Deluxe Corp (DLX, Financial) released its third-quarter earnings report on November 2, 2023, revealing a decrease in revenue but an optimistic outlook for the full year. The company's reported revenue decreased by 3.1%, including the impact from divestitures, while comparable adjusted revenue remained flat year-over-year. The third quarter GAAP diluted EPS was ($0.18) while adjusted diluted EPS was $0.79. The company reported a net loss of $8.0 million, including restructuring and other charges in the quarter, down from a net income of $14.7 million in the prior year.
Financial Highlights and Outlook
DLX's adjusted EBITDA decreased by 2.6%, while comparable adjusted EBITDA increased by 3.0%. The company has increased its full-year 2023 guidance for adjusted EBITDA and adjusted EPS, reflecting a positive outlook for the remainder of the year. The company's adjusted EBITDA margin was 18.9%, up 10 basis points from the prior year, while comparable adjusted EBITDA margin was up 50 basis points. Adjusted diluted EPS was $0.79 versus $0.99 in the prior year.
Looking ahead, DLX has updated its full-year 2023 guidance, inclusive of divestitures. The company expects revenue of $2.180 to $2.220 billion, unchanged from prior guidance, and adjusted EBITDA of $405 to $420 million, up from $400 to $415 million. Adjusted EPS is expected to be $3.20 to $3.45, up from $3.10 to $3.40. However, free cash flow is expected to be $60 to $80 million, lowered from $80 to $100 million to reflect in-year cash charges.
North Star Initiative
DLX has introduced the North Star initiative, aiming to drive an incremental $100 million of run-rate free cash flow by 2026. The initiative is expected to extend the company's momentum and enable it to drive more than $100 million of run-rate free cash flow and $80 million of incremental run-rate EBITDA over its multi-year planning horizon.
Dividend Announcement
The Board of Directors recently approved a regular quarterly dividend of $0.30 per share, payable on December 4, 2023, to shareholders of record as of market closing on November 20, 2023.
Despite the challenges faced in the third quarter, Deluxe Corp (DLX, Financial) remains optimistic about its future performance, as reflected in its raised full-year guidance and the introduction of the North Star initiative.
Explore the complete 8-K earnings release (here) from Deluxe Corp for further details.
