Deluxe Reports Solid Second Quarter 2020 Performance

“Deluxe delivered stronger than expected second quarter performance. Our cash flow from operations exceeded last year’s quarterly performance, enabling us to pay down $100 million on the revolving credit facility in July, and declare our regular dividend. Our reported revenue partially recovered from the April low, declining $84 million for the second quarter as compared to last year. We believe the company continued its historic sales-driven revenue growth from the first quarter, excluding our estimate of COVID-19 impact. GAAP margins stabilized and Adjusted EBITDA margins rebounded to our pre-COVID-19 range,” said Barry McCarthy, President & CEO of Deluxe. “Our sales-driven ‘One Deluxe’ transformation is working too. We signed 4 of our top 25 prospects and further built our already strong sales pipeline. Our robust financial health has proven to be a significant competitive advantage in these wins,” added McCarthy.

McCarthy continued, “We are grateful to our fellow Deluxers who have unfailingly provided selfless service to our customers as COVID-19 unfolded. We have proven we are agile and innovative at all levels, further evidence our ‘One Deluxe’ strategy is working. We are a trusted business technology company with the ability to generate strong revenue with healthy margins and are confident we will deliver strong shareholder value over the long-term.”

*Revenue was $83.6 million lower than last year. COVID-19 negatively impacted our results in the quarter, primarily across our Promotional Solutions, Cloud Solutions and Check segments.
*The Payments segment delivered strong revenue growth of 12.6% over the same period last year, benefiting from Treasury Management revenue growth of 20.5% in the second quarter driven primarily by previously announced and continuing business wins.
*Net income decreased $17.7 million, driven primarily by the challenging business environment resulting from COVID-19, previously disclosed investments in the Company’s business transformation and a pretax asset impairment charge of $4.9 million related to management’s ongoing rationalization of the Company’s real estate footprint.
*Cash flow from operations for the period ending June 30, 2020 was $109.7 million and capital expenditures were $27.1 million. Free cash flow, defined as cash provided by operating activities, less capital expenditures, was $82.6 million, an improvement of $9.8 million as compared to last year.
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