Business segment information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Business segment information

For many years, we operated 3 reportable business segments: Small Business Services, Financial Services and Direct Checks. These segments were generally organized by customer type and reflected the way we managed the company. Effective January 1, 2020, we reorganized our reportable business segments to align with structural and management reporting changes in support of our growth strategy. We now operate 4 reportable segments, generally organized by product type, as follows:

•Payments – This segment includes our treasury management solutions, including remittance and lockbox processing, remote deposit capture, receivables management, payment processing and paperless treasury management, in addition to payroll and disbursement services, including Deluxe Payment Exchange and fraud and security services.

•Cloud Solutions – This segment includes web hosting and design services, data-driven marketing solutions and hosted solutions, including digital engagement, logo design, financial institution profitability reporting, account switching tools and business incorporation services.

•Promotional Solutions – This segment includes business forms, accessories, advertising specialties, promotional apparel, retail packaging and strategic sourcing services.

•Checks – This segment includes printed personal and business checks.

The accounting policies of the segments are the same as those described in the Notes to Consolidated Financial Statements included in the 2019 Form 10-K. We allocate corporate costs for our shared services functions to our business segments when the costs are directly attributable to a segment. This includes certain sales and marketing, human resources, supply chain, real estate, finance, information technology and legal costs. Costs that are not directly attributable to a business segment are reported as Corporate operations and consist primarily of marketing, accounting, information technology, facilities, executive management and legal, tax and treasury costs that support the corporate function. Corporate operations also includes other income. All of our segments operate primarily in the U.S., with some operations in Canada. In addition, Cloud Solutions has operations in Australia and portions of Europe, as well as partners in Central and South America.

Under the new segment structure, our chief operating decision maker (i.e., our Chief Executive Officer) reviews earnings before interest, taxes, depreciation and amortization (EBITDA) on an adjusted basis for each segment when deciding how to allocate resources and to assess segment operating performance. Adjusted EBITDA for each segment excludes depreciation and amortization expense, interest expense, income tax expense and certain other amounts, which may include, from time to time: asset impairment charges; restructuring, integration and other costs; CEO transition costs; share-based compensation expense; acquisition transaction costs; certain legal-related expense; and gains or losses on sales of businesses and customer lists. Our Chief Executive Officer does not review segment asset information when making investment or operating decisions regarding our reportable business segments.

The following is our segment information for the quarters and nine months ended September 30, 2020 and 2019. The segment information for 2019 has been revised to reflect our current segment structure.

	Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands)	2020		2019		2020		2019
Payments:
Revenue	$	74,675	$	64,634	$	223,886	$	193,888
Adjusted EBITDA	16,746		17,199		50,352		52,037
Cloud Solutions:
Revenue	63,758		79,976		193,600		237,178
Adjusted EBITDA	16,425		20,216		45,494		56,362
Promotional Solutions:
Revenue	124,929		156,835		385,667		468,209
Adjusted EBITDA	21,478		22,909		46,529		68,787
Checks:
Revenue	176,099		192,148		533,135		587,370
Adjusted EBITDA	84,954		98,782		258,392		300,887
Total segment:
Revenue	$	439,461	$	493,593	$	1,336,288	$	1,486,645
Adjusted EBITDA	139,603		159,106		400,767		478,073

The following table presents a reconciliation of total segment adjusted EBITDA to consolidated income (loss) before income taxes:

	Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands)	2020		2019		2020		2019
Total segment adjusted EBITDA	$	139,603	$	159,106	$	400,767	$	478,073
Corporate operations	(37,090)		(39,770)		(131,101)		(127,543)
Depreciation and amortization	(27,972)		(30,494)		(83,065)		(95,430)
Interest expense	(5,083)		(8,710)		(18,254)		(27,251)
Pre-tax income attributable to non-controlling interest	21		—		46		—
Asset impairment charges	(2,760)		(390,980)		(97,973)		(390,980)
Restructuring, integration and other costs	(18,941)		(29,723)		(59,064)		(53,699)
CEO transition costs(1)	—		(1,145)		(10)		(8,539)
Share-based compensation expense	(6,240)		(5,356)		(15,335)		(14,016)
Acquisition transaction costs	—		(13)		(9)		(193)
Certain legal-related expenses	—		—		2,165		(6,417)
Loss on sales of customer lists	—		(125)		(18)		(224)
Income (loss) before income taxes	$	41,538	$	(347,210)	$	(1,851)	$	(246,219)

(1) In 2019, includes adjustments to share-based compensation expense related to the modification of certain awards in conjunction with our CEO transition.

The following tables present revenue disaggregated by our product and service offerings. In conjunction with the realignment of our reportable segments on January 1, 2020, we refined the disaggregation of our revenue by product and service offering. As such, certain amounts reported in the prior year have been revised from previously reported amounts.

	Quarter Ended September 30, 2020
(in thousands)	Payments		Cloud Solutions		Promotional Solutions		Checks		Consolidated
Checks	$	—	$	—	$	—	$	176,099	$	176,099
Forms and other products	—		—		77,492		—		77,492
Treasury management solutions	55,418		—		—		—		55,418
Marketing and promotional solutions	—		—		47,437		—		47,437
Web and hosted solutions	—		33,250		—		—		33,250
Data-driven marketing solutions	—		30,508		—		—		30,508
Other payments solutions	19,257		—		—		—		19,257
Total revenue	$	74,675	$	63,758	$	124,929	$	176,099	$	439,461

	Quarter Ended September 30, 2019
(in thousands)	Payments		Cloud Solutions		Promotional Solutions		Checks		Consolidated
Checks	$	—	$	—	$	—	$	192,148	$	192,148
Forms and other products	—		—		86,184		—		86,184
Treasury management solutions	45,836		—		—		—		45,836
Marketing and promotional solutions	—		—		70,651		—		70,651
Web and hosted solutions	—		38,892		—		—		38,892
Data-driven marketing solutions	—		41,084		—		—		41,084
Other payments solutions	18,798		—		—		—		18,798
Total revenue	$	64,634	$	79,976	$	156,835	$	192,148	$	493,593

	Nine Months Ended September 30, 2020
(in thousands)	Payments		Cloud Solutions		Promotional Solutions		Checks		Consolidated
Checks	$	—	$	—	$	—	$	533,135	$	533,135
Forms and other products	—		—		234,735		—		234,735
Treasury management solutions	167,078		—		—		—		167,078
Marketing and promotional solutions	—		—		150,932		—		150,932
Web and hosted solutions	—		104,673		—		—		104,673
Data-driven marketing solutions	—		88,927		—		—		88,927
Other payments solutions	56,808		—		—		—		56,808
Total revenue	$	223,886	$	193,600	$	385,667	$	533,135	$	1,336,288

	Nine Months Ended September 30, 2019
(in thousands)	Payments		Cloud Solutions		Promotional Solutions		Checks		Consolidated
Checks	$	—	$	—	$	—	$	587,370	$	587,370
Forms and other products	—		—		257,553		—		257,553
Treasury management solutions	136,782		—		—		—		136,782
Marketing and promotional solutions	—		—		210,656		—		210,656
Web and hosted solutions	—		120,514		—		—		120,514
Data-driven marketing solutions	—		116,664		—		—		116,664
Other payments solutions	57,106		—		—		—		57,106
Total revenue	$	193,888	$	237,178	$	468,209	$	587,370	$	1,486,645

The following tables present revenue disaggregated by geography, based on where items are shipped from or where services are performed:

	Quarter Ended September 30, 2020
(in thousands)	Payments		Cloud Solutions		Promotional Solutions		Checks		Consolidated
United States	$	66,377	$	55,755	$	118,454	$	170,865	$	411,451
Foreign, primarily Canada and Australia	8,298		8,003		6,475		5,234		28,010
Total revenue	$	74,675	$	63,758	$	124,929	$	176,099	$	439,461

	Quarter Ended September 30, 2019
(in thousands)	Payments		Cloud Solutions		Promotional Solutions		Checks		Consolidated
United States	$	56,088	$	71,300	$	150,336	$	186,659	$	464,383
Foreign, primarily Canada and Australia	8,546		8,676		6,499		5,489		29,210
Total revenue	$	64,634	$	79,976	$	156,835	$	192,148	$	493,593

	Nine Months Ended September 30, 2020
(in thousands)	Payments		Cloud Solutions		Promotional Solutions		Checks		Consolidated
United States	$	198,965	$	169,917	$	369,023	$	516,961	$	1,254,866
Foreign, primarily Canada and Australia	24,921		23,683		16,644		16,174		81,422
Total revenue	$	223,886	$	193,600	$	385,667	$	533,135	$	1,336,288

	Nine Months Ended September 30, 2019
(in thousands)	Payments		Cloud Solutions		Promotional Solutions		Checks		Consolidated
United States	$	169,130	$	210,929	$	448,049	$	570,565	$	1,398,673
Foreign, primarily Canada and Australia	24,758		26,249		20,160		16,805		87,972
Total revenue	$	193,888	$	237,178	$	468,209	$	587,370	$	1,486,645