Deluxe(DLX) - 2024 Q4 - Annual Report

Financial Performance - Consolidated revenue decreased by $70 million to$ 2.12 billion, primarily due to a secular decline in order volumes and business exits, which accounted for a $45 million reduction [178]. - Net income increased by$ 27 million to $53 million, driven by pricing and cost reduction actions, despite losses from exited businesses and inflationary pressures [178]. - Adjusted EBITDA decreased by$ 5 million to $412 million, with business exits contributing a$ 20 million decrease; excluding these exits, adjusted EBITDA would have increased [178]. - Adjusted EBITDA margin improved to 19.4% for 2024, up from 19.0% in 2023, aided by a 14% reduction in corporate operation costs [171]. - SG&A expense decreased by 4.9% to $909.2 million, with SG&A as a percentage of total revenue falling to 42.8% from 43.6% [188]. - Free cash flow increased by$ 2 million to $100 million, allowing reinvestment into growth businesses [178]. - Net income for 2024 was$ 52,945, reflecting a 101.9% increase from $26,227 in 2023, while diluted EPS rose to$ 1.18 from $0.59 [195]. - Free cash flow for 2024 was$ 99,892, an increase from $97,620 in 2023, with net cash provided by operating activities at$ 194,281 [197]. Revenue by Segment - Total revenue for the Merchant Services segment in 2024 was $384,038, representing a 5.4% increase compared to 2023's revenue of$ 364,233 [208]. - Total revenue for the B2B Payments segment decreased to $287,851 in 2024, a decline of 3.8% compared to$ 299,196 in 2023 [212]. - Total revenue for the Data Solutions segment increased to $234,033 in 2024, a growth of 10.5% compared to$ 211,788 in 2023 [216]. - Total revenue for the Print segment decreased to $1,205,077 in 2024, a decline of 4.5% compared to$ 1,261,283 in 2023 [220]. Adjusted EBITDA by Segment - Adjusted EBITDA for the Merchant Services segment in 2024 was $78,540, up 5.6% from$ 74,399 in 2023, with an adjusted EBITDA margin of 20.5% [208][209]. - Adjusted EBITDA for the B2B Payments segment fell to $57,088 in 2024, down 8.0% from$ 62,034 in 2023, with an adjusted EBITDA margin of 19.8% [212][213]. - Adjusted EBITDA for the Data Solutions segment rose to $60,443 in 2024, a significant increase of 30.6% from$ 46,281 in 2023, with an adjusted EBITDA margin of 25.8% [216][217]. - Adjusted EBITDA for the Print segment was $376,601 in 2024, down 6.1% from$ 400,942 in 2023, with an adjusted EBITDA margin of 31.3% [220][221]. Cash Flow and Liquidity - Cash provided by operating activities decreased by $4 million to$ 194 million, reflecting secular declines and inflationary pressures [178]. - As of December 31, 2024, the company held cash and cash equivalents of $34 million, with an additional$ 374 million available for borrowing [180]. - As of December 31, 2024, the company held cash and cash equivalents of $34 million and had an additional$ 374 million available for borrowing under its revolving credit facility, indicating sufficient liquidity to support operations over the next 12 months [230]. - Net cash provided by operating activities for 2024 was $194,281, a decrease of$ 4,086 compared to $198,367 in 2023 [225]. Debt and Interest - Total debt decreased to$ 1,503,151 in 2024 from $1,592,851 in 2023, resulting in net debt of$ 1,468,752 [198]. - The principal amount of the company's debt obligations was $1.52 billion, down from$ 1.60 billion in 2023, reflecting a decrease of $82.27 million [231]. - The company executed a$ 900 million amended and restated credit agreement, with $518 million outstanding at a weighted-average interest rate of 7.23% [233]. - The company issued$ 450 million of 8.125% senior secured notes maturing in September 2029, with net proceeds of $441 million used to refinance previous debt [234]. - Interest expense decreased by 1.9% to$ 123,281 in 2024 from $125,643 in 2023, primarily due to a 5.5% reduction in average debt outstanding [193]. - A one percentage point change in the weighted-average interest rate would result in a$ 6 million change in interest expense for 2025 [256]. Capital Expenditures and Investments - The company anticipates capital expenditures between $90 million and$ 100 million in 2025, compared to $94 million in 2024 [180]. - The company has committed payments totaling approximately$ 225 million to third-party service providers for IT services, with $70 million due in 2025 [229]. Compliance and Governance - The company remains in compliance with its debt covenants as of December 31, 2024 [235]. - The company recorded goodwill totaling$ 1.42 billion as of December 31, 2024, representing 50.3% of total assets, with no impairment charges recorded for the year [244]. Restructuring and Integration - Restructuring and integration expenses for 2024 were $48,570, a decrease of 37.9% from$ 78,245 in 2023 [190]. Other Financial Metrics - Gain on sale of businesses and long-lived assets decreased by 3.7% to $31,207 in 2024 from$ 32,421 in 2023 [191]. - Asset impairment charges of $7,743 were recorded in 2024 due to the exit from the U.S. and Canadian payroll and human resources services business [192]. - Income tax provision increased by 73.5% to$ 23,552 in 2024 from $13,572 in 2023, with an effective tax rate decrease of 3.3 percentage points to 30.8% [194]. - The company paid cash dividends of$ 54.15 million in 2024, slightly up from $53.33 million in 2023 [228].