Key Takeaways from CES 2026 Investor Meetings Industry Overview - The meetings involved three major companies in the technology hardware sector: DELL, HPQ, and PENG, held during CES 2026 in Las Vegas [1] DELL Insights - **PC Demand and Growth**: DELL anticipates above-market PC growth and stable margins in the medium term despite challenges from higher pricing. This will be achieved through pricing strategies, supply chain management, and active quote management [1][3] - **AI Infrastructure Demand**: DELL noted robust demand for AI infrastructure, primarily driven by neoclouds and sovereign customers, with increasing enterprise customer engagement in deploying AI infrastructure on-premise [1] - **Margin Management**: DELL is positioned to navigate memory cost headwinds by leveraging supply chain relationships and real-time pricing strategies. The company expects to recover approximately two-thirds of costs associated with commodity price increases within 90 days [3][6] - **New Product Announcements**: DELL introduced several new PC platforms aimed at expanding market share in mainstream categories, including premium laptops and gaming products [6][10] HPQ Insights - **Market Strategy**: HPQ is focusing on higher-margin print opportunities, such as Big Tank and consumer subscriptions, to support margins in a declining total addressable market (TAM) for printing [1][9] - **Print Market Outlook**: The printing market is expected to decline in single digits in 2026, but HPQ aims to outperform this trend through strategic initiatives [9][14] - **Industrial Print Growth**: HPQ has experienced nine consecutive quarters of growth in industrial print revenue, driven by the transition from analog to digital and expanding use cases in labeling and packaging [14] - **Product Innovations**: HPQ previewed new products, including AI-powered PCs and updated consumer laptops, integrating Microsoft Copilot for enhanced functionality [14] PENG Insights - **AI Management Capabilities**: PENG is well-positioned to address the needs of neoclouds and sovereign AI infrastructure, highlighting strong opportunities in its pipeline [15] - **Memory Pricing Environment**: PENG raised its full-year guidance for Integrated Memory to a growth range of 20% to 35% year-over-year, driven by higher average selling prices (ASPs) [16] - **Enterprise AI Use Cases**: PENG is actively supporting emerging enterprise AI use cases, leveraging its technical knowledge and design capabilities [15][16] Financial Ratings and Risks - **DELL**: Rated as "Buy" with a target price of $185. Key risks include weaker consumer demand and pricing pressures from competitors [17] - **HPQ**: Rated as "Neutral" with a target price of $24. Risks include potential declines in commercial PC demand and pricing pressures due to high channel inventory [18] - **PENG**: Rated as "Buy" with a target price of $26. Risks include memory market cyclicality and competition from OEMs [19] Additional Notes - The discussions highlighted the importance of adapting to changing market conditions, particularly in the context of AI and evolving consumer preferences in the technology hardware sector [1][6][9][15]

Financial Performance Highlights - Q3 2025 revenue increased to $540.2 million, a 2.2% increase compared to Q3 2024[16] - Comparable adjusted revenue increased by 2.5% compared to Q3 2024[16] - Net income for Q3 2025 was $33.7 million, up from $8.9 million in Q3 2024[16] - Adjusted EBITDA for Q3 2025 reached $118.9 million, a 13.8% increase compared to Q3 2024, with a margin of 22.0%[16] - Comparable adjusted EPS was $1.09, a 29.8% increase compared to Q3 2024[17] Segment Performance - Data Solutions revenue increased by 46.0% compared to Q3 2024[17] - Merchant Services revenue increased by 4.8% compared to Q3 2024[17] - B2B Payments revenue decreased by 2.7% compared to Q3 2024[17] - Print revenue decreased by 5.9%, with Check revenue down by 2.1% compared to Q3 2024[17] Balance Sheet and Cash Flow - Net debt decreased by $44.7 million compared to year-end 2024[17] - Leverage ratio reached 3.3x in Q3 2025[17] - Cash flow from operations year-to-date was $168.5 million, a 25.7% increase compared to YTD Q3 2024[17] 2025 Guidance - Revenue is projected to be between $2.11 billion and $2.13 billion, flat to a 1% increase compared to 2024[46] - Adjusted EBITDA is expected to be between $425 million and $435 million, a 5% to 7% increase compared to 2024[46] - Adjusted EPS is projected to be between $3.45 and $3.60, a 6% to 10% increase compared to 2024[46] - Free cash flow is expected to be between $140 million and $150 million, a 40% to 50% increase compared to 2024[46]

Core Insights - Postal Center International (PCI) has made significant donations from its PCI Powerhouse Fund to two nonprofit organizations, Abby's House and SA Hope Center, to support women, children, and families in need [1][2][7] - The PCI Powerhouse Fund was launched in December 2022 and aims to uplift communities by providing resources to organizations that address social issues [7] Group 1: Donations and Impact - PCI donated to Abby's House in Worcester, Massachusetts, and SA Hope Center in San Antonio, Texas, with the handover taking place on September 4, 2025 [1] - Abby's House has been providing safe and affordable housing for nearly five decades, focusing on women and children experiencing homelessness [3] - SA Hope Center addresses generational poverty and provides services such as workforce development, childcare, and mental health support [4][6] Group 2: Leadership and Commitment - Ismael Diaz, PCI President & CEO, emphasized the company's commitment to social responsibility, stating that success is measured by the lives transformed through their initiatives [2] - Julie Orozco, Executive Director of Abby's House, expressed gratitude for PCI's support, highlighting its role in maintaining affordable housing and quality care for residents [2] - Megan Legacy, CEO of SA Hope Center, noted that PCI's investment reflects their corporate mission and values, helping families achieve stability and better-paying jobs [4] Group 3: Fund's Mission and Achievements - The PCI Powerhouse Fund has donated to numerous organizations nationwide since its inception, including 4KIDS, Franklin Food Pantry, and others [7] - The founders of PCI, Arturo and Susan Echarte, stated that the Fund aims to extend PCI's legacy into communities where the need is greatest, supporting resilience and hope [7] - PCI is recognized as a leading provider of mail, print, and marketing solutions, employing over 600 associates across various regions [9]

Investment Rating - The report assigns a rating of "1" (Buy) to Western Digital Corporation (WDC), Seagate Technology Holdings (STX), and Amphenol Corporation (APH), while CDW Corporation (CDW), HP Inc. (HPQ), and NetApp, Inc. (NTAP) receive a rating of "2" (Neutral) [8]. Core Insights - The hardware and storage industry is experiencing robust demand driven by AI tailwinds, limited production capacity, and stable pricing, with demand consistently exceeding supply [2][4]. - Companies are focusing on enhancing their product offerings and operational efficiencies to capitalize on the growing demand for high-speed connectivity and data storage solutions [3][19][42]. Company Summaries Western Digital Corporation (WDC) - WDC anticipates a 23% CAGR in enterprise business (EB) demand, driven by AI, with a baseline growth of 15% [27]. - The company is focused on delivering scalable and reliable growth, with significant purchase orders from top customers providing visibility into 2027 [27][28]. - WDC is investing in ePMR and HAMR technologies to enhance storage capacity and reliability [27][32]. Seagate Technology Holdings (STX) - STX expects mid-20s% growth in nearline EB, with demand outpacing supply [37]. - The company is qualifying major cloud customers for its HAMR technology, aiming to meet increasing demand for higher density storage solutions [34][37]. - STX maintains a focus on cost efficiency and capital allocation, with a capex of 4-6% of revenues [41]. Amphenol Corporation (APH) - APH is optimistic about demand in the IT datacom segment, driven by data center interconnect needs [51]. - The company is achieving sustainable incremental margins of over 30% through disciplined execution and a diverse product portfolio [51][55]. - APH's recent acquisitions are expected to enhance its capabilities and market position [53][55]. CDW Corporation (CDW) - CDW's performance reflects resilience due to a diverse portfolio and disciplined execution, with expectations for continued growth despite macroeconomic caution [5][13]. - The company is capitalizing on cloud transitions and the complexity of technology to drive demand for its services [13][18]. - CDW is focused on integrating AI into its offerings to enhance operational efficiencies and customer experiences [18]. HP Inc. (HPQ) - HPQ projects unit growth in PCs at a mid-single-digit rate through 2025, driven by a refresh cycle and the transition to AI PCs [22]. - The company is optimizing its supply chain and expects revenue growth to outpace unit growth in premium categories [22]. - HPQ anticipates a slight decline in print revenues due to enterprise prioritization of other investments, though this is expected to be temporary [22][23]. NetApp, Inc. (NTAP) - NTAP is gaining market share with its refreshed portfolio, focusing on data modernization and AI implementation [42]. - The company expects cautious enterprise IT spending but sees potential upsides in a more favorable macro environment [42]. - NTAP is positioned to benefit from the shift towards AI workloads, which are expected to drive significant data growth [47].

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $521 million, down 2.5% year-over-year, attributed mainly to the low-margin promotional portion of Print [4][17] - Comparable adjusted EBITDA increased by 4.5% year-over-year to $106 million, with EBITDA margin expanding by 140 basis points to just above 20% [4][5] - Comparable adjusted EPS rose by 3.5% to $0.88, and year-to-date free cash flow expanded by over 200% to more than $34 million compared to 2024 [5][17] - The leverage ratio improved to 3.5 times, with a target to be below 3 times next year [5][28] Business Segment Data and Key Metrics Changes - Data Solutions segment revenue grew by over 18% in Q2, continuing to be a standout performer [5][22] - Merchant Services revenue increased by 2.9% year-over-year to $101.4 million, with adjusted EBITDA improving by 13% to $21.7 million [18][19] - B2B payments segment revenues were $71 million, up 1.1% year-over-year, with adjusted EBITDA expanding by 11.4% [20] - Print segment revenue declined by 9% year-over-year to $281.1 million, with adjusted EBITDA declining by 3.7% but maintaining a margin of 32.2% [23][26] Market Data and Key Metrics Changes - The overall revenue ratio remains modestly weighted toward Print at 54% to 46% for the year [10] - Payments and Data segments combined have expanded year-over-year by a blended rate of just under 7.5% [10] Company Strategy and Development Direction - The company is focused on transforming from a paper payments company to a digital payments and data company, with ongoing investments in technology and partnerships [15][11] - The acquisition of CheckMatch is expected to enhance the Deluxe Payment Network, creating revenue and cost synergy opportunities [11][12] - The company aims to maintain strong margins in Print while avoiding low-margin promotional deals [8][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic uncertainty but expressed confidence in affirming revenue and earnings guidance while increasing free cash flow expectations [30][33] - The company expects to see continued growth in the Data Solutions segment and a solid exit growth rate for B2B payments as it enters 2026 [21][30] Other Important Information - The company ended Q2 with a net debt level of $1.44 billion, a reduction from previous levels, and aims for a leverage ratio of three times or better by 2026 [28][29] - A quarterly dividend of $0.30 per share was approved, payable on September 2, 2025 [30] Q&A Session Summary Question: What has driven the efficiency in the merchant business? - Management highlighted a focus on operating efficiency, pricing strategies, and new market expansions as key drivers for margin improvement [35][36] Question: Has Brian Mahoney implemented any ideas in the merchant business? - Management confirmed that Mahoney has made significant progress and is already seeing positive results from his initiatives [37][39] Question: What are the key drivers for the increase in free cash flow? - The increase is attributed to improved profitability, reduced restructuring spend, and better working capital efficiency [40][42] Question: What continues to drive growth in the Data Solutions segment? - Growth is driven by helping financial institutions target low-cost deposits and expanding into non-FI verticals [46][48] Question: What does the CheckMatch acquisition bring to the company? - CheckMatch enhances the existing Deluxe Payment Network by adding more lockboxes, allowing for digital payment processing and improved cash flow [49][51] Question: What is the outlook for future acquisition opportunities? - The company remains disciplined in capital allocation and will consider opportunities that align with its strategy for growth [60][62] Question: How is the company managing macroeconomic challenges? - Management noted a continuation of consumer hesitancy but emphasized good forecast accuracy and performance across the business [55][57]

Q2 2025 Financial Performance - Total revenue was $521.3 million, a decrease of 3.1% compared to Q2 2024[28] - Net income was $22.4 million, or $0.50 per share on a diluted basis, up from $20.5 million, or $0.46 per share in Q2 2024[28] - Adjusted EBITDA increased 4.6% to $106.5 million, with an adjusted EBITDA margin of 20.4%, up 140 basis points versus Q2 2024[28] - Adjusted diluted EPS was $0.88, up 3.5% compared to Q2 2024[28] Segment Performance - Merchant Services revenue increased 2.9% to $101.4 million, with an adjusted EBITDA margin of 21.4%, up 190 basis points year-over-year[29, 31] - B2B Payments revenue increased 1.1% to $71.0 million, with an adjusted EBITDA margin of 22.0%, up 210 basis points year-over-year[32, 34] - Data Solutions revenue increased 18.1% to $67.8 million, with an adjusted EBITDA margin of 30.1%, up 260 basis points year-over-year[35, 37] - Print revenue decreased 9.0%, with an adjusted EBITDA margin of 32.2%, expanding 180 basis points year-over-year[45, 47] Balance Sheet and Cash Flow - Net debt was $1,444.6 million as of June 30, 2025, with a net debt to adjusted EBITDA ratio of 3.5x[49] - Free cash flow for the six months ended June 30, 2025, was $52.1 million, compared to $17.6 million for the same period in 2024[49] 2025 Guidance - Revenue is projected to be between $2.090 billion and $2.155 billion, representing a decline of 1% to an increase of 2%[52] - Adjusted EBITDA is expected to be between $415 million and $435 million, an increase of 2% to 7%[52] - Adjusted EPS is projected to be between $3.25 and $3.55, flat to an increase of 9%[52] - Free cash flow is expected to be between $130 million and $150 million, an increase of 30% to 50%[52]

Q1 2025 Financial Performance - Total revenue reached $536.5 million, a 0.3% increase compared to Q1 2024[25] - Comparable adjusted revenue increased by 1.4% compared to Q1 2024[25] - Adjusted EBITDA increased by 3.4% to $100.2 million compared to Q1 2024[25] - Adjusted EBITDA margin increased by 40 basis points to 18.7% compared to Q1 2024[25] - Adjusted diluted EPS increased by 4.2% to $0.75 compared to Q1 2024[25] - Net income attributable to Deluxe was $14.0 million, or $0.31 per share, up from $10.8 million in Q1 2024[25,60] Segment Performance - Data Solutions revenue increased significantly by 29.3%[33] - Data Solutions adjusted EBITDA margin increased by 50 basis points to 25.5%[34] - Print segment revenue decreased by 4.0%[39] - Print segment adjusted EBITDA margin expanded by 120 basis points to 31.2%[41] Balance Sheet and Cash Flow - Net debt to adjusted EBITDA ratio remained at 3.6x[43] - Free cash flow increased significantly to $24.3 million, compared to $6.2 million in Q1 2024[43] 2025 Guidance - Revenue is projected to be between $2.090 billion and $2.155 billion, representing a comparable adjusted growth of -1% to +2%[46] - Adjusted EBITDA is expected to be between $415 million and $435 million, a growth of +2% to +7%[46] - Adjusted EPS is projected to be between $3.25 and $3.55, representing a growth of 0% to +9%[46] - Free cash flow is expected to be between $120 million and $140 million, a growth of +20% to +40%[46]