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Press Release: Deluxe Reports Fourth Quarter and Full Year 2020 Results; Declares Regular Dividend and Provides 2021 Outlook

· 02/04/2021 16:05
-- Full year 2021 revenue is expected to grow in the range of 0% to 2% primarily due to the combination of sales transformation and related wins and steady macro-economic recovery from COVID-19. -- We expect first quarter financial performance to be a continuation of fourth quarter 2020 results as we begin to lap the onset of the pandemic in March 2020. -- We are positioned for recovery to begin in the second quarter, enabling us to exit the year with revenue growth in mid-single digits. -- Adjusted EBITDA margin for full year 2021 is expected to be in the range between 20% to 21%, at the lower end of the company's long-term target range. -- We expect our tax rate to continue to be approximately 25%.4(th) Quarter 4(th) Quarter 2020 2019 % Change ---------------- ---------------- ---------- Revenue $454.5 million $522.1 million (12.9%) Net Income Attributable to Deluxe $24.7 million $44.8 million (44.9%) Adjusted EBITDA $94.9 million $130.3 million (27.2%) Diluted EPS -- GAAP $0.58 $1.06 (45.3%) Adjusted Diluted EPS $1.38 $1.94 (28.9%) -- Revenue was $67.6 million lower than last year. COVID-19 continued to negatively impact the company's results, primarily across the Promotional Solutions, Cloud Solutions and Checks segments. -- Revenue grew 3% from the third quarter, reflecting new business and some seasonality in Promotional Solutions. -- The Payments segment delivered revenue growth of 3% over the same period last year, consistent with management's expectations. COVID-19-related delays in customer implementations impacted the growth rate in this segment. -- Net income of $24.7 million was impacted by COVID-19 and continued costs in support of the company's transformation. -- Adjusted EBITDA margin remained strong at 20.9%, despite the impact of COVID-19, as management continues to aggressively execute cost-savings and efficiency programs.Full Year Full Year 2020 2019 % Change ------------------ ------------------ ---------- Revenue $1,790.8 million $2,008.7 million (10.8%) Net Income (Loss) Attributable to Deluxe $8.8 million ($199.9) million n/m Adjusted EBITDA $364.5 million $480.9 million (24.2%) Diluted EPS -- GAAP $0.19 ($4.65) n/m Adjusted Diluted EPS $5.08 $6.82 (25.5%) n/m - not meaningful -- Revenue was $217.9 million lower than the previous year. COVID-19 negatively impacted the company's results, primarily across the Promotional Solutions, Cloud Solutions and Checks segments. -- The Payments segment formed at the beginning of the year delivered revenue growth of 12% over the previous year. COVID-19-related delays in customer implementations impacted the growth rate in this segment, which will likely continue into Q1 2021. -- Net income of $8.8 million was impacted by COVID-19 and continued costs in support of the company's transformation. -- Despite the impact of COVID-19, adjusted EBITDA margin remained strong at 20.4%, as management continued to implement cost savings and efficiency programs across the company. -- Cash flow from operations for 2020 was $217.6 million and capital expenditures were $62.6 million. Free cash flow, defined as cash provided by operating activities less capital expenditures, was $155.0 million, a decrease of $65.1 million as compared to 2019. -- In addition to COVID-19, free cash flow was impacted by previously disclosed expenditures to support the company's business transformation and the ongoing secular decline in checks. These impacts were partially offset by lower income taxes, management's cost savings initiatives, and lower capital expenditures. -- Net debt of $716.9 million was the lowest since June 30, 2018. -- During the fourth quarter, the company repaid $200 million on its revolving credit facility under which it borrowed at the onset of the COVID-19 pandemic. -- As of December 31, 2020, $840.0 million was drawn on the revolving credit facility, compared to $883.5 million at the beginning of 2020. Liquidity was $425.4 million, with cash and cash equivalents increasing $49.5 million for the year.-- Delivered solid financial results and accelerated historic transformation despite COVID challenges -- Sales-driven success continues to drive momentum -- Achieved strong cash flows and increased liquidity; lowest total and net debt in 2.5 years -- Declares regular quarterly dividend affirming confidence in financial strength and disciplined stewardship SHOREVIEW, Minn.--(BUSINESS WIRE)--February 04, 2021--

Deluxe Reports Fourth Quarter and Full Year 2020 Results; Declares Regular Dividend and Provides 2021 Outlook

Deluxe (NYSE: DLX), a Trusted Business Technology(TM) company, today reported operating results for its fourth quarter and year ended December 31, 2020.

"Our One Deluxe strategy, including our new go-to-market approach, delivered record sales success in 2020, exceeding our pre-pandemic plan and positioning Deluxe to drive further growth in 2021 and beyond. Our team continues to successfully execute on this historic transformation, with our newly created Payments business unit delivering double-digit growth for the full year. We also strengthened our financial position by reducing net debt to the lowest level in two-and-a-half years, while achieving our full year target margin percentage. Through the course of the year, we continued to pay our regular quarterly dividend, demonstrating our confidence in the business and commitment to returning value to our shareholders," said Barry McCarthy, President and CEO of Deluxe.

"Given our disciplined stewardship, financial strength, sales-driven performance and rebounding core revenue expectations, we are confident in our future and look forward to steady improvement in 2021," said McCarthy.

Full Year 2020 Financial and Segment Highlights

Fourth Quarter 2020 Financial and Segment Highlights

Outlook

Although the specific timing for larger economic recovery remains uncertain, as a result of increased confidence in the Company's financial position and strong execution against its strategic plan, Deluxe is establishing guidance for the full year 2021:

Capital Allocation and Dividend

The Board of Directors recently approved a regular quarterly dividend of $0.30 per share. The dividend will be payable on March 1, 2021 to shareholders of record as of market closing on February 16, 2021.

Earnings Call Information

A live conference call will be held today at 4:45 p.m. ET (3:45 p.m. CT) to review the financial results. Listeners can access the call by dialing 1-615-247-0252 (access code 3364057). A presentation also will be available via a webcast on the investor relations website at www.deluxe.com/investor. Alternatively, an audio replay of the call will be available after 8:00 p.m. ET and through midnight on February 12, 2021 by dialing 1-404-537-3406 (access code 3364057).

About Deluxe Corporation

Deluxe, a Trusted Business Technology(TM) company, champions business so communities thrive. Our solutions help businesses pay and get paid, accelerate growth and operate more efficiently. For more than 100 years, Deluxe customers have relied on our solutions and platforms at all stages of their lifecycle, from start-up to maturity. Our powerful scale supports millions of small businesses, thousands of vital financial institutions and hundreds of the world's largest consumer brands, while processing more than $2.8 trillion in annual payment volume. Our reach, scale and distribution channels position Deluxe to be our customers' most trusted business partner. To learn how we can help your business, visit us at www.deluxe.com, www.facebook.com/deluxecorp, www.linkedin.com/company/deluxe, or www.twitter.com/deluxe.

Forward-Looking Statements

Statements made in this release concerning Deluxe, the company's or management's intentions, expectations, outlook or predictions about future results or events are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect management's current intentions or beliefs and are subject to risks and uncertainties that could cause actual results or events to vary from stated expectations, which variations could be material and adverse. Factors that could produce such a variation include, but are not limited to, the following: potential continuing negative impacts from pandemic health issues, such as the coronavirus / COVID-19, along with the impact of government restrictions or similar directives on our future results of operations, our future financial condition and our ability to continue business activities in affected regions; the impact that further deterioration or prolonged softness in the economy may have on demand for the company's products and services; the company's ability to execute its transformational strategy and to realize the intended benefits; the inherent unreliability of earnings, revenue and cash flow predictions due to numerous factors, many of which are beyond the company's control; declining demand for the company's checks, check-related products and services and business forms; risks that the company's strategies intended to drive sustained revenue and earnings

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February 04, 2021 16:05 ET (21:05 GMT)