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 October 25, 2012, of Deluxe Corporation reporting results from third quarter 2012. |
DELUXE CORPORATION | ||
/s/ Anthony C. Scarfone | ||
Anthony C. Scarfone | ||
Senior Vice President, | ||
General Counsel and Secretary |
99.1 | Press Release, dated October 25, 2012, of Deluxe Corporation reporting results from third 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 THIRD QUARTER 2012 FINANCIAL RESULTS |
Revenue grows 7%: exceeds high end of outlook |
Diluted EPS of $0.81 grows 14%; adjusted EPS of $0.85 grows 9% - both exceed high end of outlook |
Raises full-year revenue and EPS outlook |
Declares regular quarterly dividend |
Q3 2012 | Q3 2011 | Vs. Q3 2011 | ||||||||
Revenue | $378.3 million | $355.1 million | 6.5 | % | ||||||
Net income | $41.5 million | $36.7 million | 13.1 | % | ||||||
Diluted EPS – GAAP | $0.81 | $0.71 | 14.1 | % | ||||||
Adjusted Diluted EPS – Non-GAAP | $0.85 | $0.78 | 9.0 | % |
• | Revenue for the quarter was $378.3 million compared to $355.1 million during the third quarter of 2011. Revenue increased 6.5% compared to 2011, driven by 14.0% growth in Small Business Services, which included the impact of the OrangeSodaTM acquisition. Marketing solutions and other services revenue increased 22.9% compared to 2011 and represented 19.2% of consolidated revenue, up from 16.7% in the third quarter of 2011. |
• | Gross margin was 65.2 percent of revenue compared to 65.5 percent in 2011. Increased delivery rates, material costs and performance based compensation expense in 2012 were partially off-set by favorable impacts from price increases and the Company's continued cost reduction initiatives. |
• | Selling, general and administrative (SG&A) expense increased $8.6 million in the quarter compared to 2011, but as a percent of revenue, was down slightly to 45.3 percent. Increased SG&A expense associated with commissions on increased revenue, as well as higher performance based compensation expense and the OrangeSodaTM acquisition last quarter was partially offset by benefits from continued execution against cost reduction initiatives. |
• | Operating income in 2012 was $72.7 million compared to $65.6 million in the third quarter of 2011. Restructuring and transaction-related costs were $2.9 million in 2012 versus $5.1 million in 2011. These costs were primarily attributable to the Company's on-going cost reduction initiatives. Operating income was 19.2 percent of revenue compared to 18.5 percent in the prior year driven primarily by higher revenue per order, continued cost reductions and lower restructuring charges, partially off-set by higher performance based compensation expense, increased delivery rates and material costs, and the OrangeSoda acquisition last quarter. |
• | Reported diluted EPS increased $0.10 from the prior year driven by improved operating performance and lower restructuring charges in 2012. |
• | Revenue was $244.5 million versus $214.4 million in 2011. Revenue was 14.0% higher in the quarter driven by growth in marketing solutions and other services revenue and in the Safeguard® distributor, dealer, and major account channels. Revenue also benefited from price increases and $8.6 million from the OrangeSoda acquisition. |
• | Operating income in 2012 increased to $39.6 million from $34.6 million in 2011. |
• | Revenue was $82.8 million compared to $85.2 million in 2011. The impact of check usage declines exceeded the benefits of price increases, revenue from a new financial institution client, and growth in non-check revenue. Secular declines for consumer checks were slightly less than 5% in the quarter. |
• | Operating income in 2012 increased to $17.7 million from $14.1 million in 2011. |
• | Revenue was $51.0 million compared to $55.5 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 $16.9 million in 2011. |
• | Cash provided by operating activities for the first nine months of 2012 totaled $177.1 million, an increase of $5.9 million compared to 2011. Improved operating performance and the discontinuation of payments to our defined contribution pension plan were partially 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 payments. |
• | The Board of Directors of Deluxe Corporation declared a regular quarterly dividend of $0.25 per share to all outstanding shares of the Company. The dividend will be payable on December 3, 2012 to shareholders of record at the close of business on November 19, 2012. The Company had 50,902,714 shares outstanding as of October 23, 2012. |
Current outlook (10/25/2012) | |||
Revenue | $381 to $388 million | ||
Diluted EPS – GAAP | $0.82 to $0.89 | ||
Adjusted Diluted EPS – Non-GAAP | $0.85 to $0.92 |
Prior outlook (7/26/12) | Current outlook (10/25/2012) | ||
Revenue | $1.490 to $1.510 billion | $1.508 to $1.515 billion | |
Diluted EPS – GAAP | $3.20 to $3.35 | $3.30 to $3.37 | |
Adjusted Diluted EPS – Non-GAAP | $3.30 to $3.45 | $3.43 to $3.50 | |
Operating cash flow | $235 to $245 million | $239 to $245 million | |
Capital expenditures | $35 million | $35 million | |
Depreciation and amortization | $65 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 1-866-700-7477 (access code 39894246). |
• | 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 November 1st by calling 1-888-286-8010 (access code 46672795). The presentation will be archived on Deluxe's web site. |
Actual | |||||||
Q3 2012 | Q3 2011 | ||||||
Adjusted Diluted EPS | $0.85 | $0.78 | |||||
Restructuring and related costs | (0.04 | ) | (0.06 | ) | |||
Transaction-related costs | — | (0.01 | ) | ||||
Reported Diluted EPS | $0.81 | $0.71 |
Outlook | |||||
Q4 2012 | Full Year 2012 | ||||
Adjusted Diluted EPS | $0.85 - $0.92 | $3.43 - $3.50 | |||
Restructuring and related costs | (0.03 | ) | (0.12 | ) | |
Transaction-related costs | — | (0.01 | ) | ||
Reported Diluted EPS | $0.82 - $0.89 | $3.30 - $3.37 |
Quarter Ended September 30, | |||||||||||||
2012 | 2011 | ||||||||||||
Revenue | $378.3 | $355.1 | |||||||||||
Cost of goods sold, including net restructuring charges | (131.7 | ) | (34.8 | %) | (122.6 | ) | (34.5 | %) | |||||
Gross profit | 246.6 | 65.2 | % | 232.5 | 65.5 | % | |||||||
Selling, general and administrative expense | (171.2 | ) | (45.3 | %) | (162.6 | ) | (45.8 | %) | |||||
Net restructuring charges | (2.7 | ) | (0.7 | %) | (4.3 | ) | (1.2 | %) | |||||
Operating income | 72.7 | 19.2 | % | 65.6 | 18.5 | % | |||||||
Interest expense | (11.9 | ) | (3.1 | %) | (11.8 | ) | (3.3 | %) | |||||
Other income (expense) | 0.2 | 0.1 | % | (0.3 | ) | (0.1 | %) | ||||||
Income before income taxes | 61.0 | 16.1 | % | 53.5 | 15.1 | % | |||||||
Income tax provision | (19.5 | ) | (5.2 | %) | (16.8 | ) | (4.7 | %) | |||||
Net income | $41.5 | 11.0 | % | $36.7 | 10.3 | % | |||||||
Weighted average dilutive shares outstanding | 51.0 | 51.2 | |||||||||||
Diluted earnings per share | $0.81 | $0.71 | |||||||||||
Capital expenditures | $8.2 | $8.9 | |||||||||||
Depreciation and amortization expense | 16.2 | 17.8 | |||||||||||
Number of employees-end of period | 5,646 | 5,761 | |||||||||||
Non-GAAP financial measure - EBITDA(1) | $89.1 | $83.1 | |||||||||||
Non-GAAP financial measure - Adjusted EBITDA(1) | 92.0 | 88.2 |
Quarter Ended September 30, | ||||||||
2012 | 2011 | |||||||
Adjusted EBITDA | $92.0 | $88.2 | ||||||
Restructuring and related costs | (2.9 | ) | (4.6 | ) | ||||
Transaction-related costs | — | (0.5 | ) | |||||
EBITDA | 89.1 | 83.1 | ||||||
Income tax provision | (19.5 | ) | (16.8 | ) | ||||
Interest expense | (11.9 | ) | (11.8 | ) | ||||
Depreciation and amortization expense | (16.2 | ) | (17.8 | ) | ||||
Net income | $41.5 | $36.7 |
Nine Months Ended September 30, | |||||||||||||
2012 | 2011 | ||||||||||||
Revenue | $1,127.3 | $1,051.2 | |||||||||||
Cost of goods sold, including net restructuring charges | (386.7 | ) | (34.3 | %) | (363.5 | ) | (34.6 | %) | |||||
Gross profit | 740.6 | 65.7 | % | 687.7 | 65.4 | % | |||||||
Selling, general and administrative expense | (510.9 | ) | (45.3 | %) | (480.7 | ) | (45.7 | %) | |||||
Net restructuring charges | (5.4 | ) | (0.5 | %) | (9.9 | ) | (0.9 | %) | |||||
Operating income | 224.3 | 19.9 | % | 197.1 | 18.8 | % | |||||||
Loss on early extinguishment of debt | — | — | (7.0 | ) | (0.7 | %) | |||||||
Interest expense | (34.9 | ) | (3.1 | %) | (35.9 | ) | (3.4 | %) | |||||
Other income (expense) | 0.5 | — | (0.2 | ) | — | ||||||||
Income before income taxes | 189.9 | 16.8 | % | 154.0 | 14.6 | % | |||||||
Income tax provision | (62.1 | ) | (5.5 | %) | (49.2 | ) | (4.7 | %) | |||||
Net income | $127.8 | 11.3 | % | $104.8 | 10.0 | % | |||||||
Weighted average dilutive shares outstanding | 51.1 | 51.5 | |||||||||||
Diluted earnings per share | $2.49 | $2.02 | |||||||||||
Capital expenditures | $25.6 | $28.2 | |||||||||||
Depreciation and amortization expense | 49.7 | 56.5 | |||||||||||
Number of employees-end of period | 5,646 | 5,761 | |||||||||||
Non-GAAP financial measure - EBITDA(1) | $274.5 | $246.4 | |||||||||||
Non-GAAP financial measure - Adjusted EBITDA(1) | 281.6 | 265.0 |
Nine Months Ended September 30, | ||||||||
2012 | 2011 | |||||||
Adjusted EBITDA | $281.6 | $265.0 | ||||||
Restructuring and related costs | (6.7 | ) | (10.7 | ) | ||||
Transaction-related costs | (0.4 | ) | (0.9 | ) | ||||
Loss on early debt extinguishment | — | (7.0 | ) | |||||
EBITDA | 274.5 | 246.4 | ||||||
Income tax provision | (62.1 | ) | (49.2 | ) | ||||
Interest expense | (34.9 | ) | (35.9 | ) | ||||
Depreciation and amortization expense | (49.7 | ) | (56.5 | ) | ||||
Net income | $127.8 | $104.8 |
September 30, 2012 | December 31, 2011 | September 30, 2011 | |||||||||
Cash and cash equivalents | $105.6 | $28.7 | $23.0 | ||||||||
Other current assets | 165.4 | 163.9 | 157.5 | ||||||||
Property, plant & equipment-net | 106.5 | 113.4 | 116.8 | ||||||||
Intangibles-net | 155.2 | 157.3 | 163.7 | ||||||||
Goodwill | 789.7 | 777.0 | 776.9 | ||||||||
Other non-current assets | 144.9 | 148.5 | 149.5 | ||||||||
Total assets | $1,467.3 | $1,388.8 | $1,387.4 | ||||||||
Short-term debt and current portion of long-term debt | $85.1 | $85.6 | $33.0 | ||||||||
Other current liabilities | 214.6 | 214.8 | 209.6 | ||||||||
Long-term debt | 657.2 | 656.1 | 742.6 | ||||||||
Deferred income taxes | 54.8 | 49.8 | 51.9 | ||||||||
Other non-current liabilities | 57.6 | 79.8 | 66.9 | ||||||||
Shareholders' equity | 398 | 302.7 | 283.4 | ||||||||
Total liabilities and shareholders' equity | $1,467.3 | $1,388.8 | $1,387.4 | ||||||||
Shares outstanding | 50.9 | 50.8 | 50.8 |
Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
Cash provided (used) by: | |||||||
Operating activities: | |||||||
Net income | $127.8 | $104.8 | |||||
Depreciation and amortization of intangibles | 49.7 | 56.5 | |||||
Contract acquisition payments | (15.0 | ) | (10.0 | ) | |||
Other | 14.6 | 19.9 | |||||
Total operating activities | 177.1 | 171.2 | |||||
Investing activities: | |||||||
Purchases of capital assets | (25.6 | ) | (28.2 | ) | |||
Payments for acquisitions | (32.6 | ) | (83.2 | ) | |||
Payments on company-owned life insurance policies | — | (6.4 | ) | ||||
Other | 0.3 | (2.7 | ) | ||||
Total investing activities | (57.9 | ) | (120.5 | ) | |||
Financing activities: | |||||||
Net change in debt | — | 11.0 | |||||
Dividends | (38.1 | ) | (38.4 | ) | |||
Share repurchases | (12.0 | ) | (23.6 | ) | |||
Shares issued under employee plans | 9.6 | 7.6 | |||||
Other | (2.7 | ) | (0.6 | ) | |||
Total financing activities | (43.2 | ) | (44.0 | ) | |||
Effect of exchange rate change on cash | 0.9 | (1.1 | ) | ||||
Net change in cash and cash equivalents | 76.9 | 5.6 | |||||
Cash and cash equivalents: Beginning of period | 28.7 | 17.4 | |||||
Cash and cash equivalents: End of period | $105.6 | $23.0 |
Quarter Ended September 30, | |||||||
2012 | 2011 | ||||||
Revenue: | |||||||
Small Business Services | $244.5 | $214.4 | |||||
Financial Services | 82.8 | 85.2 | |||||
Direct Checks | 51 | 55.5 | |||||
Total | $378.3 | $355.1 | |||||
Operating income: (1) | |||||||
Small Business Services | $39.6 | $34.6 | |||||
Financial Services | 17.7 | 14.1 | |||||
Direct Checks | 15.4 | 16.9 | |||||
Total | $72.7 | $65.6 |
Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
Revenue: | |||||||
Small Business Services | $707.1 | $617.6 | |||||
Financial Services | 259.1 | 259.9 | |||||
Direct Checks | 161.1 | 173.7 | |||||
Total | $1,127.3 | $1,051.2 | |||||
Operating income: (1) | |||||||
Small Business Services | $116.7 | $104.8 | |||||
Financial Services | 59.6 | 43.0 | |||||
Direct Checks | 48.0 | 49.3 | |||||
Total | $224.3 | $197.1 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Small Business Services | $2.1 | $2.5 | $4.5 | $5.4 | |||||||||||
Financial Services | 0.4 | 2.3 | 0.7 | 5.2 | |||||||||||
Direct Checks | 0.4 | 0.3 | 1.9 | 1.0 | |||||||||||
Total | $2.9 | $5.1 | $7.1 | $11.6 |
Quarter Ended September 30, | |||||||
2012 | 2011 | ||||||
Adjusted operating income: (1) | |||||||
Small Business Services | $41.7 | $37.1 | |||||
Financial Services | 18.1 | 16.4 | |||||
Direct Checks | 15.8 | 17.2 | |||||
Total | $75.6 | $70.7 |
Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
Adjusted operating income: (1) | |||||||
Small Business Services | $121.2 | $110.2 | |||||
Financial Services | 60.3 | 48.2 | |||||
Direct Checks | 49.9 | 50.3 | |||||
Total | $231.4 | $208.7 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Adjusted operating income | $75.6 | $70.7 | $231.4 | $208.7 | |||||||||||
Restructuring and transaction-related costs: | |||||||||||||||
Small Business Services | (2.1 | ) | (2.5 | ) | (4.5 | ) | (5.4 | ) | |||||||
Financial Services | (0.4 | ) | (2.3 | ) | (0.7 | ) | (5.2 | ) | |||||||
Direct Checks | (0.4 | ) | (0.3 | ) | (1.9 | ) | (1.0 | ) | |||||||
Total | (2.9 | ) | (5.1 | ) | (7.1 | ) | (11.6 | ) | |||||||
Reported operating income | $72.7 | $65.6 | $224.3 | $197.1 |