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Deluxe Corp. Reports Operating Results (10-Q)

August 03, 2012 | About:
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10qk

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Deluxe Corp. (DLX) filed Quarterly Report for the period ended 2012-06-30.

Deluxe Corporation has a market cap of $1.42 billion; its shares were traded at around $28.44 with a P/E ratio of 8.4 and P/S ratio of 1. The dividend yield of Deluxe Corporation stocks is 3.6%. Deluxe Corporation had an annual average earning growth of 0.6% over the past 10 years.

Highlight of Business Operations:

We anticipate that consolidated revenue will be between $1.49 billion and $1.51 billion for 2012, compared to $1.42 billion for 2011. In Small Business Services, we expect the percentage increase in revenue to be in the low double digits compared to 2011 revenue of $846.4 million, as declines in core business products are expected to be more than offset by price increases, benefits from our e-commerce investments, and growth in our distributor, dealer and major accounts channels and in our marketing solutions and other services offerings, including incremental revenue from the PsPrint acquisition in July 2011 and the OrangeSoda acquisition in May 2012. In Financial Services, we expect the percentage decrease in revenue to be in the low single digits compared to 2011 revenue of $342.4 million, driven by check order declines of approximately five to six percent for the remainder of the year, partially offset by higher revenue per order, a new large customer which began contributing volume early in the first quarter of 2012, and continued contributions from marketing solutions and other services offerings. In Direct Checks, we expect the percentage decrease in revenue to be in the middle to high single digits compared to 2011 revenue of $228.8 million, driven by check usage declines.

We expect that 2012 diluted earnings per share will be between $3.20 and $3.35, including estimated total charges of $0.10 per share related to restructuring-related costs and transaction costs related to acquisitions, compared to $2.80 for 2011, which included total charges of $0.31 per share related to restructuring-related costs, losses on debt retirements, transaction costs related to acquisitions, and an asset impairment charge. We expect that the benefits of our cost reduction activities will be partially offset by continued investments in revenue growth opportunities, increased performance-based compensation and increases in material and delivery rates. We estimate that our annual effective tax rate for 2012 will be approximately 33%, the same as in 2011.

We anticipate that net cash provided by operating activities will be between $235 million and $245 million in 2012, compared to $235 million in 2011, driven by higher earnings, offset by higher income tax and contract acquisition payments, as well as contributions to our trust used to pay medical benefits. We anticipate contract acquisition payments of approximately $20 million in 2012, and we estimate that capital spending will be approximately $35 million in 2012 as we continue to invest in key revenue growth initiatives and order fulfillment and information technology infrastructure.

We anticipate that net cash provided by operating activities will be between $235 million and $245 million in 2012, compared to $235 million in 2011, driven by higher earnings offset by higher income tax payments and contributions to our trust used to pay medical benefits. We anticipate that cash generated by operating activities in 2012 will be utilized for payments of $84.8 million due in December 2012 when a portion of our long-term notes matures, dividend payments of approximately $50 million, capital expenditures of approximately $35 million, payments for acquisitions already completed in

Contract acquisition costs – Other non-current assets include contract acquisition costs of our Financial Services segment. These costs, which are essentially pre-paid product discounts, are recorded as non-current assets upon contract execution and are amortized, generally on the straight-line basis, as reductions of revenue over the related contract term. Cash payments made for contract acquisition costs were $10.5 million for the first half of 2012 and $5.6 million for the first half of 2011. We anticipate cash payments of approximately $20 million in 2012. Changes in contract acquisition costs during the six months ended June 30, 2012 and 2011 were as follows:

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