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Deluxe Reports First Full Year of Sales-Driven Growth in Nearly a Decade

By Staff Writer Atlanta Trend
  • Feb 27, 2022

“Deluxe reported the first full year of sales-driven growth in nearly a decade,” said Barry McCarthy, President and CEO of Deluxe.
 
“In the fourth quarter, all four segments grew, driving transformation just as we promised in 2020. The First American acquisition accelerated this transformation and continues to exceed expectations, delivering 13% top line growth over the prior year quarter, benefiting from our One Deluxe sales model. These results demonstrate our strategy is working and we remain confident in our ability to execute, across all our segments, as we enter 2022."

“Our fourth quarter results demonstrated strong execution of our strategy, as our revenue growth exceeded expectations, and we effectively managed COVID-related and inflationary impacts,” said Scott Bomar, Senior Vice President and Chief Financial Officer of Deluxe. “Looking ahead, we expect to continue our revenue momentum into 2022 and will continue to drive the One Deluxe approach across the business."

Full Year 2021 Financial and Segment Highlights
(in millions, except per share amounts)

 
                                                      Full Year 2021             Full Year 2020         % Change       

Revenue                                      $2,022.2                                $1,790.8               12.9%    

  
Net Income Attributable to          $62.6                                       $5.2                     n/m       

Deluxe 


Adjusted EBITDA                          $407.8                                      $364.5               11.9%    

  
Diluted EPS                                    $1.45                                         $0.11                n/m  

    
Adjusted Diluted EPS                    $4.88                                         $5.08                  (3.9%)    

 

  • Revenue was $231.4 million higher than the previous year. Excluding the First American acquisition, which closed on June 1, 2021, revenue increased $36.4 million, or 2.0% year-over-year.

 

  •    The Payments segment delivered revenue growth of 69.1% over the previous year to $510.4 million. Excluding First American, Payments grew 4.5%.

 

  • Net income attributable to Deluxe of $62.6 million includes $29.5 million of acquisition amortization from the First American acquisition, as well as $18.9 million of transaction costs and increased interest expense associated with the transaction.

 

  • Net income also includes tax expense of $4.6 million in the fourth quarter, or $0.11 per diluted share, resulting from the repatriation of $85.3 million of cash from our Canadian subsidiaries.

 

  •   Adjusted EBITDA margin was 20.2%, down 20 basis points from the prior year.    

 

  •   Cash flow from operations for 2021 was $210.8 million and capital expenditures were $109.1 million. Free cash flow, defined as cash provided by operating activities less capital expenditures, was $101.7 million, a decrease of $53.3 million compared to 2020, largely attributable to increased capital investments and acquisition transaction costs this year.                   

 

  •   Total debt outstanding decreased from $1,776.2 million as of September 30, 2021 to $1,683.0 million as of December 31, 2021. Net debt was $1,641.8 million and liquidity was $403.8 million as of December 31, 2021.

 

  • Since closing the First American transaction, Deluxe has made net debt reduction payments totaling $152.9 million.

Fourth Quarter 2021 Financial and Segment Highlights
(in millions, except per share amounts)
 
                                       4th Quarter  2021                4th Quarter  2020           % Change    

  
Revenue                             $570.6                                $454.5                               25.5    %       


Net Income Attributable     $13.8                                   $24.7                                (44.1    %)    

to Deluxe

 
Adjusted EBITDA                 $117.1                                  $94.9                                23.4    %      

 
Diluted EPS                         $0.32                                     $0.58                                (44.8    %)

      
Adjusted Diluted EPS          $1.26                                     $1.38                                 (8.7    %)     

  •  Revenue for the fourth quarter was $116.1 million higher than the previous year. Excluding the First American acquisition, which closed on June 1, 2021, revenue increased $31.0 million, or 6.8% year-over-year.
  • The Payments segment delivered revenue growth of 114.5% over the previous year to $167.3 million. Excluding First American, Payments grew 5.4%.

  •  

    Net income of $13.8 million includes $13.7 million of acquisition amortization from the First American acquisition, as well as increased interest expense associated with the transaction.

  •  

    Net income also includes tax expense of $4.6 million, or $0.11 per diluted share, resulting from the repatriation of $85.3 million of cash from our Canadian subsidiaries.

  •  

    Adjusted EBITDA margin was 20.5%, down 40 basis points from the prior year.

  •  

    Cash flow from operations for the fourth quarter was $61.6 million and capital expenditures were $28.1 million. Free cash flow was $33.5 million, a sequential increase of $2.6 million from the third quarter of 2021, and an increase of $2.7 million compared to the fourth quarter of 2020, despite an $8.2 million increase in capital investments.

2022 Outlook

The company expects the following for full year 2022:

 

  • Revenue growth of 8% to 10%, which includes a full year impact from First American
  • Adjusted EBITDA margin of approximately 20%
  • Capital expenditures of approximately $105 million

The guidance outlined above is subject to, among other things, the macroeconomic unknowns associated with the COVID-19 pandemic, including the Omicron variant, as well as anticipated continued supply chain constraints, labor supply issues and inflation.

Capital Allocation and Dividend

The Board of Directors recently approved a regular quarterly dividend of $0.30 per share. The dividend will be payable on March 7, 2022 to shareholders of record as of market closing on February 22, 2022.