Deluxe(US:DLX)2025-02-06 02:28Financial Data and Key Metrics Changes - The company reported total revenue of $2.122 billion for the full year, down 3.2% including impacts from business exits, and down 1.2% year-over-year on a comparable adjusted basis [26] - Full-year GAAP net income improved to $52.9 million or $1.18 per share, up from $26.2 million or $0.59 per share in 2023, driven by improved operating results and lower restructuring spend [26] - Comparable adjusted EBITDA was $406 million, improving by $15.3 million or 3.9% from the prior year, with adjusted EBITDA margins at 19.3%, up 100 basis points [27] Business Line Data and Key Metrics Changes - Merchant Services: Revenue finished at $384 million, growing by 5.4% versus 2023, with adjusted EBITDA at $78.5 million and margins at 20.4% [28] - B2B Payments: Revenues were $287.9 million, reflecting a decline of 3.8% versus the prior year, with adjusted EBITDA at $57.1 million and a margin of 19.8% [34] - Data Segment: Revenue reached $234 million, reflecting 10.5% growth, with adjusted EBITDA at $60.5 million and a margin of 25.9% [39] - Print Segment: Revenue was $1.21 billion, down 4.5% versus 2023, with adjusted EBITDA at $376.6 million and margins at 31.3% [43] Market Data and Key Metrics Changes - The Data segment experienced a full-year growth rate of over 10%, while the Merchant business delivered more than 5% growth, generally in line with expectations [18] - The B2B payments segment reached a revenue inflection point midyear, recovering from a decline in the first half [18] Company Strategy and Development Direction - The company is focused on executing its North Star plan to increase annualized adjusted EBITDA by $80 million and free cash flows by $100 million by the end of 2026 [8][10] - Strategic investments were made in product development across all business lines, including the Deluxe Payment platform and enhancements in data capabilities [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2025 and 2026 goals despite encountering revenue headwinds in 2024 [20] - The company anticipates a stable macroeconomic environment and expects to see sequential improvement in revenue growth rates across its segments as 2025 progresses [32][100] Other Important Information - The company maintained its regular quarterly dividend of $0.30 per share, marking the 30th consecutive year of dividends [50] - The company successfully refinanced its 2026 debt maturities, extending maturities to 2029, which provides ample liquidity for growth efforts [51][52] Q&A Session Summary Question: Thoughts on the Merchant business fundamentals - Management is pleased with the Merchant business progress and expects new leadership to enhance product capabilities and market penetration [60][61] Question: Drivers of significant improvement in free cash flow for 2025 - The improvement is attributed to better operating results, lower restructuring spend, and a focus on executing the North Star program [63][66] Question: Pricing flexibility in the Merchant business - Management indicated that while pricing is important, the company competes on customer experience and will not chase low-margin deals [78][70] Question: Impact of tariffs on supply chain - Management does not anticipate significant impacts from tariffs, as most materials are produced domestically [76][77] Question: Incremental revenue wins in the Data segment - The company has invested in cloud capabilities, allowing for quick repositioning and targeting across various markets, contributing to strong revenue growth [88][90] Question: 2026 goals for Merchant Services - Management expects to achieve high single-digit revenue CAGR through 2026, driven by new customer wins and market expansion [92][95] Question: Cadence of quarterly results for 2025 - Management expects low single-digit growth in the first half of 2025, with improvement as the year progresses, particularly in B2B and Merchant segments [96][100]