Deluxe Corp (DLX, Financial) released its 8-K filing on November 6, 2024, detailing its financial results for the third quarter of 2024. The company, known for providing payment solutions across four segments—Payments, Data Solutions, Promotional Solutions, and Checks—reported a mixed performance with a decline in revenue but an improvement in earnings per share (EPS).
Performance Overview
In the third quarter of 2024, Deluxe Corp reported a 1.7% decrease in revenue, amounting to $528.4 million, compared to $537.8 million in the same period last year. Despite this decline, the company achieved a net income of $8.9 million, a significant turnaround from a net loss of $8.0 million in the third quarter of 2023. This improvement was attributed to effective cost management, reduced restructuring expenses, and gains from business exits.
The company's diluted EPS was $0.20, a notable improvement from a net loss per share of $0.18 in the previous year. On a comparable adjusted basis, diluted EPS increased by 12.0% to $0.84, surpassing the analyst estimate of $0.33.
Financial Achievements and Industry Context
Deluxe Corp's financial achievements are particularly noteworthy in the context of the conglomerate industry, where diversified operations can often lead to complex financial management. The company's comparable adjusted EBITDA rose by 6.9% to $104.5 million, reflecting a robust operational performance despite revenue challenges. This growth in EBITDA is crucial as it indicates the company's ability to generate earnings before interest, taxes, depreciation, and amortization, which is a key measure of financial health in the industry.
“We continued to deliver on core earnings and cash flow growth objectives during the third quarter, demonstrating progress across our value-capture initiatives,” said Barry McCarthy, President and CEO of Deluxe.
Key Financial Metrics
Deluxe Corp's year-to-date operating cash flows increased by 16.7% to $134.1 million, with free cash flow reaching $64.3 million through the first nine months of 2024. These metrics are vital as they highlight the company's ability to generate cash, which can be used for debt reduction, dividends, and strategic investments.
| Financial Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Revenue | $528.4 million | $537.8 million | (1.7%) |
| Net Income | $8.9 million | ($8.0 million) | n/m |
| Comparable Adjusted EBITDA | $104.5 million | $97.8 million | 6.9% |
| Diluted EPS | $0.20 | ($0.18) | n/m |
| Comparable Adjusted Diluted EPS | $0.84 | $0.75 | 12.0% |
Analysis and Outlook
Deluxe Corp's performance in the third quarter highlights its strategic focus on enhancing core earnings and cash flow. The company's ability to improve its net income and EPS, despite a slight revenue decline, underscores its effective cost management and strategic business exits. The growth in the Payments and Data Solutions segments positions Deluxe for future expansion as it continues its transformation towards these areas.
Looking ahead, Deluxe Corp has narrowed its 2024 guidance, expecting revenue between $2.12 billion and $2.14 billion, adjusted EBITDA of $405 to $415 million, and adjusted diluted EPS of $3.20 to $3.35. The company's strategic focus on capital allocation and debt reduction is evident, with a recent approval of a regular quarterly dividend of $0.30 per share.
“We delivered another strong quarter of comparable adjusted EBITDA, EPS, and free cash flow growth, enabling net debt reduction of nearly $45 million,” commented Chip Zint, Senior Vice President and Chief Financial Officer of Deluxe.
Overall, Deluxe Corp's third-quarter results reflect its resilience and strategic focus in navigating industry challenges, making it a company to watch for value investors seeking opportunities in the payments and data solutions sectors.
Explore the complete 8-K earnings release (here) from Deluxe Corp for further details.
