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Deluxe Q2 Profit Up, Raises Outlook

Friday, July 25, 2014

Press release from the issuing company

ST. PAUL, Minn. - Deluxe Corporation, a leader in providing small businesses and financial institutions with products and services to drive customer revenue, announced its financial results for the second quarter ended June 30, 2014. Key financial highlights include:

      Q2 2014     Q2 2013     % Change
Revenue     $405.4 million     $381.4 million     6.3%
Net Income     $50.1 million     $48.2 million     3.9%
Diluted EPS – GAAP     $0.99     $0.94     5.3%
Adjusted Diluted EPS – Non-GAAP     $1.01     $0.96     5.2%

A reconciliation between earnings per share on a GAAP basis and adjusted earnings per share on a non-GAAP basis is provided after the Forward-Looking Statements.

Both revenue and adjusted diluted EPS exceeded the high end of the range in the prior outlook. The earnings results were driven by strong revenue performance in all segments, each of which met or exceeded revenue expectations, and better than expected cost reductions partially offset by a slightly higher effective tax rate.

“Deluxe delivered another very strong quarter beating our revenue and earnings outlook,” said Lee Schram, CEO of Deluxe. “Our focus on Marketing Solutions and Services continues to deliver strong results and revenue increased 20 percent over last year’s level, now accounting for 23 percent of total revenue in the quarter. In April, we announced a 20 percent dividend increase and have repurchased $52 million of stock year-to-date. As we look ahead, we are well positioned to deliver a fifth consecutive year of revenue growth in 2014.”

Second Quarter 2014 Highlights:

  • Revenue increased 6.3% year-over-year, with the strongest performance in the Small Business Services segment which grew 8.7%, followed by Financial Services which grew 6.5%.
  • Revenue from marketing solutions and other services increased 19.7% year-over-year and accounted for 23.1% of total revenue in the quarter.
  • Gross margin was 64.0% of revenue, down from 65.0% in the second quarter of 2013. The decline was primarily driven by a higher services revenue mix and higher delivery and material costs.
  • Selling, general and administrative (SG&A) expense increased 5.5% from last year primarily due to additional SG&A expense from acquisitions and higher performance-based compensation and medical costs. SG&A as a percent of revenue was 42.8% in the quarter compared to 43.1% of revenue last year.
  • Operating income increased 3.0% year-over-year and includes restructuring and transaction-related costs in both periods. Adjusted operating income, which excludes these items, increased 2.3% year-over-year from higher revenue per order and continued cost reductions partially offset by higher performance-based compensation and medical costs.
  • Diluted EPS increased 5.3% year-over-year driven primarily by stronger operating performance and lower shares outstanding.


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