Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Deluxe Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode and today's call is being recorded.

We will begin by opening remarks and introductions. At this time, I would like to turn the conference over to your host, Vice President of Investor Relations, Tom Marabito. Please go ahead.

Thomas Morabito

welcome earnings Deluxe call. and full quarter operator XXXX year you, to fourth the and Thank

Zint, Officer. Joining McCarthy, Chief Chip our on President Chief me today's and Executive call Officer; is Barry our Financial and

questions. At the prepared today's end will remarks, we of take

begin estimates this I'd in Before or the future or remind expectations and like management's regarding performance seen Litigation made Reform XXXX. Securities in Private strategy defined comments about the that today as nature are intentions, to on we of slide, everyone projections, as forward-looking financial company's Act

information and actual XX-K set Form factors from other filings. in furnished Additional forth about to is our XXXX, that and for may company SEC the we our projections release today results cause year in ended press the XX, differ December

will today we free caused of call by our comparable and the will EBITDA, adjusted discuss inconsistency the financial business EBITDA and measures, will exclude revenue, adjusted or margin, flow. basis going divestitures a and adjusted and discussion cash revenue operations, prior the acquisitions To adjusted in today, on adjusted ongoing non-GAAP including adjusted both which discuss and periods. forward comparable On EPS comparable EBITDA comparable adjusted we streamline

For impact purposes the done divestitures year and will impact the partial this of exclude of full XXXX year of American year. First throughout the

with GAAP of adjusted measures, under the reconciliations additional with which you measures of EPS will SEC, Also including on the measures find most release, modeling. help filings regarding EPS, are press presentation our our disclosures the and to providing GAAP. should In non-GAAP presentation, our to reconciliations your U.S. additional we comparable these the

Barry. over it turn I'll to Now

Barry C. McCarthy

data and further delivered good fourth company. morning, for year and become everyone. proving XXXX, Tom full results a the strong payments have and Thanks, Deluxe both we quarter

half company's XXXX. expect key payments in become during will the milestone will revenue history. of be This I the by largest -- our segment first a As

to second model. reporting reflect not growth, strong the on Deluxe Four take our sales from first, revenue a of for seen the year Deluxe. highlights let results, moment key a our year another consecutive of One what achievement over strength include; decade, showing reviewing Before me an driven was year the

our In American Second, perform year data as success we the segments. payments, data in and of we're margins business, revenue. payments First its recorded business. well continues expanding across of the part to Deluxe the and In accelerating record blended second

performance strong shows last went top modernization. has marks the release and with demand of years. supply durability its of implementation Third, completion major the Fourth, major in line strongly strongest for solutions. impacts Check. and performance corporate rebounded ERP This week. in key live delivered Promo this the our earlier infrastructure COVID its over performance Check businesses milestone and disruptions our after XX these of print Promo chain This our

our reflect Cloud We on our business, transaction. web will the allowing data. name to also to also of Solutions on just announced the focus and us business. focused the more North details of payments provide that further We've hosting line Chip American non-strategic operations a which to more the Solutions business exit changed of better Data segment was

data last making dedication team fellow a company. week about their also sales to another my palpable. year, gathered take our me thank their a for customers, energy for the excitement Deluxe Deluxers payments to commitment XXXX for to kickoff, continued sales and strong Let moment The for was endless and and our and

results. Now on the to

growth. second a sales $X.X X.X% adjusted revenue comparable This Once driven consecutive of this key XXXX, increased is again, year-over-year. Reported range. was year revenue full billion, above our For our XX.X% revenue up guided is year milestone.

of demonstrate success Deluxe to model. our One continue the We

a in an all accomplishment, comparable been demonstrated very long segments four growth, revenue adjusted has XXXX, time. For seen which not

So of it's was outside and range X%. X.X% comparable adjusted long increased EBITDA EBITDA from down XXXX data. ago adjusted Total available dollars the

focused forward, revenue, and term. on in Going remain long driving adjusted flow growth we EBITDA, for free the cash

goals, greater drive we All shareholder in believe towards of will drive which these returns. turn our actions

Moving some highlights. to revenue on segment

year growth our adjusted payments full with with EBITDA mid-single-digit the on For comparable expanding a services primarily X.X% digital Merchant X.X% product basis XXXX. lines, revenue X.X% our of on payments, and includes nearly treasury increased longer-term of grew X% from margins expectations which basis, grew a business, management. receivables in and dollars in growth. payments with rest The adjusted adjusted across and XX grew points revenue payables line comparable our basis,

existing to revenue gain to largest segment year. continue grow pipeline on in the remain we continues of and customers to track we half first be the our from Our as payments wallet share for

As be I now another key for we've as and said milestone data earlier Deluxe will payments a become company. this

verticals. top adjusted the the on year, Data in were a X.X% comparable will Promo progressed, year-over-year which non-interest revenue Chip continue improvement had into year business the growing later. line, pleased comparable a adjusted X.X%. sensitive solid We as revenue strong margins to year also we had the rate expand improving with as detail

business our an incredible Check X.X% accomplishment. year-over-year, Finally, improved

are key year we segment decline expecting this this to in return growth However, secular as wins we've traditional lapped from now to the rates XXXX.

us about new progress. return to in of highlight We're manage both this We're rate allowing our investments the prior results full of calls, technology declines. as in quarter this normal to maintain will halfway technology. our us to our our costs through margin strong and match proud which implementation secular volumes, As on new help segment discussed fourth Print-on-Demand strategic we year

fundamentally different while navigating secular is our our and simultaneously And proven strong inflation, soon This business a largest infrastructure, executing revenue segment. few model and a Deluxe was growth. top Deluxe company's we've growth payments, more. a delivers portfolio with to modernizing achieved company years just ago COVID be were entire One significant line we than the what now optimization,

more on provide who to Now our will financial Chip details I'll turn performance. it over

Chip Zint

good Thank morning, Barry and you, everyone.

pending like the exited of the North latest on web the Before sold business. our American we business. our transaction hosting operations we quarter, and sale elaborate web year to results have Last the will completely Australian hosting completion of upon we I'd review hosting the for

reminder, this opportunities offered white did for includes also historically logo telecom which been selling overall through not business. a label material partners cross pending business largely fit allow within service deal As not did and This has a portfolio. our our

XX% adjusted XX margins revenue trailing $XX the EBITDA to For range. in approximately months businesses the million these generated in high mid with

revenue guidance, I discuss impaired have business to $XX which many capital our X% in million declined $XX nature and impacts a web business. approximately know was be simplify promo impacted recently, data by will hosting quarter mostly a fourth previously declines. evidenced approximately the flow XXXX with focus EBITDA been very a recurring The revenue the free adjusted cash impacted to in revenue affect These in and to changes intensive due are further and and This where the was its and moment there reflect million. be to fully our segment. small each segment will they effort but I'll included year-over-year. the portfolio impact methodical by

to reconciliations business in For about the guidance, and presentation. press to refer impact and release our exits more the please information

be XK SEC. also can with transaction in filed found the the of details our Additional recently Form

highlights through the the let's year consolidated and Now on moving before quarter to segments. for go the

fourth reported revenue X.X% $XX payments, down were of data $X revenue the diluted offset $XXX quarter from basis, per in income of GAAP came reported on employee or comparable in XXXX. from million adjusted comparable with segment. to $X.XX per costs share million expectations. up million, the a checks For million. on year-over-year. On promo EBITDA margins and quarter, share, the or corporate fourth improved line a and $X.XX $XXX We declined X.X% were our basis adjusted Adjusted Improvements or net EBITDA quarter $XX XX.X% total year. million in by adjusted in and X.X% Comparable benefit last fourth

at quarter from interest $X.XX diluted down EPS decrease This came in last Fourth quarter. fourth driven by was year's adjusted primarily expense. $X.XX,

our insulate rate from As rate, help the fixed should debt which XX% of reminder, a company is future hikes. nearly

$X.XX the year-over-year reported revenue billion, year, above guided on our a up posted basis, we For XX.X% and of full total range.

income up million for mentioned, per comparable Barry year-over-year. We GAAP revenue $XX adjusted share $X.XX X.X% or $XX $X.XX XXXX. per year, or share reported net of year in As the from full increased million

margins X.X% last year's from at EBITDA through higher $X.XX, amortization. a the and interest were million and down adjusted $XX $XXX XX.X% year came last due EPS declined X% down comparable price XXXX, inflation. expense, up mix primarily due year pass the year in from business was year. from reported XX.X% EBITDA adjusted $X.XX down from Full in last to and EBITDA adjusted year. XX.X%, or basis, depreciation, dollars to as offset for increases million On Full XX.X% margins were EBITDA of to impact Adjusted

grew Now and fourth growing our turning growth details, year-over-year our X.X% segment services businesses, Payments merchant quarter X.X% with revenue $XXX to payments to year-over-year. starting million, with data.

indicated adjusted we XX.X%, against the As growth our in margins slower leverage driven We to rates improve all by and few was growth year-over-year anticipated for call, however, treasury the operating EBITDA on XX.X%, up as progresses. we quarters tough do, up as business. largely expect payments of a year's comparisons. year last management Payments from were last

year-over-year growth For and driven of Deluxe. payments for acquisition $XXX driven XX% the to standalone grew the million, sales American First year, revenue by

adjusted increased up margins XX.X% XX points. year increased and EBITDA adjusted a from the comparable margins up year, EBITDA XX.X% For basis XX.X%, EBITDA basis for X.X%, were and the American EBITDA increased On including revenue payments X.X%, First and were adjusted XX.X%.

low to and expect to the growth margins we in revenue mid-single-digit XXXX range. adjusted see mid XX% For EBITDA

points from again margins basis a to basis, quarter adjusted increased Data's DDM well adjusted comparable volume. On XXX timing as year-over-year the basis leverage which operating as EBITDA XXX in improved to points. margin EBITDA XX.X%, strong relates

the year-over-year Data million. the the for to Data reported $XXX increased revenue a For year, year. comparable X.X% On grew basis, adjusted X% segment

On basis EBITDA points margins EBITDA XXX driven basis For prior and investments a declined adjusted mix the XXXX, our in by platform. XXX XX.X%, adjusted basis, Data's to margins business year points. Data declined comparable versus

see revenue to adjusted basis. a expect growth single-digit on low comparable we XXXX, For

also XX% see in We EBITDA the to margins expect low comparable adjusted range.

Promo we to businesses, reported fourth X.X% X.X% On of was driven pricing as basis improved On and upticks. stable basis a Checks. sequentially basis, fourth comparable sales supply Print wins XX.X%, and quarter margins adjusted up actions. revenue year-over-year. declined benefited XXX revenue adjusted from adjusted a XXX conditions, Promo's a year-over-year normal EBITDA basis, from XX our but by the EBITDA nearly basis Turning Promo's $XXX improved seasonal basis, and actions, to comparable increased million, on points quarter now XXXX. new pricing continued points margins points

basis adjusted basis for margins basis the a EBITDA down basis. year, year basis $XXX X.X% or and the Adjusted XX.X% on a X% points was on comparable down comparable adjusted on up million, were Promo’s were XXX For year-over-year a reported and XXX points. revenue

For margins single-digit XXXX, we growth low adjusted to adjusted comparable revenue see mid-teens. and expect the EBITDA in

as results down Check's supplier decreased price off-cycle Fourth from secular of quarter last expected to temporary returned adjusted fourth with XXXX. X.X% all customer lapping revenue year-over-year quarter now as increases for inputs, the are and margins $XXX EBITDA points surcharges. logistics from major the which experienced wins to million XX.X%, new some declines XXX were seasonal business materials QX we base basis both year

We have increases. and future our price increases factored XXXX into these customer expected

margin As rate a improve will the QX. believe result, in we

up mid-XX% XX%, basis consistent expectations year was million, EBITDA full but year-over-year Check's margins X.X% were long-term margins. revenue points, adjusted of and our $XXX with XXX down XXXX

range. adjusted declines mid-XX% EBITDA For expecting margins in XXXX, we and the are revenue mid-single-digit

Barry As about our margins, print-on-demand halfway help are and technology the mentioned, through implementation. will maintain we

commitment our billion to $X.XX from with sheet flow. down a the last of year, debt pay We ended debt. and continued billion, to $X.X year demonstrating cash now level balance our down Turning net

Our times debt-to-adjusted times the the from was net a ratio year EBITDA improving end X of ago. at X.X year,

strategic approximately Our remains times. long-term target X

from less million or by defined to This XXXX offset interest the capital $XX cloud working the CCA by also $XX the sequential up due a payments. from computing partially in fourth cash cash provided flow, quarter, Free third activities capital of spend, arrangement improved quarter was operating improvement million in quarter. was as higher lower expenditures, and

should free XXXX it be but interest as flow quarter will impacted expenses year onetime as be expected our ERP incremental First implementation, the payments, expense, progresses. annual negative from and cash employee was to improve by compensation

million higher payments, free capital. due was from XXXX taxes, For working $XXX cash the down $XX year, cash to flow interest and million, in

payable a on approved per share The XXXX, closing $X.XX regular to record dividend as XX, be dividend shares. Board of of on outstanding all X, market Our February of shareholders will on quarterly March XXXX. all

growth, allocation and are focused value a invest shareholders. our We to pay and a to return to approach in capital responsibly reminder, taking capital dividend, our our on priorities debt, balanced allocation are as reduce

from negative to range be and The and clear, on incremental the X% is XXXX impact keeping interest X% are providing a adjusted basis, we and announced to the rising free $XX in approximate $XXX X% negative of $X.XXX million. positive revenue guidance. divestiture. X% for EBITDA $X.XX expected of reflect mind adjusted divestiture. Turning comparable of and growth. EPS expected the $X.XX logo figures million, of XXXX, to of now comparable year adjusted impact decline million to represents billion adjusted and $XXX of full range clarify, $X.XX, our To the hosting a cash impact all million Today, Revenue $XXX web $X.XX expectations to To depreciation to further growth. billion, amortization year-over-year due an of EBITDA EPS to to to positive represents flow rates, are estimated

factoring guide basis. is cash increase on of the adjusted the However, impact year-over-year flow in comparable free divestiture, an a the

in count the depreciation acquisition of amortization million with guidance inflation, expenditures capital million interest Also, amortization to of supply things, average and approximately to, approximately of of of interest order $XXX of issues, $XXX million, and labor your rate and modeling, impact an subject million; shares, $XXX is macroeconomic assist share adjusted the is following; million. our tax XX%; including This of rates, to $XX million; assumes outstanding other prevailing XX.X which an among expense $XXX divestitures. conditions, guidance other

full are pleased we year results. summarize, the quarter XXXX fourth and To with

forward questions. customers, growth, operational in a continue revenue continued see we which to new and with look take we XXXX, free ready to continuing customer efficiencies, increased our be we from are expand and to continues Operator, existing growth We now increased pipeline to to sales the base. increased cash highlighted expect Our by flow. momentum year

Operator

[Operator Instructions].

line Lance Your Vitanza first comes from question of the from Cowen.

open. is line Your

Lance Vitanza

much logo with the sale? web taking asset the you very thanks to and the But here. questions. margin lot for guys, EBITDA Hi hosting unpack A on Did call the out me start let divestiture.

Barry C. McCarthy

mid high capital, a We business was to was that in was as a XXs. is consumer did. We said And of it that and decline. Lance know, it you that

quarter in that mentioned the declined also that revenue in We fourth segment X%.

Lance Vitanza

So right.

versus right filing, printed slight -- XXXX. in the right, X-K -- it EBITDA the with sort the going revenue add is million-ish, the $XX and you EBITDA Where that in of looks down that and that year So I about XX sales, the for that getting then you like it? was guidance of sort million months. of to something which of $XXX $XX-ish like of thinking million about kind $XXX general adjusted in face $XXX range, asset that about to we're for million or EBITDA, million I'm trailing or think vicinity. to it, Barry, of $XXX the And we this from I'm of we're is your million, talked if guess that it's the positive on this, that But way right

Chip Zint

This is Chip.

this, to the especially at that you some slides, for our full and the you'll roughly around math have your back-of-a-napkin guidance you, information of earnings provided So a But for see we time back side. on release EBITDA is have reconcile of will million digest $XX year. right as that

the is that that's million $XX only it just basis. of $XX of transparent the plus in it move so just on our are adjusted the guidance the business the impact, impact I EBITDA But where important an on on course, things modeling that's million we of was to those revenue are, roughly get We how why approximately and that be back. three year's call. quarters exits into thought dynamics of apples-to-apples referred doing impact all much favorable last we more can reconciled And rolling forward to impact

Lance Vitanza

segment Maybe Great. the Okay. Data moving on continues. to that

of currently basis, rate-sensitive mentioned in that verticals? diversification You how rate-sensitive wondering continued the how go-forward of on is much segment, into And segment much noninterest data a call, again, I'm the Data during verticals. noninterest

Barry C. McCarthy

level. offsetting you rates rising a sort in look or don't if well rate than like of sources cycles history, think reason in the I are really that more were that revenue this, previous attractive are business noninterest is to And of you back rate ever and was like highly perform mortgage. because can things showing categories period interest that business growth impacted our sensitive sectors I that we've think, continues significantly see provided we're actually But at pretty those Lance, rates, of interest the experiencing that growth.

And so that that you direction I noninterest about rate-sensitive categories. think increasingly a it's good gives of sort

Lance Vitanza

present little most like those anything And or Is it out verticals of for call rate-sensitive most about lines? any those noninterest wins talk examples are Deluxe? which recent possible there to of the obvious opportunities to a compelling along bit

Barry C. McCarthy

Yes.

them was industry, So solutions so industry. are shifted are business on from on like is deposit, interest services And largest in growing that value historically parts it good financial marketing to we confidence shown services high rate dollars the with materially can customers. things normal two of companies providing -- attacking a very lifetime But the sensitive really rate The this the wide towards growth. high being companies mortgages within reason that customer. to like of company to DDA have credit solutions. retailers own into customers. finding is campaign the in growing that, And this. focus because an to we're it. ability turn sensitive And now into will services invest of valuable business very, the from things plans and the we really businesses from in we've that that at online solution for are really, those And Everything have away the new a institutions converting services other focused to the insurance financial company high-reward are interested to certificates to a list we're those accounts, financial are others that providing range one cards, new beyond that their very that also deliver interest And is moved move and sectors and it's area. of lead away we've the all giving into just its financial

Lance Vitanza

performance quick A drove compared was How anything bit expectations? own Barry. a performance we side. one that worth your on in in Margin on the helpful, way the going That's quarter expected. other calling check during drove -- the to I than remarks. out? weaker And had or was And of margin there missed the prepared if margin question there has that your that's kind that I apologize

Chip Zint

It's Chip again.

was a right, of We the we There two you're kind expectations. were for XX.X% side was the as more on They're material them surcharge bit increases supplier the now two But will So in final the of logistics Logistics and see yet. mentioned set a we increases specifically year. quarter obviously we means that price out-of-cycle seasonal-based itself our out the of cycle, the of that year, the forecast side. price out-of-cycle didn't our both experienced below which factors. correct start for happened.

be. to deliver those year. was and price But bit And very the results it's that this next portfolio issue as that was we'll great would the able exactly to make offset I a said, surprise. increases where they so And we be in thought overall able that the early increase obviously, a into of

Lance Vitanza

Thanks.

I one promise. for Just me, last

guys. the corporate like guess, Is really And corporate close higher that I up right is it is if expenses, is that they particular is going on are guys just would we I'm there to comparable that on helpful? might that's come But you're were environment more it no, right to adjusted there looks you say on X% a inflationary basis. that the Thanks for there? in percentage wondering -- be sort -- be you just good with, this anything just or of running year-over-year. a line, be could maybe is this of is there it revenue on size anything kind -- or sort and improvement again about or some Just the happy a X% of thinking the should level point, revenues to there company the even there of that

Chip Zint

Sure.

match mentioned I that So corporate few our that's a earlier been turning to you year, we've on times got this year to quarter, the think weighing segment. we the throughout recall, restored the XXX(k)

So other year-over-year when a the year-over-year, the inflation, mostly puts to across XXX(k) fourth really match. driver net-net, that growth efficiencies. But real increases operational in you quarter that, was look there's function related takes offset by the and areas, at of other the

XXXX, what's your let on As $XXX get little we about we are I tell modeling, roughly million to give to provided. guidance right. bit just somewhere look of revenue model roughly to your as going you you forward And have thinking of you you, to would there. or me and you're the a context X% ranges around

We we've continue the investments few technology of to deal the with environment inflation, it's and the a got we've times. mentioned that factor a

divest those We the divestiture. once that that we nature function to have corporate will cost be some the the come costs corporate stranded will in also back center. there And assets, are of

of equally where And kind know need those is to not so which are we all staying flat, look like we be. we things

area get us. over strategic corporate of us deliver into the to reiterate the for results overdrive plan. remains and internal major the look cost focus of we as this just our most segment our out I'll year Getting a factors that So for one is and

you major as now. the advise model make roughly But would we focus progress on year of as million so for And to kind bring of to ours. we And just or goes try X% can I this spend that’s this $XXX think to it down. know

Lance Vitanza

quarter. solid the on Congrats it. appreciate guys, Thanks

Operator

from CJS question from the Charlie line of Securities. next Strauzer comes Your

open. is line Your

Charles Strauzer

if XXXX. piece, kind sale I'd the sale look sale of And Hi, the little is -- divestiture kind wondering tag seems business. will, May Australian you of was potential earlier but the the terms was transpired what of bit little you business yesterday process? the what at this talk bit And of where if price the a the of in bought hosting of kind back about go like to there that in a a shopping the morning. in low, all-in shop, seems good it in year price below that in

Barry C. McCarthy

robust was is we a came a what their process. from declines right. they to those XXXX impaired for the XXXX, we it we into and assets in early we profile fully in a we so really between company a And something payments company. market and leverage you'll impaired you're the Charlie, businesses, an significant quite process, changed The materially. the robust acquired fair had our capital scale we for transaction. went to asset have. to need core avoids because and So and that's ago. that that while -- out as weren't XXXX, in put fit And looking business the us before But And fully with really business ongoing didn't hosting it that a business look had we for recall data suitable we future, better acquirer a their web with the buyers, business. fit to portfolio And and the a recognize those that, have market secular adding a very match because a for very business, with think just and becoming much entirely they're a opportunity And

company. opportunity so We that. took And to the divest will think for focusing we be the it very

business, in outcome. changing And very saying clear, set that from a and very, it it's we think assets. much of segment what we're which it the the think that cloud makes now it's that good say of is business us focused distributed because on a jewel some is this been we've we And for was time. more name our heard You data

Charles Strauzer

then tail And of potentially invest or at planning the it. you process? kind to of divestitures, are businesses that are end we staying going forward topic the Got on of here more

Barry C. McCarthy

four we will check, of to But you one the pruning think not horizon we're is, Charlie, at legs the off We to lap to here. the opportunities. confident look promo, at if to that data place I look continue the on going or are for question that's where the us really payments, feel portfolio

Charles Strauzer

and guidance given the that. we're on thank revenue much going the end the into you year, looking interest of the that range that are very behind pretty on rates kind of outcomes the there guidance potentially you of of sense, range what for high there at inflation higher assumptions the Makes at some gives growth, And kind then with confidence of here and high end a at wide the what overall? in recession forecast,

Chip Zint

pipeline, years invested continue Chip. within gives ability us just improve cross-sell over Yes, the question, few the of last years, a to the sales products we've the seen of success I to just the end I the the portfolio, what the robust the confidence execution range, way and momentum. in appreciate the functionality, market Charlie. would think attractiveness say, it, build just to last I two the high the is the and It's we've over

I reasons at that uncertainty our But and look think to revenue all obviously going you about end we know mentioned, the if we very did you I a is don't from what's think range happen. right responsibly So achievable. I for still mean, side, it's top there and

wider is cost flow that plan our and bit top to we're momentum just the EBITDA enough two perspective. and start able for the very focus And from so then a said, efficiencies, and profile feel But can the corporate As sure to things we we've get obviously be company we you to we last of can more, to on EBITDA being leverage, the on uncertainty operating larger how the going when we've internal cost get had cost deleveraging. can't and the ranges grow good years where line and you as said my I the room out, much EBITDA, it just get cost even result deliver focused will as it on our execute make go about positioned, just and you down, established, help just maniacally that because list that a I larger. variance of obviously, get down guided the center

Charles Strauzer

Check Got Quick on side. the Great. it. housekeeping

Just we of of look declines the think volumes, what did then and should the full terms in about there how year? in for terms volumes

Chip Zint

checks. On

mean, did the I again declines So secular return quarter. in checks to

think function secular took we decline. you if we price more rolled about that be describe volume-price year of dynamics, after continues customer all forward. So But to of little kind because pricing actions to normal throughout of revenue the kind Obviously, the we difficult it's to wins, here. a return did lapped a the bit

reduction which that, revenue, despite So but we increases XXXX. the will be had still is out, volume you what all same we're in when net for anticipating net it

So the keep in we're forecasting ability declines, range. to mid-single-digit margins mid-XX% that but

I take three we look for volume continuing checks aside the at nice to XX-XX are of It price. actually a again see nearly quarter. and segments, was If the blend and once other

just into see excluding healthy decline the that mix of are as price we really to of volume continuing XXXX aspect and the gives and going secular just us business, So a confidence good well.

Charles Strauzer

for Great, much and said -- margin very growth on missed about expectations thank then year the I you you you payments that? on just the repeat lastly, can And what there, that.

Chip Zint

Yes.

that's that it to the to mid-single side. gets a it we and on for against. just believe be do we digit We of first think coming beyond, payments see So going and the into steam comps pick the But be year-over-year quarter, year. bit mostly it's then going maybe will as QX function revenue as up some it's we're up a little a and some lower grower in full mid-single-digit do

as starting an EBITDA get that to the show to operating side, why love it's is business so really area this is it adjusted this of we the value margin leverage. On much starting finally

business trend mid-XX% the been last to that you're of starting that margins, operating if see talking the about. this you low leverage over few we've at quarters, So look think to I

about offset And course, so EBITDA we're to, of feeling EBITDA that that declines digits also pretty mid-single good just grow nice planning. guidance ability to the the the then which checks and we're would get in hit be expansion, help overall and

Charles Strauzer

what we year? Great, share-based thank assumption-wise much. very you be lastly, just And for for comp about the then should thinking

Chip Zint

I I assume. a just me give would $XX be comp, what somewhere million Share-based around second, would would say

Charles Strauzer

Appreciate questions. it. Thanks great. is it it, my taking Got for

Operator

comes Riddick question the from of line Sidoti. next from Your Marc

Your line is open.

Marc Riddick

good Hey, morning everyone.

already talk the you a wondering could was the on that thoughts potential and if adjustments bit bit, I if all little appreciate talk headcount was details year. about wondering I So a you little I could for provided. you've

sort costs but keep stand and any investment about the where sort of maybe far year? as bit maybe I as trying about under about for the you talked might was control, wondering You've a to adding headcount little initiatives talk of

Barry C. McCarthy

Sure.

that has periods are just on and one But across-the-board but managing very managing we're particularly pruning, in professional we reductions. done at of not we January, earlier a disciplined very disciplined go So historically headcount, are we headcount, company through including about staff.

for that is So how really rest year we've the going tell and I thing proven really of company, question capable the think think on we the revenue you of rest do of is focused And the that. company now management about the growing would I cost getting the we the forward. in really is and

delivered is And target. And now we've the to be deliver company center revenue expand on been just would to big have we a and to the actually but help here. going next next the profitability us on cost the like we is very and like and thing Some attack we're growing people particularly in that and just the that, we two particular years. from do, didn't disciplined consecutive it profitability of fact, corporate thoughtful we for have think portfolio

Marc Riddick

the seeing I here. Great. customer of behavior you a was given if we're little about some that then it, touched functioning environment talk bit you And you're and that in wondering could the on

you could So about pretty than others stronger across much with behavior or the seeing customer the that particular industry little there a or any if little board largely are are that I pockets you're talk is if verticals a bit wonder verticals?

Barry C. McCarthy

Well, I tell portfolio would of we're what entire services. demand our seeing overall, you across very is, durable

continuous is demand solutions. time from by to We revenue for shift But different seeing continue periods, up where and that modestly aggregate, or perspective. some a And we -- see performance can our that's verticals or between in between or down are you strong period. see volume sector in

Marc Riddick

recessionary the the sort picture, few I whether divestiture you. of opportunity the much changes and last on the there, talk I maybe could sort of opportunities folks of the seeing a you within of that's sort any back had what the seen about I on M&A the you've current thing circle changed that's for wanted and pipeline, Thank you with thoughts to guess willingness then you're future of any environment? if last the of I months if bigger over or valuation, wondering on -- sort And Great. given bit greater a if on little engage maybe commentary was to that pruning. thinking was is, about

Barry C. McCarthy

been core think bit for objective I we success a broader the of We're invest frozen really for The runway like little we our the like in I pat have a M&A to is continue in has is, for and perspective got assets think, our of maybe company debt. time. we fairly we've course, period plenty there. our in payments feel first data. seeing some that business and And slight that. market, of of its pay And down And

So to to going, bit I we acquire interest rate are we for be which you're market kind high active a now believe where assets, frothy. is really, are going right with would rates. the transaction the a And M&A think be think of that that little hurdle I still valuations really that in

path. that we we like to So and the see but pay you and the of down as pathway never, never to say first we debt, our have, primary like we businesses continue and sort

Marc Riddick

Excellent, thank much. you very

Operator

of Stephens. the Chuck Nabhan next line question Your from comes from

line Your is open.

Unidentified Analyst

is this Alex Chuck Hi, Newman for here. on

then revenue And behind given the of growth just in you for would if be call, did some of the revenue that drivers that missed some revenue data growth pull for for give the Sorry segment the of XXXX, from year, forward I that expectations QX? but great?

Chip Zint

Yes, Alex it's Yes, Chip. we did.

for because So in important refer time. will that over adjusted year, divestiture as comparable we're to to revenue a obviously expecting And occurring have the growth. change note full that one that it's the basis we the on single-digit low

year that. past a we'll So large segment It's slower for business full low continue to past high growth. grew that this saw than I that's mean we was across of guys clear. XX%. reconcile we obviously But that see the growth year, year, single-digit north and a the a give we hurdle it's that such what just bit That's to this year. because data but know you

deals, continues those The just depleted because to don't a grow first may but campaigns the quarter single little specifically, year we're start low work of that of the into expecting of list business a kind do just to their slower, for bit. first handful quarter The little quarter reason the we know pipeline of digits shifted year. out full that at pipeline of be in the the see we fourth any team a the be but that, can't difficult that

Unidentified Analyst

then merchant you terms could from what of And the within just on the volumes like and your what's just looking services, are speak health? Okay. what see in ground overall and you to the SMBs

Barry C. McCarthy

experience happening SMBs. we're business think see I what's numbers delivered commerce deliver we quarter attention But what we we I sure the December, lots there. department media but there's to that. our way and overall, And overall, fourth do. expect volume robust to it So I'm expected it in the merchant you've to seeing and speculation solid We didn't think of the pretty in volume quarter and continue about we delivered for the exactly it. seen

other We that's -- now. in compete, the there and verticals help times. we pretty So feel and have variety we like business right we good solid times business a the feel of like in balance out where each tough

Unidentified Analyst

you. thank Alright,

Operator

Your comes King. the of next from David from line question Silver CL

line open. is Your

David Silver

morning. Yes, hi, good

be I and think revenue. free forecast cash SaaS-generated then have I on more a I'd a have your about question strategic question a would first flow maybe

range you I but the you capital, working of that's Regarding kind spending say, we And maybe in within kind range, mean, mean, that is years. capital back you Or either operating kind exceed a of cash targeted cut there on discretionary let's free your little of alternatively, or the I consider may target, should to spend? increase kind flywheel, me a is free you two spend, cash that, Can free of flow in would I noticed it terms cash target within below you or then that targeted investments, flexibility of again, about let's that that the free of your keep flow, fall I've on think the keep results how last be? think flow your $XX case flow provided, the sustaining range of million to what is Thank And remind discretionary CAPEX $XXX million would spending a term cash say, results your inviolate portion what the how that should if your secondly, of might it budget, you. million. range? $XXX versus and

Chip Zint

David, it's Chip.

first divestiture impact keep So question, of we're to guidance kind mind, so on million, to $XX your of the the $XX million million a approximating in is $XXX roughly that. that

that that's the all despite based to see we getting our our and three which $XXX historical So equal, ago you'll increases more kind to all range a us interest off towards things million range is years million apples-to-apples, costs. back -- $XXX guidance of were of two to

land. manage the P&L, we anything we though, or to good We there's We as cash or year, it's sure to that's underspend just set are whether do investment when deliver we target to wisely, hopefully may not $XXX inside for way we're achieve flow because of million of place and those, the To best money possible the many taxes. other our think we look better. can over the interest in discretionary spend starting I results our those. kind answer under question up come to throttle to the CAPEX free trending because know look the a view actually points, -- So if best We your this. investment we the to don't and have those expense going do make

results we're if that that throttle do. would what operating That's going So I be we not to trend better wouldn't investment. concerned up

rest of question, And the it sustaining. the is running of of kind to I to with would being kind of the $XXX it, $XX KBR, related. think million as of call last of business of answer that part kind guide in roughly XX keep the XX to your side of growth million the We it million, $XX the

we're the check. So capital. XX-XX know, And print doing as on-demand to in upgrade growth high level, maintenance you

that something we're through. halfway that's So

in growth with So data to the and more our just over we will payments try products efficient. And to company responsibly invest work down. time, that go and continue to make

David Silver

today, different out data slide next your pointed or I'm revenues, onetime I more for Barry, very you've little emphasis you're data, might consider you a SaaS-driven maybe transactional on companies much you of increasing been sales time. couple that, wondering, goals just strategic My of that. of targets column to just or as payments a also kinds And think philosophical. steps the SaaS-driven of But there's pretty question payments there's beyond into revenues a transform or I'm I number stickier underneath more the revenue more deck, versus services company steadily and last to that headlines is of But over service for over sales years wondering, and which underneath the And handle the relationship-based and has Thank in headings themselves. maybe whether your of the taken that, company. generation.

maybe that for of service revenue for where a differentiated there could in revenue streams, So service, differentiated make SaaS-driven more more you. component that stickier that there's and thing? maybe what are customers, durable your goals Thank maybe kind

Barry C. McCarthy

question, we insightful the really goes very strategy, core build and the businesses. are sort a and by their corporate because is our they to are of data which to that payments trying businesses of So it nature, right stickier is

in and payables increasingly choose our business their choosing for and upon run and build and platform. So their example, platform -- customers receivables to they're business, our one adopt

reselling banks bank. So a are of their branded version as of a platform that number receivables we have our

know providing Deluxe the it's So solution. you that don't

providing bank it's know the solution a You customer. their that to

our type where a we're And great that that's and customer doesn't of the by where attrite receivables because bank sticky and customer to company. with obviously the the that commercial is a tools, using has investments delivering a as software-as-a-service our business and relationship is are manage once experience making they platform. building driven their a payables, their set extremely bank model That that's on and customer platform

in to tools the are for We've our will to that attractive, We us our which new business us about we're give earlier going because receivables we've that business platform grow business data launch later invested really year, easy-to-use someone our the that's for into business, customer. for tools our improved diversifying this it's how invested verticals. allowed business, platform really in asking was

business, businesses their our We're we're from building moving absolutely receivables bigger where So towards are platform. we're business revenue not that true on here our company. happening payables recurring a revenue much to Software-as-a-Service merchant we that are of foundation a that's and in of though, in core It's clear, say services company percentage the what's It's the data. our completely in very business. foundation and a

So it's company absolutely where our growth. we're for making investments and the and is going going forward

David Silver

sufficient a procuring had. interacting company it that. I mean of my that IT all you for I've time. would kind in there opportunity thank the already way And difficulty is companies, resources. color. number for No, okay. That’s your Thank be natural with you of with noticed you're them, a just for I I over all Yes, thought

Operator

And a Lance of from question Vitanza we the have Cowen. from follow-up line

Your line is open.

Lance Vitanza

guys. thanks Hey,

about. forgot that follow-ups I quick two Just

that step just with wondering you could an wondering, And the if a some margin be any the to me sort there could I and the be business. of there apologize, you there, I that over for there XX-month respect the that think I'm I'm and time out, Thank we outlook opportunities sort you it. like contingencies then about performance-related I you second the I the there's million through And know XXXX but is would think, is kind of in payments question that web first is from hosting proceeds The if great? on X of? walk that are you aware back should you. mentioned recap had to from my me, that are earn of X-K $XX in deferred, -- that sale. so close or just period

Chip Zint

I'll is both This those. take Chip, of

web the on business. hosting the sale So, of

other closing occur neither to days million at of Those $XX with are days $XX are those million of of million performance is a a the $XX sales in other contingency-based. of to to of total So is and price of payment another There obligations. up we announced subject base XXX our XXX that believe, a day. up kind $XX X-K time later XX I price million could later, contingency sale base which take XX. to the max million, the

XX, factor happen, sale to it has business of just will second timing XX. the look XX as the payment the which as range and so and over. a And is at price transitions third a it The

a right, you're payments, we about talk about did question The bit. that

of got up of it that's then, profitability course, as way to helping starting that's are with can lockbox, at platform treasury our I I because That's volume are rates business few in see of We because realize well. quarters, in think come volume expanding. we to business, price growth. specifically function last inflation, the at that the continue mid-XXs. an as keep look margin And efficiency to margins if we what EBITDA margin rate forecasting business incremental But improving -- you're the like low as were said So, work. to management the the We there. a grows, operating leverage, is we've operational business that take you

in So XXXX. all this things we equal, nicely margins business expand a that will is believe

Lance Vitanza

much. Thank you so

Operator

some call questions remarks. Morabito, for closing this to you Tom And time. over I there are at the Mr. turn no further back

Thomas Morabito

Thanks, Rob.

on that X, share results. joining for speaking as today, us to Conference quarter with look and management Truist March Before be we the Small Thank we again Cap you you and Internet March conclude, in Virtual May forward I'd first on Technology, XXXX & XXXX, Services participating to mention XXnd. will like we Sidoti our in the Conference Securities

Operator

call. concludes conference participation. for today's your This Thank you

You may now disconnect.

Deluxe (DLX) 2 Feb 232022 Q4 Earnings call transcript