Deluxe(US:DLX)2021-08-08 12:05Financial Data and Key Metrics Changes - Total revenue for the second quarter was $478 million, representing a 16.5% year-over-year increase. Excluding the impact of First American, revenues increased by 10% [14][31] - Adjusted EBITDA margin was 20.4%, and adjusted EPS improved nearly 9% [15][32] - The company ended the quarter with $456 million in liquidity and a cash balance of $163 million [15][41] Business Line Data and Key Metrics Changes - Payments segment revenue grew 43% year-over-year to $103.3 million, driven by the acquisition of First American and sales-driven growth [12][33] - Cloud Solutions revenue increased 26.3% year-over-year to $68.1 million, benefiting from data-driven marketing solutions [23][36] - Promotional Solutions revenue was $135 million, up 14.5% year-over-year, supported by branded merchandise and business essentials [25][39] - Checks segment revenue increased 3.2% year-over-year to $171.8 million, primarily due to growth in business checks [27][40] Market Data and Key Metrics Changes - The company reported strong sales momentum, closing 10 of the 12 largest deals in the last decade over the past seven quarters [16][17] - The acquisition of First American has led to increased customer inquiries and opportunities for cross-selling [52][54] Company Strategy and Development Direction - The company is executing its "One Deluxe" strategy, focusing on becoming a payments company and leveraging the acquisition of First American to enhance its offerings [12][28] - The strategy includes cross-selling products across different business segments and expanding into new markets [21][54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the economy and the company's ability to navigate challenges posed by the Delta variant and inflation [60][79] - The company anticipates revenue growth of 10% to 12% for the full year, with adjusted EBITDA margins between 20% and 21% [47][71] Other Important Information - The company ended the quarter with a net debt level of $1.67 billion due to the First American acquisition, with a long-term target to reduce the net debt to adjusted EBITDA ratio to three times [42] - Free cash flow for the first half of 2021 was $37.2 million, a decrease of 55% from the previous year [43] Q&A Session Summary Question: How has the acquisition of First American changed customer conversations? - Management noted that customers are pleased with the company's commitment to becoming a payments company, leading to new opportunities and inquiries [50][51] Question: What is the outlook for the full year considering the Delta variant and inflation? - Management remains confident in their outlook, expecting a stable macroeconomic environment despite concerns [60][61] Question: How much growth in the Checks segment is driven by new wins versus existing customers? - Management indicated that growth was driven by both new wins and increased consumption of checks due to economic recovery [62][64]