Deluxe(US:DLX)2025-11-06 14:15Financial Performance - Adjusted EBITDA increased by $17 million to $326 million for the first nine months of 2025, with an adjusted EBITDA margin of 20.4%, up from 19.3% in the same period of 2024[92]. - Total revenue for the first nine months of 2025 decreased by $3 million to $1.60 billion, impacted by a $10 million reduction due to business exits; excluding this, revenue would have increased[93]. - Free cash flow rose by $32 million to $96 million in the first nine months of 2025, driven by improved operational performance[94]. - Net income for Q3 2025 was $33,766,000, a 276.5% increase from Q3 2024, while diluted EPS rose to $0.74, up 270.0% year-over-year[118]. - Adjusted diluted EPS for Q3 2025 was $1.09, a 29.8% increase from Q3 2024, reflecting benefits from pricing and cost management actions[118]. - Adjusted EBITDA for Q3 2025 reached $118,887,000, compared to $104,902,000 in Q3 2024, marking a 13.3% increase[123]. - Adjusted EBITDA margin improved to 22.0% in Q3 2025 from 19.9% in Q3 2024, reflecting enhanced operational efficiency[123]. - Total revenue for Q3 2025 was $279,945,000, a decrease of 5.8% compared to Q3 2024, and for the first nine months of 2025, it was $852,296,000, down 6.3% year-over-year[137]. Cost Management - Selling, general and administrative (SG&A) expenses decreased by 6.8% in Q3 2025 compared to Q3 2024, contributing to improved profitability[88]. - SG&A expense decreased by 6.8% in Q3 2025 and 6.3% in the first nine months compared to the same periods in 2024, driven by cost management actions[109]. - The company expects to realize annual cost savings of approximately $6 million in cost of sales and $14 million in SG&A expenses in 2025 compared to 2024[129]. - Restructuring and integration expenses dropped by 73.6% in Q3 2025 and 59.3% in the first nine months compared to 2024, reflecting alignment with growth strategy[112]. Debt and Cash Management - The company reduced net debt by $45 million from the previous year end, reflecting a commitment to enhancing financial performance[90]. - Cash and cash equivalents stood at $26 million as of September 30, 2025, with an additional $393 million available for borrowing under the revolving credit facility[99]. - Total debt as of September 30, 2025, was $1,449,785,000, down from $1,503,151,000 at the end of 2024, while net debt decreased to $1,423,982,000[122]. - As of September 30, 2025, total debt obligations were $1.47 billion, down from $1.52 billion as of December 31, 2024[146]. - The principal amount of fixed interest rate debt was $925 million at an average interest rate of 8.1% as of September 30, 2025[146]. Strategic Investments - The acquisition of assets from JPMorgan Chase's CheckMatch service for $25 million is expected to strengthen the B2B Payments segment[91]. - The company anticipates capital expenditures between $90 million and $100 million for the full year 2025, compared to $94 million in 2024[99]. - The company is focused on growth investments, debt reduction, and returning capital to shareholders through dividends, which are subject to board approval[99]. - The North Star program aims for a $100 million run-rate improvement in free cash flow and an $80 million run-rate improvement in adjusted EBITDA by 2026[128]. - Restructuring and integration expenses incurred through September 30, 2025, totaled approximately $110 million, with an additional $5 million expected in Q4 2025[128]. Tax and Interest - Interest expense increased by 2.1% in Q3 2025 and 2.0% in the first nine months, primarily due to higher interest rates despite a reduction in average debt outstanding[115]. - The effective income tax rate decreased to 28.5% in Q3 2025 from 33.6% in Q3 2024, benefiting from lower tax impacts from foreign operations[117]. Asset Performance - The company recorded a 100% reduction in asset impairment charges in Q3 2025 compared to $6,700,000 in Q3 2024, indicating improved asset performance[113].