Document
Document - shares | 3 Months Ended | |
Mar. 31, 2024 | Apr. 24, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 1-7945 | |
Entity Registrant Name | DELUXE CORPORATION | |
Entity Central Index Key | 0000027996 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
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 $1.00 per share | |
Trading Symbol | DLX | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 44,045,836 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash and cash equivalents, including securities carried at fair value of $22,000 as of December 31, 2023 | $ 23,544 | $ 71,962 |
Trade accounts receivable, net of allowance for credit losses | 171,269 | 191,005 |
Inventories and supplies | 38,665 | 42,088 |
Funds held for customers | 108,227 | 383,134 |
Prepaid expenses | 35,054 | 30,116 |
Revenue in excess of billings | 31,946 | 26,107 |
Other current assets | 21,505 | 16,576 |
Total current assets | 430,210 | 760,988 |
Deferred income taxes | 8,177 | 8,694 |
Long-term investments | 62,278 | 61,924 |
Property, plant and equipment, net of accumulated depreciation of $340,233 and $334,101, respectively | 111,094 | 116,539 |
Operating lease assets | 55,073 | 58,961 |
Intangibles, net of accumulated amortization of $743,140 and $775,190, respectively | 374,013 | 391,744 |
Goodwill | 1,430,558 | 1,430,590 |
Other non-current assets | 257,193 | 251,182 |
Total assets | 2,728,596 | 3,080,622 |
Current liabilities: | ||
Accounts payable | 159,306 | 154,863 |
Funds held for customers | 108,883 | 386,622 |
Accrued liabilities | 154,884 | 191,427 |
Current portion of long-term debt | 21,550 | 86,153 |
Total current liabilities | 444,623 | 819,065 |
Long-term debt | 1,538,543 | 1,506,698 |
Operating lease liabilities | 55,389 | 58,840 |
Deferred income taxes | 18,173 | 22,649 |
Other non-current liabilities | 63,476 | 68,754 |
Commitments and contingencies (Note 13) | ||
Shareholders' equity: | ||
Common shares $1 par value (authorized: 500,000 shares; outstanding: March 31, 2024 - 44,046; December 31, 2023 - 43,743) | 44,046 | 43,743 |
Additional paid-in capital | 101,317 | 99,141 |
Retained earnings | 488,317 | 491,238 |
Accumulated other comprehensive loss | (25,837) | (30,028) |
Non-controlling interest | 549 | 522 |
Total shareholders' equity | 608,392 | 604,616 |
Total liabilities and shareholders' equity | $ 2,728,596 | $ 3,080,622 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parentheticals) - USD ($) shares in Thousands, $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Cash and cash equivalents, securities carried at fair value | $ 22,000 | |
Accumulated depreciation | $ 340,233 | 334,101 |
Accumulated amortization | $ 743,140 | $ 775,190 |
Common stock, par value (per share) | $ 1 | $ 1 |
Common stock, shares authorized | 500,000 | 500,000 |
Common stock, shares outstanding | 44,046 | 43,743 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Total revenue | $ 534,955 | $ 545,365 |
Total cost of revenue | (251,418) | (250,663) |
Gross profit | 283,537 | 294,702 |
Selling, general and administrative expense | (234,093) | (247,630) |
Restructuring and integration expense | (13,804) | (12,941) |
Gain on sale of businesses and long-lived assets | 8,581 | 0 |
Operating income | 44,221 | 34,131 |
Interest expense | (30,809) | (30,016) |
Other income, net | 2,940 | 2,424 |
Income before income taxes | 16,352 | 6,539 |
Income tax provision | (5,522) | (3,759) |
Net income | 10,830 | 2,780 |
Net income attributable to non-controlling interest | (27) | (28) |
Net income attributable to Deluxe | 10,803 | 2,752 |
Total comprehensive income | 15,021 | 37 |
Comprehensive income attributable to Deluxe | $ 14,994 | $ 9 |
Basic earnings per share | $ 0.25 | $ 0.06 |
Diluted earnings per share | $ 0.24 | $ 0.06 |
Product [Member] | ||
Total revenue | $ 300,312 | $ 310,226 |
Total cost of revenue | (114,336) | (118,436) |
Service [Member] | ||
Total revenue | 234,643 | 235,139 |
Total cost of revenue | $ (137,082) | $ (132,227) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - 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] |
Balance, beginning of period at Dec. 31, 2022 | $ 604,224 | $ 43,204 | $ 79,234 | $ 518,635 | $ (37,264) | $ 415 |
Balance (in shares) at Dec. 31, 2022 | 43,204 | |||||
Net income attributable to Deluxe | $ 2,752 | 2,752 | ||||
Net income attributable to non-controlling interest | 28 | 28 | ||||
Net income | 2,780 | |||||
Cash dividends ($0.30 per share for the quarters ended March 31, 2024 and 2023) | (13,395) | (13,395) | ||||
Common shares issued, net of tax withholding | $ (1,093) | 217 | (1,310) | |||
Common shares issued, net of tax withholding (in shares) | 217 | |||||
Employee share-based compensation | $ 5,876 | 5,876 | ||||
Other comprehensive income (loss) | (2,743) | (2,743) | ||||
Balance, end of period at Mar. 31, 2023 | $ 595,649 | 43,421 | 83,800 | 507,992 | (40,007) | 443 |
Balance (in shares) at Mar. 31, 2023 | 43,421 | |||||
Balance, beginning of period at Dec. 31, 2023 | $ 604,616 | 43,743 | 99,141 | 491,238 | (30,028) | 522 |
Balance (in shares) at Dec. 31, 2023 | 43,743 | |||||
Net income attributable to Deluxe | $ 10,803 | 10,803 | ||||
Net income attributable to non-controlling interest | 27 | 27 | ||||
Net income | 10,830 | |||||
Cash dividends ($0.30 per share for the quarters ended March 31, 2024 and 2023) | (13,724) | (13,724) | ||||
Common shares issued, net of tax withholding | $ (2,690) | 303 | (2,993) | |||
Common shares issued, net of tax withholding (in shares) | 303 | |||||
Employee share-based compensation | $ 5,169 | 5,169 | ||||
Other comprehensive income (loss) | 4,191 | 4,191 | ||||
Balance, end of period at Mar. 31, 2024 | $ 608,392 | $ 44,046 | $ 101,317 | $ 488,317 | $ (25,837) | $ 549 |
Balance (in shares) at Mar. 31, 2024 | 44,046 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Parentheticals) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends per share | $ 0.30 | $ 0.30 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities: | ||
Net income | $ 10,830 | $ 2,780 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 6,049 | 5,303 |
Amortization of intangibles | 35,698 | 38,217 |
Amortization of prepaid product discounts | 8,180 | 8,513 |
Employee share-based compensation expense | 5,121 | 5,866 |
Operating lease expense | 5,367 | 5,389 |
Amortization of cloud computing arrangement implementation costs | 4,119 | 3,268 |
Gain on sale of businesses and long-lived assets | (8,581) | 0 |
Deferred income taxes | (6,040) | (6,934) |
Other non-cash items, net | 10,153 | 7,305 |
Changes in assets and liabilities: | ||
Trade accounts receivable | 16,655 | (18,355) |
Inventories and supplies | 1,942 | (2,972) |
Payments for cloud computing arrangement implementation costs | (75) | (3,701) |
Other current and non-current assets | (21,597) | (502) |
Accounts payable | 6,217 | 5,193 |
Prepaid product discount payments | (10,503) | (7,383) |
Other accrued and non-current liabilities | (36,945) | (48,693) |
Net cash provided (used) by operating activities | 26,590 | (6,706) |
Cash flows from investing activities: | ||
Purchases of capital assets | (20,442) | (25,518) |
Other | (116) | 34 |
Net cash used by investing activities | (20,558) | (25,484) |
Cash flows from financing activities: | ||
Proceeds from issuing long-term debt and swingline loans, net of debt issuance costs | 165,557 | 217,500 |
Payments on long-term debt and swingline loans | (200,125) | (175,938) |
Net change in customer funds obligations | (272,806) | (145,621) |
Cash dividends paid to shareholders | (13,956) | (13,616) |
Other | (5,249) | (4,613) |
Net cash used by financing activities | (326,579) | (122,288) |
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents | (2,642) | 612 |
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents | (323,189) | (153,866) |
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year | 458,033 | 337,415 |
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period (Note 3) | $ 134,844 | $ 183,549 |
Consolidated financial statemen
Consolidated financial statements | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated financial statements | NOTE 1: CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of March 31, 2024, the consolidated statements of comprehensive income for the quarters ended March 31, 2024 and 2023, the consolidated statements of shareholders’ equity for the quarters ended March 31, 2024 and 2023 and the consolidated statements of cash flows for the quarters ended March 31, 2024 and 2023 are unaudited. The consolidated balance sheet as of December 31, 2023 was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles ("GAAP"). In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial statements are included. Adjustments consist only of normal recurring items, except for any items discussed in the notes below. Interim results are not necessarily indicative of results for a full year or future results. The consolidated financial statements and notes are presented in accordance with instructions for Form 10-Q and do not contain certain information included in our annual consolidated financial statements and notes. The consolidated financial statements and notes appearing in this report should be read in conjunction with the consolidated audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K"). The preparation of our consolidated financial statements requires 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, 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. Comparability – The consolidated statement of cash flows for the quarter ended March 31, 2023 has 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 financing activities, employee taxes paid for shares withheld is included in other. Previously, this amount was presented separately. The consolidated statement of shareholders' equity for the quarter ended March 31, 2023 has 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. |
New accounting pronouncements
New accounting pronouncements | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New accounting pronouncements | NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS ASU No. 2023-07 – In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 is required to 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 | 3 Months Ended |
Mar. 31, 2024 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental balance sheet and cash flow information | NOTE 3: SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION Trade accounts receivable – Net trade accounts receivable was comprised of the following: (in thousands) March 31, December 31, Trade accounts receivable – gross $ 178,829 $ 197,546 Allowance for credit losses (7,560) (6,541) Trade accounts receivable – net (1) $ 171,269 $ 191,005 (1) Includes unbilled receivables of $51,408 as of March 31, 2024 and $43,673 as of December 31, 2023. Changes in the allowance for credit losses for the quarters ended March 31, 2024 and 2023 were as follows: Quarter Ended (in thousands) 2024 2023 Balance, beginning of year $ 6,541 $ 4,182 Bad debt expense 2,960 1,466 Write-offs and other (1,941) (824) Balance, end of period $ 7,560 $ 4,824 Inventories and supplies – Inventories and supplies were comprised of the following: (in thousands) March 31, December 31, Finished and semi-finished goods $ 32,646 $ 34,194 Raw materials and supplies 16,762 17,339 Reserve for excess and obsolete items (10,743) (9,445) Inventories and supplies, net of reserve $ 38,665 $ 42,088 Available-for-sale debt securities – We did not hold any available for sale debt securities as of March 31, 2024. Available-for-sale debt securities held as of December 31, 2023 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 The domestic money market fund held highly liquid, short-term investments managed by the financial institution. 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: (in thousands) March 31, December 31, Conditional right to receive consideration $ 21,855 $ 20,680 Unconditional right to receive consideration (1) 10,091 5,427 Revenue in excess of billings $ 31,946 $ 26,107 (1) Represents revenues that are earned but not currently billable under the related contract terms. Intangibles – Intangibles were comprised of the following: March 31, 2024 December 31, 2023 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Internal-use software $ 571,949 $ (433,475) $ 138,474 $ 554,825 $ (412,364) $ 142,461 Customer lists/relationships 359,375 (242,420) 116,955 363,298 (235,557) 127,741 Partner relationships 74,562 (14,557) 60,005 74,911 (14,031) 60,880 Technology-based intangibles 65,700 (23,721) 41,979 97,633 (54,251) 43,382 Trade names 39,367 (24,317) 15,050 39,367 (23,792) 15,575 Software to be sold 6,200 (4,650) 1,550 36,900 (35,195) 1,705 Intangibles $ 1,117,153 $ (743,140) $ 374,013 $ 1,166,934 $ (775,190) $ 391,744 Amortization of intangibles was $35,698 for the quarter ended March 31, 2024 and $38,217 for the quarter ended March 31, 2023. Based on the intangibles in service as of March 31, 2024, estimated future amortization expense is as follows: (in thousands) Estimated Remainder of 2024 $ 85,055 2025 87,044 2026 58,798 2027 37,871 2028 29,071 In the normal course of business, we acquire and develop internal-use software. We also, at times, purchase customer list and partner relationship assets. During the quarter ended March 31, 2024, we acquired or developed internal-use software of $17,095 with a weighted-average useful life of 3 years. Other intangibles acquired during the quarter were not material. Goodwill – In conjunction with the realignment of our reportable business segments during the quarter ended March 31, 2024 (Note 15), the goodwill amounts by reportable segment as of December 31, 2023 have been recast to reflect our new segment structure. No goodwill impairment charges were recorded in conjunction with the segment realignment. Changes in goodwill by reportable segment and in total were as follows for the quarter ended March 31, 2024: (in thousands) Merchant Services B2B Payments Data Solutions (1) Print (1) All Other Total Balance, December 31, 2023 $ 727,688 $ 160,431 $ 40,804 $ 493,924 $ 7,743 $ 1,430,590 Currency translation adjustment — — — (32) — (32) Balance, March 31, 2024 $ 727,688 $ 160,431 $ 40,804 $ 493,892 $ 7,743 $ 1,430,558 (1) The Data Solutions and Print balances are net of accumulated impairment charges of $145,584 and $193,699, respectively, for each period. Other non-current assets – Other non-current assets were comprised of the following: (in thousands) March 31, December 31, Postretirement benefit plan asset $ 96,859 $ 94,939 Cloud computing arrangement implementation costs 52,252 59,234 Prepaid product discounts (1) 43,690 40,376 Deferred contract acquisition costs (2) 21,527 21,103 Loans and notes receivable from distributors, net of allowance for credit losses (3) 12,773 12,443 Other 30,092 23,087 Other non-current assets $ 257,193 $ 251,182 (1) Amortization of prepaid product discounts was $8,180 for the quarter ended March 31, 2024 and $8,513 for the quarter ended March 31, 2023. (2) Amortization of deferred contract acquisition costs was $3,091 for the quarter ended March 31, 2024 and $2,367 for the quarter ended March 31, 2023. (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 $1,317 as of March 31, 2024 and $987 as of December 31, 2023. Changes in the allowance for credit losses related to loans and notes receivable from distributors were as follows for the quarters ended March 31, 2024 and 2023: Quarter Ended (in thousands) 2024 2023 Balance, beginning of year $ 928 $ 1,024 Bad debt expense (benefit) 54 (28) Balance, end of period $ 982 $ 996 Past due receivables and those on non-accrual status were not material as of March 31, 2024 or December 31, 2023. We categorize loans and notes receivable into risk categories based on information about the ability of 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 March 31, 2024. There were no write-offs or recoveries recorded during the quarter ended March 31, 2024. Loans and notes receivable from distributors amortized cost basis by origination year (in thousands) 2024 2023 2020 2019 Prior Total Risk rating: 1-2 internal grade $ 991 $ 361 $ 961 $ 355 $ 12,404 $ 15,072 3-4 internal grade — — — — — — Loans and notes receivable $ 991 $ 361 $ 961 $ 355 $ 12,404 $ 15,072 Accrued liabilities – Accrued liabilities were comprised of the following: (in thousands) March 31, December 31, Deferred revenue (1) $ 30,586 $ 35,343 Employee bonuses, including sales incentives 15,739 49,446 Interest 15,308 10,481 Operating lease liabilities 13,388 13,562 Customer rebates 9,699 12,718 Wages and payroll liabilities, including vacation 9,559 8,605 Restructuring 7,436 9,689 Prepaid product discounts 5,542 4,477 Other 47,627 47,106 Accrued liabilities $ 154,884 $ 191,427 (1) Revenue recognized for amounts included in deferred revenue at the beginning of the period was $14,644 for the quarter ended March 31, 2024 and $18,683 for the quarter ended March 31, 2023. Supplemental cash flow information – The reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets was as follows: (in thousands) March 31, March 31, Cash and cash equivalents $ 23,544 $ 24,622 Restricted cash and restricted cash equivalents included in funds held for customers 108,227 149,010 Cash and cash equivalents included in other current assets (1) — 7,325 Non-current restricted cash included in other non-current assets 3,073 2,592 Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 134,844 $ 183,549 Non-cash investing activities: Investment in joint venture (2) $ — $ 18,392 (1) Represents the cash and cash equivalents of our former North American web hosting and logo design business, which was classified as held for sale as of March 31, 2023. (2) In February 2023, we entered into a joint venture focused on launching and marketing a business payment distribution technology platform. We committed to invest $20,000 over a 3-year period and we have option rights to acquire additional non-controlling ownership interest. During the quarter ended March 31, 2023, we recorded $18,392 for our investment in the joint venture and option rights. |
Earnings per share
Earnings per share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Earnings per share | NOTE 4: EARNINGS PER SHARE The following table reflects the calculation of basic and diluted earnings per share. During each period, certain share-based awards, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive. Quarter Ended (in thousands, except per share amounts) 2024 2023 Earnings per share – basic: Net income $ 10,830 $ 2,780 Net income attributable to non-controlling interest (27) (28) Net income attributable to Deluxe 10,803 2,752 Income allocated to participating securities (9) (10) Income attributable to Deluxe available to common shareholders $ 10,794 $ 2,742 Weighted-average shares outstanding 43,917 43,317 Earnings per share – basic $ 0.25 $ 0.06 Earnings per share – diluted: Net income $ 10,830 $ 2,780 Net income attributable to non-controlling interest (27) (28) Net income attributable to Deluxe 10,803 2,752 Income allocated to participating securities (9) (10) Re-measurement of share-based awards classified as liabilities (37) (19) Income attributable to Deluxe available to common shareholders $ 10,757 $ 2,723 Weighted-average shares outstanding 43,917 43,317 Dilutive impact of potential common shares 570 344 Weighted-average shares and potential common shares outstanding 44,487 43,661 Earnings per share – diluted $ 0.24 $ 0.06 Antidilutive potential common shares excluded from calculation 1,350 1,644 |
Other comprehensive income (los
Other comprehensive income (loss) | 3 Months Ended |
Mar. 31, 2024 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Other comprehensive income (loss) | NOTE 5: 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 comprehensive income Quarter Ended (in thousands) 2024 2023 Amortization of postretirement benefit plan items: Prior service credit $ 355 $ 355 Other income Net actuarial loss (334) (568) Other income Total amortization 21 (213) Other income Tax (expense) benefit (43) 16 Income tax provision Amortization of postretirement benefit plan items, net of tax (22) (197) Net income Realized gain on cash flow hedges 915 570 Interest expense Tax expense (247) (152) Income tax provision Realized gain on cash flow hedges, net of tax 668 418 Net income Total reclassifications, net of tax $ 646 $ 221 Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss for the quarters ended March 31, 2024 and 2023 were as follows: (in thousands) Postretirement benefit plans Net unrealized gain on cash flow hedges (1) Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2023 $ (19,824) $ (286) $ (9,918) $ (30,028) Other comprehensive income (loss) before reclassifications — 5,864 (1,027) 4,837 Amounts reclassified from accumulated other comprehensive loss 22 (668) — (646) Net current-period other comprehensive income (loss) 22 5,196 (1,027) 4,191 Balance, March 31, 2024 $ (19,802) $ 4,910 $ (10,945) $ (25,837) (1) Other comprehensive income before reclassifications is net of income tax expense of $2,169. (in thousands) Postretirement benefit plans Net unrealized loss on debt securities (1) Net unrealized gain (loss) on cash flow hedges (2) Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2022 $ (26,872) $ (909) $ 2,593 $ (12,076) $ (37,264) Other comprehensive income (loss) before reclassifications — 123 (2,872) 227 (2,522) Amounts reclassified from accumulated other comprehensive loss 197 — (418) — (221) Net current-period other comprehensive income (loss) 197 123 (3,290) 227 (2,743) Balance, March 31, 2023 $ (26,675) $ (786) $ (697) $ (11,849) $ (40,007) (1) Other comprehensive income before reclassifications is net of income tax expense of $43. (2) Other comprehensive loss before reclassifications is net of an income tax benefit of $1,045. |
Divestitures
Divestitures | 3 Months Ended |
Mar. 31, 2024 | |
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract] | |
Divestitures | NOTE 6: DIVESTITURES 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 the quarter ended March 31, 2024, we recognized related income of $7,581, which is included in gain on sale of businesses and long-lived assets on the consolidated statement of comprehensive income. Recognition of the remaining income will be based on actual customer conversion and retention activity, which we expect to be completed during 2024. These businesses generated annual revenue of approximately $27,000 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 March 31, 2024. We evaluated this goodwill for impairment as of March 31, 2024, 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 during 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. During the quarter ended March 31, 2024, we also recognized a gain of $1,000 on the sale of a small business distributor customer list. In June 2023, we completed the sale of our North American web hosting and logo design businesses. These businesses generated revenue of approximately $28,000 during 2023, through the sale date. Further information regarding this sale can be found under the caption "Note 6: Acquisition and Divestitures" in the Notes to Consolidated Financial Statements appearing in the 2023 Form 10-K. |
Derivative financial instrument
Derivative financial instruments | 3 Months Ended |
Mar. 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative financial instruments | NOTE 7: DERIVATIVE FINANCIAL INSTRUMENTS As part of our interest rate risk management strategy, we have 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 12). Our derivative instruments were comprised of the following: March 31, December 31, (in thousands) Notional amount Interest rate Maturity Balance sheet location Fair value Fair value June 2023 amortizing interest rate swap: $ 255,417 4.249 % June 2026 Other non-current assets and other non-current liabilities $ 887 $ (2,158) March 2023 200,000 4.003 % March 2026 Other non-current assets 2,289 287 September 2022 interest rate swap: 300,000 3.990 % September 2025 Other non-current assets 3,590 1,519 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 to 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 March 31, 2024 and December 31, 2023, and their impact on consolidated net income and the 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 | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | NOTE 8: FAIR VALUE MEASUREMENTS Recurring fair value measurements – C ash and cash equivalents included available-for-sale debt securities at December 31, 2023 (Note 3), which consisted of a domestic money market fund. The cost of the fund, which was traded in an active market, approximated its fair value because of the short-term nature of the underlying investments. The fair value of derivative instruments (Note 7) is 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 March 31, 2024 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Balance sheet location Carrying value Fair value Measured at fair value through comprehensive income: Derivative assets (Note 7) Other non-current assets $ 6,766 $ 6,766 $ — $ 6,766 $ — Amortized cost: Cash Cash and cash equivalents 23,544 23,544 23,544 — — Cash Funds held for customers 108,227 108,227 108,227 — — Cash Other non-current assets 3,073 3,073 3,073 — — Loans and notes receivable from distributors Other current assets and other non-current assets 14,090 14,159 — — 14,159 Long-term debt Current portion of long-term debt and long-term debt 1,560,093 1,531,878 — 1,531,878 — Fair value measurements using December 31, 2023 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Balance sheet location 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 assets and other 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 — |
Restructuring and integration e
Restructuring and integration expense | 3 Months Ended |
Mar. 31, 2024 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and integration expense | NOTE 9: 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. 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 recorded 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 costs, was approximately $12,000 during the quarter ended March 31, 2024. To date, we have incurred expense of approximately $60,000, and we anticipate that we will incur an additional $60,000 to $80,000 of North Star restructuring and integration expense through 2025. Restructuring and integration expense is reflected on the consolidated statements of comprehensive income as follows: Quarter Ended (in thousands) 2024 2023 Total cost of revenue $ 933 $ 1,153 Operating expenses 13,804 12,941 Restructuring and integration expense $ 14,737 $ 14,094 Restructuring and integration expense for each period was comprised of the following: Quarter Ended (in thousands) 2024 2023 External consulting and other costs $ 7,969 $ 7,692 Employee severance benefits 1,972 186 Internal labor 838 2,122 Other 3,958 4,094 Restructuring and integration expense $ 14,737 $ 14,094 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 the end of 2024. Changes in our restructuring and integration accruals were as follows: (in thousands) Employee severance benefits Balance, December 31, 2023 $ 9,689 Charges 2,042 Reversals (70) Payments (4,225) Balance, March 31, 2024 $ 7,436 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 | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income tax provision | NOTE 10: INCOME TAX PROVISION The effective income tax rate for the quarter ended March 31, 2024 was 33.8%, consistent with the effective tax rate of 34.1% for the year ended December 31, 2023. The reconciliation of our effective tax rate for 2023 to the U.S. federal statutory tax rate can be found under the caption "Note 10: Income Tax Provision" in the Notes to Consolidated Financial Statements appearing in the 2023 Form 10-K. |
Postretirement benefits
Postretirement benefits | 3 Months Ended |
Mar. 31, 2024 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Postretirement benefits | NOTE 11: POSTRETIREMENT BENEFITS We have historically provided certain health care benefits for eligible retired U.S. employees. In addition to our retiree health care plan, we also have a U.S. supplemental executive retirement plan. Further information regarding our postretirement benefit plans can be found under the caption “Note 12: Postretirement Benefits” in the Notes to Consolidated Financial Statements appearing in the 2023 Form 10-K. Postretirement benefit income is included in other income on the consolidated statements of comprehensive income and consisted of the following components: Quarter Ended (in thousands) 2024 2023 Interest cost $ 435 $ 496 Expected return on plan assets (2,099) (1,830) Amortization of prior service credit (355) (355) Amortization of net actuarial losses 334 568 Net periodic benefit income $ (1,685) $ (1,121) |
Debt
Debt | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 12: DEBT Debt outstanding was comprised of the following: (in thousands) March 31, December 31, Senior, secured term loan facility $ 790,562 $ 877,187 Senior, unsecured notes 475,000 475,000 Amounts drawn on senior, secured revolving credit facility 239,750 252,000 Securitization obligations 64,969 — Total principal amount 1,570,281 1,604,187 Less: unamortized discount and debt issuance costs (10,188) (11,336) Total debt, net of discount and debt issuance costs 1,560,093 1,592,851 Less: current portion of long-term debt, net of debt issuance costs (21,550) (86,153) Long-term debt $ 1,538,543 $ 1,506,698 Maturities of long-term debt were as follows as of March 31, 2024: (in thousands) Debt obligations 2025 $ 101,062 2026 929,250 2027 64,969 2028 — 2029 475,000 Total principal amount $ 1,570,281 Credit facility – In June 2021, we executed a senior, secured 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. 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 is required to 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 Secured Overnight Financing Rate ("SOFR") plus an applicable margin ranging from 1.5% to 2.5%, depending on our consolidated total leverage ratio, as defined in the credit agreement, and a commitment fee is payable on the unused portion of the revolving credit facility. Amounts outstanding under the credit facility had a weighted-average interest rate of 6.71% as of March 31, 2024 and 6.83% as of December 31, 2023, 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. During each remaining quarterly period, the consolidated total leverage ratio may not equal or exceed 4.25 to 1:00 and the consolidated secured leverage ratio may not equal or exceed 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 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 are unable to settle the amounts outstanding. We were in compliance with all debt covenants as of March 31, 2024. 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 in connection with incentive-based equity and compensation is limited to $60,000. As of March 31, 2024, amounts available for borrowing under our revolving credit facility were as follows: (in thousands) Available borrowings Revolving credit facility commitment $ 500,000 Amounts drawn on revolving credit facility (239,750) Outstanding letters of credit (1) (8,036) Net available for borrowing as of March 31, 2024 $ 252,214 (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. Interest payments are due each June and December. During 2022, we settled $25,000 of these notes via open market purchases. 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. Securitization facility – In March 2024, Deluxe Receivables LLC, a wholly-owned subsidiary, entered into a receivables financing agreement (the “Securitization Facility”) with a group of financial institutions with a termination date of March 12, 2027, unless extended in accordance with its terms. The maximum amount available under the Securitization Facility is $80,000, subject to certain borrowing base adjustments. Under the agreement, we sold and will continue to automatically sell certain of our accounts receivable to the subsidiary as collateral for borrowings under the facility. Borrowings bear interest at SOFR plus an applicable margin, and a commitment fee is payable on the unused portion of the facility. Interest and fees are due monthly. As of March 31, 2024, $64,969 was outstanding under the facility at an interest rate of 6.87%. We utilized the proceeds from these borrowings to prepay amounts due under our secured term loan facility. The Securitization Facility is accounted for as a collateralized financing activity, rather than the sale of assets. As such, the subsidiary is consolidated, and the receivable balances pledged as collateral are presented as accounts receivable on the consolidated balance sheet, and the borrowings are presented as long-term debt. Cash receipts related to the underlying receivables are reflected as operating cash flows and borrowings and repayments under the collateralized loans are reflected as financing cash flows within the consolidated statement of cash flows. |
Other commitments and contingen
Other commitments and contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other commitments and contingencies | NOTE 13: 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/or 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/or 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 March 31, 2024 or December 31, 2023. 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 $9,319 as of March 31, 2024 and $9,024 as of December 31, 2023. 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 March 31, 2024 or December 31, 2023. 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 period, 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 in the period in which the ruling occurs or in future periods. |
Shareholders' equity
Shareholders' equity | 3 Months Ended |
Mar. 31, 2024 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' equity | NOTE 14: 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. No shares were repurchased under this authorization during the quarters ended March 31, 2024 or March 31, 2023, and $287,452 remained available for repurchase as of March 31, 2024. |
Business segment information
Business segment information | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Business segment information | NOTE 15: BUSINESS SEGMENT INFORMATION Effective January 1, 2024, we reorganized our reportable business segments to align with structural and management reporting changes that better reflect our portfolio mix and offerings. We now operate the following reportable segments, generally organized by product type: • 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, as well as fraud and security services 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 the Notes to Consolidated Financial Statements included in the 2023 Form 10-K. 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, 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, human resources, 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 June 2023, we also had web hosting business operations in portions of Europe and partners in Central and South America. 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, 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. The following is our segment information for the quarters ended March 31, 2024 and 2023. The segment information for 2023 has been recast to reflect our current segment structure. Quarter Ended March 31, (in thousands) 2024 2023 Merchant Services: Revenue $ 96,477 $ 89,105 Adjusted EBITDA 21,437 18,427 B2B Payments: Revenue 69,418 75,196 Adjusted EBITDA 13,261 13,475 Data Solutions: Revenue 59,712 44,353 Adjusted EBITDA 14,869 10,256 Print: Revenue 303,334 314,040 Adjusted EBITDA 90,956 95,201 Total reportable segments: Revenue $ 528,941 $ 522,694 Adjusted EBITDA 140,523 137,359 All other: (1) Revenue 6,014 22,671 Adjusted EBITDA 3,636 9,803 Total: Revenue $ 534,955 $ 545,365 Adjusted EBITDA 144,159 147,162 (1) Includes our North American web hosting and logo design businesses, which were sold in June 2023, and our payroll and human resources services business, which we are in the process of exiting (Note 6). The following table presents a reconciliation of total segment adjusted EBITDA to consolidated income before income taxes: Quarter Ended (in thousands) 2024 2023 Total segment adjusted EBITDA $ 144,159 $ 147,162 Corporate operations (43,701) (46,726) Depreciation and amortization expense (41,747) (43,520) Interest expense (30,809) (30,016) Net income attributable to non-controlling interest 27 28 Restructuring and integration expense (14,737) (14,094) Share-based compensation expense (5,121) (5,866) Certain legal-related expense (300) (429) Gain on sale of businesses and long-lived assets 8,581 — Income before income taxes $ 16,352 $ 6,539 The following tables present revenue disaggregated by our product and service offerings: Quarter Ended March 31, 2024 (in thousands) Merchant Services B2B Data Print All Consolidated Checks $ — $ — $ — $ 178,484 $ — $ 178,484 Merchant services 96,477 — — — — 96,477 Forms and other business products — — — 63,792 — 63,792 Promotional solutions — — — 61,058 — 61,058 Treasury management solutions — 55,077 — — — 55,077 Data-driven marketing — — 54,325 — — 54,325 Other — 14,341 5,387 — 6,014 25,742 Total revenue $ 96,477 $ 69,418 $ 59,712 $ 303,334 $ 6,014 $ 534,955 Quarter Ended March 31, 2023 (in thousands) Merchant Services B2B Data Print All Consolidated Checks $ — $ — $ — $ 178,647 $ — $ 178,647 Merchant services 89,105 — — — — 89,105 Forms and other business products — — — 65,490 — 65,490 Promotional solutions — — — 69,903 748 70,651 Treasury management solutions — 60,474 — — — 60,474 Data-driven marketing — — 39,282 — — 39,282 Other — 14,722 5,071 — 21,923 41,716 Total revenue $ 89,105 $ 75,196 $ 44,353 $ 314,040 $ 22,671 $ 545,365 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net income attributable to Deluxe | $ 10,803 | $ 2,752 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | Set forth below are Rule 10b5-1 trading arrangements previously entered into by our directors or officers. Each such trading arrangement is intended to satisfy the affirmative defense of Rule 10-b5-1(c). Name and Position Plan Adoption Date Plan Effective Date Duration of the Plan Aggregate Number of Shares to be Purchased Under the Plan Barry C. McCarthy, President and Chief Executive Officer December 13, 2023 March 12, 2024 March 11, 2025 * William C. Zint, Senior Vice President, Chief Financial Officer December 11, 2023 March 13, 2024 December 10, 2025 1,175 * The trading arrangement provides for quarterly purchases, each such purchase in an aggregate dollar amount equal to the number of shares owned by Mr. McCarthy on the date of such purchase multiplied by $0.30. |
Rule 10b5-1 Arrangement Adopted | true |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Barry McCarthy [Member] | |
Trading Arrangements, by Individual | |
Name | Barry C. McCarthy |
Title | President and Chief Executive Officer |
Adoption Date | December 13, 2023 |
Termination Date | March 11, 2025 |
William Zint [Member] | |
Trading Arrangements, by Individual | |
Name | William C. Zint |
Title | Senior Vice President, Chief Financial Officer |
Adoption Date | December 11, 2023 |
Termination Date | December 10, 2025 |
Aggregate Available | 1,175 |
Consolidated financial statem_2
Consolidated financial statements (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Comparability | Comparability – The consolidated statement of cash flows for the quarter ended March 31, 2023 has 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 financing activities, employee taxes paid for shares withheld is included in other. Previously, this amount was presented separately. The consolidated statement of shareholders' equity for the quarter ended March 31, 2023 has 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. |
Accounting Changes and Error Co
Accounting Changes and Error Corrections (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Changes and Error Corrections [Abstract] | |
New accounting pronouncements | ASU No. 2023-07 – In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 is required to 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) | 3 Months Ended |
Mar. 31, 2024 | |
Inventories and supplies | Inventories and supplies – Inventories and supplies were comprised of the following: (in thousands) March 31, December 31, Finished and semi-finished goods $ 32,646 $ 34,194 Raw materials and supplies 16,762 17,339 Reserve for excess and obsolete items (10,743) (9,445) Inventories and supplies, net of reserve $ 38,665 $ 42,088 |
Available-for-sale debt securities | Available-for-sale debt securities – We did not hold any available for sale debt securities as of March 31, 2024. Available-for-sale debt securities held as of December 31, 2023 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 |
Revenue in excess of billings | Revenue in excess of billings – Revenue in excess of billings was comprised of the following: (in thousands) March 31, December 31, Conditional right to receive consideration $ 21,855 $ 20,680 Unconditional right to receive consideration (1) 10,091 5,427 Revenue in excess of billings $ 31,946 $ 26,107 (1) Represents revenues that are earned but not currently billable under the related contract terms. |
Intangibles | Intangibles – Intangibles were comprised of the following: March 31, 2024 December 31, 2023 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Internal-use software $ 571,949 $ (433,475) $ 138,474 $ 554,825 $ (412,364) $ 142,461 Customer lists/relationships 359,375 (242,420) 116,955 363,298 (235,557) 127,741 Partner relationships 74,562 (14,557) 60,005 74,911 (14,031) 60,880 Technology-based intangibles 65,700 (23,721) 41,979 97,633 (54,251) 43,382 Trade names 39,367 (24,317) 15,050 39,367 (23,792) 15,575 Software to be sold 6,200 (4,650) 1,550 36,900 (35,195) 1,705 Intangibles $ 1,117,153 $ (743,140) $ 374,013 $ 1,166,934 $ (775,190) $ 391,744 |
Estimated future amortization expense | Based on the intangibles in service as of March 31, 2024, estimated future amortization expense is as follows: (in thousands) Estimated Remainder of 2024 $ 85,055 2025 87,044 2026 58,798 2027 37,871 2028 29,071 |
Goodwill | Goodwill – In conjunction with the realignment of our reportable business segments during the quarter ended March 31, 2024 (Note 15), the goodwill amounts by reportable segment as of December 31, 2023 have been recast to reflect our new segment structure. No goodwill impairment charges were recorded in conjunction with the segment realignment. Changes in goodwill by reportable segment and in total were as follows for the quarter ended March 31, 2024: (in thousands) Merchant Services B2B Payments Data Solutions (1) Print (1) All Other Total Balance, December 31, 2023 $ 727,688 $ 160,431 $ 40,804 $ 493,924 $ 7,743 $ 1,430,590 Currency translation adjustment — — — (32) — (32) Balance, March 31, 2024 $ 727,688 $ 160,431 $ 40,804 $ 493,892 $ 7,743 $ 1,430,558 (1) The Data Solutions and Print balances are net of accumulated impairment charges of $145,584 and $193,699, respectively, for each period. |
Other non-current assets | Other non-current assets – Other non-current assets were comprised of the following: (in thousands) March 31, December 31, Postretirement benefit plan asset $ 96,859 $ 94,939 Cloud computing arrangement implementation costs 52,252 59,234 Prepaid product discounts (1) 43,690 40,376 Deferred contract acquisition costs (2) 21,527 21,103 Loans and notes receivable from distributors, net of allowance for credit losses (3) 12,773 12,443 Other 30,092 23,087 Other non-current assets $ 257,193 $ 251,182 (1) Amortization of prepaid product discounts was $8,180 for the quarter ended March 31, 2024 and $8,513 for the quarter ended March 31, 2023. (2) Amortization of deferred contract acquisition costs was $3,091 for the quarter ended March 31, 2024 and $2,367 for the quarter ended March 31, 2023. (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 $1,317 as of March 31, 2024 and $987 as of December 31, 2023. |
Loans and notes receivable by credit quality Indicator | 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 March 31, 2024. There were no write-offs or recoveries recorded during the quarter ended March 31, 2024. Loans and notes receivable from distributors amortized cost basis by origination year (in thousands) 2024 2023 2020 2019 Prior Total Risk rating: 1-2 internal grade $ 991 $ 361 $ 961 $ 355 $ 12,404 $ 15,072 3-4 internal grade — — — — — — Loans and notes receivable $ 991 $ 361 $ 961 $ 355 $ 12,404 $ 15,072 |
Accrued liabilities | Accrued liabilities – Accrued liabilities were comprised of the following: (in thousands) March 31, December 31, Deferred revenue (1) $ 30,586 $ 35,343 Employee bonuses, including sales incentives 15,739 49,446 Interest 15,308 10,481 Operating lease liabilities 13,388 13,562 Customer rebates 9,699 12,718 Wages and payroll liabilities, including vacation 9,559 8,605 Restructuring 7,436 9,689 Prepaid product discounts 5,542 4,477 Other 47,627 47,106 Accrued liabilities $ 154,884 $ 191,427 (1) Revenue recognized for amounts included in deferred revenue at the beginning of the period was $14,644 for the quarter ended March 31, 2024 and $18,683 for the quarter ended March 31, 2023. |
Supplemental cash flow information | Supplemental cash flow information – The reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets was as follows: (in thousands) March 31, March 31, Cash and cash equivalents $ 23,544 $ 24,622 Restricted cash and restricted cash equivalents included in funds held for customers 108,227 149,010 Cash and cash equivalents included in other current assets (1) — 7,325 Non-current restricted cash included in other non-current assets 3,073 2,592 Total cash, cash equivalents, restricted cash and restricted cash equivalents $ 134,844 $ 183,549 Non-cash investing activities: Investment in joint venture (2) $ — $ 18,392 (1) Represents the cash and cash equivalents of our former North American web hosting and logo design business, which was classified as held for sale as of March 31, 2023. (2) In February 2023, we entered into a joint venture focused on launching and marketing a business payment distribution technology platform. We committed to invest $20,000 over a 3-year period and we have option rights to acquire additional non-controlling ownership interest. During the quarter ended March 31, 2023, we recorded $18,392 for our investment in the joint venture and option rights. |
Trade accounts receivable [Member] | |
Allowance for credit losses | Trade accounts receivable – Net trade accounts receivable was comprised of the following: (in thousands) March 31, December 31, Trade accounts receivable – gross $ 178,829 $ 197,546 Allowance for credit losses (7,560) (6,541) Trade accounts receivable – net (1) $ 171,269 $ 191,005 (1) Includes unbilled receivables of $51,408 as of March 31, 2024 and $43,673 as of December 31, 2023. Changes in the allowance for credit losses for the quarters ended March 31, 2024 and 2023 were as follows: Quarter Ended (in thousands) 2024 2023 Balance, beginning of year $ 6,541 $ 4,182 Bad debt expense 2,960 1,466 Write-offs and other (1,941) (824) Balance, end of period $ 7,560 $ 4,824 |
Loans and notes receivable [Member] | |
Allowance for credit losses | Changes in the allowance for credit losses related to loans and notes receivable from distributors were as follows for the quarters ended March 31, 2024 and 2023: Quarter Ended (in thousands) 2024 2023 Balance, beginning of year $ 928 $ 1,024 Bad debt expense (benefit) 54 (28) Balance, end of period $ 982 $ 996 |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Earnings per share | The following table reflects the calculation of basic and diluted earnings per share. During each period, certain share-based awards, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive. Quarter Ended (in thousands, except per share amounts) 2024 2023 Earnings per share – basic: Net income $ 10,830 $ 2,780 Net income attributable to non-controlling interest (27) (28) Net income attributable to Deluxe 10,803 2,752 Income allocated to participating securities (9) (10) Income attributable to Deluxe available to common shareholders $ 10,794 $ 2,742 Weighted-average shares outstanding 43,917 43,317 Earnings per share – basic $ 0.25 $ 0.06 Earnings per share – diluted: Net income $ 10,830 $ 2,780 Net income attributable to non-controlling interest (27) (28) Net income attributable to Deluxe 10,803 2,752 Income allocated to participating securities (9) (10) Re-measurement of share-based awards classified as liabilities (37) (19) Income attributable to Deluxe available to common shareholders $ 10,757 $ 2,723 Weighted-average shares outstanding 43,917 43,317 Dilutive impact of potential common shares 570 344 Weighted-average shares and potential common shares outstanding 44,487 43,661 Earnings per share – diluted $ 0.24 $ 0.06 Antidilutive potential common shares excluded from calculation 1,350 1,644 |
Other comprehensive income (l_2
Other comprehensive income (loss) (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Reclassification adjustments | 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 comprehensive income Quarter Ended (in thousands) 2024 2023 Amortization of postretirement benefit plan items: Prior service credit $ 355 $ 355 Other income Net actuarial loss (334) (568) Other income Total amortization 21 (213) Other income Tax (expense) benefit (43) 16 Income tax provision Amortization of postretirement benefit plan items, net of tax (22) (197) Net income Realized gain on cash flow hedges 915 570 Interest expense Tax expense (247) (152) Income tax provision Realized gain on cash flow hedges, net of tax 668 418 Net income Total reclassifications, net of tax $ 646 $ 221 |
Accumulated other comprehensive loss | Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss for the quarters ended March 31, 2024 and 2023 were as follows: (in thousands) Postretirement benefit plans Net unrealized gain on cash flow hedges (1) Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2023 $ (19,824) $ (286) $ (9,918) $ (30,028) Other comprehensive income (loss) before reclassifications — 5,864 (1,027) 4,837 Amounts reclassified from accumulated other comprehensive loss 22 (668) — (646) Net current-period other comprehensive income (loss) 22 5,196 (1,027) 4,191 Balance, March 31, 2024 $ (19,802) $ 4,910 $ (10,945) $ (25,837) (1) Other comprehensive income before reclassifications is net of income tax expense of $2,169. (in thousands) Postretirement benefit plans Net unrealized loss on debt securities (1) Net unrealized gain (loss) on cash flow hedges (2) Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2022 $ (26,872) $ (909) $ 2,593 $ (12,076) $ (37,264) Other comprehensive income (loss) before reclassifications — 123 (2,872) 227 (2,522) Amounts reclassified from accumulated other comprehensive loss 197 — (418) — (221) Net current-period other comprehensive income (loss) 197 123 (3,290) 227 (2,743) Balance, March 31, 2023 $ (26,675) $ (786) $ (697) $ (11,849) $ (40,007) (1) Other comprehensive income before reclassifications is net of income tax expense of $43. (2) Other comprehensive loss before reclassifications is net of an income tax benefit of $1,045. |
Derivative financial instrume_2
Derivative financial instruments (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative financial instruments | Our derivative instruments were comprised of the following: March 31, December 31, (in thousands) Notional amount Interest rate Maturity Balance sheet location Fair value Fair value June 2023 amortizing interest rate swap: $ 255,417 4.249 % June 2026 Other non-current assets and other non-current liabilities $ 887 $ (2,158) March 2023 200,000 4.003 % March 2026 Other non-current assets 2,289 287 September 2022 interest rate swap: 300,000 3.990 % September 2025 Other non-current assets 3,590 1,519 |
Fair value measurements (Tables
Fair value measurements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Balance sheet location Carrying value Fair value Measured at fair value through comprehensive income: Derivative assets (Note 7) Other non-current assets $ 6,766 $ 6,766 $ — $ 6,766 $ — Amortized cost: Cash Cash and cash equivalents 23,544 23,544 23,544 — — Cash Funds held for customers 108,227 108,227 108,227 — — Cash Other non-current assets 3,073 3,073 3,073 — — Loans and notes receivable from distributors Other current assets and other non-current assets 14,090 14,159 — — 14,159 Long-term debt Current portion of long-term debt and long-term debt 1,560,093 1,531,878 — 1,531,878 — Fair value measurements using December 31, 2023 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Balance sheet location 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 assets and other 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 — |
Restructuring and integration_2
Restructuring and integration expense (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and integration expense | Restructuring and integration expense is reflected on the consolidated statements of comprehensive income as follows: Quarter Ended (in thousands) 2024 2023 Total cost of revenue $ 933 $ 1,153 Operating expenses 13,804 12,941 Restructuring and integration expense $ 14,737 $ 14,094 Restructuring and integration expense for each period was comprised of the following: Quarter Ended (in thousands) 2024 2023 External consulting and other costs $ 7,969 $ 7,692 Employee severance benefits 1,972 186 Internal labor 838 2,122 Other 3,958 4,094 Restructuring and integration expense $ 14,737 $ 14,094 |
Changes in restructuring and integration accruals | Changes in our restructuring and integration accruals were as follows: (in thousands) Employee severance benefits Balance, December 31, 2023 $ 9,689 Charges 2,042 Reversals (70) Payments (4,225) Balance, March 31, 2024 $ 7,436 |
Postretirement benefits (Tables
Postretirement benefits (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Components of net periodic benefit income | Postretirement benefit income is included in other income on the consolidated statements of comprehensive income and consisted of the following components: Quarter Ended (in thousands) 2024 2023 Interest cost $ 435 $ 496 Expected return on plan assets (2,099) (1,830) Amortization of prior service credit (355) (355) Amortization of net actuarial losses 334 568 Net periodic benefit income $ (1,685) $ (1,121) |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Debt outstanding | Debt outstanding was comprised of the following: (in thousands) March 31, December 31, Senior, secured term loan facility $ 790,562 $ 877,187 Senior, unsecured notes 475,000 475,000 Amounts drawn on senior, secured revolving credit facility 239,750 252,000 Securitization obligations 64,969 — Total principal amount 1,570,281 1,604,187 Less: unamortized discount and debt issuance costs (10,188) (11,336) Total debt, net of discount and debt issuance costs 1,560,093 1,592,851 Less: current portion of long-term debt, net of debt issuance costs (21,550) (86,153) Long-term debt $ 1,538,543 $ 1,506,698 |
Maturities of long-term debt | Maturities of long-term debt were as follows as of March 31, 2024: (in thousands) Debt obligations 2025 $ 101,062 2026 929,250 2027 64,969 2028 — 2029 475,000 Total principal amount $ 1,570,281 |
Revolving credit facility | As of March 31, 2024, amounts available for borrowing under our revolving credit facility were as follows: (in thousands) Available borrowings Revolving credit facility commitment $ 500,000 Amounts drawn on revolving credit facility (239,750) Outstanding letters of credit (1) (8,036) Net available for borrowing as of March 31, 2024 $ 252,214 (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. |
Business segment information (T
Business segment information (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Business segment information | The following is our segment information for the quarters ended March 31, 2024 and 2023. The segment information for 2023 has been recast to reflect our current segment structure. Quarter Ended March 31, (in thousands) 2024 2023 Merchant Services: Revenue $ 96,477 $ 89,105 Adjusted EBITDA 21,437 18,427 B2B Payments: Revenue 69,418 75,196 Adjusted EBITDA 13,261 13,475 Data Solutions: Revenue 59,712 44,353 Adjusted EBITDA 14,869 10,256 Print: Revenue 303,334 314,040 Adjusted EBITDA 90,956 95,201 Total reportable segments: Revenue $ 528,941 $ 522,694 Adjusted EBITDA 140,523 137,359 All other: (1) Revenue 6,014 22,671 Adjusted EBITDA 3,636 9,803 Total: Revenue $ 534,955 $ 545,365 Adjusted EBITDA 144,159 147,162 (1) Includes our North American web hosting and logo design businesses, which were sold in June 2023, and our payroll and human resources services business, which we are in the process of exiting (Note 6). |
Reconciliation of adjusted EBITDA to income before income taxes | The following table presents a reconciliation of total segment adjusted EBITDA to consolidated income before income taxes: Quarter Ended (in thousands) 2024 2023 Total segment adjusted EBITDA $ 144,159 $ 147,162 Corporate operations (43,701) (46,726) Depreciation and amortization expense (41,747) (43,520) Interest expense (30,809) (30,016) Net income attributable to non-controlling interest 27 28 Restructuring and integration expense (14,737) (14,094) Share-based compensation expense (5,121) (5,866) Certain legal-related expense (300) (429) Gain on sale of businesses and long-lived assets 8,581 — Income before income taxes $ 16,352 $ 6,539 |
Revenue disaggregated by product and service offerings | The following tables present revenue disaggregated by our product and service offerings: Quarter Ended March 31, 2024 (in thousands) Merchant Services B2B Data Print All Consolidated Checks $ — $ — $ — $ 178,484 $ — $ 178,484 Merchant services 96,477 — — — — 96,477 Forms and other business products — — — 63,792 — 63,792 Promotional solutions — — — 61,058 — 61,058 Treasury management solutions — 55,077 — — — 55,077 Data-driven marketing — — 54,325 — — 54,325 Other — 14,341 5,387 — 6,014 25,742 Total revenue $ 96,477 $ 69,418 $ 59,712 $ 303,334 $ 6,014 $ 534,955 Quarter Ended March 31, 2023 (in thousands) Merchant Services B2B Data Print All Consolidated Checks $ — $ — $ — $ 178,647 $ — $ 178,647 Merchant services 89,105 — — — — 89,105 Forms and other business products — — — 65,490 — 65,490 Promotional solutions — — — 69,903 748 70,651 Treasury management solutions — 60,474 — — — 60,474 Data-driven marketing — — 39,282 — — 39,282 Other — 14,722 5,071 — 21,923 41,716 Total revenue $ 89,105 $ 75,196 $ 44,353 $ 314,040 $ 22,671 $ 545,365 |
Supplemental balance sheet an_3
Supplemental balance sheet and cash flow information (trade accounts receivable, allowance for credit losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | ||
Trade accounts receivable | ||||
Trade accounts receivable - gross | $ 178,829 | $ 197,546 | ||
Allowance for credit losses | (7,560) | (6,541) | ||
Trade accounts receivable - net | [1] | 171,269 | 191,005 | |
Unbilled receivables | 51,408 | $ 43,673 | ||
Changes in allowance for credit losses | ||||
Balance, beginning of year | 6,541 | $ 4,182 | ||
Bad debt expense | 2,960 | 1,466 | ||
Write-offs and other | (1,941) | (824) | ||
Balance, end of period | $ 7,560 | $ 4,824 | ||
[1]Includes unbilled receivables of $51,408 as of March 31, 2024 and $43,673 as of December 31, 2023. |
Supplemental balance sheet an_4
Supplemental balance sheet and cash flow information (inventories and supplies) (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Inventories and supplies | ||
Finished and semi-finished goods | $ 32,646 | $ 34,194 |
Raw materials and supplies | 16,762 | 17,339 |
Reserve for excess and obsolete items | (10,743) | (9,445) |
Inventories and supplies, net of reserve | $ 38,665 | $ 42,088 |
Supplemental balance sheet an_5
Supplemental balance sheet and cash flow information (available-for-sale debt securities) (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Available-for-sale debt securities [Line Items] | |
Cost | $ 22,000 |
Gross unrealized gains | 0 |
Gross unrealized losses | 0 |
Fair value | 22,000 |
Cash and cash equivalents [Member] | Money market securities [Member] | Domestic [Member] | |
Available-for-sale debt securities [Line Items] | |
Cost | 22,000 |
Gross unrealized gains | 0 |
Gross unrealized losses | 0 |
Fair value | $ 22,000 |
Supplemental balance sheet an_6
Supplemental balance sheet and cash flow information (revenue in excess of billings) (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | |
Revenue in excess of billings | |||
Conditional right to receive consideration | $ 21,855 | $ 20,680 | |
Unconditional right to receive consideration | [1] | 10,091 | 5,427 |
Revenue in excess of billings | $ 31,946 | $ 26,107 | |
[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 (intangibles) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Amortizable intangibles [Line Items] | |||
Gross carrying amount | $ 1,117,153 | $ 1,166,934 | |
Accumulated amortization | (743,140) | (775,190) | |
Net carrying amount | 374,013 | 391,744 | |
Amortization of intangibles | 35,698 | $ 38,217 | |
Estimated future amortization expense | |||
Remainder of 2024 | 85,055 | ||
2025 | 87,044 | ||
2026 | 58,798 | ||
2027 | 37,871 | ||
2028 | 29,071 | ||
Internal-use software [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 571,949 | 554,825 | |
Accumulated amortization | (433,475) | (412,364) | |
Net carrying amount | 138,474 | 142,461 | |
Acquired intangibles | $ 17,095 | ||
Acquired intangibles, weighted-average amortization period (in years) | 3 years | ||
Customer lists/relationships [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | $ 359,375 | 363,298 | |
Accumulated amortization | (242,420) | (235,557) | |
Net carrying amount | 116,955 | 127,741 | |
Technology-based intangibles [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 65,700 | 97,633 | |
Accumulated amortization | (23,721) | (54,251) | |
Net carrying amount | 41,979 | 43,382 | |
Partner relationships [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 74,562 | 74,911 | |
Accumulated amortization | (14,557) | (14,031) | |
Net carrying amount | 60,005 | 60,880 | |
Trade names [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 39,367 | 39,367 | |
Accumulated amortization | (24,317) | (23,792) | |
Net carrying amount | 15,050 | 15,575 | |
Software to be sold [Member] | |||
Amortizable intangibles [Line Items] | |||
Gross carrying amount | 6,200 | 36,900 | |
Accumulated amortization | (4,650) | (35,195) | |
Net carrying amount | $ 1,550 | $ 1,705 |
Supplemental balance sheet an_8
Supplemental balance sheet and cash flow information (goodwill) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Dec. 31, 2023 | ||
Goodwill [Roll Forward] | |||
Goodwill impairment charges | $ 0 | ||
Goodwill, beginning of year | 1,430,590 | ||
Currency translation adjustment | (32) | ||
Goodwill, end of period | 1,430,558 | ||
Operating segments [Member] | Merchant Services [Member] | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning of year | 727,688 | ||
Goodwill, end of period | 727,688 | ||
Operating segments [Member] | B2B Payments [Member] | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning of year | 160,431 | ||
Goodwill, end of period | 160,431 | ||
Operating segments [Member] | Data Solutions [Member] | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning of year | [1] | 40,804 | |
Goodwill, end of period | [1] | 40,804 | |
Goodwill accumulated impairment charges | 145,584 | $ 145,584 | |
Operating segments [Member] | Print [Member] | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning of year | [1] | 493,924 | |
Currency translation adjustment | (32) | ||
Goodwill, end of period | [1] | 493,892 | |
Goodwill accumulated impairment charges | 193,699 | $ 193,699 | |
Operating segments [Member] | All Other [Member] | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning of year | 7,743 | ||
Goodwill, end of period | $ 7,743 | ||
[1]The Data Solutions and Print balances are net of accumulated impairment charges of $145,584 and $193,699, respectively, for each period |
Supplemental balance sheet an_9
Supplemental balance sheet and cash flow information (other non-current assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | ||
Other non-current assets | ||||
Postretirement benefit plan asset | $ 96,859 | $ 94,939 | ||
Cloud computing arrangements implementation costs | 52,252 | 59,234 | ||
Prepaid product discounts | [1] | 43,690 | 40,376 | |
Deferred contract acquisition costs | [2] | 21,527 | 21,103 | |
Loans and notes receivable from distributors, net of allowance for credit losses | [3] | 12,773 | 12,443 | |
Other | 30,092 | 23,087 | ||
Other non-current assets | 257,193 | 251,182 | ||
Amortization of prepaid product discounts | 8,180 | $ 8,513 | ||
Amortization of deferred contract acquisition costs | 3,091 | 2,367 | ||
Loans and notes receivable, current | 1,317 | $ 987 | ||
Loans and notes receivable from distributors [Member] | ||||
Loans and notes receivable from distributors, allowance for credit losses [Line Items] | ||||
Balance, beginning of year | 928 | 1,024 | ||
Bad debt expense (benefit) | 54 | (28) | ||
Balance, end of period | 982 | $ 996 | ||
Write-offs | 0 | |||
Recoveries | 0 | |||
Loans and notes receivable from distributors, credit quality information | ||||
2024 | 991 | |||
2023 | 361 | |||
2020 | 961 | |||
2019 | 355 | |||
Prior | 12,404 | |||
Total | 15,072 | |||
Loans and notes receivable from distributors [Member] | 1-2 internal grade member [Member] | ||||
Loans and notes receivable from distributors, credit quality information | ||||
2024 | 991 | |||
2023 | 361 | |||
2020 | 961 | |||
2019 | 355 | |||
Prior | 12,404 | |||
Total | 15,072 | |||
Loans and notes receivable from distributors [Member] | 3-4 internal grade [Member] | ||||
Loans and notes receivable from distributors, credit quality information | ||||
2024 | 0 | |||
2023 | 0 | |||
2020 | 0 | |||
2019 | 0 | |||
Prior | 0 | |||
Total | $ 0 | |||
[1] Amortization of prepaid product discounts was $8,180 for the quarter ended March 31, 2024 and $8,513 for the quarter ended March 31, 2023. Amortization of deferred contract acquisition costs was $3,091 for the quarter ended March 31, 2024 and $2,367 for the quarter ended March 31, 2023. 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 $1,317 as of March 31, 2024 and $987 as of December 31, 2023. |
Supplemental balance sheet a_10
Supplemental balance sheet and cash flow information (accrued liabilities, supplemental cash flow information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |||
Accrued liabilities | ||||||
Deferred revenue | [1] | $ 30,586 | $ 35,343 | |||
Employee bonuses, including sales incentives | 15,739 | 49,446 | ||||
Interest | 15,308 | 10,481 | ||||
Operating lease liabilities | 13,388 | 13,562 | ||||
Customer rebates | 9,699 | 12,718 | ||||
Wages and payroll liabilities, including vacation | 9,559 | 8,605 | ||||
Restructuring | 7,436 | 9,689 | ||||
Prepaid product discounts | 5,542 | 4,477 | ||||
Other | 47,627 | 47,106 | ||||
Accrued liabilities | 154,884 | 191,427 | ||||
Deferred revenue recognized | 14,644 | $ 18,683 | ||||
Supplemental cash flow information | ||||||
Cash and cash equivalents | 23,544 | 24,622 | $ 71,962 | |||
Restricted cash and restricted cash equivalents included in funds held for customers | $ 108,227 | 149,010 | ||||
Restricted cash and restricted cash equivalents included in funds held for customers [Extensible Enumeration] | Funds held for customers | Funds held for customers | ||||
Cash and cash equivalents included in other current assets | $ 0 | 7,325 | [2] | |||
Non-current restricted cash included in other non-current assets | 3,073 | 2,592 | $ 2,937 | |||
Total cash, cash equivalents, restricted cash and restricted cash equivalents | $ 134,844 | $ 183,549 | $ 458,033 | $ 337,415 | ||
Non-cash investing activity, investment in joint venture | — | 18,392 | [3] | |||
Liability for joint venture investment | $ 20,000 | |||||
Consideration due, payment period | 3 years | |||||
Investment, joint venture | $ 18,392 | |||||
[1] Revenue recognized for amounts included in deferred revenue at the beginning of the period was $14,644 for the quarter ended March 31, 2024 and $18,683 for the quarter ended March 31, 2023. Represents the cash and cash equivalents of our former North American web hosting and logo design business, which was classified as held for sale as of March 31, 2023. |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Earnings per share - basic: | ||
Net income | $ 10,830 | $ 2,780 |
Net income attributable to non-controlling interest | (27) | (28) |
Net income attributable to Deluxe | 10,803 | 2,752 |
Income allocated to participating securities | (9) | (10) |
Income attributable to Deluxe available to common shareholders | $ 10,794 | $ 2,742 |
Weighted-average shares outstanding | 43,917 | 43,317 |
Earnings per share - basic | $ 0.25 | $ 0.06 |
Earnings per share - diluted: | ||
Net income | $ 10,830 | $ 2,780 |
Net income attributable to non-controlling interest | (27) | (28) |
Net income attributable to Deluxe | 10,803 | 2,752 |
Income allocated to participating securities | (9) | (10) |
Re-measurement of share-based awards classified as liabilities | (37) | (19) |
Income attributable to Deluxe available to common shareholders | $ 10,757 | $ 2,723 |
Weighted-average shares outstanding | 43,917 | 43,317 |
Dilutive impact of potential common shares | 570 | 344 |
Weighted-average shares and potential common shares outstanding | 44,487 | 43,661 |
Earnings per share - diluted | $ 0.24 | $ 0.06 |
Antidilutive potential common shares excluded from calculation | 1,350 | 1,644 |
Other comprehensive income (l_3
Other comprehensive income (loss) (reclassification adjustments) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Reclassifications from accumulated other comprehensive loss | ||
Prior service credit | $ 355 | $ 355 |
Net actuarial loss | (334) | (568) |
Total amortization | 21 | (213) |
Tax (expense) benefit | (43) | 16 |
Amortization of postretirement benefit plan items, net of tax | (22) | (197) |
Realized gain on cash flow hedges | 915 | 570 |
Tax expense | (247) | (152) |
Realized gain on cash flow hedges, net of tax | 668 | 418 |
Total reclassifications, net of tax | $ 646 | $ 221 |
Other comprehensive income (l_4
Other comprehensive income (loss) (accumulated other comprehensive loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2024 | Mar. 31, 2023 | ||||
Postretirement benefit plans [Member] | |||||
Accumulated other comprehensive loss [Line Items] | |||||
Balance, beginning of period | $ (19,824) | $ (26,872) | |||
Other comprehensive income (loss) before reclassifications | 0 | 0 | |||
Amounts reclassified from accumulated other comprehensive loss | 22 | 197 | |||
Net current-period other comprehensive income (loss) | 22 | 197 | |||
Balance, end of period | (19,802) | (26,675) | |||
Net unrealized loss on debt securities [Member] | |||||
Accumulated other comprehensive loss [Line Items] | |||||
Balance, beginning of period | (909) | ||||
Other comprehensive income (loss) before reclassifications | [1] | 123 | |||
Amounts reclassified from accumulated other comprehensive loss | 0 | ||||
Net current-period other comprehensive income (loss) | 123 | ||||
Balance, end of period | (786) | ||||
Unrealized gain on debt securities arising during the period, tax expense | 43 | ||||
Net unrealized gain (loss) on cash flow hedges [Member] | |||||
Accumulated other comprehensive loss [Line Items] | |||||
Balance, beginning of period | (286) | 2,593 | |||
Other comprehensive income (loss) before reclassifications | 5,864 | [2] | (2,872) | [3] | |
Amounts reclassified from accumulated other comprehensive loss | (668) | (418) | |||
Net current-period other comprehensive income (loss) | 5,196 | (3,290) | |||
Balance, end of period | 4,910 | (697) | |||
Unrealized loss on cash flow hedge arising during the period, tax expense (benefit) | 2,169 | (1,045) | |||
Currency translation adjustment [Member] | |||||
Accumulated other comprehensive loss [Line Items] | |||||
Balance, beginning of period | (9,918) | (12,076) | |||
Other comprehensive income (loss) before reclassifications | (1,027) | 227 | |||
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | |||
Net current-period other comprehensive income (loss) | (1,027) | 227 | |||
Balance, end of period | (10,945) | (11,849) | |||
Accumulated other comprehensive loss [Member] | |||||
Accumulated other comprehensive loss [Line Items] | |||||
Balance, beginning of period | (30,028) | (37,264) | |||
Other comprehensive income (loss) before reclassifications | 4,837 | (2,522) | |||
Amounts reclassified from accumulated other comprehensive loss | (646) | (221) | |||
Net current-period other comprehensive income (loss) | 4,191 | (2,743) | |||
Balance, end of period | $ (25,837) | $ (40,007) | |||
[1] Other comprehensive income before reclassifications is net of income tax expense of $43. Other comprehensive income before reclassifications is net of income tax expense of $2,169. Other comprehensive loss before reclassifications is net of an income tax benefit of $1,045. |
Divestitures (Details)
Divestitures (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Divestitures [Line Items] | |||
Total revenue | $ 534,955 | $ 545,365 | |
Gain on sale of businesses and long-lived assets | 8,581 | $ 0 | |
Goodwill | 1,430,558 | $ 1,430,590 | |
North American web hosting and logo design businesses [Member] | |||
Divestitures [Line Items] | |||
Total revenue | 28,000 | ||
Payroll and human resource services business | |||
Divestitures [Line Items] | |||
Total revenue | $ 27,000 | ||
Gain on sale of businesses and long-lived assets | 7,581 | ||
Goodwill | 7,743 | ||
Customer lists/relationships [Member] | |||
Divestitures [Line Items] | |||
Gain on sale of businesses and long-lived assets | $ 1,000 |
Derivative financial instrume_3
Derivative financial instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Jun. 20, 2023 | Mar. 20, 2023 | Sep. 20, 2022 |
Amortizing interest rate swap June 2023 | |||||
Derivative [Line Items] | |||||
Notional amount | $ 255,417 | ||||
Interest rate | 4.249% | ||||
Fair value asset / (liability), other non-current assets | 887 | ||||
Fair value asset / (liability), other non-current liabilities | $ (2,158) | ||||
Interest rate swap March 2023 | |||||
Derivative [Line Items] | |||||
Notional amount | $ 200,000 | ||||
Interest rate | 4.003% | ||||
Fair value asset / (liability), other non-current assets | 2,289 | 287 | |||
Interest rate swap September 2022 | |||||
Derivative [Line Items] | |||||
Notional amount | $ 300,000 | ||||
Interest rate | 3.99% | ||||
Fair value asset / (liability), other non-current assets | $ 3,590 | $ 1,519 |
Fair value measurements (Detail
Fair value measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 |
Fair value measurements [Line Items] | |||
Derivative assets (Note 7) [Extensible Enumeration] | Other non-current assets | Other non-current assets | |
Derivative Liability (Note 7) [Extensible Enumeration] | Other non-current liabilities | ||
Derivative assets (Note 7) | $ 6,766 | $ 1,806 | |
Derivative liability (Note 7) | (2,158) | ||
Cash, fair value | 22,000 | ||
Restricted cash, carrying value | 3,073 | 2,937 | $ 2,592 |
Restricted cash, fair value | 3,073 | 2,937 | |
Recurring fair value measurements [Member] | |||
Fair value measurements [Line Items] | |||
Derivative assets (Note 7) | 6,766 | 1,806 | |
Derivative liability (Note 7) | (2,158) | ||
Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements [Line Items] | |||
Restricted cash, fair value | 3,073 | 2,937 | |
Significant other observable inputs (Level 2) [Member] | Recurring fair value measurements [Member] | |||
Fair value measurements [Line Items] | |||
Derivative assets (Note 7) | 6,766 | 1,806 | |
Derivative liability (Note 7) | (2,158) | ||
Funds held for customers [Member] | |||
Fair value measurements [Line Items] | |||
Cash, carrying value | 108,227 | 383,134 | |
Cash, fair value | 108,227 | 383,134 | |
Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements [Line Items] | |||
Cash, fair value | 108,227 | 383,134 | |
Other current and noncurrent assets [Member] | |||
Fair value measurements [Line Items] | |||
Loans and notes receivable from distributors | 14,090 | 13,430 | |
Loans and notes receivable from distributors, fair value | 14,159 | 13,249 | |
Other current and noncurrent assets [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Fair value measurements [Line Items] | |||
Loans and notes receivable from distributors, fair value | 14,159 | 13,249 | |
Cash and cash equivalents [Member] | |||
Fair value measurements [Line Items] | |||
Cash, carrying value | 23,544 | 49,962 | |
Cash, fair value | 23,544 | 49,962 | |
Cash and cash equivalents [Member] | Money market securities [Member] | |||
Fair value measurements [Line Items] | |||
Cash equivalents | 22,000 | ||
Cash and cash equivalents [Member] | Money market securities [Member] | Recurring fair value measurements [Member] | |||
Fair value measurements [Line Items] | |||
Cash, fair value | 22,000 | ||
Cash and cash equivalents [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements [Line Items] | |||
Cash, fair value | 23,544 | 49,962 | |
Cash and cash equivalents [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | Money market securities [Member] | Recurring fair value measurements [Member] | |||
Fair value measurements [Line Items] | |||
Cash, fair value | 22,000 | ||
Current portion of long-term debt and long-term debt [Member] | |||
Fair value measurements [Line Items] | |||
Long-term debt | 1,560,093 | 1,592,851 | |
Long-term debt, fair value | 1,531,878 | 1,554,028 | |
Current portion of long-term debt and long-term debt [Member] | Significant other observable inputs (Level 2) [Member] | |||
Fair value measurements [Line Items] | |||
Long-term debt, fair value | $ 1,531,878 | $ 1,554,028 |
Restructuring and integration_3
Restructuring and integration expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | |
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | $ 14,737 | $ 14,094 | |
Total cost of revenue [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | 933 | 1,153 | |
Operating expenses [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | 13,804 | 12,941 | |
North Star program [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | 12,000 | $ 60,000 | |
Minimum [Member] | North Star program [Member] | |||
Restructuring and integration expense [Line Items] | |||
Anticipated additional restructuring and integration expense | 60,000 | 60,000 | |
Maximum [Member] | North Star program [Member] | |||
Restructuring and integration expense [Line Items] | |||
Anticipated additional restructuring and integration expense | 80,000 | $ 80,000 | |
External consulting fees [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | 7,969 | 7,692 | |
Employee severance benefits [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | 2,042 | ||
Restructuring charges, net | 1,972 | 186 | |
Internal labor [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | 838 | 2,122 | |
Other [Member] | |||
Restructuring and integration expense [Line Items] | |||
Restructuring and integration expense | $ 3,958 | $ 4,094 |
Restructuring and integration_4
Restructuring and integration expense (accruals) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Restructuring Cost and Reserve [Line Items] | ||
Balance, December 31, 2023 | $ 9,689 | |
Charges | 14,737 | $ 14,094 |
Balance, March 31, 2024 | 7,436 | |
Employee severance benefits [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Balance, December 31, 2023 | 9,689 | |
Charges | 2,042 | |
Reversals | (70) | |
Payments | (4,225) | |
Balance, March 31, 2024 | $ 7,436 |
Income tax provision (Details)
Income tax provision (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Reconciliation of effective income tax rate | ||
Effective income tax rate | 33.80% | 34.10% |
Postretirement benefits (Detail
Postretirement benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Net periodic benefit income | ||
Interest cost | $ 435 | $ 496 |
Expected return on plan assets | (2,099) | (1,830) |
Amortization of prior service credit | (355) | (355) |
Amortization of net actuarial losses | 334 | 568 |
Net periodic benefit income | $ (1,685) | $ (1,121) |
Debt (Details)
Debt (Details) $ in Thousands | 3 Months Ended | 27 Months Ended | |||||||||
Jun. 01, 2021 USD ($) | Mar. 31, 2026 USD ($) | Dec. 31, 2025 USD ($) | Sep. 30, 2025 USD ($) | Jun. 30, 2025 USD ($) | Mar. 31, 2025 USD ($) | Mar. 31, 2024 USD ($) | Jun. 30, 2026 USD ($) | Mar. 13, 2024 USD ($) | Dec. 31, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Debt instruments [Line Items] | |||||||||||
Total principal amount | $ 1,570,281 | $ 1,604,187 | |||||||||
Less: unamortized discount and debt issuance costs | (10,188) | (11,336) | |||||||||
Total debt, net of discount and debt issuance costs | 1,560,093 | 1,592,851 | |||||||||
Less: current portion of long-term debt, net of debt issuance costs | (21,550) | (86,153) | |||||||||
Long-term debt | 1,538,543 | 1,506,698 | |||||||||
Maturities of long-term debt | |||||||||||
2025 | 101,062 | ||||||||||
2026 | 929,250 | ||||||||||
2027 | 64,969 | ||||||||||
2028 | 0 | ||||||||||
2029 | 475,000 | ||||||||||
Senior, secured revolving credit facility [Member] | |||||||||||
Debt instruments [Line Items] | |||||||||||
Total principal amount | 239,750 | 252,000 | |||||||||
Credit facility, commitment | $ 500,000 | 500,000 | |||||||||
Net available for borrowing as of March 31, 2024 | 252,214 | ||||||||||
Senior, secured term loan facility [Member] | |||||||||||
Debt instruments [Line Items] | |||||||||||
Total principal amount | 1,155,000 | 790,562 | $ 877,187 | ||||||||
Senior, secured term loan facility [Member] | Forecast [Member] | |||||||||||
Debt instruments [Line Items] | |||||||||||
Repayment amount | $ 28,875 | $ 28,875 | $ 28,875 | $ 21,656 | $ 21,656 | ||||||
Swingline sub-facility [Member] | |||||||||||
Debt instruments [Line Items] | |||||||||||
Credit facility, commitment | 40,000 | 40,000 | |||||||||
Letter of credit sub-facility [Member] | |||||||||||
Debt instruments [Line Items] | |||||||||||
Credit facility, commitment | 25,000 | 25,000 | |||||||||
Outstanding letters of credit | $ (8,036) | ||||||||||
Credit facility agreement [Member] | |||||||||||
Debt instruments [Line Items] | |||||||||||
Weighted-average interest rate at period end | 6.71% | 6.83% | |||||||||
Maximum consolidated total leverage ratio | 4.25 | ||||||||||
Maximum consolidated secured leverage ratio | 3.50 | ||||||||||
Minimum interest coverage ratio | 3 | ||||||||||
Consolidated total leverage ratio limiting permitted payments | 2.75 | ||||||||||
Permitted payments | $ 60,000 | ||||||||||
Credit facility agreement [Member] | Forecast [Member] | |||||||||||
Debt instruments [Line Items] | |||||||||||
Maximum consolidated total leverage ratio | 4.25 | ||||||||||
Maximum consolidated secured leverage ratio | 3.50 | ||||||||||
Minimum interest coverage ratio | 3 | ||||||||||
Consolidated total leverage ratio limiting permitted payments | 2.75 | ||||||||||
Permitted payments | $ 60,000 | ||||||||||
Senior, unsecured notes [Member] | |||||||||||
Debt instruments [Line Items] | |||||||||||
Total principal amount | $ 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 | ||||||||||
Securitization facility [Member] | |||||||||||
Debt instruments [Line Items] | |||||||||||
Total principal amount | 64,969 | $ 0 | |||||||||
Credit facility, commitment | $ 80,000 | $ 80,000 | |||||||||
Weighted-average interest rate at period end | 6.87% | ||||||||||
Minimum [Member] | Credit facility agreement [Member] | |||||||||||
Debt instruments [Line Items] | |||||||||||
Interest rate margin on variable-rate debt | 1.50% | 1.50% | |||||||||
Maximum [Member] | Credit facility agreement [Member] | |||||||||||
Debt instruments [Line Items] | |||||||||||
Interest rate margin on variable-rate debt | 2.50% | 2.50% |
Other commitments and conting_2
Other commitments and contingencies (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Commitments and Contingencies Disclosure [Abstract] | ||
Self-insurance liabilities | $ 9,319 | $ 9,024 |
Shareholders' equity (Details)
Shareholders' equity (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Oct. 24, 2018 | |
Stockholders' Equity Note [Abstract] | |||
Amount remaining under share repurchase authorization | $ 287,452 | ||
Common shares repurchased (in shares) | 0 | 0 | |
Share repurchase program, authorized amount | $ 500,000 |
Business segment information (D
Business segment information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | ||
Business segment information [Line Items] | |||
Revenue | $ 534,955 | $ 545,365 | |
Depreciation and amortization expense | (41,747) | (43,520) | |
Interest expense | (30,809) | (30,016) | |
Net income attributable to non-controlling interest | 27 | 28 | |
Restructuring and integration expense | (14,737) | (14,094) | |
Share-based compensation expense | (5,121) | (5,866) | |
Certain legal-related expense | (300) | (429) | |
Gain on sale of businesses and long-lived assets | 8,581 | 0 | |
Income before income taxes | 16,352 | 6,539 | |
Operating segments [Member] | |||
Business segment information [Line Items] | |||
Adjusted EBITDA | 144,159 | 147,162 | |
Operating segments [Member] | Merchant Services [Member] | |||
Business segment information [Line Items] | |||
Revenue | 96,477 | 89,105 | |
Adjusted EBITDA | 21,437 | 18,427 | |
Operating segments [Member] | B2B Payments [Member] | |||
Business segment information [Line Items] | |||
Revenue | 69,418 | 75,196 | |
Adjusted EBITDA | 13,261 | 13,475 | |
Operating segments [Member] | Data Solutions [Member] | |||
Business segment information [Line Items] | |||
Revenue | 59,712 | 44,353 | |
Adjusted EBITDA | 14,869 | 10,256 | |
Operating segments [Member] | Print [Member] | |||
Business segment information [Line Items] | |||
Revenue | 303,334 | 314,040 | |
Adjusted EBITDA | 90,956 | 95,201 | |
Operating segments [Member] | Total reportable segments [Member] | |||
Business segment information [Line Items] | |||
Revenue | 528,941 | 522,694 | |
Adjusted EBITDA | 140,523 | 137,359 | |
Operating segments [Member] | All Other [Member] | |||
Business segment information [Line Items] | |||
Revenue | [1] | 6,014 | 22,671 |
Adjusted EBITDA | [1] | 3,636 | 9,803 |
Corporate operations [Member] | |||
Business segment information [Line Items] | |||
Adjusted EBITDA | $ (43,701) | $ (46,726) | |
[1]Includes our North American web hosting and logo design businesses, which were sold in June 2023, and our payroll and human resources services business, which we are in the process of exiting (Note 6). |
Business segment information _2
Business segment information (disaggregated revenue information) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | ||
Disaggregated revenue information | |||
Revenue | $ 534,955 | $ 545,365 | |
Merchant Services [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 96,477 | 89,105 | |
B2B Payments [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 69,418 | 75,196 | |
Data Solutions [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 59,712 | 44,353 | |
Print [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 303,334 | 314,040 | |
All Other [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | [1] | 6,014 | 22,671 |
Checks [Member] | |||
Disaggregated revenue information | |||
Revenue | 178,484 | 178,647 | |
Checks [Member] | Print [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 178,484 | 178,647 | |
Merchant services [Member] | |||
Disaggregated revenue information | |||
Revenue | 96,477 | 89,105 | |
Merchant services [Member] | Merchant Services [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 96,477 | 89,105 | |
Forms and other business products [Member] | |||
Disaggregated revenue information | |||
Revenue | 63,792 | 65,490 | |
Forms and other business products [Member] | Print [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 63,792 | 65,490 | |
Promotional solutions [Member] | |||
Disaggregated revenue information | |||
Revenue | 61,058 | 70,651 | |
Promotional solutions [Member] | Print [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 61,058 | 69,903 | |
Promotional solutions [Member] | All Other [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 748 | ||
Treasury management solutions [Member] | |||
Disaggregated revenue information | |||
Revenue | 55,077 | 60,474 | |
Treasury management solutions [Member] | B2B Payments [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 55,077 | 60,474 | |
Data-driven marketing [Member] | |||
Disaggregated revenue information | |||
Revenue | 54,325 | 39,282 | |
Data-driven marketing [Member] | Data Solutions [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 54,325 | 39,282 | |
Other [Member] | |||
Disaggregated revenue information | |||
Revenue | 25,742 | 41,716 | |
Other [Member] | B2B Payments [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 14,341 | 14,722 | |
Other [Member] | Data Solutions [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | 5,387 | 5,071 | |
Other [Member] | All Other [Member] | Operating segments [Member] | |||
Disaggregated revenue information | |||
Revenue | $ 6,014 | $ 21,923 | |
[1]Includes our North American web hosting and logo design businesses, which were sold in June 2023, and our payroll and human resources services business, which we are in the process of exiting (Note 6). |