- 2023 reported revenue decreased 2.0% including impact from
divestitures, while comparable adjusted revenue increased $6
million or 0.3%.
- Third consecutive year of revenue growth, on a comparable
adjusted basis.
- Full year GAAP diluted EPS was $0.59 while adjusted diluted EPS
was $3.32.
- Full year net income was $26.2 million, down from $65.5 million
in 2022, on increased interest expense and restructuring
activity.
- Comparable adjusted EBITDA increased 3.2% to $417.1 million for
the full year.
- 2024 guidance reiterated, reflecting continued expansion of
comparable adjusted revenue, EBITDA, and EPS.
Deluxe (NYSE: DLX), a Trusted Payments and Data company, today
reported operating results for its fourth quarter and year ended
December 31, 2023.
“We are pleased to report a third consecutive year of organic
revenue growth, while also increasing comparable adjusted EBITDA
faster than revenue, and generating significantly improved free
cash flows during both the fourth quarter and full year periods.
These results further demonstrate the power of the combined Deluxe
portfolio of offerings, aligned with the transformation of our
business to a modern Payments and Data company,” said Barry
McCarthy, President and CEO of Deluxe. “The increasing scale of our
combined Payments and Data platform is driving improved operating
leverage and expansion of our comparable adjusted EBITDA margins,
which we expect will continue in line with our 2024 guidance as we
focus on execution aligned to our North Star initiatives.”
“We were particularly pleased with our ability to improve our
net debt position and leverage ratio during 2023, and the
enterprise has strong momentum aligned with our core capital
allocation priorities as 2024 begins,” said Chip Zint, Senior Vice
President and Chief Financial Officer of Deluxe. “Deluxe remains
diligently focused on operational execution, and we are confident
in the continued expansion of our earnings trajectory.”
Full Year 2023 Financial
Highlights
(in millions, except per share
amounts)
Full Year
2023
Full Year
2022
% Change
Revenue
$2,192.3
$2,238.0
(2.0%)
Comparable Adjusted Revenue
$2,192.3
$2,186.3
0.3%
Net Income
$26.2
$65.5
(60.0%)
Adjusted EBITDA
$417.1
$418.1
(0.2%)
Comparable Adjusted EBITDA
$417.1
$404.0
3.2%
Diluted EPS
$0.59
$1.50
(60.7%)
Adjusted Diluted EPS
$3.32
$4.08
(18.6%)
- Revenue for the full year decreased 2.0% from the previous
year. Comparable adjusted revenue, reflecting the removal of
business exits, increased 0.3% compared to the previous year.
- Net income of $26.2 million was down from $65.5 million in
2022, primarily reflecting higher interest expense and
restructuring activities, in addition to the impact of
divestitures.
- Adjusted EBITDA margin was 19.0%, up 30 basis points from the
prior year, while comparable adjusted EBITDA margin was up 50 basis
points.
- Adjusted diluted EPS was $3.32 versus $4.08 in the prior
year.
Fourth Quarter 2023 Financial
Highlights
(in millions, except per share
amounts)
4th Quarter
2023
4th Quarter
2022
% Change
Revenue
$537.4
$564.0
(4.7%)
Comparable Adjusted Revenue
$537.4
$548.3
(2.0%)
Net Income
$15.0
$19.0
(21.1%)
Adjusted EBITDA
$106.4
$112.2
(5.2%)
Comparable Adjusted EBITDA
$106.4
$105.7
0.7%
Diluted EPS
$0.34
$0.44
(22.7%)
Adjusted Diluted EPS
$0.80
$1.04
(23.1%)
- Revenue for the fourth quarter decreased 4.7% from the previous
year. Comparable adjusted revenue, reflecting the removal of
business exits, decreased 2.0% compared to the previous year.
- Net income of $15.0 million was down from $19.0 million in the
fourth quarter of 2022, primarily reflecting business exits and
higher interest expense.
- Adjusted EBITDA margin was 19.8%, down 10 basis points from the
prior year, while comparable adjusted EBITDA margin was up 50 basis
points.
- Adjusted diluted EPS was $0.80 versus $1.04 in the prior
year.
Outlook
The Company expects the following for full-year 2024, inclusive
of expected business exits, and all figures are approximate:
- Revenue of $2.14 to $2.18 billion
- Adjusted EBITDA of $400 to $420 million
- Adjusted EPS of $3.10 to $3.40
- Free cash flow of $60 to $80 million
The guidance outlined above is subject to, among other things,
prevailing macroeconomic conditions, global unrest, labor supply
issues, inflation, and the impact of business exits.
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
4, 2024, to shareholders of record as of market closing on February
20, 2024.
Earnings Call Information
Deluxe management will host a conference call today at 8:30 a.m.
ET (7:30 a.m. CT) to review the financial results. Listeners can
access the call by dialing 1-888-210-4748 (access code 7092711).
The audio and accompanying slides will be available via a
simultaneous webcast on the investor relations website at
www.investors.deluxe.com.
Alternatively, an audio replay will be available after 11:30 a.m.
ET through midnight on February 8, 2024, by dialing 1-800-770-2030
(access code 7092711).
About Deluxe Corporation
Deluxe, a Trusted Payments and Data company, champions business
so communities thrive. Our solutions help businesses pay and get
paid, accelerate growth and operate more efficiently. For more than
100 years, Deluxe customers have relied on our solutions and
platforms at all stages of their lifecycle, from start-up to
maturity. Our powerful scale supports millions of small businesses,
thousands of vital financial institutions and hundreds of the
world’s largest consumer brands. Our reach, scale and distribution
channels position Deluxe to be our customers’ most trusted business
partner. To learn how we can help your business, visit us at
www.deluxe.com, www.facebook.com/deluxecorp, www.linkedin.com/company/deluxe, or www.twitter.com/deluxe.
Forward-Looking Statements
Statements made in this release concerning Deluxe, the company’s
or management’s intentions, expectations, outlook or predictions
about future results or events are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements reflect management’s current intentions or
beliefs and are subject to risks and uncertainties that could cause
actual results or events to vary from stated expectations, which
variations could be material and adverse. Factors that could
produce such a variation include, but are not limited to, the
following: potential continuing negative impacts from pandemic
health issues, such as the coronavirus / COVID-19, along with the
impact of related government restrictions or similar directives on
our future results of operations and our future financial
condition; changes in local, regional, national and international
economic or political conditions, including those resulting from
heightened inflation, rising interest rates, a recession, or
intensified international hostilities, and the impact they may have
on the company, its customers or demand for the company’s products
and services; the effect of proposed and enacted legislative and
regulatory actions affecting the company or the financial services
industry as a whole; continuing cost increases and/or declines in
the availability of materials and other services; the company’s
ability to execute its transformational strategy and to realize the
intended benefits; the inherent unreliability of earnings, revenue
and cash flow predictions due to numerous factors, many of which
are beyond the company’s control; declining demand for the
company’s checks, check-related products and services and business
forms; risks that the company’s strategies intended to drive
sustained revenue and earnings growth, despite the continuing
decline in checks and forms, are delayed or unsuccessful; intense
competition; continued consolidation of financial institutions
and/or bank failures, thereby reducing the number of potential
customers and referral sources and increasing downward pressure on
the company’s revenue and gross profit; risks related to
acquisitions, including integration-related risks and risks that
future acquisitions will not be consummated; risks that any such
acquisitions do not produce the anticipated results or synergies;
risks that the company’s cost reduction initiatives will be delayed
or unsuccessful; risks related to any divestitures contemplated or
undertaken by the company; performance shortfalls by one or more of
the company’s major suppliers, licensors or service providers;
continuing supply chain and labor supply issues; unanticipated
delays, costs and expenses in the development and marketing of
products and services, including web services and financial
technology and treasury management solutions; the failure of such
products and services to deliver the expected revenues and other
financial targets; risks related to security breaches, computer
malware or other cyber-attacks; risks of interruptions to the
company’s website operations or information technology systems; and
risks of unfavorable outcomes and the costs to defend litigation
and other disputes. The company’s forward-looking statements speak
only as of the time made, and management assumes no obligation to
publicly update any such statements. Additional information
concerning these and other factors that could cause actual results
and events to differ materially from the company’s current
expectations are contained in the company’s Form 10-K for the year
ended December 31, 2022, and other filings made with the SEC. The
company undertakes no obligation to update or revise any
forward-looking statements to reflect subsequent events, new
information or future circumstances.
DELUXE CORPORATION
CONSOLIDATED CONDENSED
STATEMENTS OF INCOME
(in millions, except per share
amounts)
(Unaudited)
Quarter Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Product revenue
$318.8
$329.5
$1,257.6
$1,286.2
Service revenue
218.6
234.5
934.7
951.8
Total revenue
537.4
564.0
2,192.3
2,238.0
Cost of products
(124.2)
(124.8)
(486.1)
(470.2)
Cost of services
(129.7)
(137.8)
(543.5)
(561.9)
Total cost of revenue
(253.9)
(262.6)
(1,029.6)
(1,032.1)
Gross profit
283.5
301.4
1,162.7
1,205.9
Selling, general and administrative
expense
(229.1)
(240.1)
(956.1)
(993.3)
Restructuring and integration
expense
(18.2)
(15.9)
(78.2)
(62.5)
Gain on sale of businesses and
long-lived assets
14.8
—
32.4
19.3
Operating income
51.0
45.4
160.8
169.4
Interest expense
(31.7)
(29.0)
(125.6)
(94.4)
Other income
0.1
1.9
4.6
9.4
Income before income taxes
19.4
18.3
39.8
84.4
Income tax (provision) benefit
(4.4)
0.7
(13.6)
(18.9)
Net income
15.0
19.0
26.2
65.5
Non-controlling interest
—
—
(0.1)
(0.1)
Net income attributable to
Deluxe
$15.0
$19.0
$26.1
$65.4
Weighted average dilutive
shares
44.1
43.4
43.8
43.3
Diluted earnings per share
$0.34
$0.44
$0.59
$1.50
Adjusted diluted earnings per
share
0.80
1.04
3.32
4.08
Capital expenditures
19.9
31.1
100.7
104.6
Depreciation and amortization
expense
44.7
43.6
169.7
172.6
EBITDA
95.8
90.9
335.0
351.3
Adjusted EBITDA
106.4
112.2
417.1
418.1
DELUXE CORPORATION
CONSOLIDATED CONDENSED BALANCE
SHEETS
(dollars and shares in
millions)
(Unaudited)
December 31,
2023
December 31,
2022
Cash and cash equivalents
$72.0
$40.4
Other current assets
689.0
663.6
Property, plant & equipment
116.5
124.9
Operating lease assets
59.0
47.1
Intangibles
391.7
459.0
Goodwill
1,430.6
1,431.4
Other non-current assets
321.8
310.1
Total assets
$3,080.6
$3,076.5
Current portion of long-term
debt
$86.2
$71.7
Other current liabilities
732.9
680.6
Long-term debt
1,506.7
1,572.5
Non-current operating lease
liabilities
58.8
49.0
Other non-current liabilities
91.4
98.5
Shareholders' equity
604.6
604.2
Total liabilities and shareholders'
equity
$3,080.6
$3,076.5
Net debt
$1,520.9
$1,603.8
Shares outstanding
43.7
43.2
DELUXE CORPORATION
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Year Ended
December 31,
2023
2022
Cash provided (used) by:
Operating activities:
Net income
$26.2
$65.5
Depreciation and amortization of
intangibles
169.7
172.6
Gain on sale of businesses and
long-lived assets
(32.4)
(19.3)
Prepaid product discount
payments
(28.5)
(30.6)
Other
63.4
3.3
Total operating activities
198.4
191.5
Investing activities:
Proceeds from sale of businesses and
long-lived assets
53.6
25.2
Purchases of capital assets
(100.7)
(104.6)
Other
3.8
(0.9)
Total investing activities
(43.3)
(80.3)
Financing activities:
Net change in debt
(55.2)
(40.6)
Dividends
(53.3)
(52.6)
Net change in customer funds
obligations
79.1
56.4
Other
(8.3)
(11.8)
Total financing activities
(37.7)
(48.6)
Effect of exchange rate change on cash,
cash equivalents, restricted cash and restricted cash
equivalents
3.2
(10.7)
Net change in cash, cash equivalents,
restricted cash and restricted cash equivalents
120.6
51.9
Cash, cash equivalents, restricted cash
and restricted cash equivalents, beginning of year
337.4
285.5
Cash, cash equivalents, restricted cash
and restricted cash equivalents, end of year
$458.0
$337.4
Free cash flow
$97.7
$86.9
DELUXE CORPORATION
SEGMENT INFORMATION
(In millions)
(Unaudited)
Quarter Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Revenue:
Payments
$174.9
$171.4
$690.7
$678.6
Data Solutions
44.1
62.7
238.8
267.5
Promotional Solutions
142.4
154.3
541.7
562.9
Checks
176.0
175.6
721.1
729.0
Total
$537.4
$564.0
$2,192.3
$2,238.0
Adjusted EBITDA:
Payments
$42.3
$37.0
$152.8
$144.6
Data Solutions
7.3
17.3
55.7
68.2
Promotional Solutions
24.1
29.8
80.8
79.5
Checks
78.9
74.7
320.3
320.5
Corporate
(46.2)
(46.6)
(192.5)
(194.7)
Total
$106.4
$112.2
$417.1
$418.1
Adjusted EBITDA Margin:
Payments
24.2%
21.6%
22.1%
21.3%
Data Solutions
16.6%
27.6%
23.3%
25.5%
Promotional Solutions
16.9%
19.3%
14.9%
14.1%
Checks
44.8%
42.5%
44.4%
44.0%
Total
19.8%
19.9%
19.0%
18.7%
The segment information reported here was calculated utilizing
the methodology outlined in the Notes to Consolidated Financial
Statements included in the company's Annual Report on Form 10-K for
the year ended December 31, 2022.
DELUXE CORPORATION
SEGMENT INFORMATION
(continued)
(In millions)
(Unaudited)
Quarter Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Comparable Adjusted Revenue:
Payments
$174.9
$171.4
$690.7
$678.6
Data Solutions
44.1
47.7
238.8
229.0
Promotional Solutions
142.4
153.6
541.7
549.7
Checks
176.0
175.6
721.1
729.0
Total
$537.4
$548.3
$2,192.3
$2,186.3
Comparable Adjusted EBITDA:
Payments
$42.3
$37.0
$152.8
$144.6
Data Solutions
7.3
10.9
55.7
54.8
Promotional Solutions
24.1
29.7
80.8
78.8
Checks
78.9
74.7
320.3
320.5
Corporate
(46.2)
(46.6)
(192.5)
(194.7)
Total
$106.4
$105.7
$417.1
$404.0
Comparable Adjusted EBITDA
Margin:
Payments
24.2%
21.6%
22.1%
21.3%
Data Solutions
16.6%
22.9%
23.3%
23.9%
Promotional Solutions
16.9%
19.3%
14.9%
14.3%
Checks
44.8%
42.5%
44.4%
44.0%
Total
19.8%
19.3%
19.0%
18.5%
DELUXE CORPORATION RECONCILIATION OF
GAAP TO NON-GAAP MEASURES (in millions) (Unaudited)
Note that the company has not reconciled the adjusted EBITDA,
adjusted EPS or free cash flow outlook for 2024 to the directly
comparable GAAP financial measures because the company does not
provide outlook guidance for the reconciling items between net
income, adjusted net income and adjusted EBITDA, and certain of
these reconciling items impact cash flows from operating
activities. Because of the substantial uncertainty and variability
surrounding certain of these forward-looking reconciling items,
including: asset impairment charges, restructuring and integration
costs, gains and losses on sales of businesses and long-lived
assets, and certain legal-related expenses, a reconciliation of the
non-GAAP financial measure outlook to the corresponding GAAP
measures is not available without unreasonable effort. The probable
significance of certain of these reconciling items is high and,
based on historical experience, could be material.
EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA
MARGIN
Management discloses EBITDA, adjusted EBITDA and adjusted EBITDA
margin because it believes they are useful in evaluating the
company's operating performance, as the calculations eliminate the
effect of interest expense, income taxes, the accounting effects of
capital investments (i.e., depreciation and amortization) and in
the case of adjusted EBITDA and adjusted EBITDA margin, certain
items, as presented below, that may not be indicative of current
period operating performance. In addition, management utilizes
these measures to assess the operating results and performance of
the business, to perform analytical comparisons and to identify
strategies to improve performance. Management also believes that an
increasing EBITDA and adjusted EBITDA depict an increase in the
value of the company. Management does not consider EBITDA and
adjusted EBITDA to be measures of cash flow, as they do not
consider certain cash requirements, such as interest, income taxes,
debt service payments or capital investments. Management does not
consider EBITDA, adjusted EBITDA or adjusted EBITDA margin to be
substitutes for operating income or net income. Instead, management
believes that these amounts are useful performance measures that
should be considered in addition to GAAP performance measures.
Quarter Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Net income
$15.0
$19.0
$26.2
$65.5
Non-controlling interest
—
—
(0.1)
(0.1)
Interest expense
31.7
29.0
125.6
94.4
Income tax provision (benefit)
4.4
(0.7)
13.6
18.9
Depreciation and amortization expense
44.7
43.6
169.7
172.6
EBITDA
95.8
90.9
335.0
351.3
Restructuring and integration costs
19.5
16.3
90.5
63.1
Share-based compensation expense
4.6
4.9
20.5
23.6
Acquisition transaction costs
—
—
—
0.1
Certain legal-related expense
(benefit)
—
0.1
2.2
(0.7)
Gain on sale of businesses and long-lived
assets
(14.8)
—
(32.4)
(19.3)
Loss on sale of Payroll investment
1.3
—
1.3
—
Adjusted EBITDA
$106.4
$112.2
$417.1
$418.1
Adjusted EBITDA as a percentage of total
revenue (adjusted EBITDA margin)
19.8%
19.9%
19.0%
18.7%
DELUXE CORPORATION RECONCILIATION OF
GAAP TO NON-GAAP MEASURES (continued) (in millions, except per
share amounts) (Unaudited)
ADJUSTED DILUTED EPS
By excluding the impact of non-cash items or items that may not
be indicative of current period operating performance, management
believes that adjusted diluted EPS provides useful comparable
information to assist in analyzing the company's current and future
operating performance. As such, adjusted diluted EPS is one of the
key financial performance metrics used to assess the operating
results and performance of the business and to identify strategies
to improve performance. It is reasonable to expect that one or more
of the excluded items will occur in future periods, but the amounts
recognized may vary significantly. Management does not consider
adjusted diluted EPS to be a substitute for GAAP performance
measures, but believes that it is a useful performance measure that
should be considered in addition to GAAP performance measures.
Quarter Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Net income
$15.0
$19.0
$26.2
$65.5
Non-controlling interest
—
—
(0.1)
(0.1)
Net income attributable to Deluxe
15.0
19.0
26.1
65.4
Acquisition amortization
16.0
21.9
74.8
90.6
Accelerated amortization
2.5
—
2.5
—
Restructuring and integration costs
19.5
16.3
90.5
63.1
Share-based compensation expense
4.6
4.9
20.5
23.6
Acquisition transaction costs
—
—
—
0.1
Certain legal-related expense
(benefit)
—
0.1
2.2
(0.7)
Gain on sale of businesses and long-lived
assets
(14.8)
—
(32.4)
(19.3)
Loss on sale of Payroll investment
1.3
—
1.3
—
Gain on debt retirements
—
—
—
(1.7)
Adjustments, pre-tax
29.1
43.2
159.4
155.7
Income tax provision impact of pretax
adjustments(1)
(8.9)
(17.0)
(39.6)
(43.8)
Adjustments, net of tax
20.2
26.2
119.8
111.9
Adjusted net income attributable to
Deluxe
35.2
45.2
145.9
177.3
Income allocated to participating
securities
—
—
—
(0.1)
Re-measurement of share-based awards
classified as liabilities
—
—
—
(0.5)
Adjusted income attributable to Deluxe
available to common shareholders
$35.2
$45.2
$145.9
$176.7
Weighted-average dilutive shares(2)
44.1
43.4
43.9
43.3
GAAP Diluted EPS
$0.34
$0.44
$0.59
$1.50
Adjustments, net of tax
0.46
0.60
2.73
2.58
Adjusted Diluted EPS
$0.80
$1.04
$3.32
$4.08
(1)
The tax effect of the pretax adjustments
considers the tax treatment and related tax rate(s) that apply to
each adjustment in the applicable tax jurisdiction(s). Generally,
this results in a tax impact that approximates the U.S. effective
tax rate for each adjustment. However, the tax impact of certain
adjustments, such as share-based compensation expense, depends on
whether the amounts are deductible in the respective tax
jurisdictions and the applicable effective tax rate(s) in those
jurisdictions.
(2)
The weighted-average dilutive shares used
in the calculation of adjusted EPS for the quarter ended December
31, 2022 differs from the GAAP calculation due to differences in
the amount of dilutive securities in each calculation.
DELUXE CORPORATION RECONCILIATION OF
GAAP TO NON-GAAP MEASURES (continued) (in millions)
(Unaudited)
COMPARABLE ADJUSTED REVENUE, COMPARABLE
ADJUSTED EBITDA AND COMPARABLE ADJUSTED EBITDA MARGIN
Management views the measures of comparable adjusted revenue and
comparable adjusted EBITDA, which exclude the impact of business
exits, as important indicators when assessing and evaluating the
performance of the business and when identifying strategies to
improve performance. By excluding the impact of business exits,
management is able to evaluate internally-generated revenue and
adjusted EBITDA, measured by comparable results on a year-over-year
basis. These measures are utilized by management to compare
operational performance across fiscal periods when an acquisition
or business exit occurs.
COMPARABLE ADJUSTED
REVENUE
Quarter Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Total Company:
Total revenue
$537.4
$564.0
$2,192.3
$2,238.0
Business exits
—
(15.7)
—
(51.7)
Comparable adjusted revenue
$537.4
$548.3
$2,192.3
$2,186.3
Payments:
Total revenue
$174.9
$171.4
$690.7
$678.6
Data Solutions:
Total revenue
$44.1
$62.7
$238.8
$267.5
Business exits
—
(15.0)
—
(38.5)
Comparable adjusted revenue
$44.1
$47.7
$238.8
$229.0
Promotional Solutions:
Total revenue
$142.4
$154.3
$541.7
$562.9
Business exits
—
(0.7)
—
(13.2)
Comparable adjusted revenue
$142.4
$153.6
$541.7
$549.7
Checks:
Total revenue
$176.0
$175.6
$721.1
$729.0
DELUXE CORPORATION
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES (continued)
(in millions)
(Unaudited)
COMPARABLE ADJUSTED EBITDA AND
COMPARABLE ADJUSTED EBITDA MARGIN
Quarter Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Total Company:
Adjusted EBITDA
$106.4
$112.2
$417.1
$418.1
Business exits
—
(6.5)
—
(14.1)
Comparable adjusted EBITDA
$106.4
$105.7
$417.1
$404.0
Comparable adjusted EBITDA margin
19.8%
19.3%
19.0%
18.5%
Payments:
Adjusted EBITDA
$42.3
$37.0
$152.8
$144.6
Data Solutions:
Adjusted EBITDA
$7.3
$17.3
$55.7
$68.2
Business exits
—
(6.4)
—
(13.4)
Comparable adjusted EBITDA
$7.3
$10.9
$55.7
$54.8
Comparable adjusted EBITDA margin
16.6%
22.9%
23.3%
23.9%
Promotional Solutions:
Adjusted EBITDA
$24.1
$29.8
$80.8
$79.5
Business exits
—
(0.1)
—
(0.7)
Comparable adjusted EBITDA
$24.1
$29.7
$80.8
$78.8
Comparable adjusted EBITDA margin
16.9%
19.3%
14.9%
14.3%
Checks:
Adjusted EBITDA
$78.9
$74.7
$320.3
$320.5
Corporate:
Adjusted EBITDA
($46.2)
($46.6)
($192.5)
($194.7)
DELUXE CORPORATION RECONCILIATION OF
GAAP TO NON-GAAP MEASURES (continued) (in millions)
(Unaudited)
NET DEBT
Management believes that net debt is an important measure to
monitor leverage and to evaluate the balance sheet. In calculating
net debt, cash and cash equivalents are subtracted from total debt
because they could be used to reduce the company’s debt
obligations. A limitation associated with using net debt is that it
subtracts cash and cash equivalents, and therefore, may imply that
management intends to use cash and cash equivalents to reduce
outstanding debt. In addition, net debt suggests that our debt
obligations are less than the most comparable GAAP measure
indicates.
December 31,
2023
December 31,
2022
Total debt
$1,592.9
$1,644.2
Cash and cash equivalents
(72.0)
(40.4)
Net debt
$1,520.9
$1,603.8
FREE CASH FLOW
Management defines free cash flow as net cash provided by
operating activities less purchases of capital assets. Management
believes that free cash flow is an important indicator of cash
available for debt service and for shareholders, after making
capital investments to maintain or expand the company’s asset base.
A limitation of using the free cash flow measure is that not all of
the company’s free cash flow is available for discretionary
spending, as the company may have mandatory debt payments and other
cash requirements that must be deducted from its cash available for
future use. Free cash flow is not a substitute for GAAP liquidity
measures. Instead, management believes that this measurement
provides an additional metric to compare cash generated by
operations on a consistent basis and to provide insight into the
cash flow available to fund items such as dividends, mandatory and
discretionary debt reduction, acquisitions or other strategic
investments, and share repurchases.
Quarter Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Net cash provided by operating
activities
$83.4
$68.1
$198.4
$191.5
Purchases of capital assets
(19.9)
(31.1)
(100.7)
(104.6)
Free cash flow
$63.5
$37.0
$97.7
$86.9
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240201904712/en/
Brian Anderson, VP, Strategy & Investor Relations
651-447-4197 brian.anderson@deluxe.com
Keith Negrin, VP, Communications 612-669-1459
keith.negrin@deluxe.com
Deluxe (NYSE:DLX)
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