ST. PAUL, Minn. - Deluxe Corporation (NYSE: DLX), a leader in providing small businesses and financial institutions with products and services to drive customer revenue, announced its financial results for the fourth quarter ended December 31, 2015. Key financial highlights include:

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

Revenue was near the high-end of the range in the prior outlook and adjusted diluted EPS exceeded the high-end of the range in the prior outlook driven primarily by strong operating results in each of the three segments and a better than expected effective tax rate.

“Our team delivered another strong year of financial results - growing revenue for the sixth consecutive year and growing cash flow from operations for the seventh consecutive year,” said Lee Schram, CEO of Deluxe. “Throughout 2015 we made substantial progress on our transformation and we further strengthened our marketing solutions and other services product offerings by aggressively expanding our focus and investments into the Financial Services segment where we added comprehensive data analytics and enhanced treasury management solutions and products. In addition, we added even more robust technologies for web-hosting customers and expanded our direct sales channels to expose more small businesses to our extensive assortment of marketing capabilities. Looking into 2016, we expect to continue our track record of growth in revenue, EPS and cash flow from operations and we expect that marketing solutions & other services will account for over one third of our total revenue.”

Fourth Quarter 2015 Highlights:

• Revenue increased 3.3% year-over-year, primarily due to the Small Business Services segment which grew 3.3%, as well as the Financial Services segment which grew 7.3% and included the results of Datamyx LLC which was acquired in October 2015.
• Revenue from marketing solutions and other services increased 12.3% year-over-year and accounted for 33.1% of consolidated revenue in the quarter.
• Gross margin was 63.0% of revenue, flat compared to 63.1% in the fourth quarter of 2014. Unfavorable product revenue mix and increased delivery and material costs were offset by previous price increases, an increase in service margins and improvements in manufacturing productivity.
• Selling, general and administrative (SG&A) expense increased 4.0% from last year primarily due to additional SG&A expense from acquisitions, but was partially offset by continued cost reduction initiatives in all segments. SG&A as a percent of revenue was 43.1% in the quarter compared to 42.8% last year.
• Operating income increased 0.8% year-over-year and includes restructuring and transaction-related costs in both periods and a loss on the sale-leaseback of a facility in 2014. Adjusted operating income, which excludes these items, increased 2.8% year-over-year from higher revenue and continued cost reductions.
• Diluted EPS increased 3.4% year-over-year. Excluding restructuring and transaction-related costs in both periods and the loss on sale-leaseback in 2014, adjusted diluted EPS increased 5.9% year-over-year driven by lower interest expense and stronger operating performance, partially offset by a higher effective income tax rate.

Segment Highlights
Small Business Services

• Revenue was $303.7 million and increased 3.3% year-over-year due primarily to growth in marketing solutions and other services, and from a channel perspective, growth in the online, Safeguard® distributor, dealer and major account channels. Previous price increases also benefitted the quarter while unfavorable foreign exchange rates negatively impacted revenue growth by approximately 1.0 percentage point year-over-year.
• Operating income increased 4.4% from last year to $54.4 million. Adjusted operating income, which excludes restructuring and transaction-related costs in both periods, increased 7.8% year-over-year due primarily to cost reductions, partly offset by product revenue mix and investments in revenue-generating initiatives.

Financial Services

• Revenue was $120.3 million and increased 7.3% year-over-year. The increase in revenue was primarily due to growth in marketing solutions and other services, which includes Datamyx revenue of approximately $8 million, as well as the impact of previous price increases, partially offset by the secular decline in check usage.
• Operating income decreased 9.3% from last year to $22.3 million. Adjusted operating income, which excludes restructuring and transaction-related costs in both periods, decreased 5.5% year-over-year and includes costs associated with the Datamyx acquisition and the impact of the secular decline in check usage, partially offset by previous price increases and the continued benefits of cost reductions.

Direct Checks

• Revenue of $39.5 million declined 6.8% year-over-year due primarily to the secular decline in check usage and the elimination of marketing expenditures that no longer met the Company’s return criteria, partially offset by higher conversion rates from email marketing offers and an improved call center incentive plan.
• Operating income increased 5.2% year-over-year to $14.1 million. Adjusted operating income, which excludes restructuring costs and a loss on sale-leaseback in 2014, decreased 0.7% year-over-year, due to lower order volume partly offset by lower costs and a higher mix of reorders.

Other Highlights

• Cash provided by operating activities for 2015 was $307.9 million, an increase of $27.5 million compared to 2014, driven primarily by lower interest payments and improved operating performance, partially offset by higher income tax and performance-based compensation payments.
• The Company repurchased an additional $13 million of common stock in open market transactions in the fourth quarter bringing the full year common stock repurchase amount to $60 million.
• At the end of the fourth quarter, the company had $631 million of total debt outstanding.
• On January 25, 2016, the Board of Directors of Deluxe Corporation declared a regular quarterly dividend of $0.30 per common share on all outstanding shares of the Company. The dividend will be payable on March 7, 2016 to all shareholders of record at the close of business on February 22, 2016.