Deluxe (DLX) Stephens 26th Annual Investment Conference | NASH2024 summary

Company overview and strategy

• Operates four segments: legacy print, data-driven marketing, B2B payments, and merchant services.

• Print business is in secular decline, while the other three segments show strong mid to upper single-digit growth.

• Uses legacy business relationships and cash flow to fuel growth in newer segments.

• Focus on cross-selling and integrated solutions across a large base of bank partners and small businesses.

• North Star program drives efficiency, capital allocation, and leverage reduction.

North Star program and financial targets

• North Star aims for $130M total profit improvement, netting $80M incremental Adjusted EBITDA by 2026.

• Targets $100M improvement in free cash flow by 2026.

• Implementation phase has over $100M of program value identified.

• One-time spend for the program is now estimated at $110M, with completion expected in Q2.

• Goal to bring leverage ratio below 3x by 2026.

Debt restructuring and capital allocation

• Recent debt restructuring pushed all maturities to 2029, improving liquidity and flexibility.

• Current debt stack: $900M bank group, $500M Term Loan A, $400M revolver, $450M secured notes at 8%.

• Four capital allocation priorities: pay down debt, invest in growth, disciplined M&A, and sustain dividend.

• CapEx is about $100M, with 60% growth-oriented, focused on B2B and merchant platforms.