditions are met: (1) management has the authority and commits to a plan to sell the assets; (2) the assets are available for immediate sale in their present condition; (3) there is an active program to locate a buyer and the plan to sell the assets has been initiated; (4) the sale of the assets is probable within 1 year; (5) the assets are being actively marketed at a reasonable sales price relative to their current fair value; and (6) it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made. As of December 31, 2023 and December 31, 2022, there were no disposal groups classified as held for sale on the consolidated balance sheets. |
Prepaid product discounts | Prepaid product discounts – Certain of our financial institution contracts require prepaid product discounts in the form of upfront cash payments or accruals for amounts owed to financial institution clients. These prepaid product discounts are included in other non-current assets on the consolidated balance sheets and are generally amortized as reductions of revenue on the straight-line basis over the contract term. These amounts are currently being amortized over periods of up to 14.5 years, with a weighted-average period of 6 years as of December 31, 2023. Whenever events or changes occur that impact the related contract, including significant declines in the anticipated profitability, we evaluate the carrying value of prepaid product discounts to determine if they are impaired. Should a financial institution cancel a contract prior to the agreement's termination date, or should the volume of orders realized through a financial institution fall below contractually-specified minimums, we generally have a contractual right to a refund of the remaining unamortized prepaid product discount. |
Loans and notes receivable from distributors | Loans and notes receivable from distributors – We have, at times, provided loans to certain of our Promotional Solutions distributors to allow them to purchase the operations of other small business distributors. We have also sold distributors and small business customer lists that we own in exchange for notes receivable. These loans and notes receivable are included in other current assets and other non-current assets on the consolidated balance sheets. Interest rates on these receivables generally range from 6% to 7% and reflect market interest rates at the time the transactions were executed. Interest is accrued as earned. Accrued interest included in loans and notes receivable was not material as of December 31, 2023 or December 31, 2022. In determining the allowance for credit losses related to loans and notes receivable, we utilize a loss-rate analysis based on historical loss information, current delinquency rates, the credit quality of the loan recipients and the portfolio mix to determine an appropriate credit risk measurement, adjusted to reflect current loan-specific risk characteristics and changes in environmental conditions affecting our small business distributors. Changes in conditions that may affect our distributors include, but are not limited to, general economic conditions, changes in the markets for their products and services and changes in governmental regulations. In completing our analysis, we utilize a reversion methodology for periods beyond the reasonable and supportable forecast period, as many of our loans and notes receivable have longer terms. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. Further information regarding our allowance for credit losses can be found in Note 3. We generally withhold commissions payable to the distributors to settle the monthly payments due on the receivables, thereby mitigating the risk that the receivables will not be collected. Our notes receivable also generally allow us to acquire a distributor's customer list in the case of default. As of December 31, 2023 and December 31, 2022, past due amounts and receivables placed on non-accrual status were not material. The determination to place receivables on non-accrual status or to resume the accrual of interest is completed on a case-by-case basis, evaluating the specifics of each situation. |
Cloud computing arrangements | Cloud computing arrangements – Implementation costs incurred in a hosting arrangement that is a service contract are recorded as non-current assets on the consolidated balance sheets. Implementation costs include activities such as integrating, configuring and customizing the related software. In evaluating whether our cloud computing arrangements include a software license, we consider whether we have the contractual right to take possession of the software at any time during the hosting period without significant penalty and whether it is feasible for us to either run the software on our own hardware or contract with another party unrelated to the vendor to host the software. If we determine that a cloud computing arrangement includes a software license, we account for the software license element of the arrangement consistent with the acquisition of other software licenses. If we determine that a cloud computing arrangement does not include a software license, we account for the implementation costs as non-current assets. In both cases, the remaining elements of the arrangement are accounted for as a service contract. The capitalized cloud computing implementation costs are amortized on the straight-line basis over the fixed, non-cancellable term of the associated hosting arrangement plus any reasonably certain renewal periods. We apply the same impairment model to these assets as we use to evaluate internally-developed software for impairment. |
Advertising costs | Advertising costs – We expense non-direct response advertising costs as incurred. Advertising costs qualifying for deferral were not material to our consolidated financial statements. The total amount of advertising expense was $32,673 in 2023, $38,731 in 2022 and $47,461 in 2021. |
Litigation | Litigation – We are party to legal actions and claims arising in the ordinary course of business. We record accruals for legal matters when the expected outcome of these matters is either known or considered probable and can be reasonably estimated. Our accruals do not include related legal and other costs expected to be incurred in defense of legal actions. These costs are expensed as incurred. Further information regarding litigation can be found in Note 15. |
Income taxes | Income taxes – We estimate our income tax provision based on the various jurisdictions where we conduct business. We estimate our current tax liability and record deferred income taxes resulting from temporary differences between the financial reporting basis of assets and liabilities and their respective tax reporting bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences reverse. Net deferred tax assets are recognized to the extent that realization of such benefits is more likely than not. To the extent that we believe realization is not likely, we establish a valuation allowance against the net deferred tax assets. We are subject to tax audits in numerous domestic and foreign tax jurisdictions. Tax audits are often complex and can require several years to complete. In the normal course of business, we are subject to challenges from the Internal Revenue Service ("IRS") and other tax authorities regarding the amount of taxes due. These challenges may alter the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. We recognize the benefits of tax return positions in the financial statements when they are more likely than not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50% likely to be realized. Accrued interest and penalties related to unrecognized tax positions is included in our provision for income taxes on the consolidated statements of income. |
Derivative financial instruments | Derivative financial instruments – We have outstanding interest rate swaps related to our variable-rate debt. Further Information regarding these derivative financial instruments can be found in Note 7. We do not use derivative financial instruments for speculative or trading purposes. Our policy is that all derivative transactions must be linked to an existing balance sheet item or firm commitment, and the notional amount cannot exceed the value of the exposure being hedged. We recognize all derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. Changes in the fair value of derivative financial instruments are recognized periodically either in income or in shareholders' equity as a component of accumulated other comprehensive loss, depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it qualifies as a fair value hedge or a cash flow hedge and whether the hedge is effective. Generally, changes in the fair value of derivatives accounted for as fair value hedges are recorded in income along with the portion of the change in the fair value of the hedged items that relate to the hedged risk. Changes in the fair value of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in accumulated other comprehensive loss, net of tax. We classify the cash flows from derivative instruments that have been designated as fair value or cash flow hedges in the same category as the cash flows from the items being hedged. Changes in the fair value of derivatives not qualifying as hedges and the ineffective portion of hedges are included in net income. |
Revenue recognition | Revenue recognition – Product revenue is recognized when control of the goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods. In most cases, control is transferred when products are shipped. We have elected to account for shipping and handling activities that occur after the customer has obtained control of the product as fulfillment activities and not as separate performance obligations. We recognize the vast majority of our service revenue as services are provided. The majority of our contracts are for the shipment of tangible products or the delivery of services that have a single performance obligation or include multiple performance obligations where control is transferred at the same time. Revenue is presented on the consolidated statements of income net of rebates, discounts, amortization of prepaid product discounts, and taxes collected concurrent with revenue-producing activities. Many of our check supply contracts with financial institutions provide for rebates on certain products. We record these rebates as reductions of revenue and as accrued liabilities on the consolidated balance sheets when the related revenue is recognized. Amounts billed to customers for shipping and handling are included in revenue, while the related shipping and handling costs are reflected in cost of products and are accrued when the related revenue is recognized. When another party is involved in providing goods or services to a customer, we must determine whether our obligation is to provide the specified good or service itself (i.e., we are the principal in the transaction) or to arrange for that good or service to be provided by the other party (i.e., we are an agent in the transaction). When we are responsible for satisfying a performance obligation, based on our ability to control the product or service provided, we are considered the principal and revenue is recognized for the gross amount of consideration. When the other party is primarily responsible for satisfying a performance obligation, we are considered the agent and revenue is recognized in the amount of any fee or commission to which we are entitled. We sell certain Promotional Solutions and Checks products and services through a network of distributors. We have determined that we are the principal in these transactions, and revenue is recorded for the gross amount of consideration. Certain of our contracts for data-driven marketing solutions have variable consideration that is contingent on the success of the marketing campaign (i.e., pay-for-performance). We recognize revenue for estimated variable consideration as services are provided based on the most likely amount to be realized. Revenue is recognized to the extent that it is probable that a significant reversal of revenue will not occur when the contingency is resolved. Estimates regarding the recognition of variable consideration are updated each quarter. Typically, the amount of consideration for these contracts is finalized within 4 months. Our payment terms vary by type of customer and the products or services offered. The time period between invoicing and when payment is due is not significant. For certain products, services and customer types, we require payment before the products or services are delivered to the customer. When a customer pays in advance, primarily for treasury management solutions, we defer the revenue and recognize it as the services are performed, generally over a period of less than 1 year. Deferred revenue is included in accrued liabilities and other non-current liabilities on the consolidated balance sheets. In addition to the amounts included in deferred revenue, we will recognize revenue in future periods related to remaining performance obligations for certain of our data-driven marketing and treasury management solutions contracts. Generally, these contracts have terms of 1 year or less and many have terms of 3 months or less, and therefore, we do not consider any potential financing component to be significant. The amount of revenue related to these unsatisfied performance obligations is not material to our annual consolidated revenue. When the revenue recognized for uncompleted contracts exceeds the amount of customer billings and the right to receive the consideration is conditional, a contract asset is recorded. These amounts are included in revenue in excess of billings on the consolidated balance sheets. Additionally, we record an asset for unbilled receivables when the revenue recognized has not been billed to customers in accordance with contractually stated billing terms and the right to receive the consideration is unconditional. These amounts are also included in revenue in excess of billings on the consolidated balance sheets. We record sales commissions related to obtaining check supply and treasury management solution contracts, as well as contract acquisition costs within our merchant services business, as other non-current assets on the consolidated balance sheets. These contract acquisition costs are amortized as SG&A expense on the straight-line basis, which approximates the timing of the transfer of goods or services to the customer. These amounts are being amortized over periods of 2 years to 5 years. We expense contract acquisition costs as incurred when the amortization period would be 1 year or less. |
Restructuring and integration expense | Restructuring and integration expense – We incur restructuring and integration expense as a result of fundamental changes in the manner in which certain business functions are conducted, including initiatives to drive earnings and cash flow growth and the consolidation and migration of certain applications and processes. We also incur expenses resulting from our various cost management efforts, including facility closings and the relocation of business activities. These expenses consist of costs that are expensed when incurred, such as consulting, project management services, internal labor and costs associated with facility closures and consolidations. In addition, we accrue the costs of employee termination benefits payable under our ongoing severance benefit plan. We record accruals for employee termination benefits when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. We are required to make estimates and assumptions in calculating these accruals as, on some occasions, employees choose to voluntarily leave the company prior to their termination date or they secure another position within the company. In these situations, the employees do not receive termination benefits. To the extent our assumptions and estimates differ from our actual costs, subsequent adjustments to restructuring and integration accruals have been and will be required. Restructuring and integration accruals are included in accrued liabilities on the consolidated balance sheets. |
Employee share-based compensation | Employee share-based compensation – Our share-based compensation consists of non-qualified stock options, restricted stock units, performance share unit awards and an employee stock purchase plan. Employee share-based compensation expense is included in total cost of revenue and in SG&A expense on the consolidated statements of income, based on the functional areas of the employees receiving the awards, and is recognized as follows: • The fair value of stock options is measured on the grant date using the Black-Scholes option pricing model. The related compensation expense is recognized on the straight-line basis, net of estimated forfeitures, over the options' vesting periods. • The fair value of a portion of our restricted stock unit awards is measured on the grant date based on the market value of our common stock. The related compensation expense, net of estimated forfeitures, is recognized over the applicable service period. • Certain of our restricted stock unit awards may be settled in cash if an employee voluntarily chooses to leave the company. These awards are included in accrued liabilities and other non-current liabilities on the consolidated balance sheets and are remeasured at fair value as of each balance sheet date. • Compensation expense resulting from the 15% discount provided under our employee stock purchase plan is recognized over each 3 month purchase period. • Our performance share unit awards specify certain performance and market-based conditions that must be achieved in order for the awards to vest. For the portion of the awards based on a performance condition, the performance target is not considered in determining the fair value of the awards and thus, fair value is measured on the grant date based on the market value of our common stock. The related compensation expense for this type of award is recognized, net of estimated forfeitures, over the related service period. The amount of compensation expense is dependent on our periodic assessment of the probability of the targets being achieved and our estimate, which may vary over time, of the number of shares that ultimately will be issued. For the portion of the awards based on a market condition, fair value is calculated on the grant date using the Monte Carlo simulation model. All compensation cost for these awards is recognized, net of estimated forfeitures, over the related service period, even if the market condition is never satisfied. |
Postretirement benefit plan | Postretirement benefit plan – We have historically provided certain health care benefits for a large number of retired U.S. employees hired prior to January 1, 2002. Our postretirement benefit income and obligation are calculated utilizing various actuarial assumptions and methodologies. These assumptions include, but are not limited to, the discount rate, the expected long-term rate of return on plan assets, estimated medical claims, the expected health care cost trend rate and the average remaining life expectancy of plan participants. We analyze the assumptions used each year when we complete our actuarial valuation of the plan. When actual events differ from our assumptions or when we change the assumptions used, an actuarial gain or loss results. The gain or loss is recognized immediately on the consolidated balance sheets within accumulated other comprehensive loss and is amortized into postretirement benefit income over the average remaining life expectancy of inactive plan participants, as a large percentage of our plan participants are classified as inactive. The valuation of our postretirement plan requires judgment about circumstances that are inherently uncertain, including projected equity market performance, the number of plan participants, catastrophic health care events for our plan participants and a significant change in medical costs. Actual results may differ from assumed and estimated amounts. |
Earnings per share | Earnings per share – We calculate earnings per share using the two-class method, as we have unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalent payments. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Basic earnings per share is based on the weighted-average number of common shares outstanding during the year. Diluted earnings per share is based on the weighted-average number of common shares outstanding during the year, adjusted to give effect to potential common shares such as stock options and other awards that are not participating securities, calculated using the treasury stock method. |
Comprehensive income | Comprehensive income – Comprehensive income includes charges and credits to shareholders' equity that are not the result of transactions with shareholders. Our total comprehensive income consists of net income, changes in the funded status and amortization of amounts related to our postretirement benefit plans, unrealized gains and losses on cash flow hedges, unrealized gains and losses on available-for-sale debt securities, and foreign currency translation adjustments. The items of other comprehensive income (loss) are included in accumulated other comprehensive loss on the consolidated balance sheets and statements of shareholders' equity, net of their related tax impacts. We release stranded income tax effects from accumulated other comprehensive loss when the circumstances upon which they are premised cease to exist. |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New accounting pronouncements | Accounting Standards Adopted During 2023 ASU No. 2022-02 – In March 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2022-02, Troubled Debt Restructurings and Vintage Disclosures . This standard modifies the accounting for troubled debt restructurings by creditors and modifies certain disclosure requirements. We adopted this standard on January 1, 2023 and elected to apply it prospectively to modifications occurring on or after January 1, 2023. Adoption of this standard did not impact our financial position as of December 31, 2023 or our results of operations for the year ended December 31, 2023. Reference rate reform – In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate ("LIBOR") or by another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No 2021-01, Reference Rate Reform (Topic 848): Scope , which clarified the scope and application of the original guidance. Effective March 20, 2023, we modified our existing credit facility and our September 2022 interest rate swap agreement (Note 7) to utilize the Secured Overnight Financing Rate ("SOFR") as the reference rate in the agreements. In accounting for these modifications, we adopted the reference rate reform guidance on a prospective basis as allowed under the provisions of ASU No. 2022-06, Deferral of the Sunset Date of Topic 848. Adoption of these standards did not have a material impact on our consolidated financial statements. Accounting Standards Not Yet Adopted ASU No. 2023-07 – In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures. which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. We are currently evaluating the potential impact of adopting this new guidance on the related disclosures within our consolidated financial statements. ASU No. 2023-09 – In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures, which modifies the required income tax disclosures to include specific categories in the income tax rate reconciliation and to require the disclosure of income tax payments by jurisdiction, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The standard should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on the related disclosures within our consolidated financial statements. |
SUPPLEMENTAL BALANCE SHEET AN_2
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Inventories and supplies | Inventories and supplies were comprised of the following at December 31: (in thousands) 2023 2022 Finished and semi-finished goods $ 34,194 $ 40,715 Raw materials and supplies 17,339 17,952 Reserve for excess and obsolete items (9,445) (6,400) Inventories and supplies, net of reserve $ 42,088 $ 52,267 Changes in the reserve for excess and obsolete items for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Balance, beginning of year $ 6,400 $ 5,132 $ 11,748 Amounts charged to expense 4,105 2,940 3,513 Write-offs and sales (1,060) (1,672) (10,129) Balance, end of year $ 9,445 $ 6,400 $ 5,132 |
Available-for-sale debt securities | Available-for-sale debt securities were comprised of the following: December 31, 2023 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Cash equivalents: Domestic money market fund $ 22,000 $ — $ — $ 22,000 Available-for-sale debt securities $ 22,000 $ — $ — $ 22,000 December 31, 2022 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Cash equivalents: Domestic money market fund $ 5,000 $ — $ — $ 5,000 Funds held for customers: (1) Canadian and provincial government securities 9,190 — (1,064) 8,126 Available-for-sale debt securities $ 14,190 $ — $ (1,064) $ 13,126 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2022, also included cash of $294,165. |
Revenue in excess of billings | Revenue in excess of billings was comprised of the following at December 31: (in thousands) 2023 2022 Conditional right to receive consideration $ 20,680 $ 26,520 Unconditional right to receive consideration (1) 5,427 12,241 Revenue in excess of billings $ 26,107 $ 38,761 (1) Represents revenues that are earned but not currently billable under the related contract terms. |
Property, plant and equipment | Property, plant and equipment was comprised of the following at December 31: 2023 2022 (in thousands) Gross carrying amount Accumulated depreciation Net carrying amount Gross carrying amount Accumulated depreciation Net carrying amount Machinery and equipment $ 314,778 $ (262,308) $ 52,470 $ 378,468 $ (307,838) $ 70,630 Buildings and improvements 123,072 (68,391) 54,681 111,916 (67,936) 43,980 Land and improvements 12,790 (3,402) 9,388 14,498 (4,214) 10,284 Property, plant and equipment $ 450,640 $ (334,101) $ 116,539 $ 504,882 $ (379,988) $ 124,894 |
Intangibles | Amortizable intangibles were comprised of the following at December 31: 2023 2022 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Internal-use software $ 554,825 $ (412,364) $ 142,461 $ 529,306 $ (395,514) $ 133,792 Customer lists/relationships 363,298 (235,557) 127,741 497,882 (312,986) 184,896 Technology-based intangibles 97,633 (54,251) 43,382 99,613 (47,478) 52,135 Partner relationships 74,911 (14,031) 60,880 74,682 (9,094) 65,588 Trade names 39,367 (23,792) 15,575 44,185 (26,510) 17,675 Software to be sold 36,900 (35,195) 1,705 36,900 (32,007) 4,893 Intangibles $ 1,166,934 $ (775,190) $ 391,744 $ 1,282,568 $ (823,589) $ 458,979 |
Estimated amortization expense | Based on the intangibles in service as of December 31, 2023, estimated amortization expense for each of the next five years ending December 31 is as follows: (in thousands) Estimated 2024 $ 107,127 2025 75,217 2026 48,604 2027 37,075 2028 28,806 |
Acquired intangibles | In the normal course of business, we acquire and develop internal-use software. We also, at times, purchase customer lists and partner relationships. During 2021, we acquired other intangible assets in conjunction with the acquisition of First American Payment Systems, L.P. (Note 6). The following intangible assets were capitalized or developed during the years ended December 31: 2023 2022 2021 (in thousands) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Internal-use software $ 81,349 4 $ 74,778 3 $ 75,918 3 Customer lists/relationships — — 18,267 6 149,642 8 Partner relationships 1,385 2 1,587 3 73,095 15 Technology-based intangibles — — — — 65,000 8 Trade names — — — — 21,000 10 Intangible additions $ 82,734 4 $ 94,632 4 $ 384,655 8 |
Goodwill | Changes in goodwill by reportable business segment and in total were as follows: (in thousands) Payments Data Solutions (1) Promotional Solutions (1) Checks Total Balance, December 31, 2021: $ 895,338 $ 40,816 $ 59,175 $ 434,812 $ 1,430,141 Currency translation adjustment and other 1,343 — (99) — 1,244 Balance, December 31, 2022 $ 896,681 $ 40,816 $ 59,076 $ 434,812 $ 1,431,385 Currency translation adjustment and other (828) — 33 — (795) Balance, December 31, 2023 $ 895,853 $ 40,816 $ 59,109 $ 434,812 $ 1,430,590 (1) The Data Solutions and Promotional Solutions balances are net of accumulated impairment charges of $392,168 and $193,699, respectively, for each period presented. |
Other non-current assets | Other non-current assets were comprised of the following at December 31: (in thousands) 2023 2022 Postretirement benefit plan asset (Note 12) $ 94,939 $ 79,343 Cloud computing arrangement implementation costs 59,234 71,547 Prepaid product discounts (1) 40,376 44,824 Deferred contract acquisition costs (2) 21,103 21,300 Loans and notes receivable from distributors, net of allowance for credit losses (3) 12,443 13,259 Other 23,087 30,081 Other non-current assets $ 251,182 $ 260,354 (1) Amortization of prepaid product discounts was $33,370 for 2023, $34,400 for 2022 and $31,784 for 2021. (2) Amortization of deferred contract acquisition costs was $11,061 for 2023, $8,206 for 2022 and $4,975 for 2021. (3) Amount includes the non-current portion of loans and notes receivable. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $987 as of December 31, 2023 and $961 as of December 31, 2022. |
Loans and notes receivable by credit quality indicator and year of origination | The following table presents loans and notes receivable from distributors, including the current portion, by credit quality indicator and by year of origination, as of December 31, 2023. Loans and notes receivable from distributors amortized cost basis by origination year (in thousands) 2023 2020 2019 Prior Total Risk rating: 1-2 internal grade $ 342 $ 1,003 $ 370 $ 12,643 $ 14,358 3-4 internal grade — — — — — Loans and notes receivable $ 342 $ 1,003 $ 370 $ 12,643 $ 14,358 |
Accrued liabilities | Accrued liabilities were comprised of the following at December 31: (in thousands) 2023 2022 Employee cash bonuses, including sales incentives $ 49,446 $ 57,398 Deferred revenue (1) 35,343 47,012 Operating lease liabilities (Note 14) 13,562 12,780 Customer rebates 12,718 12,153 Interest 10,481 7,314 Restructuring and integration (Note 9) 9,689 8,528 Wages and payroll liabilities, including vacation 8,605 20,264 Prepaid product discounts due within one year 4,477 4,179 Other 47,106 48,776 Accrued liabilities $ 191,427 $ 218,404 (1) Revenue recognized for amounts included in deferred revenue at the beginning of the period was $43,624 for 2023, $47,547 for 2022 and $39,366 for 2021. |
Supplemental cash flow information | Supplemental cash flow information was as follows for the years ended December 31: (in thousands) 2023 2022 2021 Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets: Cash and cash equivalents $ 71,962 $ 40,435 $ 41,231 Restricted cash and restricted cash equivalents included in funds held for customers 383,134 294,165 241,488 Non-current restricted cash included in other non-current assets 2,937 2,815 2,772 Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 458,033 $ 337,415 $ 285,491 Interest paid $ 115,556 $ 87,108 $ 46,621 Income taxes paid 47,945 38,629 18,761 Non-cash investing activities: Accrued purchases of capital assets $ 11,924 $ 1,340 $ 6,477 Non-cash consideration for customer list purchases (1) — 5,096 15,528 Non-cash financing activities: Vesting of restricted stock unit awards 8,538 13,602 16,646 (1) Consists of pre-acquisition amounts owed to us by the sellers. Information regarding operating and finance leases executed in each period can be found in Note 14. |
Trade accounts receivable [Member] | |
Allowance for credit losses | Net trade accounts receivable was comprised of the following at December 31: (in thousands) 2023 2022 Trade accounts receivable – gross (1) $ 197,546 $ 210,799 Allowance for credit losses (6,541) (4,182) Trade accounts receivable – net $ 191,005 $ 206,617 (1) Includes unbilled receivables of $43,673 as of December 31, 2023 and $43,902 as of December 31, 2022. Changes in the allowance for credit losses for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Balance, beginning of year $ 4,182 $ 4,130 $ 6,428 Bad debt expense 7,045 4,185 223 Write-offs and other (4,686) (4,133) (2,521) Balance, end of year $ 6,541 $ 4,182 $ 4,130 |
Notes receivable [Member] | |
Allowance for credit losses | Changes in the allowance for credit losses related to loans and notes receivable from distributors for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Balance, beginning of year $ 1,024 $ 2,830 $ 3,995 Bad debt (benefit) expense (96) 1,195 (1,165) Write-offs — (2,599) — Other — (402) — Balance, end of year $ 928 $ 1,024 $ 2,830 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings per share | The following table reflects the calculation of basic and diluted earnings per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive. (in thousands, except per share amounts) 2023 2022 2021 Earnings per share – basic: Net income $ 26,227 $ 65,530 $ 62,772 Net income attributable to non-controlling interest (107) (135) (139) Net income attributable to Deluxe 26,120 65,395 62,633 Income allocated to participating securities (38) (47) (46) Income attributable to Deluxe available to common shareholders $ 26,082 $ 65,348 $ 62,587 Weighted-average shares outstanding 43,553 43,025 42,378 Earnings per share – basic $ 0.60 $ 1.52 $ 1.48 Earnings per share – diluted: Net income $ 26,227 $ 65,530 $ 62,772 Net income attributable to non-controlling interest (107) (135) (139) Net income attributable to Deluxe 26,120 65,395 62,633 Income allocated to participating securities (38) (35) (26) Remeasurement of share-based awards classified as liabilities — (497) (438) Income attributable to Deluxe available to common shareholders $ 26,082 $ 64,863 $ 62,169 Weighted-average shares outstanding 43,553 43,025 42,378 Dilutive impact of potential common shares 290 285 449 Weighted-average shares and potential common shares outstanding 43,843 43,310 42,827 Earnings per share – diluted $ 0.59 $ 1.50 $ 1.45 Antidilutive options excluded from calculation 1,380 1,732 2,179 |
OTHER COMPREHENSIVE INCOME (L_2
OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Reclassification adjustments | Information regarding amounts reclassified from accumulated other comprehensive loss to net income was as follows: Accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affected line item in consolidated statements of income (in thousands) 2023 2022 2021 Amortization of postretirement benefit plan items: Prior service credit $ 1,421 $ 1,421 $ 1,421 Other income, net Net actuarial loss (2,273) (900) (1,629) Other income, net Total amortization (852) 521 (208) Other income, net Tax benefit (expense) 67 (315) (123) Income tax provision Amortization of postretirement benefit plan items, net of tax (785) 206 (331) Net income Debt securities: Realized loss on debt securities (1,468) (8) — Other income, net Tax benefit 376 2 — Income tax provision Realized loss on debt securities, net of tax (1,092) (6) — Net income Cash flow hedges: Realized gain (loss) on cash flow hedges 3,227 20 (1,384) Interest expense Tax (expense) benefit (872) (5) 361 Income tax provision Realized gain (loss) on cash flow hedges, net of tax 2,355 15 (1,023) Net income Foreign currency translation adjustment (1) (863) (5,550) — Gain on sale of businesses and long-lived assets Total reclassifications, net of tax $ (385) $ (5,335) $ (1,354) (1) Relates to the sale of our web hosting businesses. Further information can be found in Note 6. |
Accumulated other comprehensive loss | Changes in the components of accumulated other comprehensive loss were as follows: (in thousands) Postretirement benefit plans Net unrealized loss on debt securities Net unrealized loss on cash flow hedges Foreign currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2020 $ (21,956) $ (90) $ (5,351) $ (14,036) $ (41,433) Other comprehensive income (loss) before reclassifications 6,194 (254) 2,067 580 8,587 Amounts reclassified from accumulated other comprehensive loss 331 — 1,023 — 1,354 Net other comprehensive income (loss) 6,525 (254) 3,090 580 9,941 Balance, December 31, 2021 (15,431) (344) (2,261) (13,456) (31,492) Other comprehensive (loss) income before reclassifications (11,235) (571) 4,869 (4,170) (11,107) Amounts reclassified from accumulated other comprehensive loss (206) 6 (15) 5,550 5,335 Net other comprehensive (loss) income (11,441) (565) 4,854 1,380 (5,772) Balance, December 31, 2022 (26,872) (909) 2,593 (12,076) (37,264) Other comprehensive income (loss) before reclassifications 6,263 (183) (524) 1,295 6,851 Amounts reclassified from accumulated other comprehensive loss 785 1,092 (2,355) 863 385 Net other comprehensive income (loss) 7,048 909 (2,879) 2,158 7,236 Balance, December 31, 2023 $ (19,824) $ — $ (286) $ (9,918) $ (30,028) |
ACQUISITION AND DIVESTITURES (T
ACQUISITION AND DIVESTITURES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Business Combinations [Abstract] | |
Acquisition | Operating results for First American for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Revenue $ 364,232 $ 347,709 $ 194,976 Net income attributable to Deluxe 14,266 5,794 1,806 |
Unaudited pro forma financial information | The following unaudited pro forma financial information summarizes our consolidated results of operations for the year ended December 31, 2021 as though the acquisition occurred on January 1, 2020: (in thousands) 2021 Revenue $ 2,156,313 Net income attributable to Deluxe 74,843 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative financial instruments | As part of our interest rate risk management strategy, we entered into interest rate swaps, which we designated as cash flow hedges, to mitigate variability in interest payments on a portion of our variable-rate debt (Note 13). In March 2023, we modified our September 2022 interest rate swap agreement to utilize SOFR as the reference rate in the agreement. Information regarding our accounting for this modification can be found in Note 2. Our derivative instruments were comprised of the following at December 31: December 31, 2023 December 31, 2022 (in thousands) Notional amount Interest Rate Maturity Balance Sheet Location Fair Value Fair Value June 2023 amortizing interest rate swap: $ 271,659 4.249 % June 2026 Other non-current liabilities $ (2,158) $ — March 2023 interest rate swap: 200,000 4.003 % March 2026 Other non-current assets 287 — September 2022 interest rate swap: 300,000 3.990 % September 2025 Other non-current assets 1,519 2,409 July 2019 200,000 1.798 % March 2023 Other current assets — 1,184 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial instruments | Information regarding the fair values of our financial instruments was as follows: Fair value measurements using Balance sheet location December 31, 2023 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value Measured at fair value through comprehensive income: Available-for-sale debt securities Cash and cash equivalents $ 22,000 $ 22,000 $ 22,000 $ — $ — Derivative assets (Note 7) Other non-current assets 1,806 1,806 — 1,806 — Derivative liability (Note 7) Other non-current liabilities (2,158) (2,158) — (2,158) — Amortized cost: Cash Cash and cash equivalents 49,962 49,962 49,962 — — Cash Funds held for customers 383,134 383,134 383,134 — — Cash Other non-current assets 2,937 2,937 2,937 — — Loans and notes receivable from distributors Other current and non-current assets 13,430 13,249 — — 13,249 Long-term debt Current portion of long-term debt and long-term debt 1,592,851 1,554,028 — 1,554,028 — Fair value measurements using Balance sheet location December 31, 2022 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value Measured at fair value through comprehensive income: Available-for-sale debt securities Cash and cash equivalents $ 5,000 $ 5,000 $ 5,000 $ — $ — Available-for-sale debt securities Funds held for customers 8,126 8,126 — 8,126 — Derivative assets (Note 7) Other current and non-current assets 3,593 3,593 — 3,593 — Amortized cost: Cash Cash and cash equivalents 35,435 35,435 35,435 — — Cash Funds held for customers 294,165 294,165 294,165 — — Cash Other non-current assets 2,815 2,815 2,815 — — Loans and notes receivable from distributors Other current and non-current assets 14,220 13,315 — — 13,315 Long-term debt Current portion of long-term debt and long-term debt 1,644,276 1,574,417 — 1,574,417 — |
RESTRUCTURING AND INTEGRATION_2
RESTRUCTURING AND INTEGRATION EXPENSE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and integration expense | Restructuring and integration expense is reflected on the consolidated statements of income as follows for the years ended December 31: (in thousands) 2023 2022 2021 Total cost of revenue $ 12,230 $ 607 $ 4,197 Operating expenses 78,245 62,529 54,750 Restructuring and integration expense $ 90,475 $ 63,136 $ 58,947 Restructuring and integration expense was comprised of the following for the years ended December 31: (in thousands) 2023 2022 2021 External consulting and other costs $ 52,290 $ 32,067 $ 26,676 Employee severance benefits 18,103 12,829 9,076 Internal labor 8,723 7,989 7,948 Other 11,359 10,251 15,247 Restructuring and integration expense $ 90,475 $ 63,136 $ 58,947 |
Changes in restructuring and integration accruals | Changes in our restructuring and integration accruals were as follows: (in thousands) Employee severance benefits Balance, December 31, 2020 $ 6,798 Charges 10,897 Reversals (1,821) Payments (10,202) Balance, December 31, 2021 5,672 Charges 13,782 Reversals (953) Payments (9,973) Balance, December 31, 2022 8,528 Charges 18,653 Reversals (550) Payments (16,942) Balance, December 31, 2023 $ 9,689 |
INCOME TAX PROVISION (Tables)
INCOME TAX PROVISION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income before income taxes | Income before income taxes was comprised of the following for the years ended December 31: (in thousands) 2023 2022 2021 U.S. $ (7,636) $ 51,640 $ 62,361 Foreign 47,435 32,738 31,442 Income before income taxes $ 39,799 $ 84,378 $ 93,803 |
Components of income tax provision | The components of the income tax provision were as follows for the years ended December 31: (in thousands) 2023 2022 2021 Current tax provision: Federal $ 20,999 $ 27,789 $ (61) State 6,331 8,507 2,389 Foreign 18,118 11,081 10,945 Total current tax provision 45,448 47,377 13,273 Deferred tax provision: Federal (20,357) (21,368) 15,889 State (4,389) (5,710) 1,958 Foreign (7,130) (1,451) (89) Total deferred tax provision (31,876) (28,529) 17,758 Income tax provision $ 13,572 $ 18,848 $ 31,031 |
Effective tax rate reconciliation | The effective tax rate on pretax income reconciles to the U.S. federal statutory tax rate for the years ended December 31 as follows: 2023 2022 2021 Income tax at federal statutory rate 21.0 % 21.0 % 21.0 % Change in valuation allowances 17.5 % 7.2 % 0.1 % Tax impact of share-based compensation 6.7 % 3.2 % 0.9 % Tax on repatriation of foreign earnings 6.2 % 2.2 % 4.9 % Foreign tax rate differences 5.7 % 1.9 % 1.7 % Non-deductible executive compensation 4.1 % 2.2 % 1.7 % Return to provision adjustments 2.0 % (1.9 %) — State income tax expense, net of federal income tax benefit 2.0 % 2.7 % 2.4 % Change in state deferred income tax rates 1.7 % 0.3 % 0.1 % Non-deductible acquisition costs 0.2 % 0.1 % 1.5 % Business exits (Note 6) (30.2 %) (15.8 %) — Research and development tax credit (3.0 %) (1.2 %) (0.9 %) Other 0.2 % 0.4 % (0.3 %) Effective tax rate 34.1 % 22.3 % 33.1 % |
Rollforward of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties and the federal benefit of deductible state income tax, was as follows: (in thousands) 2023 2022 2021 Balance, beginning of year $ 2,635 $ 2,551 $ 3,361 Additions for tax positions of current year 249 250 169 Additions for tax positions of prior years 91 270 8 Reductions for tax positions of prior years — (45) (673) Settlements (303) — — Lapse of statutes of limitations (282) (391) (314) Balance, end of year $ 2,390 $ 2,635 $ 2,551 |
Deferred tax assets and liabilities | Tax-effected temporary differences that gave rise to deferred tax assets and liabilities as of December 31 were as follows: 2023 2022 (in thousands) Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities Goodwill $ — $ 40,572 $ — $ 30,848 Employee benefit plans — 14,482 — 11,009 Cloud computing arrangements — 10,337 — 13,969 Revenue recognition — 7,187 — 7,312 Prepaid assets — 5,385 — 5,474 Property, plant and equipment — 4,529 3,139 — Acquisition costs — 1,604 — 1,691 Operating leases 20,078 15,923 16,681 12,387 Deductible interest carryforward 34,038 — 16,403 — Net operating loss, tax credit and capital loss carryforwards 22,639 — 16,720 — Reserves and accruals 9,522 — 6,935 — Gain on payroll and human resources business exit (Note 6) 6,100 — — — Intangible assets 4,510 — — 16,901 Inventories 2,804 — 2,018 — Deferred revenue 1,406 — 2,951 — All other 670 719 954 1,768 Total deferred taxes 101,767 100,738 65,801 101,359 Valuation allowances (14,984) — (7,996) — Net deferred taxes $ 86,783 $ 100,738 $ 57,805 $ 101,359 |
Rollforward of deferred income tax valuation allowances | Changes in our valuation allowances for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Balance, beginning of year $ (7,996) $ (10,993) $ (11,453) Expense from change in allowances (6,979) (6,086) (65) Sale of business (Note 6) — 8,745 — Foreign currency translation (9) 338 525 Balance, end of year $ (14,984) $ (7,996) $ (10,993) |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement, Noncash Expense [Abstract] | |
Share-based compensation expense | The following amounts were recognized in our consolidated statements of income for share-based compensation awards for the years ended December 31: (in thousands) 2023 2022 2021 Restricted stock units $ 14,092 $ 16,632 $ 20,407 Performance share unit awards 4,127 3,840 4,338 Stock options 1,845 2,665 4,187 Employee stock purchase plan 461 539 545 Total share-based compensation expense $ 20,525 $ 23,676 $ 29,477 Income tax benefit $ (7,408) $ (6,853) $ (7,714) |
Weighted-average assumptions used in Black-Scholes option pricing model | The following weighted-average assumptions were used in the Black-Scholes option pricing model to determine the fair value of these stock option grants: 2021 Risk-free interest rate 0.7 % Dividend yield 2.9 % Expected volatility 42.0 % Weighted-average option life (in years) 4.8 |
Stock options rollforward | Information regarding options issued under the current and all previous plans was as follows: Number of options (in thousands) Weighted-average exercise price per option Aggregate intrinsic value (in thousands) Weighted-average remaining contractual term (in years) Outstanding, December 31, 2022 1,732 $ 44.77 Forfeited or expired (352) 44.24 Outstanding, December 31, 2023 1,380 44.91 $ — 4.9 Exercisable at December 31, 2023 1,158 45.79 $ — 4.5 |
Restricted stock units rollforward | Information regarding our restricted stock units was as follows: Number of units (in thousands) Weighted-average grant date fair value per unit Weighted-average remaining vesting period (in years) Outstanding at December 31, 2022 1,045 $ 34.10 Granted 987 18.98 Vested (475) 35.77 Forfeited (336) 25.44 Outstanding at December 31, 2023 1,221 23.34 2.4 |
Weighted-average assumptions used in Monte Carlo simulation pricing model, performance share awards | The following weighted-average assumptions were used in the Monte Carlo simulation model in determining the fair value of market-based performance share units granted: 2023 2022 2021 Risk-free interest rate 4.4 % 1.8 % 0.3 % Dividend yield 6.1 % 3.7 % 4.4 % Expected volatility 54.3 % 54.9 % 55.6 % |
Performance share awards rollforward | Information regarding unvested performance share units was as follows: Performance share units (in thousands) Weighted-average grant date fair value per unit Weighted-average remaining contractual term (in years) Unvested at December 31, 2022 461 $ 34.35 Granted (1) 298 18.34 Forfeited (235) 27.12 Unvested at December 31, 2023 524 28.50 1.5 (1) Reflects awards granted assuming achievement of performance goals at target. |
POSTRETIREMENT BENEFITS (Tables
POSTRETIREMENT BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Change in benefit obligation, plan assets and funded status | Changes in our benefit obligation, plan assets and funded status for the years ended December 31 were as follows: (in thousands) Postretirement benefit plan Pension plan (1) Change in benefit obligation: Benefit obligation, December 31, 2021 $ 57,781 $ 3,060 Interest cost 1,069 52 Net actuarial gain (13,839) (414) Benefits paid from plan assets and company funds (5,302) (324) Benefit obligation, December 31, 2022 39,709 2,374 Interest cost 1,874 111 Net actuarial (gain) loss (785) 128 Benefits paid from plan assets and company funds (4,823) (324) Benefit obligation, December 31, 2023 $ 35,975 $ 2,289 Change in plan assets: Fair value of plan assets, December 31, 2021 $ 144,800 $ — Loss on plan assets (22,116) — Benefits paid (3,632) — Fair value of plan assets, December 31, 2022 119,052 — Return on plan assets 15,241 — Benefits paid (3,379) — Fair value of plan assets, December 31, 2023 $ 130,914 $ — Funded status, December 31, 2022 $ 79,343 $ (2,374) Funded status, December 31, 2023 $ 94,939 $ (2,289) (1) The accumulated benefit obligation equals the projected benefit obligation. |
Amounts recognized in consolidated balance sheets | The funded status of our plans was recognized on the consolidated balance sheets as of December 31 as follows: Postretirement benefit plan Pension plan (in thousands) 2023 2022 2023 2022 Other non-current assets $ 94,939 $ 79,343 $ — $ — Accrued liabilities — — 324 324 Other non-current liabilities — — 1,965 2,050 |
Amounts included in other comprehensive loss that have not been recognized as components of postretirement benefit income | Amounts included in accumulated other comprehensive loss as of December 31 that have not been recognized as components of postretirement benefit income were as follows: (in thousands) 2023 2022 Unrecognized net actuarial loss $ (29,019) $ (39,871) Unrecognized prior service credit 7,071 8,493 Tax effect 2,124 4,506 Amount recognized in accumulated other comprehensive loss, net of tax $ (19,824) $ (26,872) |
Components of net periodic benefit income | Postretirement benefit income for the years ended December 31 consisted of the following components: (in thousands) 2023 2022 2021 Interest cost $ 1,985 $ 1,121 $ 968 Expected return on plan assets (7,320) (7,462) (7,498) Amortization of prior service credit (1,421) (1,421) (1,421) Amortization of net actuarial losses 2,273 900 1,629 Net periodic benefit income $ (4,483) $ (6,862) $ (6,322) |
Actuarial assumptions used in measuring benefit obligation and net periodic benefit income | In measuring the benefit obligations as of December 31, the following discount rate assumptions were used: Postretirement benefit plan Pension plan 2023 2022 2023 2022 Discount rate 4.89 % 5.09 % 4.80 % 5.00 % In measuring net periodic benefit income for the years ended December 31, the following assumptions were used: Postretirement benefit plan Pension plan 2023 2022 2021 2023 2022 2021 Discount rate 5.09 % 2.61 % 2.16 % 5.00 % 2.26 % 1.74 % Expected return on plan assets 6.25 % 5.25 % 5.50 % — — — |
Health care cost trend rate assumptions | In measuring the benefit obligation as of December 31 for our postretirement benefit plan, the following assumptions for health care cost trend rates were used. These rates are utilized to determine our periodic benefit income for the following year. 2023 2022 2021 Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Health care cost trend rate assumed for next year 6.6 % 7.3 % 6.6 % 7.3 % 6.9 % 7.6 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.5 % 4.5 % 4.5 % 4.5 % 4.5 % 4.5 % Year that the rate reaches the ultimate trend rate 2030 2030 2030 2030 2030 2030 |
Allocation of plan assets by asset category | The allocation of plan assets by asset category as of December 31 was as follows: Postretirement benefit plan 2023 2022 U.S. corporate debt securities 54 % 55 % International equity securities 20 % 20 % U.S. large capitalization equity securities 18 % 17 % Mortgage-backed securities 5 % 5 % U.S. small and mid-capitalization equity securities 3 % 3 % Total 100 % 100 % Our postretirement benefit plan has assets that are intended to meet long-term obligations. In order to meet these obligations, we employ a total return investment approach that considers cash flow needs and balances long-term projected returns against expected asset risk, as measured using projected standard deviations. Risk tolerance is established through consideration of projected plan liabilities, the plan's funded status, projected liquidity needs and our financial condition. The target asset allocation percentages for our postretirement benefit plan are based on our liability and asset projections. The targeted allocation of plan assets is 59% fixed income securities, 20% international equity securities, 18% large capitalization equity securities and 3% small and mid-capitalization equity securities. Information regarding fair value measurements of plan assets was as follows as of December 31, 2023: Fair value measurements using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Investments measured at net asset value Fair value as of December 31, 2023 (in thousands) (Level 1) (Level 2) (Level 3) U.S. corporate debt securities $ — $ 71,225 $ — $ — $ 71,225 International equity securities — 26,441 — — 26,441 U.S. large capitalization equity securities — 23,143 — — 23,143 Mortgage-backed securities — 6,540 — — 6,540 U.S. small and mid-capitalization equity securities — 3,565 — — 3,565 Plan assets $ — $ 130,914 $ — $ — $ 130,914 Information regarding fair value measurements of plan assets was as follows as of December 31, 2022: Fair value measurements using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Investments measured at net asset value Fair value as of December 31, 2022 (in thousands) (Level 1) (Level 2) (Level 3) U.S. corporate debt securities $ — $ 65,700 $ — $ — $ 65,700 International equity securities — 23,835 — — 23,835 U.S. large capitalization equity securities — 20,496 — — 20,496 Mortgage-backed securities — 5,959 — — 5,959 U.S. small and mid-capitalization equity securities — 3,062 — — 3,062 Plan assets $ — $ 119,052 $ — $ — $ 119,052 |
Expected benefit payments | The following benefit payments are expected to be paid during the years indicated: (in thousands) Postretirement benefit plan Pension plan 2024 $ 4,711 $ 320 2025 4,356 300 2026 3,907 280 2027 3,560 260 2028 3,277 250 2029 - 2033 13,049 910 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt outstanding | Debt outstanding was comprised of the following at December 31: (in thousands) 2023 2022 Senior, secured term loan facility $ 877,187 $ 987,375 Senior, unsecured notes 475,000 475,000 Amounts drawn on senior, secured revolving credit facility 252,000 197,000 Total principal amount 1,604,187 1,659,375 Less: unamortized discount and debt issuance costs (11,336) (15,099) Total debt, net of discount and debt issuance costs 1,592,851 1,644,276 Less: current portion of long-term debt, net of debt issuance costs (86,153) (71,748) Long-term debt $ 1,506,698 $ 1,572,528 |
Maturities of long-term debt | Maturities of long-term debt were as follows as of December 31, 2023: (in thousands) Debt obligations 2024 $ 86,625 2025 101,062 2026 941,500 2027 — 2028 — Thereafter 475,000 Total principal amount $ 1,604,187 |
Leverage ratio requirements | These ratios may not equal or exceed the following amounts during the periods indicated: Fiscal Quarter Ending Consolidated total leverage ratio Consolidated secured leverage ratio December 31, 2023 through March 31, 2024 4.50 to 1:00 3.50 to 1:00 June 30, 2024 and each fiscal quarter thereafter 4.25 to 1:00 3.50 to 1:00 |
Credit facility | As of December 31, 2023, amounts were available for borrowing under our revolving credit facility as follows: (in thousands) Total available Revolving credit facility commitment $ 500,000 Amount drawn on revolving credit facility (252,000) Outstanding letters of credit (1) (7,486) Net available for borrowing as of December 31, 2023 $ 240,514 (1) We use standby letters of credit primarily to collateralize certain obligations related to our self-insured workers' compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility. |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Balance sheets information related to leases | Leases were reflected on the consolidated balance sheets as follows at December 31: (in thousands) 2023 2022 Operating leases: Operating lease assets $ 58,961 $ 47,132 Accrued liabilities $ 13,562 $ 12,780 Operating lease liabilities 58,840 48,925 Total operating lease liabilities $ 72,402 $ 61,705 Weighted-average remaining lease term 6 years 5 years Weighted-average discount rate 7.8 % 5.2 % Finance leases: Property, plant and equipment, gross $ 26,941 $ 33,060 Accumulated depreciation (4,188) (8,630) Property, plant and equipment, net $ 22,753 $ 24,430 Accrued liabilities $ 1,146 $ 1,050 Other non-current liabilities 26,134 27,287 Total finance lease liabilities $ 27,280 $ 28,337 Weighted-average remaining lease term 14 years 15 years Weighted-average discount rate 6.0 % 6.0 % |
Components of lease expense | The components of lease expense for the years ended December 31 were as follows: (in thousands) 2023 2022 2021 Operating lease expense $ 18,811 $ 20,480 $ 17,485 Finance lease expense: Amortization of right-of-use assets $ 2,067 $ 1,853 $ 1,283 Interest on lease liabilities 1,659 1,697 829 Total finance lease expense $ 3,726 $ 3,550 $ 2,112 |
Statements of cash flows information related to leases | Supplemental cash flow information related to leases for the years ended December 31 was as follows: (in thousands) 2023 2022 2021 Lease assets obtained in exchange for lease obligations: Operating leases (1) $ 26,167 $ 6,294 $ 38,630 Finance leases (2) — — 26,941 Cash paid for amounts included in lease obligations: Operating cash flows from operating leases (3) $ 19,922 $ 19,015 $ 8,444 Operating cash flows from finance leases 1,659 1,697 8 Financing cash flows from finance leases 2,715 1,290 421 (1) Operating lease assets obtained during 2021 included $24,396 acquired in conjunction with the acquisition of First American in June 2021 (Note 6). (2) Finance lease assets obtained during 2021 consisted of a lease on our corporate headquarters located in Minnesota that commenced in July 2021. (3) Cash paid for operating leases for 2021 was reduced by lease incentives received of $9,410. |
Maturities of lease liabilities | Maturities of lease liabilities were as follows at December 31, 2023: (in thousands) Operating lease obligations Finance 2024 $ 17,829 $ 2,743 2025 17,746 2,777 2026 16,210 2,812 2027 12,168 2,847 2028 8,882 2,881 Thereafter 19,294 26,151 Total lease payments 92,129 40,211 Less imputed interest (19,727) (12,931) Present value of lease payments $ 72,402 $ 27,280 |
BUSINESS SEGMENT INFORMATION (T
BUSINESS SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Business segment information | Our segment information for the years ended December 31 was as follows: (in thousands) 2023 2022 2021 Payments: Revenue $ 690,704 $ 678,580 $ 510,359 Adjusted EBITDA 152,798 144,605 105,576 Data Solutions: Revenue 238,817 267,525 262,310 Adjusted EBITDA 55,700 68,214 70,172 Promotional Solutions: Revenue 541,650 562,917 546,473 Adjusted EBITDA 80,751 79,549 85,384 Checks: Revenue 721,089 728,988 703,055 Adjusted EBITDA 320,333 320,498 324,224 Total segments: Revenue $ 2,192,260 $ 2,238,010 $ 2,022,197 Adjusted EBITDA 609,582 612,866 585,356 |
Reconciliation of total segment adjusted EBITDA to consolidated income before income taxes | The following table presents a reconciliation of total segment adjusted EBITDA to consolidated income before income taxes: (in thousands) 2023 2022 2021 Total segment adjusted EBITDA $ 609,582 $ 612,866 $ 585,356 Corporate operations (192,447) (194,736) (177,591) Depreciation and amortization (169,703) (172,552) (148,767) Interest expense (125,643) (94,454) (55,554) Net income attributable to non-controlling interest 107 135 139 Restructuring and integration expense (90,475) (63,136) (58,947) Share-based compensation expense (20,525) (23,676) (29,477) Acquisition transaction costs — (130) (18,913) Certain legal-related (expense) benefit (2,195) 730 (2,443) Loss on sale of investment securities (1,323) — — Gain on sale of businesses and long-lived assets 32,421 19,331 — Income before income taxes $ 39,799 $ 84,378 $ 93,803 |
Revenue disaggregated by product and service offerings | The following tables present revenue disaggregated by our product and service offerings: Year Ended December 31, 2023 (in thousands) Payments Data Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 721,089 $ 721,089 Mer chant services and other payment solutions 450,384 — — — 450,384 Marketing and promotional solutions — — 278,200 — 278,200 Forms and other products — — 263,450 — 263,450 Treasury management solutions 240,320 — — — 240,320 Data-driven marketing solutions — 192,656 — — 192,656 Web and hosted solutions — 46,161 — — 46,161 Total revenue $ 690,704 $ 238,817 $ 541,650 $ 721,089 $ 2,192,260 Year Ended December 31, 2022 (in thousands) Payments Data Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 728,988 $ 728,988 Merchant services and other payment solutions 437,395 — — — 437,395 Marketing and promotional solutions — — 272,997 — 272,997 Forms and other products — — 289,920 — 289,920 Treasury management solutions 241,185 — — — 241,185 Data-driven marketing solutions — 177,598 — — 177,598 Web and hosted solutions — 89,927 — — 89,927 Total revenue $ 678,580 $ 267,525 $ 562,917 $ 728,988 $ 2,238,010 Year Ended December 31, 2021 (in thousands) Payments Data Promotional Solutions Checks Consolidated Checks $ — $ — $ — $ 703,055 $ 703,055 Merchant services and other payment solutions 276,118 — — — 276,118 Marketing and promotional solutions — — 249,480 — 249,480 Forms and other products — — 296,993 — 296,993 Treasury management solutions 234,241 — — — 234,241 Data-driven marketing solutions — 150,772 — — 150,772 Web and hosted solutions — 111,538 — — 111,538 Total revenue $ 510,359 $ 262,310 $ 546,473 $ 703,055 $ 2,022,197 |
Revenue disaggregated by geographic area | The following table presents revenue disaggregated by geography, based on where items are shipped or services are performed. Substantially all of our long-lived assets reside in the U.S. Long-lived assets of our foreign subsidiaries are located primarily in Canada and are not material to our consolidated financial position. (in thousands) Payments Data Promotional Solutions Checks Consolidated Year ended December 31, 2023: U.S. $ 640,769 $ 233,090 $ 518,929 $ 694,864 $ 2,087,652 Foreign, primarily Canada 49,935 5,727 22,721 26,225 104,608 Total revenue $ 690,704 $ 238,817 $ 541,650 $ 721,089 $ 2,192,260 Year ended December 31, 2022: U.S. $ 634,945 $ 248,227 $ 537,643 $ 700,170 $ 2,120,985 Foreign, primarily Canada and Australia 43,635 19,298 25,274 28,818 117,025 Total revenue $ 678,580 $ 267,525 $ 562,917 $ 728,988 $ 2,238,010 Year ended December 31, 2021: U.S. $ 469,102 $ 227,091 $ 522,966 $ 678,229 $ 1,897,388 Foreign, primarily Canada and Australia 41,257 35,219 23,507 24,826 124,809 Total revenue $ 510,359 $ 262,310 $ 546,473 $ 703,055 $ 2,022,197 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (cash and cash equivalents and trade accounts receivable) (Details) | 12 Months Ended |
Dec. 31, 2023 | |
Cash and cash equivalents | |
Maximum maturity of cash equivalents | 3 months |
Trade accounts receivable | |
Period for write-off of trade accounts receivable | 1 year |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (property, plant and equipment and leases) (Details) | 12 Months Ended |
Dec. 31, 2023 | |
Maximum [Member] | |
Property, plant and equipment [Line Items] | |
Short-term lease term | 1 year |
Building [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 40 years |
Machinery and equipment [Member] | Minimum [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 1 year |
Machinery and equipment [Member] | Maximum [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 11 years |
Machinery and equipment [Member] | Weighted-average [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 7 years |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES (intangibles) (Details) | Dec. 31, 2023 |
Minimum [Member] | |
Amortizable intangibles [Line Items] | |
Useful life | 1 year |
Maximum [Member] | |
Amortizable intangibles [Line Items] | |
Useful life | 15 years |
Weighted-average [Member] | |
Amortizable intangibles [Line Items] | |
Useful life | 7 years |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES (business combinations and prepaid product discounts) (Details) | 12 Months Ended |
Dec. 31, 2023 | |
Business ccmbinations | |
Measurement period | 1 year |
Maximum [Member] | |
Prepaid product discounts [Line Items] | |
Amortization period | 14 years 6 months |
Weighted-average [Member] | |
Prepaid product discounts [Line Items] | |
Amortization period | 6 years |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES (loans and notes receivable from distributors and advertising costs) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Advertising costs | |||
Advertising expense | $ 32,673 | $ 38,731 | $ 47,461 |
Minimum [Member] | |||
Loans and notes receivable [Line Items] | |||
Interest rate, loans and notes receivable | 6% | ||
Maximum [Member] | |||
Loans and notes receivable [Line Items] | |||
Interest rate, loans and notes receivable | 7% |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES (income taxes, revenue recognition) (Details) | 12 Months Ended |
Dec. 31, 2023 | |
Income taxes | |
Measurement of tax benefit, minimum percentage tax benefit must be likely to be realized | 50% |
Variable consideration, period over which finalized | 4 months |
Deferred revenue, period over which recognized | 1 year |
Contract costs practical expedient period | 1 year |
Minimum [Member] | |
Capitalized contract costs amortization period | 2 years |
Maximum [Member] | |
Capitalized contract costs amortization period | 5 years |
Data-driven marketing and treasury management solutions [Member] | Minimum [Member] | |
Remaining performance obligations, expected timing of satisfaction | 3 months |
Data-driven marketing and treasury management solutions [Member] | Maximum [Member] | |
Remaining performance obligations, expected timing of satisfaction | 1 year |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES (employee share-based compensation) (Details) - Employee stock purchase plan [Member] | 12 Months Ended |
Dec. 31, 2023 | |
Share-based compensation plans [Line Items] | |
Employee stock purchase plan discount | 15% |
Purchase period | 3 months |
SUPPLEMENTAL BALANCE SHEET AN_3
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (trade accounts receivable) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Trade accounts receivable | ||||
Trade accounts receivable - gross | [1] | $ 197,546 | $ 210,799 | |
Allowance for credit losses | (6,541) | (4,182) | $ (4,130) | |
Trade accounts receivable - net | 191,005 | 206,617 | ||
Unbilled receivables | 43,673 | 43,902 | ||
Changes in allowance for credit losses | ||||
Balance, beginning of year | 4,182 | 4,130 | 6,428 | |
Bad debt expense | 7,045 | 4,185 | 223 | |
Write-offs and other | (4,686) | (4,133) | (2,521) | |
Balance, end of year | $ 6,541 | $ 4,182 | $ 4,130 | |
[1]Includes unbilled receivables of $43,673 as of December 31, 2023 and $43,902 as of December 31, 2022. |
SUPPLEMENTAL BALANCE SHEET AN_4
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (inventories and supplies) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Inventories and supplies | |||
Finished and semi-finished goods | $ 34,194 | $ 40,715 | |
Raw materials and supplies | 17,339 | 17,952 | |
Reserve for excess and obsolete items | (9,445) | (6,400) | $ (5,132) |
Inventories and supplies, net of reserve | 42,088 | 52,267 | |
Changes in reserves for excess and obsolete items | |||
Balance, beginning of year | 6,400 | 5,132 | 11,748 |
Balance, end of year | 9,445 | 6,400 | 5,132 |
Reserve for excess and obsolete inventory [Member] | |||
Changes in reserves for excess and obsolete items | |||
Amounts charged to expense | 4,105 | 2,940 | 3,513 |
Write-offs and other | $ (1,060) | $ (1,672) | $ (10,129) |
SUPPLEMENTAL BALANCE SHEET AN_5
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (available-for-sale debt securities) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | |
Available-for-sale debt securities [Line Items] | |||
Cost | $ 22,000 | $ 14,190 | |
Gross unrealized gains | 0 | 0 | |
Gross unrealized losses | 0 | (1,064) | |
Available-for-sale debt securities | 22,000 | 13,126 | [1] |
Cash and cash equivalents [Member] | |||
Available-for-sale debt securities [Line Items] | |||
Cash | 49,962 | 35,435 | |
Cash and cash equivalents [Member] | Money market fund [Member] | |||
Available-for-sale debt securities [Line Items] | |||
Available-for-sale debt securities | 22,000 | 5,000 | |
Cash and cash equivalents [Member] | Money market fund [Member] | Domestic [Member] | |||
Available-for-sale debt securities [Line Items] | |||
Cost | 22,000 | 5,000 | |
Gross unrealized gains | 0 | 0 | |
Gross unrealized losses | 0 | 0 | |
Available-for-sale debt securities | 22,000 | 5,000 | |
Funds held for customers [Member] | |||
Available-for-sale debt securities [Line Items] | |||
Cash | $ 383,134 | 294,165 | |
Funds held for customers [Member] | Canadian and provincial government securities [Member] | |||
Available-for-sale debt securities [Line Items] | |||
Cost | 9,190 | ||
Gross unrealized gains | 0 | ||
Gross unrealized losses | (1,064) | ||
Available-for-sale debt securities | $ 8,126 | ||
[1] Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2022, also included cash of $294,165. |
SUPPLEMENTAL BALANCE SHEET AN_6
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (revenue in excess of billings) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | |
Supplemental balance sheet and cash flow information [Abstract] | |||
Conditional right to receive consideration | $ 20,680 | $ 26,520 | |
Unconditional right to receive consideration | [1] | 5,427 | 12,241 |
Revenue in excess of billings | $ 26,107 | $ 38,761 | |
[1] Represents revenues that are earned but not currently billable under the related contract terms. |
SUPPLEMENTAL BALANCE SHEET AN_7
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (property, plant and equipment) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Property, plant and equipment [Line Items] | ||
Gross carrying amount | $ 450,640 | $ 504,882 |
Accumulated depreciation | (334,101) | (379,988) |
Net carrying amount | 116,539 | 124,894 |
Machinery and equipment [Member] | ||
Property, plant and equipment [Line Items] | ||
Gross carrying amount | 314,778 | 378,468 |
Accumulated depreciation | (262,308) | (307,838) |
Net carrying amount | 52,470 | 70,630 |
Buildings and improvements [Member] | ||
Property, plant and equipment [Line Items] | ||
Gross carrying amount | 123,072 | 111,916 |
Accumulated depreciation | (68,391) | (67,936) |
Net carrying amount | 54,681 | 43,980 |
Land and improvements [Member] | ||
Property, plant and equipment [Line Items] | ||
Gross carrying amount | 12,790 | 14,498 |
Accumulated depreciation | (3,402) | (4,214) |
Net carrying amount | $ 9,388 | $ 10,284 |
SUPPLEMENTAL BALANCE SHEET AN_8
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (intangibles) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Amortizable intangibles [Line Items] | |||
Gross carrying amount | $ 1,166,934 | $ 1,282,568 | |
Accumulated amortization | (775,190) | (823,589) | |
Net carrying amount | 391,744 | 458,979 | |
Amortization of intangibles | 146,277 | 146,555 | $ 123,142 |
Acquired intangibles | $ 82,734 | $ 94,632 | $ 384,655 |
Weighted-average amortization period (in years) | 4 years | 4 years | 8 years |
Estimated future amortization expense | |||
2024 | $ 107,127 | ||
2025 | 75,217 | ||
2026 | 48,604 | ||
2027 | 37,075 | ||
2028 | 28,806 | ||
Internal-use software [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 554,825 | $ 529,306 | |
Accumulated amortization | (412,364) | (395,514) | |
Net carrying amount | 142,461 | 133,792 | |
Acquired intangibles | $ 81,349 | $ 74,778 | $ 75,918 |
Weighted-average amortization period (in years) | 4 years | 3 years | 3 years |
Customer lists/relationships [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | $ 363,298 | $ 497,882 | |
Accumulated amortization | (235,557) | (312,986) | |
Net carrying amount | 127,741 | 184,896 | |
Acquired intangibles | 0 | $ 18,267 | $ 149,642 |
Weighted-average amortization period (in years) | 6 years | 8 years | |
Technology-based intangibles [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 97,633 | $ 99,613 | |
Accumulated amortization | (54,251) | (47,478) | |
Net carrying amount | 43,382 | 52,135 | |
Acquired intangibles | 0 | 0 | $ 65,000 |
Weighted-average amortization period (in years) | 8 years | ||
Partner relationships [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 74,911 | 74,682 | |
Accumulated amortization | (14,031) | (9,094) | |
Net carrying amount | 60,880 | 65,588 | |
Acquired intangibles | $ 1,385 | $ 1,587 | $ 73,095 |
Weighted-average amortization period (in years) | 2 years | 3 years | 15 years |
Trade names [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | $ 39,367 | $ 44,185 | |
Accumulated amortization | (23,792) | (26,510) | |
Net carrying amount | 15,575 | 17,675 | |
Acquired intangibles | 0 | 0 | $ 21,000 |
Weighted-average amortization period (in years) | 10 years | ||
Software to be sold [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 36,900 | 36,900 | |
Accumulated amortization | (35,195) | (32,007) | |
Net carrying amount | $ 1,705 | $ 4,893 |
SUPPLEMENTAL BALANCE SHEET AN_9
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (goodwill) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Changes in goodwill | ||||
Goodwill, net of accumulated impairment charges, beginning of year | $ 1,431,385 | $ 1,430,141 | ||
Currency translation adjustment and other | (795) | 1,244 | ||
Accumulated impairment charges | $ (193,699) | |||
Goodwill, net of accumulated impairment charges, end of period | 1,430,590 | 1,431,385 | ||
Data Solutions [Member] | ||||
Changes in goodwill | ||||
Accumulated impairment charges | $ (392,168) | |||
Reportable business segments [Member] | Payments [Member] | ||||
Changes in goodwill | ||||
Goodwill, net of accumulated impairment charges, beginning of year | 896,681 | 895,338 | ||
Currency translation adjustment and other | (828) | 1,343 | ||
Goodwill, net of accumulated impairment charges, end of period | 895,853 | 896,681 | ||
Reportable business segments [Member] | Data Solutions [Member] | ||||
Changes in goodwill | ||||
Goodwill, net of accumulated impairment charges, beginning of year | [1] | 40,816 | 40,816 | |
Accumulated impairment charges | (392,168) | (392,168) | ||
Goodwill, net of accumulated impairment charges, end of period | [1] | 40,816 | 40,816 | |
Reportable business segments [Member] | Promotional Solutions [Member] | ||||
Changes in goodwill | ||||
Goodwill, net of accumulated impairment charges, beginning of year | [1] | 59,076 | 59,175 | |
Currency translation adjustment and other | 33 | (99) | ||
Accumulated impairment charges | (193,699) | (193,699) | ||
Goodwill, net of accumulated impairment charges, end of period | [1] | 59,109 | 59,076 | |
Reportable business segments [Member] | Checks [Member] | ||||
Changes in goodwill | ||||
Goodwill, net of accumulated impairment charges, beginning of year | 434,812 | 434,812 | ||
Goodwill, net of accumulated impairment charges, end of period | $ 434,812 | $ 434,812 | ||
[1] The Data Solutions and Promotional Solutions balances are net of accumulated impairment charges of $392,168 and $193,699, respectively, for each period presented. |
SUPPLEMENTAL BALANCE SHEET A_10
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (other non-current assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Other non-current assets | ||||
Postretirement benefit plan asset (Note 12) | $ 94,939 | $ 79,343 | ||
Cloud computing arrangement implementation costs | 59,234 | 71,547 | ||
Prepaid product discounts | [1] | 40,376 | 44,824 | |
Deferred contract acquisition costs | [2] | 21,103 | 21,300 | |
Loans and notes receivable from distributors, net of allowance for credit losses | [3] | 12,443 | 13,259 | |
Other | 23,087 | 30,081 | ||
Other non-current assets | 251,182 | 260,354 | ||
Amortization of prepaid product discounts | 33,370 | 34,400 | $ 31,784 | |
Amortization of contract acquisition costs | 11,061 | 8,206 | 4,975 | |
Loans and notes receivable from distributors, current | 987 | 961 | ||
Loans and notes receivable from distributors [Member] | ||||
Loans and notes receivable allowance for credit losses [Line Items] | ||||
Balance, beginning of year | 1,024 | 2,830 | 3,995 | |
Bad debt (benefit) expense | (96) | 1,195 | (1,165) | |
Write-offs | 0 | (2,599) | 0 | |
Other | 0 | (402) | 0 | |
Balance, end of year | 928 | $ 1,024 | $ 2,830 | |
Loans and notes receivable credit quality information by origination year | ||||
2023 | 342 | |||
2020 | 1,003 | |||
2019 | 370 | |||
Prior | 12,643 | |||
Total | 14,358 | |||
Loans and notes receivable from distributors [Member] | 1 to 2 internal grade [Member] | ||||
Loans and notes receivable credit quality information by origination year | ||||
2023 | 342 | |||
2020 | 1,003 | |||
2019 | 370 | |||
Prior | 12,643 | |||
Total | 14,358 | |||
Loans and notes receivable from distributors [Member] | 3 to 4 internal grade [Member] | ||||
Loans and notes receivable credit quality information by origination year | ||||
2023 | 0 | |||
2020 | 0 | |||
2019 | 0 | |||
Prior | 0 | |||
Total | $ 0 | |||
[1]Amortization of prepaid product discounts was $33,370 for 2023, $34,400 for 2022 and $31,784 for 2021.[2]Amortization of deferred contract acquisition costs was $11,061 for 2023, $8,206 for 2022 and $4,975 for 2021.[3]Amount includes the non-current portion of loans and notes receivable. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $987 as of December 31, 2023 and $961 as of December 31, 2022. |
SUPPLEMENTAL BALANCE SHEET A_11
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (accrued liabilities) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Accrued liabilities | ||||
Employee cash bonuses, including sales incentives | $ 49,446 | $ 57,398 | ||
Deferred revenue | [1] | 35,343 | 47,012 | |
Operating lease liabilities (Note 14) | 13,562 | 12,780 | ||
Customer rebates | 12,718 | 12,153 | ||
Interest | 10,481 | 7,314 | ||
Restructuring and integration (Note 9) | 9,689 | 8,528 | ||
Wages and payroll liabilities, including vacation | 8,605 | 20,264 | ||
Prepaid product discounts due within one year | 4,477 | 4,179 | ||
Other | 47,106 | 48,776 | ||
Accrued liabilities | 191,427 | 218,404 | ||
Recognition of deferred revenue | $ 43,624 | $ 47,547 | $ 39,366 | |
[1] Revenue recognized for amounts included in deferred revenue at the beginning of the period was $43,624 for 2023, $47,547 for 2022 and $39,366 for 2021. |
SUPPLEMENTAL BALANCE SHEET A_12
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (supplemental cash flow information) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Cash and cash equivalents | $ 71,962 | $ 40,435 | $ 41,231 | ||
Restricted cash and restricted cash equivalents included in funds held for customers | $ 383,134 | $ 294,165 | $ 241,488 | ||
Restricted cash and restricted cash equivalents included in funds held for customers [Extensible Enumeration] | Funds held for customers, including securities carried at fair value of $8,126 as of December 31, 2022 | Funds held for customers, including securities carried at fair value of $8,126 as of December 31, 2022 | Funds held for customers, including securities carried at fair value of $8,126 as of December 31, 2022 | ||
Non-current restricted cash included in other non-current assets | $ 2,937 | $ 2,815 | $ 2,772 | ||
Non-current restricted cash included in other non-current assets [Extensible Enumeration] | Other non-current assets | Other non-current assets | Other non-current assets | ||
Cash, cash equivalents, restricted cash and restricted cash equivalents | $ 458,033 | $ 337,415 | $ 285,491 | $ 229,409 | |
Interest paid | 115,556 | 87,108 | 46,621 | ||
Income taxes paid | 47,945 | 38,629 | 18,761 | ||
Accrued purchases of capital assets | 11,924 | 1,340 | 6,477 | ||
Non-cash consideration for customer list purchases | [1] | 0 | 5,096 | 15,528 | |
Restricted stock units [Member] | |||||
Vesting of restricted stock unit awards | $ 8,538 | $ 13,602 | $ 16,646 | ||
[1] Consists of pre-acquisition amounts owed to us by the sellers. |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Earnings per share - basic: | |||
Net income | $ 26,227 | $ 65,530 | $ 62,772 |
Net income attributable to non-controlling interest | (107) | (135) | (139) |
Net income attributable to Deluxe | 26,120 | 65,395 | 62,633 |
Income allocated to participating securities | (38) | (47) | (46) |
Income attributable to Deluxe available to common shareholders | $ 26,082 | $ 65,348 | $ 62,587 |
Weighted-average shares outstanding | 43,553 | 43,025 | 42,378 |
Earnings per share - basic | $ 0.60 | $ 1.52 | $ 1.48 |
Earnings per share - diluted: | |||
Net income | $ 26,227 | $ 65,530 | $ 62,772 |
Net income attributable to non-controlling interest | (107) | (135) | (139) |
Net income attributable to Deluxe | 26,120 | 65,395 | 62,633 |
Income allocated to participating securities | (38) | (35) | (26) |
Remeasurement of share-based awards classified as liabilities | 0 | (497) | (438) |
Income attributable to Deluxe available to common shareholders | $ 26,082 | $ 64,863 | $ 62,169 |
Weighted-average shares outstanding | 43,553 | 43,025 | 42,378 |
Dilutive impact of potential common shares | 290 | 285 | 449 |
Weighted-average shares and potential common shares outstanding | 43,843 | 43,310 | 42,827 |
Earnings per share - diluted | $ 0.59 | $ 1.50 | $ 1.45 |
Antidilutive options excluded from calculation | 1,380 | 1,732 | 2,179 |
OTHER COMPREHENSIVE INCOME (L_3
OTHER COMPREHENSIVE INCOME (LOSS) (reclassification adjustments) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Prior service credit | $ 1,421 | $ 1,421 | $ 1,421 | |
Net actuarial loss | (2,273) | (900) | (1,629) | |
Total amortization | (852) | 521 | (208) | |
Tax benefit (expense) | 67 | (315) | (123) | |
Amortization of postretirement benefit plan items, net of tax | (785) | 206 | (331) | |
Realized loss on debt securities | (1,468) | (8) | 0 | |
Tax benefit | 376 | 2 | 0 | |
Realized loss on debt securities, net of tax | (1,092) | (6) | 0 | |
Realized gain (loss) on cash flow hedges | 3,227 | 20 | (1,384) | |
Tax (expense) benefit | (872) | (5) | 361 | |
Realized gain (loss) on cash flow hedges, net of tax | 2,355 | 15 | (1,023) | |
Foreign currency translation adjustment | [1] | (863) | (5,550) | 0 |
Total reclassifications, net of tax | $ (385) | $ (5,335) | $ (1,354) | |
[1]Relates to the sale of our web hosting businesses. Further information can be found in Note 6 |
OTHER COMPREHENSIVE INCOME (L_4
OTHER COMPREHENSIVE INCOME (LOSS) (accumulated other comprehensive loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | $ (37,264) | $ (31,492) | $ (41,433) |
Other comprehensive income (loss) before reclassifications | 6,851 | (11,107) | 8,587 |
Amounts reclassified from accumulated other comprehensive loss | 385 | 5,335 | 1,354 |
Other comprehensive income (loss) | 7,236 | (5,772) | 9,941 |
Accumulated other comprehensive loss | (30,028) | (37,264) | (31,492) |
Balance, end of year | (30,028) | (37,264) | (31,492) |
Postretirement benefit plans [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | (26,872) | (15,431) | (21,956) |
Other comprehensive income (loss) before reclassifications | 6,263 | (11,235) | 6,194 |
Amounts reclassified from accumulated other comprehensive loss | 785 | (206) | 331 |
Other comprehensive income (loss) | 7,048 | (11,441) | 6,525 |
Accumulated other comprehensive loss | (19,824) | (26,872) | (15,431) |
Balance, end of year | (19,824) | (26,872) | (15,431) |
Net unrealized loss on debt securities [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | (909) | (344) | (90) |
Other comprehensive income (loss) before reclassifications | (183) | (571) | (254) |
Amounts reclassified from accumulated other comprehensive loss | 1,092 | 6 | 0 |
Other comprehensive income (loss) | 909 | (565) | (254) |
Accumulated other comprehensive loss | 0 | (909) | (344) |
Balance, end of year | 0 | (909) | (344) |
Net unrealized loss on cash flow hedges [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | 2,593 | (2,261) | (5,351) |
Other comprehensive income (loss) before reclassifications | (524) | 4,869 | 2,067 |
Amounts reclassified from accumulated other comprehensive loss | (2,355) | (15) | 1,023 |
Other comprehensive income (loss) | (2,879) | 4,854 | 3,090 |
Accumulated other comprehensive loss | (286) | 2,593 | (2,261) |
Balance, end of year | (286) | 2,593 | (2,261) |
Foreign currency translation adjustment [Member] | |||
Accumulated other comprehensive loss [Line Items] | |||
Balance, beginning of year | (12,076) | (13,456) | (14,036) |
Other comprehensive income (loss) before reclassifications | 1,295 | (4,170) | 580 |
Amounts reclassified from accumulated other comprehensive loss | 863 | 5,550 | 0 |
Other comprehensive income (loss) | 2,158 | 1,380 | 580 |
Accumulated other comprehensive loss | (9,918) | (12,076) | (13,456) |
Balance, end of year | $ (9,918) | $ (12,076) | $ (13,456) |
ACQUISITION AND DIVESTITURES (D
ACQUISITION AND DIVESTITURES (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Jun. 01, 2021 USD ($) | Dec. 31, 2023 USD ($) reporting_units | Dec. 31, 2023 USD ($) reporting_units | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | ||
Acquisition and divestitures [Line Items] | ||||||
Acquisition transaction costs | $ 0 | $ 130 | $ 18,913 | |||
Payments for acquisition, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired | 0 | 0 | 958,514 | |||
Revenue | 2,192,260 | 2,238,010 | 2,022,197 | |||
Net income attributable to Deluxe | 26,120 | 65,395 | 62,633 | |||
Pro forma revenue | 2,156,313 | |||||
Pro forma net income attributable to Deluxe | 74,843 | |||||
Gain on sale of businesses and long-lived assets | 32,421 | 19,331 | 0 | |||
Goodwill | $ 1,430,590 | 1,430,590 | 1,431,385 | 1,430,141 | ||
North American web hosting business [Member] | ||||||
Acquisition and divestitures [Line Items] | ||||||
Proceeds from sale of business | 31,230 | |||||
Gain on sale of businesses and long-lived assets | 17,486 | |||||
U.S. & Canadian payroll and human resources services [Member] | ||||||
Acquisition and divestitures [Line Items] | ||||||
Proceeds from sale of business | 15,669 | |||||
Gain on sale of businesses and long-lived assets | 10,700 | |||||
Goodwill | 7,743 | $ 7,743 | ||||
Business Facilities | ||||||
Acquisition and divestitures [Line Items] | ||||||
Gain on sale of businesses and long-lived assets | $ 3,792 | 2,361 | ||||
Number of facilities | reporting_units | 2 | 2 | ||||
Proceeds from sale of long-lived assets | $ 8,094 | 6,929 | ||||
Australian web hosting business [Member] | ||||||
Acquisition and divestitures [Line Items] | ||||||
Proceeds from sale of business | 17,620 | |||||
Gain on sale of businesses and long-lived assets | 15,166 | |||||
Reportable business segments [Member] | Data Solutions [Member] | ||||||
Acquisition and divestitures [Line Items] | ||||||
Revenue | $ 238,817 | 267,525 | 262,310 | |||
Goodwill | [1] | 40,816 | 40,816 | 40,816 | 40,816 | |
Reportable business segments [Member] | Data Solutions [Member] | North American web hosting business [Member] | ||||||
Acquisition and divestitures [Line Items] | ||||||
Revenue | 66,000 | |||||
Reportable business segments [Member] | Data Solutions [Member] | Australian web hosting business [Member] | ||||||
Acquisition and divestitures [Line Items] | ||||||
Revenue | 23,766 | |||||
Reportable business segments [Member] | Promotional Solutions [Member] | ||||||
Acquisition and divestitures [Line Items] | ||||||
Revenue | 541,650 | 562,917 | 546,473 | |||
Goodwill | [1] | 59,109 | 59,109 | 59,076 | 59,175 | |
Reportable business segments [Member] | Promotional Solutions [Member] | Promotional Solutions business exits [Member] | ||||||
Acquisition and divestitures [Line Items] | ||||||
Revenue | 29,000 | |||||
Reportable business segments [Member] | Payments [Member] | ||||||
Acquisition and divestitures [Line Items] | ||||||
Revenue | 690,704 | 678,580 | 510,359 | |||
Goodwill | $ 895,853 | 895,853 | 896,681 | 895,338 | ||
Reportable business segments [Member] | Payments [Member] | U.S. & Canadian payroll and human resources services [Member] | ||||||
Acquisition and divestitures [Line Items] | ||||||
Revenue | 27,000 | |||||
First American [Member] | ||||||
Acquisition and divestitures [Line Items] | ||||||
Acquisition transaction costs | 18,913 | |||||
Payments for acquisition, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired | $ 958,514 | |||||
Revenue | 364,232 | 347,709 | 194,976 | |||
Net income attributable to Deluxe | $ 14,266 | 5,794 | $ 1,806 | |||
Restructuring and integration expense | $ 5,452 | |||||
[1] The Data Solutions and Promotional Solutions balances are net of accumulated impairment charges of $392,168 and $193,699, respectively, for each period presented. |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Jun. 20, 2023 | Mar. 20, 2023 | Dec. 31, 2022 | Sep. 16, 2022 | Jul. 19, 2019 |
July 2019 interest rate swap [Member] | ||||||
Derivative financial instruments [Line Items] | ||||||
Notional amount | $ 200,000 | |||||
Derivative fixed interest rate | 1.798% | |||||
Fair value of derivative asset | $ 0 | $ 1,184 | ||||
September 2022 interest rate swap [Member] | ||||||
Derivative financial instruments [Line Items] | ||||||
Notional amount | $ 300,000 | |||||
Derivative fixed interest rate | 3.99% | |||||
Fair value of derivative asset | 1,519 | $ 2,409 | ||||
March 2023 interest rate swap [Member] | ||||||
Derivative financial instruments [Line Items] | ||||||
Notional amount | $ 200,000 | |||||
Derivative fixed interest rate | 4.003% | |||||
Fair value of derivative asset | 287 | |||||
Amortizing interest rate swap June 2023 | ||||||
Derivative financial instruments [Line Items] | ||||||
Notional amount | $ 271,659 | |||||
Derivative fixed interest rate | 4.249% | |||||
Fair value of derivative liability | $ (2,158) |
FAIR VALUE MEASUREMENTS (goodwi
FAIR VALUE MEASUREMENTS (goodwill impairment analyses) (Details) $ in Thousands | 3 Months Ended | |||||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Jun. 30, 2021 USD ($) reporting_units | Mar. 31, 2021 reporting_units | Jul. 31, 2022 USD ($) | |
Schedule of asset impairment analyses [Line Items] | ||||||
Goodwill impairment charge | $ | $ 0 | $ 0 | $ 0 | $ 0 | ||
Payments [Member] | Reportable business segments [Member] | ||||||
Schedule of asset impairment analyses [Line Items] | ||||||
Number of reporting units | reporting_units | 4 | 1 | ||||
Promotional Solutions [Member] | Reportable business segments [Member] | ||||||
Schedule of asset impairment analyses [Line Items] | ||||||
Number of reporting units | reporting_units | 2 | 1 | ||||
Data Analytics reporting unit [Member] | ||||||
Schedule of asset impairment analyses [Line Items] | ||||||
Excess of fair value over carrying value of reporting unit's net assets | $ | $ 46,000 | |||||
Excess of fair value over carrying value of reporting unit, percentage | 39% |
FAIR VALUE MEASUREMENTS (financ
FAIR VALUE MEASUREMENTS (financial instruments) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | |
Fair value measurements, financial instruments [Line Items] | |||
Cash and cash equivalents, fair value | $ 22,000 | $ 5,000 | |
Available-for-sale debt securities | 22,000 | 13,126 | [1] |
Derivative assets (Note 7) | $ 1,806 | $ 3,593 | |
Derivative assets [Extensible Enumeration] | Other non-current assets | Assets | |
Derivative liability [Extensible Enumeration] | Other non-current liabilities | ||
Derivative liability (Note 7) | $ (2,158) | ||
Long-term debt | 1,592,851 | $ 1,644,276 | |
Recurring fair value measurements [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Derivative assets (Note 7) | 1,806 | 3,593 | |
Derivative liability (Note 7) | (2,158) | ||
Significant other observable inputs (Level 2) [Member] | Recurring fair value measurements [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Derivative assets (Note 7) | 1,806 | 3,593 | |
Derivative liability (Note 7) | (2,158) | ||
Cash and cash equivalents [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Cash and cash equivalents, fair value | 49,962 | 35,435 | |
Cash | 49,962 | 35,435 | |
Cash and cash equivalents [Member] | Money market fund [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Available-for-sale debt securities | 22,000 | 5,000 | |
Cash and cash equivalents [Member] | Recurring fair value measurements [Member] | Money market fund [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Available-for-sale debt securities | 22,000 | 5,000 | |
Cash and cash equivalents [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Cash and cash equivalents, fair value | 49,962 | 35,435 | |
Cash and cash equivalents [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Recurring fair value measurements [Member] | Money market fund [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Available-for-sale debt securities | 22,000 | 5,000 | |
Funds held for customers [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Cash and cash equivalents, fair value | 383,134 | 294,165 | |
Cash | 383,134 | 294,165 | |
Funds held for customers [Member] | Foreign [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Available-for-sale debt securities | 8,126 | ||
Funds held for customers [Member] | Recurring fair value measurements [Member] | Foreign [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Available-for-sale debt securities | 8,126 | ||
Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Cash and cash equivalents, fair value | 383,134 | 294,165 | |
Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member] | Recurring fair value measurements [Member] | Foreign [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Available-for-sale debt securities | 8,126 | ||
Other non-current assets [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Cash and cash equivalents, fair value | 2,937 | 2,815 | |
Cash | 2,937 | 2,815 | |
Other non-current assets [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Cash and cash equivalents, fair value | 2,937 | 2,815 | |
Other current and non-current assets [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Loans and notes receivable from distributors | 13,430 | 14,220 | |
Loans and notes receivable from distributors, fair value | 13,249 | 13,315 | |
Other current and non-current assets [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Loans and notes receivable from distributors, fair value | 13,249 | 13,315 | |
Current portion of long-term debt and long-term debt [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Long-term debt | 1,592,851 | 1,644,276 | |
Long-term debt, fair value | 1,554,028 | 1,574,417 | |
Current portion of long-term debt and long-term debt [Member] | Significant other observable inputs (Level 2) [Member] | |||
Fair value measurements, financial instruments [Line Items] | |||
Long-term debt, fair value | $ 1,554,028 | $ 1,574,417 | |
[1] Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2022, also included cash of $294,165. |
RESTRUCTURING AND INTEGRATION_3
RESTRUCTURING AND INTEGRATION EXPENSE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | $ 90,475 | $ 63,136 | $ 58,947 |
North Star Project | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | $ 45,000 | ||
Expected restructuring integration expense period | 2 years | ||
Maximum [Member] | North Star Project | |||
Restructuring and integration expense [Line Items] | |||
Anticipated restructuring and integration costs over the next two years | $ 90,000 | ||
Minimum [Member] | North Star Project | |||
Restructuring and integration expense [Line Items] | |||
Anticipated restructuring and integration costs over the next two years | 70,000 | ||
Total cost of revenue [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | 12,230 | 607 | 4,197 |
Operating expenses [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | 78,245 | 62,529 | 54,750 |
External consulting and other costs [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | 52,290 | 32,067 | 26,676 |
Employee severance [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | 18,653 | 13,782 | 10,897 |
Restructuring and integration expense, net of reversals | 18,103 | 12,829 | 9,076 |
Internal labor [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | 8,723 | 7,989 | 7,948 |
Other costs [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | $ 11,359 | $ 10,251 | $ 15,247 |
RESTRUCTURING AND INTEGRATION_4
RESTRUCTURING AND INTEGRATION EXPENSE (restructuring and integration accruals) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restructuring and integration accruals [Line Items] | |||
Charges | $ 90,475 | $ 63,136 | $ 58,947 |
Employee severance [Member] | |||
Restructuring and integration accruals [Line Items] | |||
Balance, beginning of year | 8,528 | 5,672 | 6,798 |
Charges | 18,653 | 13,782 | 10,897 |
Reversals | (550) | (953) | (1,821) |
Payments | (16,942) | (9,973) | (10,202) |
Balance, end of year | $ 9,689 | $ 8,528 | $ 5,672 |
INCOME TAX PROVISION (income ta
INCOME TAX PROVISION (income tax provision) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income before income taxes | |||
U.S. | $ (7,636) | $ 51,640 | $ 62,361 |
Foreign | 47,435 | 32,738 | 31,442 |
Income before income taxes | 39,799 | 84,378 | 93,803 |
Current tax provision: | |||
Federal | 20,999 | 27,789 | (61) |
State | 6,331 | 8,507 | 2,389 |
Foreign | 18,118 | 11,081 | 10,945 |
Total current tax provision | 45,448 | 47,377 | 13,273 |
Deferred tax provision: | |||
Federal | (20,357) | (21,368) | 15,889 |
State | (4,389) | (5,710) | 1,958 |
Foreign | (7,130) | (1,451) | (89) |
Total deferred tax provision | (31,876) | (28,529) | 17,758 |
Income tax provision | $ 13,572 | $ 18,848 | $ 31,031 |
Reconciliation of effective tax rate to U.S. statutory tax rate | |||
Income tax at federal statutory rate | 21% | 21% | 21% |
Change in valuation allowances | 17.50% | 7.20% | 0.10% |
Tax impact of share-based compensation | 6.70% | 3.20% | 0.90% |
Tax on repatriation of foreign earnings | 6.20% | 2.20% | 4.90% |
Foreign tax rate differences | 5.70% | 1.90% | 1.70% |
Non-deductible executive compensation | 4.10% | 2.20% | 1.70% |
Return to provision adjustments | 2% | (1.90%) | 0% |
State income tax expense, net of federal income tax benefit | 2% | 2.70% | 2.40% |
Change in state deferred income tax rates | 1.70% | 0.30% | 0.10% |
Non-deductible acquisition costs | 0.20% | 0.10% | 1.50% |
Business exits (Note 6) | (30.20%) | (15.80%) | 0% |
Research and development tax credit | (3.00%) | (1.20%) | (0.90%) |
Other | 0.20% | 0.40% | (0.30%) |
Effective tax rate | 34.10% | 22.30% | 33.10% |
INCOME TAX PROVISION (repatriat
INCOME TAX PROVISION (repatriation and unrecognized tax benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income tax provision | $ 13,572 | $ 18,848 | $ 31,031 |
Foreign earnings repatriated | 32,931 | 25,526 | 85,285 |
Income tax expense on repatriation of foreign earnings | 2,168 | 1,818 | 4,555 |
Cash and cash equivalents | 71,962 | 40,435 | 41,231 |
Changes in unrecognized tax benefits | |||
Balance, beginning of year | 2,635 | 2,551 | 3,361 |
Additions for tax positions of current year | 249 | 250 | 169 |
Additions for tax positions of prior years | 91 | 270 | 8 |
Reductions for tax positions of prior years | 0 | (45) | (673) |
Settlements | (303) | ||
Lapse of statutes of limitations | (282) | (391) | (314) |
Balance, end of year | 2,390 | 2,635 | 2,551 |
Unrecognized tax benefits | |||
Unrecognized tax benefits that would impact income tax expense | (2,390) | ||
Accruals for interest and penalties | 583 | 731 | |
Net increase in income tax provision for interest and penalties | 70 | $ 97 | $ 84 |
Amount by which it is reasonably possible that unrecognized tax benefits will decrease in next 12 months | 1,300 | ||
Amount by which it is reasonably possible that unrecognized tax benefits will increase in next 12 months | 2,000 | ||
Foreign, primarily Canada [Member] | |||
Cash and cash equivalents | $ 25,270 |
INCOME TAX PROVISION (deferred
INCOME TAX PROVISION (deferred income taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Deferred tax assets | |||
Operating leases | $ 20,078 | $ 16,681 | |
Deductible interest carryforward | 34,038 | 16,403 | |
Net operating loss, tax credit and capital loss carryforwards | 22,639 | 16,720 | |
Reserves and accruals | 9,522 | 6,935 | |
Gain on payroll and human resources business exit (Note 6) | 6,100 | ||
Intangible assets | 4,510 | ||
Inventories | 2,804 | 2,018 | |
Deferred revenue | 1,406 | 2,951 | |
All other | 670 | 954 | |
Property, plant and equipment | 0 | 3,139 | |
Total deferred taxes | 101,767 | 65,801 | |
Valuation allowances | (14,984) | (7,996) | $ (10,993) |
Net deferred taxes | 86,783 | 57,805 | |
Deferred tax liabilities | |||
Goodwill | 40,572 | 30,848 | |
Employee benefit plans | 14,482 | 11,009 | |
Cloud computing arrangements | 10,337 | 13,969 | |
Revenue recognition | 7,187 | 7,312 | |
Prepaid assets | 5,385 | 5,474 | |
Property, plant and equipment | 4,529 | ||
Acquisition costs | 1,604 | 1,691 | |
Operating leases | 15,923 | 12,387 | |
Intangible assets | 0 | 16,901 | |
All other | 719 | 1,768 | |
Total deferred taxes | 100,738 | 101,359 | |
Net deferred taxes | 100,738 | 101,359 | |
Changes in deferred tax asset valuation allowances | |||
Balance, beginning of year | (7,996) | (10,993) | (11,453) |
Expense from change in allowances | (6,979) | (6,086) | (65) |
Sale of business (Note 6) | 0 | 8,745 | 0 |
Foreign currency translation | (9) | 338 | 525 |
Balance, end of year | $ (14,984) | $ (7,996) | $ (10,993) |
INCOME TAX PROVISION (net opera
INCOME TAX PROVISION (net operating loss, tax credit and capital loss carryforwards) (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
State [Member] | |
Tax carryforwards [Line Items] | |
Net operating loss and tax credit carryforwards | $ 125,881 |
Federal [Member] | Deductible interest carryforward [Member] | |
Tax carryforwards [Line Items] | |
Tax credit carryforwards | 127,238 |
Federal [Member] | Capital loss carryforward [Member] | |
Tax carryforwards [Line Items] | |
Tax credit carryforwards | $ 57,096 |
SHARE-BASED COMPENSATION PLAN_2
SHARE-BASED COMPENSATION PLANS (long-term incentive plan and share-based compensation expense) (Details) - USD ($) $ in Thousands, shares in Millions | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Apr. 27, 2022 | |
Share-based compensation plans [Line Items] | ||||
Common stock reserved for issuance | 2.5 | |||
Common stock available for issuance | 2.4 | |||
Share-based compensation expense | $ 20,525 | $ 23,676 | $ 29,477 | |
Income tax benefit | (7,408) | (6,853) | (7,714) | |
Compensation expense not yet recognized for unvested awards | $ 22,213 | |||
Weighted-average period over which expense for unvested awards will be recognized | 1 year 10 months 24 days | |||
Restricted stock units [Member] | ||||
Share-based compensation plans [Line Items] | ||||
Share-based compensation expense | $ 14,092 | 16,632 | 20,407 | |
Performance share unit awards [Member] | ||||
Share-based compensation plans [Line Items] | ||||
Share-based compensation expense | 4,127 | 3,840 | 4,338 | |
Stock options [Member] | ||||
Share-based compensation plans [Line Items] | ||||
Share-based compensation expense | 1,845 | 2,665 | 4,187 | |
Employee stock purchase plan [Member] | ||||
Share-based compensation plans [Line Items] | ||||
Share-based compensation expense | $ 461 | $ 539 | $ 545 |
SHARE-BASED COMPENSATION PLAN_3
SHARE-BASED COMPENSATION PLANS (award terms) (Details) - shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2019 | |
Stock options [Member] | ||
Share-based compensation plans [Line Items] | ||
Options vesting each year during vesting period | 25% | |
Term of award | 10 years | 7 years |
Number of shares of common stock into which each award is convertible | 1 | |
Stock options [Member] | Minimum [Member] | ||
Share-based compensation plans [Line Items] | ||
Award vesting period | 1 year | |
Stock options [Member] | Maximum [Member] | ||
Share-based compensation plans [Line Items] | ||
Award vesting period | 4 years | |
Restricted stock units [Member] | ||
Share-based compensation plans [Line Items] | ||
Number of shares of common stock into which each award is convertible | 1 | |
Restricted stock units [Member] | Minimum [Member] | ||
Share-based compensation plans [Line Items] | ||
Award vesting period | 3 years | |
Restricted stock units [Member] | Maximum [Member] | ||
Share-based compensation plans [Line Items] | ||
Award vesting period | 4 years | |
Performance share unit awards [Member] | ||
Share-based compensation plans [Line Items] | ||
Award vesting period | 3 years | |
Period after grant when vesting of stock options may be modified in certain circumstances outlined in award agreement | 1 year |
SHARE-BASED COMPENSATION PLAN_4
SHARE-BASED COMPENSATION PLANS (stock options) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Change in number of stock options | |||
Outstanding, beginning of year | 1,732 | ||
Granted | 0 | 0 | |
Forfeited or expired | (352) | ||
Outstanding, end of year | 1,380 | 1,732 | |
Exercisable, end of year | 1,158 | ||
Weighted-average exercise price per option | |||
Outstanding, beginning of year | $ 44.77 | ||
Forfeited or expired | 44.24 | ||
Outstanding, end of year | 44.91 | $ 44.77 | |
Exercisable, end of year | $ 45.79 | ||
Additional disclosures | |||
Weighted-average grant date fair value, options granted | $ 11.57 | ||
Aggregate intrinsic value, options outstanding, end of year | $ 0 | ||
Aggregate intrinsic value, options exercisable, end of year | $ 0 | ||
Weighted average remaining contractual term, options outstanding, end of year | 4 years 10 months 24 days | ||
Weighted-average remaining contractual term, options exercisable, end of year | 4 years 6 months | ||
Total intrinsic value, options exercised | $ 510 | ||
Stock options [Member] | |||
Assumptions, Black-Scholes option pricing model | |||
Risk-free interest rate | 0.70% | ||
Dividend yield | 2.90% | ||
Expected volatility | 42% | ||
Weighted-average option life (in years) | 4 years 9 months 18 days |
SHARE-BASED COMPENSATION PLAN_5
SHARE-BASED COMPENSATION PLANS (restricted stock units and performance share unit awards) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Restricted stock units [Member] | ||||
Changes in share-based compensation awards (in thousands) | ||||
Outstanding, beginning of year | 1,045 | |||
Granted | 987 | |||
Vested | (475) | |||
Forfeited | (336) | |||
Outstanding, end of year | 1,221 | 1,045 | ||
Weighted-average grant date fair value | ||||
Outstanding, beginning of year | $ 34.10 | |||
Granted | 18.98 | |||
Vested | 35.77 | |||
Forfeited | 25.44 | |||
Outstanding, end of year | $ 23.34 | $ 34.10 | ||
Additional disclosures | ||||
Weighted-average remaining contractual term, outstanding, end of year | 2 years 4 months 24 days | |||
Fair value, awards vested | $ 8,538 | $ 13,602 | $ 16,646 | |
Restricted stock units classified as liabilities [Member] | ||||
Changes in share-based compensation awards (in thousands) | ||||
Outstanding, end of year | 37 | |||
Additional disclosures | ||||
Aggregate intrinsic value, outstanding, end of year | $ 798 | |||
Weighted-average remaining contractual term, outstanding, end of year | 4 months | |||
Fair value per unit, end of year | $ 21.45 | |||
Performance share unit awards [Member] | ||||
Assumptions, Monte Carlo simulation model | ||||
Risk-free interest rate | 4.40% | 1.80% | 0.30% | |
Dividend yield | 6.10% | 3.70% | 4.40% | |
Expected volatility | 54.30% | 54.90% | 55.60% | |
Changes in share-based compensation awards (in thousands) | ||||
Outstanding, beginning of year | 461 | |||
Granted | [1] | 298 | ||
Forfeited | (235) | |||
Outstanding, end of year | 524 | 461 | ||
Weighted-average grant date fair value | ||||
Outstanding, beginning of year | $ 34.35 | |||
Granted | 18.34 | |||
Forfeited | 27.12 | |||
Outstanding, end of year | $ 28.50 | $ 34.35 | ||
Additional disclosures | ||||
Weighted-average remaining contractual term, outstanding, end of year | 1 year 6 months | |||
[1]Reflects awards granted assuming achievement of performance goals at target. |
SHARE-BASED COMPENSATION PLAN_6
SHARE-BASED COMPENSATION PLANS (employee stock purchase plan) (Details) - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Employee stock purchase plan [Line Items] | |||
Number of shares issued, employee stock purchase plan | 196 | 149 | 108 |
Minimum [Member] | |||
Employee stock purchase plan [Line Items] | |||
Purchase price per share, employee stock purchase plan | $ 12.61 | $ 15.62 | $ 18.84 |
Maximum [Member] | |||
Employee stock purchase plan [Line Items] | |||
Purchase price per share, employee stock purchase plan | $ 15.77 | $ 25.59 | $ 37.32 |
POSTRETIREMENT BENEFITS (obliga
POSTRETIREMENT BENEFITS (obligations and funded status) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Change in benefit obligation | ||||
Interest cost | $ 1,985 | $ 1,121 | $ 968 | |
Change in plan assets | ||||
Fair value of plan assets, beginning of year | 119,052 | |||
Fair value of plan assets, end of year | 130,914 | 119,052 | ||
Amounts recognized on the consolidated balance sheets | ||||
Other non-current assets | 94,939 | 79,343 | ||
Amounts recognized in accumulated other comprehensive loss | ||||
Unrecognized net actuarial loss | (29,019) | (39,871) | ||
Unrecognized prior service credit | 7,071 | 8,493 | ||
Tax effect | 2,124 | 4,506 | ||
Amount recognized in accumulated other comprehensive loss, net of tax | (19,824) | (26,872) | ||
Postretirement benefit plan [Member] | ||||
Change in benefit obligation | ||||
Benefit obligation, beginning of year | 39,709 | 57,781 | ||
Interest cost | 1,874 | 1,069 | ||
Net actuarial (gain) loss | (785) | (13,839) | ||
Benefits paid from plan assets and company funds | (4,823) | (5,302) | ||
Benefit obligation, end of year | 35,975 | 39,709 | 57,781 | |
Change in plan assets | ||||
Fair value of plan assets, beginning of year | 119,052 | 144,800 | ||
Return (loss) on plan assets | 15,241 | (22,116) | ||
Benefits paid | (3,379) | (3,632) | ||
Fair value of plan assets, end of year | 130,914 | 119,052 | 144,800 | |
Funded status | 94,939 | 79,343 | ||
Amounts recognized on the consolidated balance sheets | ||||
Other non-current assets | $ 94,939 | 79,343 | ||
Amounts recognized in accumulated other comprehensive loss | ||||
Amortization period net actuarial loss | 12 years | |||
Pension plan [Member] | ||||
Change in benefit obligation | ||||
Benefit obligation, beginning of year | [1] | $ 2,374 | 3,060 | |
Interest cost | 111 | 52 | ||
Net actuarial (gain) loss | 128 | (414) | ||
Benefits paid from plan assets and company funds | (324) | (324) | ||
Benefit obligation, end of year | [1] | 2,289 | 2,374 | 3,060 |
Change in plan assets | ||||
Fair value of plan assets, beginning of year | 0 | 0 | ||
Fair value of plan assets, end of year | 0 | 0 | $ 0 | |
Funded status | (2,289) | (2,374) | ||
Amounts recognized on the consolidated balance sheets | ||||
Accrued liabilities | 324 | 324 | ||
Other non-current liabilities | $ 1,965 | $ 2,050 | ||
[1]The accumulated benefit obligation equals the projected benefit obligation |
POSTRETIREMENT BENEFITS (net pe
POSTRETIREMENT BENEFITS (net periodic benefit income and actuarial assumptions) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Net periodic benefit income | |||
Interest cost | $ 1,985 | $ 1,121 | $ 968 |
Postretirement plans, interest cost [Extensible Enumeration] | Other income, net | Other income, net | Other income, net |
Expected return on plan assets | $ (7,320) | $ (7,462) | $ (7,498) |
Postretirement plans, expected return on plan assets [Extensible Enumeration] | Other income, net | Other income, net | Other income, net |
Amortization of prior service credit | $ (1,421) | $ (1,421) | $ (1,421) |
Postretirement plans, amortization of prior service credit [Extensible Enumeration] | Other income, net | Other income, net | Other income, net |
Amortization of net actuarial losses | $ 2,273 | $ 900 | $ 1,629 |
Postretirement plans, amortization of net actuarial losses [Extensible Enumeration] | Other income, net | Other income, net | Other income, net |
Net periodic benefit income | $ (4,483) | $ (6,862) | $ (6,322) |
Participants under age 65 [Member] | |||
Health care cost trend rates | |||
Health care cost trend rate assumed for next year | 6.60% | 6.60% | 6.90% |
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 4.50% | 4.50% | 4.50% |
Year that the rate reaches the ultimate trend rate | 2030 | 2030 | 2030 |
Participants age 65 and older [Member] | |||
Health care cost trend rates | |||
Health care cost trend rate assumed for next year | 7.30% | 7.30% | 7.60% |
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 4.50% | 4.50% | 4.50% |
Year that the rate reaches the ultimate trend rate | 2030 | 2030 | 2030 |
Postretirement benefit plan [Member] | |||
Net periodic benefit income | |||
Interest cost | $ 1,874 | $ 1,069 | |
Actuarial assumptions | |||
Discount rate, benefit obligation | 4.89% | 5.09% | |
Discount rate, net periodic benefit income | 5.09% | 2.61% | 2.16% |
Expected return on plan assets | 6.25% | 5.25% | 5.50% |
Pension plan [Member] | |||
Net periodic benefit income | |||
Interest cost | $ 111 | $ 52 | |
Actuarial assumptions | |||
Discount rate, benefit obligation | 4.80% | 5% | |
Discount rate, net periodic benefit income | 5% | 2.26% | 1.74% |
POSTRETIREMENT BENEFITS (plan a
POSTRETIREMENT BENEFITS (plan assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Postretirement benefits [Line Items] | |||
Postretirement benefit plan, plan assets [Extensible List] | Postretirement benefit plan [Member] | Postretirement benefit plan [Member] | |
Allocation of plan assets | 100% | 100% | |
Fair value of plan assets | $ 130,914 | $ 119,052 | |
Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 130,914 | 119,052 | |
Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
U.S. corporate debt securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 54% | 55% | |
Fair value of plan assets | $ 71,225 | $ 65,700 | |
U.S. corporate debt securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U.S. corporate debt securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 71,225 | 65,700 | |
U.S. corporate debt securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U.S. corporate debt securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
International equity securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 20% | 20% | |
Target allocation of plan assets | 20% | ||
Fair value of plan assets | $ 26,441 | $ 23,835 | |
International equity securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
International equity securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 26,441 | 23,835 | |
International equity securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
International equity securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
U,S, large capitalization equity securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 18% | 17% | |
Target allocation of plan assets | 18% | ||
Fair value of plan assets | $ 23,143 | $ 20,496 | |
U,S, large capitalization equity securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U,S, large capitalization equity securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 23,143 | 20,496 | |
U,S, large capitalization equity securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U,S, large capitalization equity securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
Mortgage-backed securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 5% | 5% | |
Fair value of plan assets | $ 6,540 | $ 5,959 | |
Mortgage-backed securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Mortgage-backed securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 6,540 | 5,959 | |
Mortgage-backed securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Mortgage-backed securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
U.S. small and mid-capitalization equity securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 3% | 3% | |
Target allocation of plan assets | 3% | ||
Fair value of plan assets | $ 3,565 | $ 3,062 | |
U.S. small and mid-capitalization equity securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U.S. small and mid-capitalization equity securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 3,565 | 3,062 | |
U.S. small and mid-capitalization equity securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U.S. small and mid-capitalization equity securities [Member] | Investments measured at net asset value [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | 0 | |
Fixed income securities [Member] | |||
Postretirement benefits [Line Items] | |||
Target allocation of plan assets | 59% | ||
Postretirement benefit plan [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 130,914 | $ 119,052 | $ 144,800 |
POSTRETIREMENT BENEFITS (cash f
POSTRETIREMENT BENEFITS (cash flows) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Postretirement benefits [Line Items] | |||
Postretirement benefit plan, contributions [Extensible List] | Postretirement benefit plan [Member] | Postretirement benefit plan [Member] | |
Company contributions | $ 0 | $ 0 | $ 0 |
Postretirement benefit plan [Member] | |||
Expected benefit payments | |||
2024 | 4,711 | ||
2025 | 4,356 | ||
2026 | 3,907 | ||
2027 | 3,560 | ||
2028 | 3,277 | ||
2029 - 2033 | 13,049 | ||
Pension plan [Member] | |||
Postretirement benefits [Line Items] | |||
Cash surrender value of insurance polices that fund pension plan | 7,713 | $ 7,429 | |
Expected benefit payments | |||
2024 | 320 | ||
2025 | 300 | ||
2026 | 280 | ||
2027 | 260 | ||
2028 | 250 | ||
2029 - 2033 | $ 910 |
POSTRETIREMENT BENEFITS (401k P
POSTRETIREMENT BENEFITS (401k Plan) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Employee compensation plans [Line Items] | |||
401(k) contributions, maximum annual employee contribution, percent of wages | 50% | ||
401(k) expense | $ 12,046 | $ 12,958 | $ 763 |
Employee service requirement | 30 days | ||
401(k) plan, first 1% of wages contributed by employee [Member] | |||
Employee compensation plans [Line Items] | |||
Employer matching 401(k) contribution, percentage | 100% | ||
401(k) plan, next 5% of wages contributed by employee [Member] | |||
Employee compensation plans [Line Items] | |||
Employer matching 401(k) contribution, percentage | 50% | ||
401(k) plan, 100% employer match [Member] | |||
Employee compensation plans [Line Items] | |||
Employee 401(k) contribution receiving employer match, percent of wages | 1% | ||
401(k) plan, 50% employer match [Member] | |||
Employee compensation plans [Line Items] | |||
Employee 401(k) contribution receiving employer match, percent of wages | 5% |
DEBT (Details)
DEBT (Details) $ in Thousands | 3 Months Ended | 30 Months Ended | |||||||||||||||||||
Mar. 31, 2026 USD ($) | Dec. 31, 2025 USD ($) | Sep. 30, 2025 USD ($) | Jun. 30, 2025 USD ($) | Mar. 31, 2025 USD ($) | Dec. 31, 2024 USD ($) | Sep. 30, 2024 USD ($) | Jun. 30, 2024 USD ($) | Mar. 31, 2024 USD ($) | Dec. 31, 2023 USD ($) | Jun. 01, 2021 USD ($) | Mar. 31, 2025 | Dec. 31, 2024 | Sep. 30, 2024 | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 USD ($) | Sep. 30, 2022 USD ($) | Jun. 30, 2026 USD ($) | Dec. 31, 2022 USD ($) | ||
Debt instruments [Line Items] | |||||||||||||||||||||
Total principal amount | $ 1,604,187 | $ 1,604,187 | $ 1,659,375 | ||||||||||||||||||
Less: unamortized discount and debt issuance costs | (11,336) | (11,336) | (15,099) | ||||||||||||||||||
Total debt, net of discount and debt issuance costs | 1,592,851 | 1,592,851 | 1,644,276 | ||||||||||||||||||
Less: current portion of long-term debt, net of debt issuance costs | (86,153) | (86,153) | (71,748) | ||||||||||||||||||
Long-term debt | 1,506,698 | 1,506,698 | $ 1,572,528 | ||||||||||||||||||
Maturities of Long-term Debt | |||||||||||||||||||||
2024 | 86,625 | 86,625 | |||||||||||||||||||
2025 | 101,062 | 101,062 | |||||||||||||||||||
2026 | 941,500 | 941,500 | |||||||||||||||||||
2027 | 0 | 0 | |||||||||||||||||||
2028 | 0 | 0 | |||||||||||||||||||
Thereafter | $ 475,000 | $ 475,000 | |||||||||||||||||||
Credit facility | |||||||||||||||||||||
Weighted-average Interest rate at period end | 6.83% | 6.83% | 6.07% | ||||||||||||||||||
Maximum total leverage ratio | 4.50 | ||||||||||||||||||||
Maximum consolidated secured leverage ratio | 3.50 | ||||||||||||||||||||
Outstanding letters of credit | [1] | $ (7,486) | $ (7,486) | ||||||||||||||||||
Net available for borrowing as of December 31, 2023 | 240,514 | 240,514 | |||||||||||||||||||
Forecast [Member] | |||||||||||||||||||||
Credit facility | |||||||||||||||||||||
Maximum total leverage ratio | 4.25 | 4.25 | 4.25 | 4.25 | 4.50 | ||||||||||||||||
Maximum consolidated secured leverage ratio | 3.50 | 3.50 | 3.50 | 3.50 | 3.50 | ||||||||||||||||
Minimum interest coverage ratio | 3 | ||||||||||||||||||||
Consolidated total leverage ratio limiting permitted payments | 2.75 | ||||||||||||||||||||
Permitted payments | $ 60,000 | ||||||||||||||||||||
Minimum [Member] | |||||||||||||||||||||
Credit facility | |||||||||||||||||||||
Interest rate margin on variable-rate debt | 1.50% | ||||||||||||||||||||
Maximum [Member] | |||||||||||||||||||||
Credit facility | |||||||||||||||||||||
Interest rate margin on variable-rate debt | 2.50% | ||||||||||||||||||||
Senior, secured term loan facility [Member] | |||||||||||||||||||||
Debt instruments [Line Items] | |||||||||||||||||||||
Total principal amount | 877,187 | 877,187 | $ 987,375 | ||||||||||||||||||
Credit facility | |||||||||||||||||||||
Credit facility current commitment | $ 1,155,000 | ||||||||||||||||||||
Repayment amount | 21,656 | ||||||||||||||||||||
Senior, secured term loan facility [Member] | Forecast [Member] | |||||||||||||||||||||
Credit facility | |||||||||||||||||||||
Repayment amount | $ 28,875 | $ 28,875 | $ 28,875 | $ 21,656 | $ 21,656 | $ 21,656 | $ 21,656 | $ 21,656 | $ 21,656 | ||||||||||||
Senior, unsecured notes [Member] | |||||||||||||||||||||
Debt instruments [Line Items] | |||||||||||||||||||||
Total principal amount | 475,000 | $ 500,000 | 475,000 | 475,000 | |||||||||||||||||
Senior, unsecured notes | |||||||||||||||||||||
Stated interest rate | 8% | ||||||||||||||||||||
Proceeds from debt offering, net of discount and debt issuance costs | $ 490,741 | ||||||||||||||||||||
Effective interest rate | 8.30% | ||||||||||||||||||||
Debt settled | $ 25,000 | ||||||||||||||||||||
Gain on debt retirement | $ 1,726 | ||||||||||||||||||||
Senior, secured revolving credit facility [Member] | |||||||||||||||||||||
Debt instruments [Line Items] | |||||||||||||||||||||
Total principal amount | 252,000 | 252,000 | $ 197,000 | ||||||||||||||||||
Credit facility | |||||||||||||||||||||
Credit facility current commitment | $ 500,000 | $ 500,000 | $ 500,000 | ||||||||||||||||||
Senior, secured revolving credit facility [Member] | Minimum [Member] | |||||||||||||||||||||
Credit facility | |||||||||||||||||||||
Revolving credit facility, commitment fee | 0.25% | ||||||||||||||||||||
Senior, secured revolving credit facility [Member] | Maximum [Member] | |||||||||||||||||||||
Credit facility | |||||||||||||||||||||
Revolving credit facility, commitment fee | 0.35% | ||||||||||||||||||||
Swing-line sub-facility [Member] | |||||||||||||||||||||
Credit facility | |||||||||||||||||||||
Credit facility current commitment | $ 40,000 | ||||||||||||||||||||
Letter of credit sub-facility [Member] | |||||||||||||||||||||
Credit facility | |||||||||||||||||||||
Credit facility current commitment | $ 25,000 | ||||||||||||||||||||
[1] We use standby letters of credit primarily to collateralize certain obligations related to our self-insured workers' compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our revolving credit facility. |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 01, 2021 | ||
Operating leases: | |||||
Operating lease assets | $ 58,961 | $ 47,132 | |||
Accrued liabilities | $ 13,562 | $ 12,780 | |||
Current operating lease liability [Extensible Enumeration] | Accrued Liabilities, Current | Accrued Liabilities, Current | |||
Operating lease liabilities | $ 58,840 | $ 48,925 | |||
Total operating lease liabilities | $ 72,402 | $ 61,705 | |||
Weighted-average remaining lease term (in years) | 6 years | 5 years | |||
Weighted-average discount rate | 7.80% | 5.20% | |||
Finance leases: | |||||
Property, plant and equipment, gross | $ 26,941 | $ 33,060 | |||
Accumulated depreciation | (4,188) | (8,630) | |||
Property, plant and equipment, net | $ 22,753 | $ 24,430 | |||
Finance lease right-of-use asset [Extensible Enumeration] | Property, plant and equipment, net of accumulated depreciation | Property, plant and equipment, net of accumulated depreciation | |||
Accrued liabilities | $ 1,146 | $ 1,050 | |||
Current finance lease liability [Extensible Enumeration] | Accrued Liabilities, Current | Accrued Liabilities, Current | |||
Other non-current liabilities | $ 26,134 | $ 27,287 | |||
Non-current finance lease liability [Extensible Enumeration] | Other non-current liabilities | Other non-current liabilities | |||
Total finance lease liabilities | $ 27,280 | $ 28,337 | |||
Weighted-average remaining lease term (in years) | 14 years | 15 years | |||
Weighted-average discount rate | 6% | 6% | |||
Lease expense | |||||
Operating lease expense | $ 18,811 | $ 20,480 | $ 17,485 | ||
Amortization of right-of-use assets | 2,067 | 1,853 | 1,283 | ||
Interest on lease liabillities | 1,659 | 1,697 | 829 | ||
Total finance lease expense | 3,726 | 3,550 | 2,112 | ||
Supplemental cash flow information | |||||
Lease assets obtained in exchange for lease obligations, operating leases | 26,167 | 6,294 | [1] | 38,630 | |
Lease assets obtained in exchange for lease liabilities, finance leases | 0 | 0 | [2] | 26,941 | |
Operating cash flows from operating leases | 19,922 | 19,015 | [3] | 8,444 | |
Operating cash flows from finance leases | 1,659 | 1,697 | 8 | ||
Financing cash flows from finance leases | 2,715 | 1,290 | 421 | ||
Lease incentive received | $ 9,410 | ||||
Maturities of operating lease liabilities | |||||
2024 | 17,829 | ||||
2025 | 17,746 | ||||
2026 | 16,210 | ||||
2027 | 12,168 | ||||
2028 | 8,882 | ||||
Thereafter | 19,294 | ||||
Total lease payments | 92,129 | ||||
Less imputed interest | (19,727) | ||||
Total operating lease liabilities | 72,402 | 61,705 | |||
Maturities of finance lease liabilities | |||||
2024 | 2,743 | ||||
2025 | 2,777 | ||||
2026 | 2,812 | ||||
2027 | 2,847 | ||||
2028 | 2,881 | ||||
Thereafter | 26,151 | ||||
Total lease payments | 40,211 | ||||
Less imputed interest | (12,931) | ||||
Total finance lease liabilities | $ 27,280 | $ 28,337 | |||
First American [Member] | |||||
Supplemental cash flow information | |||||
Operating lease assets acquired | $ 24,396 | ||||
Real estate [Member] | Maximum [Member] | |||||
Operating leases: | |||||
Remaining lease term | 11 years | ||||
[1]Operating lease assets obtained during 2021 included $24,396 acquired in conjunction with the acquisition of First American in June 2021 (Note 6).[2]Finance lease assets obtained during 2021 consisted of a lease on our corporate headquarters located in Minnesota that commenced in July 2021.[3]Cash paid for operating leases for 2021 was reduced by lease incentives received of $9,410. |
OTHER COMMITMENTS AND CONTING_2
OTHER COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Jul. 29, 2022 | Dec. 31, 2023 | Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | |||
Self-insurance liabilities | $ 9,024 | $ 9,661 | |
Litigation settlement, amount awarded | $ 4,900 | ||
Litigation settlement, period | 7 days |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Jun. 30, 2021 | Dec. 31, 2023 | Oct. 24, 2018 | |
Share repurchase authorization | $ 500,000 | ||
Remaining available for repurchase | $ 287,452 | ||
First American [Member] | |||
Stock issued shares | 294 | ||
Stock issued value | $ 13,000 |
BUSINESS SEGMENT INFORMATION (s
BUSINESS SEGMENT INFORMATION (segment results) (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 USD ($) customers segment | Dec. 31, 2022 USD ($) customers | Dec. 31, 2021 USD ($) customers | |
Business segment information [Line Items] | |||
Number of reportable segments | segment | 4 | ||
Revenue | $ 2,192,260 | $ 2,238,010 | $ 2,022,197 |
Depreciation and amortization | (169,703) | (172,552) | (148,767) |
Interest expense | (125,643) | (94,454) | (55,554) |
Net income attributable to non-controlling Interest | 107 | 135 | 139 |
Restructuring and integration expense | (90,475) | (63,136) | (58,947) |
Share-based compensation expense | (20,525) | (23,676) | (29,477) |
Acquisition transaction costs | 0 | (130) | (18,913) |
Certain legal-related (expense) benefit | (2,195) | 730 | (2,443) |
Loss on sale of investment securities | (1,323) | 0 | 0 |
Gain on sale of businesses and long-lived assets | 32,421 | 19,331 | 0 |
Income before income taxes | 39,799 | 84,378 | 93,803 |
Reportable business segments [Member] | |||
Business segment information [Line Items] | |||
Adjusted EBITDA | 609,582 | 612,866 | 585,356 |
Reportable business segments [Member] | Payments [Member] | |||
Business segment information [Line Items] | |||
Revenue | 690,704 | 678,580 | 510,359 |
Adjusted EBITDA | 152,798 | 144,605 | 105,576 |
Reportable business segments [Member] | Data Solutions [Member] | |||
Business segment information [Line Items] | |||
Revenue | 238,817 | 267,525 | 262,310 |
Adjusted EBITDA | 55,700 | 68,214 | 70,172 |
Reportable business segments [Member] | Promotional Solutions [Member] | |||
Business segment information [Line Items] | |||
Revenue | 541,650 | 562,917 | 546,473 |
Adjusted EBITDA | 80,751 | 79,549 | 85,384 |
Reportable business segments [Member] | Checks [Member] | |||
Business segment information [Line Items] | |||
Revenue | 721,089 | 728,988 | 703,055 |
Adjusted EBITDA | 320,333 | 320,498 | 324,224 |
Corporate operations [Member] | |||
Business segment information [Line Items] | |||
Adjusted EBITDA | $ (192,447) | $ (194,736) | $ (177,591) |
Customer concentration risk [Member] | |||
Business segment information [Line Items] | |||
Number of customers | customers | 0 | 0 | 0 |
Customer concentration risk [Member] | Total revenue benchmark [Member] | Major customers [Member] | |||
Business segment information [Line Items] | |||
Concentration risk, percentage | 10% | 10% | 10% |
BUSINESS SEGMENT INFORMATION (d
BUSINESS SEGMENT INFORMATION (disaggregated revenue information) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Product and service information [Line Items] | |||
Total revenue | $ 2,192,260 | $ 2,238,010 | $ 2,022,197 |
U. S. [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 2,087,652 | 2,120,985 | 1,897,388 |
Foreign, primarily Canada and Australia [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 104,608 | 117,025 | 124,809 |
Reportable business segments [Member] | Payments [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 690,704 | 678,580 | 510,359 |
Reportable business segments [Member] | Payments [Member] | U. S. [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 640,769 | 634,945 | 469,102 |
Reportable business segments [Member] | Payments [Member] | Foreign, primarily Canada and Australia [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 49,935 | 43,635 | 41,257 |
Reportable business segments [Member] | Data Solutions [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 238,817 | 267,525 | 262,310 |
Reportable business segments [Member] | Data Solutions [Member] | U. S. [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 233,090 | 248,227 | 227,091 |
Reportable business segments [Member] | Data Solutions [Member] | Foreign, primarily Canada and Australia [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 5,727 | 19,298 | 35,219 |
Reportable business segments [Member] | Promotional Solutions [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 541,650 | 562,917 | 546,473 |
Reportable business segments [Member] | Promotional Solutions [Member] | U. S. [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 518,929 | 537,643 | 522,966 |
Reportable business segments [Member] | Promotional Solutions [Member] | Foreign, primarily Canada and Australia [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 22,721 | 25,274 | 23,507 |
Reportable business segments [Member] | Checks [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 721,089 | 728,988 | 703,055 |
Reportable business segments [Member] | Checks [Member] | U. S. [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 694,864 | 700,170 | 678,229 |
Reportable business segments [Member] | Checks [Member] | Foreign, primarily Canada and Australia [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 26,225 | 28,818 | 24,826 |
Checks [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 721,089 | 728,988 | 703,055 |
Checks [Member] | Reportable business segments [Member] | Checks [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 721,089 | 728,988 | 703,055 |
Merchant services and other payment solutions [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 450,384 | 437,395 | 276,118 |
Merchant services and other payment solutions [Member] | Reportable business segments [Member] | Payments [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 450,384 | 437,395 | 276,118 |
Marketing and promotional solutions [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 278,200 | 272,997 | 249,480 |
Marketing and promotional solutions [Member] | Reportable business segments [Member] | Promotional Solutions [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 278,200 | 272,997 | 249,480 |
Forms and other products [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 263,450 | 289,920 | 296,993 |
Forms and other products [Member] | Reportable business segments [Member] | Promotional Solutions [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 263,450 | 289,920 | 296,993 |
Treasury management solutions [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 240,320 | 241,185 | 234,241 |
Treasury management solutions [Member] | Reportable business segments [Member] | Payments [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 240,320 | 241,185 | 234,241 |
Data-driven marketing solutions [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 192,656 | 177,598 | 150,772 |
Data-driven marketing solutions [Member] | Reportable business segments [Member] | Data Solutions [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 192,656 | 177,598 | 150,772 |
Web and hosted solutions [Member] | |||
Product and service information [Line Items] | |||
Total revenue | 46,161 | 89,927 | 111,538 |
Web and hosted solutions [Member] | Reportable business segments [Member] | Data Solutions [Member] | |||
Product and service information [Line Items] | |||
Total revenue | $ 46,161 | $ 89,927 | $ 111,538 |