Deluxe Reports Fourth Quarter and Full Year 2020 Results

Deluxe (NYSE: DLX), a Trusted Business Technology™ company, today reported operating results for its fourth quarter and year ended December 31, 2020.

“Our One Deluxe strategy, including our new go-to-market approach, delivered record sales success in 2020, exceeding our pre-pandemic plan and positioning Deluxe to drive further growth in 2021 and beyond. Our team continues to successfully execute on this historic transformation, with our newly created Payments business unit delivering double-digit growth for the full year. We also strengthened our financial position by reducing net debt to the lowest level in two-and-a-half years, while achieving our full year target margin percentage. Through the course of the year, we continued to pay our regular quarterly dividend, demonstrating our confidence in the business and commitment to returning value to our shareholders,” said Barry McCarthy, President and CEO of Deluxe.

“Given our disciplined stewardship, financial strength, sales-driven performance and rebounding core revenue expectations, we are confident in our future and look forward to steady improvement in 2021,” said McCarthy.

Full Year 2020 Highlights:
*Revenue was $217.9 million lower than the previous year. COVID-19 negatively impacted the company’s results, primarily across the Promotional Solutions, Cloud Solutions and Checks segments.
*The Payments segment formed at the beginning of the year delivered revenue growth of 12% over the previous year. COVID-19-related delays in customer implementations impacted the growth rate in this segment, which will likely continue into Q1 2021.
*Net income of $8.8 million was impacted by COVID-19 and continued costs in support of the company’s transformation.
*Despite the impact of COVID-19, adjusted EBITDA margin remained strong at 20.4%, as management continued to implement cost savings and efficiency programs across the company.
*Cash flow from operations for 2020 was $217.6 million and capital expenditures were $62.6 million. Free cash flow, defined as cash provided by operating activities less capital expenditures, was $155.0 million, a decrease of $65.1 million as compared to 2019.
**In addition to COVID-19, free cash flow was impacted by previously disclosed expenditures to support the company’s business transformation and the ongoing secular decline in checks. These impacts were partially offset by lower income taxes, management’s cost savings initiatives, and lower capital expenditures.
*Net debt of $716.9 million was the lowest since June 30, 2018.
*During the fourth quarter, the company repaid $200 million on its revolving credit facility under which it borrowed at the onset of the COVID-19 pandemic.
**As of December 31, 2020, $840.0 million was drawn on the revolving credit facility, compared to $883.5 million at the beginning of 2020. Liquidity was $425.4 million, with cash and cash equivalents increasing $49.5 million for the year.
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