Deluxe(US:DLX)2024-11-07 04:14Financial Data and Key Metrics Changes - The company reported total revenue of $528.4 million for Q3 2024, down 1.7% year-over-year, and a comparable adjusted revenue decline of 0.7% [31] - Comparable adjusted EBITDA reached $104.5 million, increasing approximately 6.9% from Q3 2023, with adjusted EBITDA margins improving by 140 basis points to 19.8% [34][18] - Free cash flow for Q3 was $46.7 million, reflecting a year-to-date improvement of $30.2 million compared to the same period in 2023 [51] Business Line Data and Key Metrics Changes - Merchant Services: Revenue grew by 6.3% year-over-year to $93.5 million, with year-to-date growth at 7.4% [35] - B2B Payments: Revenue finished at $75.1 million, showing a sequential improvement and a year-over-year growth of 0.7% [39] - Data Solutions: Revenue was $61.1 million, reflecting a year-over-year decline of 4.5% but a sequential increase of 6.4% [43] - Print Segment: Revenue was $297.3 million, declining 2.3% year-over-year, with legacy check revenues declining 1.8% [46] Market Data and Key Metrics Changes - The company noted that overall economic uncertainty remains, but trends appear to have stabilized during Q3, with solid processing volumes in the Merchant Services segment [22][21] - The B2B segment is expected to improve sequentially in Q4, supported by a strong pipeline of SaaS opportunities [24] Company Strategy and Development Direction - The North Star program aims to identify $130 million in improvements to baseline comparable adjusted EBITDA results over a multi-year horizon, with $100 million of targeted annualized EBITDA improvements expected by 2026 [13][14] - The company is focused on executing its deleveraging path, having reduced net debt by $45 million sequentially [12] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the B2B and Merchant businesses, anticipating sequential growth in Q4 [63][64] - The company expects to maintain a low to mid-single-digit revenue decline in the Print segment while achieving growth in other segments [68] Other Important Information - The company declared a quarterly dividend of $0.30 per share, payable on December 2, 2024 [55] - Full year guidance was narrowed to revenue of $2.12 billion to $2.14 billion, reflecting a decline of 1% to flat comparable adjusted growth versus 2023 [56] Q&A Session Summary Question: Can you provide insight into consolidated revenue growth for 2025? - Management indicated that while they are pleased with progress, they have not provided specific guidance for 2025, but expect mid to high-single-digit growth in certain segments [61][68] Question: What are the drivers behind the strong EBITDA margin despite revenue being nearly flat? - Management attributed margin improvement to operational efficiency and significant reductions in corporate spending, alongside strong performance in the Data segment [72][75] Question: Are there any changes in the competitive environment or pricing pressure in the Merchant business? - Management acknowledged ongoing competitive pressure but emphasized their strong service levels and successful client wins, which help mitigate pricing pressures [81][82]