Deluxe Reports Strong Fourth Quarter and Full Year 2021 Results; Declares Regular Dividend; Provides 2022 Outlook
Deluxe reported a 12.9% increase in full-year revenue to $2.022 billion for 2021, marking the first year of sales-driven growth in nearly a decade. Fourth-quarter revenue rose 25.5% to $570.6 million, with all segments contributing to year-over-year growth. However, net income in Q4 declined 44.1% to $13.8 million. The company declared a quarterly dividend of $0.30, payable on March 7, 2022. Projections for 2022 indicate an 8%-10% revenue growth, contingent on macroeconomic conditions.
- 12.9% increase in full-year revenue to $2.022 billion.
- First full year of sales-driven growth in nearly a decade.
- Fourth quarter revenue rose 25.5% year-over-year.
- Quarterly dividend of $0.30 declared.
- Q4 net income decreased 44.1% to $13.8 million, impacted by acquisition amortization costs.
- Adjusted diluted EPS fell 8.7% year-over-year.
-
Full year revenue increased
12.9% , up2.0% , excluding First American, delivering the first full year of reported sales-driven growth in nearly a decade -
Consolidated fourth quarter revenue increased
25.5% , up6.8% , excluding contribution from First American - All four segments delivered year-over-year sales-driven revenue growth in the fourth quarter
-
Fourth quarter net income was up
10.4% from the third quarter of 2021 and adjusted EBITDA margin was20.5% , up 120 basis points sequentially from the third quarter of 2021 - Declared regular quarterly dividend
“Deluxe reported the first full year of sales-driven growth in nearly a decade,” said
“Our fourth quarter results demonstrated strong execution of our strategy, as our revenue growth exceeded expectations, and we effectively managed COVID-related and inflationary impacts,” said
Full Year 2021 Financial and Segment Highlights
(in millions, except per share amounts)
|
Full Year
|
|
Full Year
|
|
% Change |
|
Revenue |
|
|
|
|
|
|
Net Income Attributable to Deluxe |
|
|
|
|
n/m |
|
Adjusted EBITDA |
|
|
|
|
|
|
Diluted EPS |
|
|
|
|
n/m |
|
Adjusted Diluted EPS |
|
|
|
|
( |
|
n/m - not meaningful |
-
Revenue was
$231.4 million June 1, 2021 , revenue increased$36.4 million 2.0% year-over-year. -
The Payments segment delivered revenue growth of
69.1% over the previous year to$510.4 million 4.5% . -
Net income attributable to Deluxe of
$62.6 million $29.5 million $18.9 million -
Net income also includes tax expense of
$4.6 million $0.11 $85.3 million -
Adjusted EBITDA margin was
20.2% , down 20 basis points from the prior year. -
Cash flow from operations for 2021 was
$210.8 million $109.1 million $101.7 million $53.3 million -
Total debt outstanding decreased from
$1,776.2 million September 30, 2021 to$1,683.0 million December 31, 2021 . Net debt was$1,641.8 million $403.8 million December 31, 2021 . -
Since closing the First American transaction, Deluxe has made net debt reduction payments totaling
$152.9 million
Fourth Quarter 2021 Financial and Segment Highlights
(in millions, except per share amounts)
|
4th Quarter
|
|
4th Quarter
|
|
% Change |
||
Revenue |
|
|
|
|
25.5 |
% |
|
Net Income Attributable to Deluxe |
|
|
|
|
(44.1 |
%) |
|
Adjusted EBITDA |
|
|
|
|
23.4 |
% |
|
Diluted EPS |
|
|
|
|
(44.8 |
%) |
|
Adjusted Diluted EPS |
|
|
|
|
(8.7 |
%) |
|
-
Revenue for the fourth quarter was
$116.1 million June 1, 2021 , revenue increased$31.0 million 6.8% year-over-year. -
The Payments segment delivered revenue growth of
114.5% over the previous year to$167.3 million 5.4% . -
Net income of
$13.8 million $13.7 million -
Net income also includes tax expense of
$4.6 million $0.11 $85.3 million -
Adjusted EBITDA margin was
20.5% , down 40 basis points from the prior year. -
Cash flow from operations for the fourth quarter was
$61.6 million $28.1 million $33.5 million $2.6 million $2.7 million $8.2 million
2022 Outlook
The company expects the following for full year 2022:
-
Revenue growth of
8% to10% , which includes a full year impact from First American -
Adjusted EBITDA margin of approximately
20% -
Capital expenditures of approximately
$105 million
The guidance outlined above is subject to, among other things, the macroeconomic unknowns associated with the COVID-19 pandemic, including the Omicron variant, as well as anticipated continued supply chain constraints, labor supply issues and inflation.
Capital Allocation and Dividend
The Board of Directors recently approved a regular quarterly dividend of
Earnings Call Information
Deluxe management will host a conference call today at
About
Deluxe, a Trusted Payments and Business Technology™ company, champions business so communities thrive. Our solutions help businesses pay and get paid, accelerate growth and operate more efficiently. For more than 100 years, Deluxe customers have relied on our solutions and platforms at all stages of their lifecycle, from start-up to maturity. Our powerful scale supports millions of small businesses, thousands of vital financial institutions and hundreds of the world’s largest consumer brands, while processing approximately
Forward-Looking Statements
Statements made in this release concerning Deluxe, the company’s or management’s intentions, expectations, outlook or predictions about future results or events are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect management’s current intentions or beliefs and are subject to risks and uncertainties that could cause actual results or events to vary from stated expectations, which variations could be material and adverse. Factors that could produce such a variation include, but are not limited to, the following: potential continuing negative impacts from pandemic health issues, such as the coronavirus / COVID-19, along with the impact of government restrictions or similar directives on our future results of operations, our future financial condition and our ability to continue business activities in affected regions; the impact that further deterioration or prolonged softness in the economy may have on demand for the company’s products and services; the company’s ability to execute its transformational strategy and to realize the intended benefits; the inherent unreliability of earnings, revenue and cash flow predictions due to numerous factors, many of which are beyond the company’s control; declining demand for the company’s checks, check-related products and services and business forms; risks that the company’s strategies intended to drive sustained revenue and earnings growth, despite the continuing decline in checks and forms, are delayed or unsuccessful; intense competition; continued consolidation of financial institutions and/or additional bank failures, thereby reducing the number of potential customers and referral sources and increasing downward pressure on the company’s revenue and gross profit; risks related to the company’s acquisition of
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (in millions, except per share amounts) (Unaudited) |
||||||||||||
|
Quarter Ended
|
|
Year Ended
|
|||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020(1) |
|||||
Product revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
233.7 |
|
|
132.0 |
|
|
777.7 |
|
|
560.1 |
|
|
Total revenue |
570.6 |
|
|
454.5 |
|
|
2,022.2 |
|
|
1,790.8 |
|
|
Cost of products |
(120.1 |
) |
|
(125.8 |
) |
|
(450.9 |
) |
|
(458.7 |
) |
|
Cost of services |
(135.0 |
) |
|
(66.2 |
) |
|
(433.4 |
) |
|
(272.1 |
) |
|
Total cost of revenue |
(255.1 |
) |
|
(192.0 |
) |
|
(884.3 |
) |
|
(730.8 |
) |
|
Gross profit |
315.5 |
|
|
262.5 |
|
|
1,137.9 |
|
|
1,060.0 |
|
|
Selling, general and administrative expense |
(255.4 |
) |
|
(207.0 |
) |
|
(941.0 |
) |
|
(841.7 |
) |
|
Restructuring and integration expense |
(16.7 |
) |
|
(18.9 |
) |
|
(54.7 |
) |
|
(75.9 |
) |
|
Asset impairment charges |
— |
|
|
— |
|
|
— |
|
|
(101.7 |
) |
|
Operating income |
43.4 |
|
|
36.6 |
|
|
142.2 |
|
|
40.7 |
|
|
Interest expense |
(20.0 |
) |
|
(4.9 |
) |
|
(55.6 |
) |
|
(23.1 |
) |
|
Other income |
0.7 |
|
|
0.7 |
|
|
7.2 |
|
|
9.2 |
|
|
Income before income taxes |
24.1 |
|
|
32.4 |
|
|
93.8 |
|
|
26.8 |
|
|
Income tax provision |
(10.3 |
) |
|
(7.7 |
) |
|
(31.0 |
) |
|
(21.5 |
) |
|
Net income |
13.8 |
|
|
24.7 |
|
|
62.8 |
|
|
5.3 |
|
|
Non-controlling interest |
— |
|
|
— |
|
|
(0.2 |
) |
|
(0.1 |
) |
|
Net income attributable to Deluxe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average dilutive shares |
43.1 |
|
|
42.2 |
|
|
42.8 |
|
|
42.1 |
|
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share |
1.26 |
|
|
1.38 |
|
|
4.88 |
|
|
5.08 |
|
|
Capital expenditures |
28.1 |
|
|
19.9 |
|
|
109.1 |
|
|
62.6 |
|
|
Depreciation and amortization expense |
45.8 |
|
|
27.7 |
|
|
148.8 |
|
|
110.8 |
|
|
EBITDA |
89.9 |
|
|
65.0 |
|
|
298.0 |
|
|
160.6 |
|
|
Adjusted EBITDA |
117.1 |
|
|
94.9 |
|
|
407.8 |
|
|
364.5 |
|
|
(1) |
The statement of income for the year ended |
CONSOLIDATED CONDENSED BALANCE SHEETS (dollars and shares in millions) (Unaudited) |
||||
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
Other current assets |
579.3 |
|
383.5 |
|
Property, plant & equipment |
132.3 |
|
88.7 |
|
Operating lease assets |
58.2 |
|
35.9 |
|
Intangibles |
504.4 |
|
246.8 |
|
|
1,430.1 |
|
703.0 |
|
Other non-current assets |
328.9 |
|
261.2 |
|
Total assets |
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
|
$— |
|
Other current liabilities |
626.2 |
|
411.8 |
|
Long-term debt |
1,625.8 |
|
840.0 |
|
Non-current operating lease liabilities |
56.4 |
|
28.3 |
|
Other non-current liabilities |
134.2 |
|
48.7 |
|
Shareholders' equity |
574.6 |
|
513.4 |
|
Total liabilities and shareholders' equity |
|
|
|
|
|
|
|
|
|
Net debt |
|
|
|
|
Shares outstanding |
42.7 |
|
42.0 |
|
Number of employees |
6,313 |
|
6,185 |
|
(1) |
The |
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in millions) (Unaudited) |
||||||
|
Year Ended |
|||||
|
2021 |
|
2020(1) |
|||
Cash provided (used) by: |
|
|
|
|||
Operating activities: |
|
|
|
|||
Net income |
|
|
|
|
|
|
Depreciation and amortization of intangibles |
148.8 |
|
|
110.8 |
|
|
Asset impairment charges |
— |
|
|
101.7 |
|
|
Prepaid product discount payments |
(40.9 |
) |
|
(33.6 |
) |
|
Other |
40.1 |
|
|
33.4 |
|
|
Total operating activities |
210.8 |
|
|
217.6 |
|
|
Investing activities: |
|
|
|
|||
Payment for acquisition, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired |
(958.5 |
) |
|
— |
|
|
Purchases of capital assets |
(109.1 |
) |
|
(62.6 |
) |
|
Proceeds from facility sales |
2.6 |
|
|
9.7 |
|
|
Other |
(1.6 |
) |
|
(3.2 |
) |
|
Total investing activities |
(1,066.6 |
) |
|
(56.1 |
) |
|
Financing activities: |
|
|
|
|||
Net change in debt, net of debt issuance costs |
836.8 |
|
|
(43.5 |
) |
|
Proceeds from issuing shares |
16.8 |
|
|
3.7 |
|
|
Dividends |
(51.6 |
) |
|
(50.7 |
) |
|
Share repurchases |
— |
|
|
(14.0 |
) |
|
Net change in customer funds obligations |
126.7 |
|
|
(0.2 |
) |
|
Other |
(15.7 |
) |
|
(5.9 |
) |
|
Total financing activities |
913.0 |
|
|
(110.6 |
) |
|
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents |
(1.1 |
) |
|
3.7 |
|
|
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents |
56.1 |
|
|
54.6 |
|
|
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year |
229.4 |
|
|
174.8 |
|
|
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of year |
|
|
|
|
|
|
Free cash flow |
|
|
|
|
|
|
(1) |
The 2020 statement of cash flows has been revised from amounts reported in the prior year to correct an error in the amount of goodwill impairment charges in the first quarter of 2020, which were previously understated by |
SEGMENT INFORMATION (In millions) (Unaudited) |
||||||||||||
|
Quarter Ended
|
|
Year Ended
|
|||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||
Revenue: |
|
|
|
|
|
|
|
|||||
Payments |
|
|
|
|
|
|
|
|
|
|
|
|
Cloud Solutions |
62.5 |
|
|
59.2 |
|
|
262.3 |
|
|
252.8 |
|
|
Promotional Solutions |
156.7 |
|
|
144.0 |
|
|
546.5 |
|
|
529.6 |
|
|
Checks |
184.1 |
|
|
173.3 |
|
|
703.0 |
|
|
706.5 |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|||||
Payments |
|
|
|
|
|
|
|
|
|
|
|
|
Cloud Solutions |
15.1 |
|
|
16.1 |
|
|
70.2 |
|
|
61.6 |
|
|
Promotional Solutions |
28.6 |
|
|
20.1 |
|
|
85.4 |
|
|
66.6 |
|
|
Checks |
83.2 |
|
|
83.3 |
|
|
324.2 |
|
|
341.7 |
|
|
Corporate |
(44.3 |
) |
|
(42.4 |
) |
|
(177.6 |
) |
|
(173.5 |
) |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin: |
|
|
|
|
|
|
|
|||||
Payments |
20.6 |
% |
|
22.8 |
% |
|
20.7 |
% |
|
22.6 |
% |
|
Cloud Solutions |
24.2 |
% |
|
27.2 |
% |
|
26.8 |
% |
|
24.4 |
% |
|
Promotional Solutions |
18.3 |
% |
|
14.0 |
% |
|
15.6 |
% |
|
12.6 |
% |
|
Checks |
45.2 |
% |
|
48.1 |
% |
|
46.1 |
% |
|
48.4 |
% |
|
Total |
20.5 |
% |
|
20.9 |
% |
|
20.2 |
% |
|
20.4 |
% |
|
The segment information reported here was calculated utilizing the methodology outlined in the Notes to Consolidated Financial Statements included in the company's Annual Report on Form 10-K for the year ended
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(in millions)
(Unaudited)
Note that the company has not reconciled the adjusted EBITDA outlook for 2022 to the directly comparable GAAP financial measure because the company does not provide outlook guidance for net income or the reconciling items between net income and adjusted EBITDA. Because of the substantial uncertainty and variability surrounding certain of these forward-looking reconciling items, including asset impairment charges; restructuring, integration and other costs; and certain legal-related expenses, a reconciliation of the non-GAAP financial measure outlook guidance to the corresponding GAAP measure is not available without unreasonable effort. The probable significance of certain of these reconciling items is high and, based on historical experience, could be material.
EBITDA AND ADJUSTED EBITDA
Management discloses EBITDA and adjusted EBITDA because it believes they are useful in evaluating the company's operating performance, as the calculations eliminate the effect of interest expense, income taxes, the accounting effects of capital investments (i.e., depreciation and amortization) and in the case of adjusted EBITDA, certain items, as presented below, that may not be indicative of current period operating performance. In addition, management utilizes adjusted EBITDA to assess the operating results and performance of the business, to perform analytical comparisons and to identify strategies to improve performance. Management also believes that an increasing EBITDA and adjusted EBITDA depict an increase in the value of the company. Management does not consider EBITDA and adjusted EBITDA to be measures of cash flow, as they do not consider certain cash requirements, such as interest, income taxes, debt service payments or capital investments. Management does not consider EBITDA or adjusted EBITDA to be substitutes for operating income or net income. Instead, management believes that EBITDA and adjusted EBITDA are useful performance measures that should be considered in addition to GAAP performance measures.
|
Quarter Ended
|
|
Year Ended
|
|||||||
|
2021 |
|
2020 |
|
2021 |
|
2020(1) |
|||
Net income |
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
— |
|
— |
|
(0.2 |
) |
|
(0.1 |
) |
|
Interest expense |
20.0 |
|
4.9 |
|
55.6 |
|
|
23.1 |
|
|
Income tax provision |
10.3 |
|
7.7 |
|
31.0 |
|
|
21.5 |
|
|
Depreciation and amortization expense |
45.8 |
|
27.7 |
|
148.8 |
|
|
110.8 |
|
|
EBITDA |
89.9 |
|
65.0 |
|
298.0 |
|
|
160.6 |
|
|
Asset impairment charges |
— |
|
— |
|
— |
|
|
101.7 |
|
|
Restructuring, integration and other costs |
17.9 |
|
21.6 |
|
59.0 |
|
|
80.7 |
|
|
Share-based compensation expense |
7.7 |
|
6.5 |
|
29.5 |
|
|
21.8 |
|
|
Acquisition transaction costs |
0.1 |
|
— |
|
18.9 |
|
|
— |
|
|
Certain legal-related expense (benefit) |
1.5 |
|
— |
|
2.4 |
|
|
(2.1 |
) |
|
Loss on sales of businesses and customer lists |
— |
|
1.8 |
|
— |
|
|
1.8 |
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
(1) |
Information for the year ended |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (continued)
(in millions, except per share amounts)
(Unaudited)
ADJUSTED DILUTED EPS
By excluding the impact of non-cash items or items that may not be indicative of current period operating performance, management believes that adjusted diluted EPS provides useful comparable information to assist in analyzing the company's current and future operating performance. As such, adjusted diluted EPS is one of the key financial performance metrics used to assess the operating results and performance of the business and to identify strategies to improve performance. It is reasonable to expect that one or more of the excluded items will occur in future periods, but the amounts recognized may vary significantly. Management does not consider adjusted diluted EPS to be a substitute for GAAP performance measures, but believes that it is a useful performance measure that should be considered in addition to GAAP performance measures.
|
Quarter Ended
|
|
Year Ended
|
|||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020(1) |
|||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
— |
|
|
— |
|
|
(0.2 |
) |
|
(0.1 |
) |
|
Net income attributable to Deluxe |
13.8 |
|
|
24.7 |
|
|
62.6 |
|
|
5.2 |
|
|
Asset impairment charges |
— |
|
|
— |
|
|
— |
|
|
101.7 |
|
|
Acquisition amortization |
27.2 |
|
|
13.8 |
|
|
82.9 |
|
|
55.9 |
|
|
Restructuring, integration and other costs |
17.9 |
|
|
21.6 |
|
|
59.0 |
|
|
80.7 |
|
|
Share-based compensation expense |
7.7 |
|
|
6.5 |
|
|
29.5 |
|
|
21.8 |
|
|
Acquisition transaction costs |
0.1 |
|
|
— |
|
|
18.9 |
|
|
— |
|
|
Certain legal-related expense (benefit) |
1.5 |
|
|
— |
|
|
2.4 |
|
|
(2.1 |
) |
|
Loss on sales of businesses and customer lists |
— |
|
|
1.8 |
|
|
— |
|
|
1.8 |
|
|
Adjustments, pre-tax |
54.4 |
|
|
43.7 |
|
|
192.7 |
|
|
259.8 |
|
|
Income tax provision impact of pretax adjustments(2) |
(13.7 |
) |
|
(10.2 |
) |
|
(45.8 |
) |
|
(50.1 |
) |
|
Adjustments, net of tax |
40.7 |
|
|
33.5 |
|
|
146.9 |
|
|
209.7 |
|
|
Adjusted net income attributable to Deluxe |
54.5 |
|
|
58.2 |
|
|
209.5 |
|
|
214.9 |
|
|
Income allocated to participating securities |
— |
|
|
— |
|
|
(0.2 |
) |
|
(0.1 |
) |
|
Re-measurement of share-based awards classified as liabilities |
(0.1 |
) |
|
— |
|
|
(0.4 |
) |
|
(0.8 |
) |
|
Adjusted income attributable to Deluxe available to common shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted-average dilutive shares |
43.1 |
|
|
42.2 |
|
|
42.8 |
|
|
42.1 |
|
|
Adjustment(3) |
(0.1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
Adjusted weighted-average dilutive shares |
43.0 |
|
|
42.2 |
|
|
42.8 |
|
|
42.1 |
|
|
|
|
|
|
|
|
|
|
|||||
GAAP Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments, net of tax |
0.94 |
|
|
0.80 |
|
|
3.43 |
|
|
4.97 |
|
|
Adjusted Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Information for the year ended |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (continued)
(in millions)
(Unaudited)
(2) |
The tax effect of the pretax adjustments considers the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). Generally, this results in a tax impact that approximates the |
|
|
(3) |
The total of weighted-average shares and potential common shares outstanding used in the calculation of adjusted EPS differs from the GAAP calculation for the quarter ended |
REVENUE EXCLUDING FIRST AMERICAN
Because of the magnitude of the First American acquisition, management views the measure of revenue growth, excluding the First American acquisition, as an important indicator when assessing and evaluating the performance of the business and when identifying strategies to improve performance. This measure of revenue growth may be expressed as a dollar amount or as a percentage rate. By excluding the First American revenue, management is able to evaluate internally-generated revenue, measured by comparable sales of products and services year-over-year. This measure will be utilized by management until the acquisition has been under the company's ownership for at least four full fiscal quarters at the beginning of a reporting period.
|
Quarter Ended
|
|
Year Ended
|
|||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||
Total revenue |
|
|
|
|
|
|
|
|
|
|
Less: First American revenue |
(85.1 |
) |
|
— |
|
(195.0 |
) |
|
— |
|
Total revenue excluding First American |
|
|
|
|
|
|
|
|
|
|
Total revenue growth excluding First American |
|
|
|
|
|
|
|
|
|
|
Total revenue growth excluding First American % |
6.8 |
% |
|
|
|
2.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||
Payments revenue |
|
|
|
|
|
|
|
|
|
|
Less: First American revenue |
(85.1 |
) |
|
— |
|
(195.0 |
) |
|
— |
|
Payments revenue excluding First American |
|
|
|
|
|
|
|
|
|
|
Payments revenue growth excluding First American |
|
|
|
|
|
|
|
|
|
|
Payments revenue growth excluding First American % |
5.4 |
% |
|
|
|
4.5 |
% |
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (continued)
(in millions)
(Unaudited)
NET DEBT
Management believes that net debt is an important measure to monitor leverage and to evaluate the balance sheet. In calculating net debt, cash and cash equivalents are subtracted from total debt because they could be used to reduce the company’s debt obligations. A limitation associated with using net debt is that it subtracts cash and cash equivalents, and therefore, may imply that management intends to use cash and cash equivalents to reduce outstanding debt. In addition, net debt suggests that our debt obligations are less than the most comparable GAAP measure indicates.
|
|
|
|
|||
Total debt |
|
|
|
|
|
|
Cash and cash equivalents |
(41.2 |
) |
|
(123.1 |
) |
|
Net debt |
|
|
|
|
|
|
FREE CASH FLOW
Management defines free cash flow as net cash provided by operating activities less purchases of capital assets. Management believes that free cash flow is an important indicator of cash available for debt service and for shareholders, after making capital investments to maintain or expand the company’s asset base. Free cash flow is limited and not all of the company’s free cash flow is available for discretionary spending, as the company may have mandatory debt payments and other cash requirements that must be deducted from its cash available for future use. Free cash flow is not a substitute for GAAP liquidity measures. Instead, management believes that this measurement provides an additional metric to compare cash generated by operations on a consistent basis and to provide insight into the cash flow available to fund items such as dividends, mandatory and discretionary debt reduction, acquisitions or other strategic investments, and share repurchases.
|
|
Quarter Ended
|
|
Year Ended
|
||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of capital assets |
|
(28.1 |
) |
|
(19.9 |
) |
|
(109.1 |
) |
|
(62.6 |
) |
Free cash flow |
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (continued)
(in millions)
(Unaudited)
LIQUIDITY
Management defines liquidity as cash and cash equivalents plus the amount available for borrowing under our revolving credit facility. Management considers liquidity to be an important metric for demonstrating the amount of cash that is available or that could be readily available to the company on short notice. This financial measure is not a substitute for GAAP liquidity measures. Instead, management believes that this measurement enhances investors’ understanding of the funds that are currently available to the company.
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
Amounts available for borrowing under revolving credit facility |
|
362.6 |
|
302.3 |
Liquidity |
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220203005126/en/
470-607-5567
tom.morabito@deluxe.com
651-233-7735
cameron.potts@deluxe.com
Source:
FAQ
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