Deluxe (DLX) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $528.4 million, down 1.7% year-over-year, with comparable adjusted revenue at $527.0 million; adjusted EBITDA rose 6.9% to $104.5 million, and net income improved to $8.9 million from a loss of $8.0 million, driven by cost management and lower restructuring.

• Free cash flow for the nine months ended September 30, 2024, was $64.3 million, up $30 million year-over-year, with a $45 million sequential net debt reduction.

• The North Star Program has achieved $100 million of $130 million targeted annualized EBITDA improvements in execution, supporting confidence in 2026 goals.

• The company realigned its segments in 2024 to focus on payments and data, and exited non-core businesses, resulting in gains and goodwill impairment.

• Confirmed full-year guidance within a narrower range, reflecting robust operating leverage and continued progress on capital allocation priorities.

Financial highlights

• Q3 2024 revenue was $528.4 million, down 1.7% year-over-year; adjusted EBITDA was $104.5 million, up 6.9% year-over-year; net income was $8.9 million, or $0.20 per share, reversing a loss of $8.0 million in Q3 2023.

• Comparable adjusted EBITDA margin reached 19.8%, up 140 basis points from Q3 2023; comparable adjusted EPS was $0.84, up 12% year-over-year.

• Free cash flow for Q3 was $46.7 million, with year-to-date free cash flow at $64.3 million, a $30.2 million improvement over the prior year.

• Adjusted EBITDA for the nine months was $308.7 million, down 0.6% year-over-year; gross margin for the nine months was 46.6%, flat year-over-year.

• Net debt at quarter-end was $1.49 billion, down from $1.52 billion at year-end 2023.

Outlook and guidance

• 2024 revenue guidance narrowed to $2.12–$2.14 billion, down from $2.19 billion in 2023 due to business exits; adjusted EBITDA projected at $405–$415 million, adjusted EPS at $3.20–$3.35, and free cash flow at $90–$100 million.

• Guidance assumes $120 million interest expense, 26% adjusted tax rate, $165 million depreciation/amortization, $100 million capex, and 45 million average shares.

• Long-term value algorithm targets 2–4% consolidated growth, with profit expanding faster than revenue; 2025 expected at lower end (1–2%) due to segment mix.

• Guidance reflects the impact of recent business exits and is subject to macroeconomic and industry risks.

• Regular quarterly dividend of $0.30 per share maintained.