Minnesota | 1-7945 | 41-0216800 |
(State or Other Jurisdiction | (Commission | (I.R.S. Employer |
of Incorporation) | File Number) | Identification No.) |
3680 Victoria St. North, Shoreview, Minnesota | 55126-2966 |
(Address of Principal Executive Offices) | (Zip Code) |
99.1 | Press Release, dated July 26, 2012, of Deluxe Corporation reporting results from second quarter 2012. |
DELUXE CORPORATION | ||
/s/ Anthony C. Scarfone | ||
Anthony C. Scarfone | ||
Senior Vice President, | ||
General Counsel and Secretary |
99.1 | Press Release, dated July 26, 2012, of Deluxe Corporation reporting results from second quarter 2012 |
Deluxe Corporation P.O. Box 64235 St. Paul, MN 55164-0235 (651) 483-7111 |
NEWS RELEASE | For additional information: Jeff Johnson Treasurer and VP Investor Relations (651) 787-1068 | |
DELUXE REPORTS SECOND QUARTER 2012 FINANCIAL RESULTS |
Revenue grows 7% and exceeds high end of outlook |
Diluted EPS of $0.82 grows 21%, adjusted EPS of $0.85 grows 13% - both exceed high end of outlook |
Raises full year revenue and EPS outlook |
Q2 2012 | Q2 2011 | Vs. Q2 2011 | ||||||||
Revenue | $371.0 million | $346.3 million | 7.1 | % | ||||||
Net income | $42.3 million | $35.5 million | 19.2 | % | ||||||
Diluted EPS – GAAP | $0.82 | $0.68 | 20.6 | % | ||||||
Adjusted diluted EPS – Non-GAAP | $0.85 | $0.75 | 13.3 | % |
• | Revenue for the quarter was $371.0 million compared to $346.3 million during the second quarter of 2011. Revenue increased 7.1% compared to 2011, driven by 14.8% growth in Small Business Services. Marketing solutions and other services revenue increased 29.9% compared to 2011 and represented 17.5% of consolidated revenue, up from 14.4% in the second quarter of 2011. |
• | Gross margin was 65.6 percent of revenue compared to 65.1 percent in 2011. Favorable impacts from price increases and the Company's continued cost reduction initiatives more than offset increased delivery rates, material costs and performance based compensation expense in 2012. |
• | Selling, general and administrative (SG&A) expense increased $10.3 million in the quarter compared to 2011, but as a percent of revenue, was down slightly to 45.2 percent. Increased SG&A expense associated with commissions on increased revenue, as well as acquisitions, higher performance based compensation expense and investments in revenue generating initiatives was partially offset by benefits from continued execution against cost reduction initiatives and lower amortization related to previous acquisitions. |
• | Operating income in 2012 was $73.6 million compared to $64.0 million in the second quarter of 2011. Restructuring and transaction-related costs were $2.3 million in 2012 versus $5.0 million in 2011. These costs were primarily attributable to the Company's on-going cost reduction initiatives. Operating income was 19.8 percent of revenue compared to 18.5 percent in the prior year driven primarily by higher revenue per order and continued cost reductions. |
• | Reported diluted EPS increased $0.14 from the prior year driven by improved operating performance in 2012. The effective tax rate in both years benefited from favorable discrete items related primarily to state taxes in 2012 and foreign taxes in 2011. |
• | Revenue was $233.1 million versus $203.1 million in 2011. Revenue was 14.8% higher in the quarter driven by growth in marketing solutions and other services, the Safeguard® distributor and dealer channels, and checks and forms. Revenue also benefited from price increases and $10.5 million from the PsPrint® and OrangeSodaTM acquisitions. |
• | Operating income in 2012 increased to $38.2 million from $34.3 million in 2011. |
• | Revenue was $85.7 million compared to $86.7 million in 2011. The impact of check usage declines slightly exceeded the benefits of price increases, revenue from a new financial institution client, and growth in non-check revenue. |
• | Operating income in 2012 increased to $20.0 million from $13.2 million in 2011. |
• | Revenue was $52.2 million compared to $56.5 million in 2011, primarily driven by lower order volume resulting from the continued decline in check usage. |
• | Operating income in 2012 decreased to $15.4 million from $16.5 million in 2011. |
• | Cash provided by operating activities for the first half of 2012 totaled $99.9 million, a decrease of $4.3 million compared to 2011. Improved operating performance and the discontinuation of payments to our defined contribution pension plan were more than offset by higher income tax payments, a planned contribution in the first quarter to our VEBA trust for future medical costs and higher contract acquisition and interest payments. |
• | In the second quarter, the Company repurchased $12 million of shares to further off-set dilution from employee equity compensation plans. |
Current outlook (7/26/2012) | |||
Revenue | $366 to $375 million | ||
Diluted EPS – GAAP | $0.73 to $0.78 | ||
Adjusted Diluted EPS – Non-GAAP | $0.76 to $0.81 |
Prior outlook (4/26/12) | Current outlook (7/26/2012) | ||
Revenue | $1.445 to $1.475 billion | $1.490 to $1.510 billion | |
Diluted EPS – GAAP | $3.12 to $3.32 | $3.20 to $3.35 | |
Adjusted Diluted EPS – Non-GAAP | $3.20 to $3.40 | $3.30 to $3.45 | |
Operating cash flow | $225 to $245 million | $235 to $245 million | |
Capital expenditures | $35 million | $35 million | |
Depreciation and amortization | $64 million | $65 million | |
Effective tax rate | approximately 33% | approximately 33% |
• | Deluxe will hold an open-access teleconference call today at 11:00 a.m. ET (10:00 a.m. CT) to review the financial results. All interested persons may listen to the call by dialing 1-866-770-7051 (access code 29404515). |
• | The presentation also will be available via a simultaneous webcast at www.deluxe.com in the news and investor relations section. |
• | An audio replay of the call will be available through midnight on August 2nd by calling 1-888-286-8010 (access code 59901479). The presentation will be archived on Deluxe's web site. |
Actual | |||||||
Q2 2012 | Q2 2011 | ||||||
Adjusted EPS | $0.85 | $0.75 | |||||
Restructuring and related costs | (0.02 | ) | (0.06 | ) | |||
Transaction-related costs | (0.01 | ) | (0.01 | ) | |||
Reported Diluted EPS | $0.82 | $0.68 |
Outlook | |||||
Q3 2012 | Full Year 2012 | ||||
Adjusted EPS | $0.76 - $0.81 | $3.30 - $3.45 | |||
Restructuring and related costs | (0.03 | ) | (0.09 | ) | |
Transaction-related costs | — | (0.01 | ) | ||
Reported Diluted EPS | $0.73 - $0.78 | $3.20 to $3.35 |
Quarter Ended June 30, | |||||||||||||
2012 | 2011 | ||||||||||||
Revenue | $371.0 | $346.3 | |||||||||||
Cost of goods sold, including net restructuring charges | (127.6 | ) | (34.4 | %) | (120.7 | ) | (34.9 | %) | |||||
Gross profit | 243.4 | 65.6 | % | 225.6 | 65.1 | % | |||||||
Selling, general and administrative expense | (167.8 | ) | (45.2 | %) | (157.5 | ) | (45.5 | %) | |||||
Net restructuring charges | (2.0 | ) | (0.5 | %) | (4.1 | ) | (1.2 | %) | |||||
Operating income | 73.6 | 19.8 | % | 64.0 | 18.5 | % | |||||||
Interest expense | (11.4 | ) | (3.1 | %) | (12.0 | ) | (3.5 | %) | |||||
Other income (expense) | 0.3 | 0.1 | % | (0.1 | ) | — | |||||||
Income before income taxes | 62.5 | 16.8 | % | 51.9 | 15.0 | % | |||||||
Income tax provision | (20.2 | ) | (5.4 | %) | (16.4 | ) | (4.7 | %) | |||||
Net income | $42.3 | 11.4 | % | $35.5 | 10.3 | % | |||||||
Weighted average dilutive shares outstanding | 51.0 | 51.7 | |||||||||||
Diluted earnings per share | $0.82 | $0.68 | |||||||||||
Capital expenditures | $8.3 | $10.9 | |||||||||||
Depreciation and amortization expense | 16.3 | 18.9 | |||||||||||
Number of employees-end of period | 5,892 | 5,692 | |||||||||||
Non-GAAP financial measure - EBITDA(1) | $90.2 | $82.8 | |||||||||||
Non-GAAP financial measure - adjusted EBITDA(1) | 92.5 | 87.8 |
Quarter Ended June 30, | ||||||||
2012 | 2011 | |||||||
Adjusted EBITDA | $92.5 | $87.8 | ||||||
Restructuring and related costs | (1.9 | ) | (4.6 | ) | ||||
Transaction-related costs | (0.4 | ) | (0.4 | ) | ||||
EBITDA | 90.2 | 82.8 | ||||||
Income tax provision | (20.2 | ) | (16.4 | ) | ||||
Interest expense | (11.4 | ) | (12.0 | ) | ||||
Depreciation and amortization expense | (16.3 | ) | (18.9 | ) | ||||
Net income | $42.3 | $35.5 |
Six Months Ended June 30, | |||||||||||||
2012 | 2011 | ||||||||||||
Revenue | $749.0 | $696.0 | |||||||||||
Cost of goods sold, including net restructuring charges | (255.1 | ) | (34.1 | %) | (240.8 | ) | (34.6 | %) | |||||
Gross profit | 493.9 | 65.9 | % | 455.2 | 65.4 | % | |||||||
Selling, general and administrative expense | (339.7 | ) | (45.4 | %) | (318.3 | ) | (45.7 | %) | |||||
Net restructuring charges | (2.6 | ) | (0.3 | %) | (5.5 | ) | (0.8 | %) | |||||
Operating income | 151.6 | 20.2 | % | 131.4 | 18.9 | % | |||||||
Loss on early extinguishment of debt | — | — | (7.0 | ) | (1.0 | %) | |||||||
Interest expense | (23.1 | ) | (3.1 | %) | (24.1 | ) | (3.5 | %) | |||||
Other income | 0.4 | 0.1 | % | 0.1 | — | ||||||||
Income before income taxes | 128.9 | 17.2 | % | 100.4 | 14.4 | % | |||||||
Income tax provision | (42.6 | ) | (5.7 | %) | (32.4 | ) | (4.7 | %) | |||||
Net income | $86.3 | 11.5 | % | $68.0 | 9.8 | % | |||||||
Weighted average dilutive shares outstanding | 51.1 | 51.7 | |||||||||||
Diluted earnings per share | $1.68 | $1.31 | |||||||||||
Capital expenditures | $17.3 | $19.3 | |||||||||||
Depreciation and amortization expense | 33.4 | 38.7 | |||||||||||
Number of employees-end of period | 5,892 | 5,692 | |||||||||||
Non-GAAP financial measure - EBITDA(1) | $185.4 | $163.2 | |||||||||||
Non-GAAP financial measure - adjusted EBITDA(1) | 189.6 | 176.7 |
Six Months Ended June 30, | ||||||||
2012 | 2011 | |||||||
Adjusted EBITDA | $189.6 | $176.7 | ||||||
Restructuring and related costs | (3.8 | ) | (6.1 | ) | ||||
Transaction-related costs | (0.4 | ) | (0.4 | ) | ||||
Loss on early debt extinguishment | — | (7.0 | ) | |||||
EBITDA | 185.4 | 163.2 | ||||||
Income tax provision | (42.6 | ) | (32.4 | ) | ||||
Interest expense | (23.1 | ) | (24.1 | ) | ||||
Depreciation and amortization expense | (33.4 | ) | (38.7 | ) | ||||
Net income | $86.3 | $68.0 |
June 30, 2012 | December 31, 2011 | June 30, 2011 | |||||||||
Cash and cash equivalents | $45.1 | $28.7 | $17.6 | ||||||||
Other current assets | 176.0 | 163.9 | 165.6 | ||||||||
Property, plant & equipment-net | 108.2 | 113.4 | 117.1 | ||||||||
Intangibles-net | 161.5 | 157.3 | 152.5 | ||||||||
Goodwill | 789.7 | 777.0 | 752.3 | ||||||||
Other non-current assets | 141.7 | 148.5 | 129.9 | ||||||||
Total assets | $1,422.2 | $1,388.8 | $1,335.0 | ||||||||
Short-term debt and current portion of long-term debt | $85.3 | $85.6 | $13.0 | ||||||||
Other current liabilities | 203.7 | 214.8 | 195.3 | ||||||||
Long-term debt | 656.8 | 656.1 | 740.0 | ||||||||
Deferred income taxes | 54.3 | 49.8 | 49.6 | ||||||||
Other non-current liabilities | 63.2 | 79.8 | 71.5 | ||||||||
Shareholders' equity | 358.9 | 302.7 | 265.6 | ||||||||
Total liabilities and shareholders' equity | $1,422.2 | $1,388.8 | $1,335.0 | ||||||||
Shares outstanding | 50.5 | 50.8 | 51.0 |
Six Months Ended June 30, | ||||||||
2012 | 2011 | |||||||
Cash provided (used) by: | ||||||||
Operating activities: | ||||||||
Net income | $86.3 | $68.0 | ||||||
Depreciation and amortization of intangibles | 33.4 | 38.7 | ||||||
Contract acquisition payments | (10.5 | ) | (5.6 | ) | ||||
Other | (9.3 | ) | 3.1 | |||||
Total operating activities | 99.9 | 104.2 | ||||||
Investing activities: | ||||||||
Purchases of capital assets | (17.3 | ) | (19.3 | ) | ||||
Payments for acquisitions | (28.5 | ) | (36.7 | ) | ||||
Other | — | 0.7 | ||||||
Total investing activities | (45.8 | ) | (55.3 | ) | ||||
Financing activities: | ||||||||
Net change in debt | — | (9.0 | ) | |||||
Dividends | (25.4 | ) | (25.7 | ) | ||||
Share repurchases | (12.0 | ) | (18.0 | ) | ||||
Shares issued under employee plans | 2.9 | 6.5 | ||||||
Other | (3.4 | ) | (3.0 | ) | ||||
Total financing activities | (37.9 | ) | (49.2 | ) | ||||
Effect of exchange rate change on cash | 0.2 | 0.5 | ||||||
Net change in cash and cash equivalents | 16.4 | 0.2 | ||||||
Cash and cash equivalents: Beginning of period | 28.7 | 17.4 | ||||||
Cash and cash equivalents: End of period | $45.1 | $17.6 |
Quarter Ended June 30, | |||||||
2012 | 2011 | ||||||
Revenue: | |||||||
Small Business Services | $233.1 | $203.1 | |||||
Financial Services | 85.7 | 86.7 | |||||
Direct Checks | 52.2 | 56.5 | |||||
Total | $371.0 | $346.3 | |||||
Operating income: (1) | |||||||
Small Business Services | $38.2 | $34.3 | |||||
Financial Services | 20.0 | 13.2 | |||||
Direct Checks | 15.4 | 16.5 | |||||
Total | $73.6 | $64.0 |
Six Months Ended June 30, | |||||||
2012 | 2011 | ||||||
Revenue: | |||||||
Small Business Services | $462.7 | $403.1 | |||||
Financial Services | 176.3 | 174.7 | |||||
Direct Checks | 110.0 | 118.2 | |||||
Total | $749.0 | $696.0 | |||||
Operating income: (1) | |||||||
Small Business Services | $77.0 | $70.1 | |||||
Financial Services | 41.9 | 28.9 | |||||
Direct Checks | 32.7 | 32.4 | |||||
Total | $151.6 | $131.4 |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Small Business Services | $1.3 | $2.1 | $2.4 | $2.9 | |||||||||||
Financial Services | 0.3 | 2.4 | 0.3 | 2.8 | |||||||||||
Direct Checks | 0.7 | 0.5 | 1.5 | 0.8 | |||||||||||
Total | $2.3 | $5.0 | $4.2 | $6.5 |
Quarter Ended June 30, | |||||||
2012 | 2011 | ||||||
Adjusted operating income: (1) | |||||||
Small Business Services | $39.5 | $36.4 | |||||
Financial Services | 20.3 | 15.6 | |||||
Direct Checks | 16.1 | 17.0 | |||||
Total | $75.9 | $69.0 |
Six Months Ended June 30, | |||||||
2012 | 2011 | ||||||
Adjusted operating income: (1) | |||||||
Small Business Services | $79.4 | $73.0 | |||||
Financial Services | 42.2 | 31.7 | |||||
Direct Checks | 34.2 | 33.2 | |||||
Total | $155.8 | $137.9 |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Adjusted operating income | $75.9 | $69.0 | $155.8 | $137.9 | |||||||||||
Restructuring and transaction-related costs: | |||||||||||||||
Small Business Services | (1.3 | ) | (2.1 | ) | (2.4 | ) | (2.9 | ) | |||||||
Financial Services | (0.3 | ) | (2.4 | ) | (0.3 | ) | (2.8 | ) | |||||||
Direct Checks | (0.7 | ) | (0.5 | ) | (1.5 | ) | (0.8 | ) | |||||||
Total | (2.3 | ) | (5.0 | ) | (4.2 | ) | (6.5 | ) | |||||||
Reported operating income | $73.6 | $64.0 | $151.6 | $131.4 |