Deluxe Corporation (NYSE:DLX) Q1 2023 Results Conference Call May 4, 2023 8:30 AM ET

Company Participants

Tom Morabito - Vice President of Investor Relations

Barry McCarthy - President and Chief Executive Officer

Chip Zint - Chief Financial Officer

Conference Call Participants

Lance Vitanza - TD Cowen

Charles Strauzer - CJS

Marc Riddick - Sidoti

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Deluxe First Quarter 2023 Earnings Conference Call [Operator Instructions]. Today's call is being recorded. We will begin with opening remarks and introductions.

At this time, I would like to turn the conference over to your host, Vice President of Investor Relations, Tom Morabito. Please go ahead.

Tom Morabito

Thank you, operator, and welcome to the Deluxe First Quarter 2023 Earnings Call. Joining me on today's call is Barry McCarthy, our President and Chief Executive Officer; and Chip Zint, our Chief Financial Officer. At the end of today's prepared remarks, we will take questions.

Before we begin, and as you see on this slide, I'd like to remind everyone that comments made today regarding management's intentions, projections, financial estimates or expectations about the company's future strategy or performance are forward-looking in nature as defined in the Private Securities Litigation Reform Act of 1995. Additional information about factors that may cause our actual results to differ from projection is set forth in the press release we furnished today and our Form 10-K for the year ended December 31, 2022, and in other company SEC filings. On the call today, we will discuss non-GAAP financial measures, including comparable adjusted revenue, adjusted and comparable adjusted EBITDA, adjusted and comparable adjusted EBITDA margin, adjusted EPS and free cash flow. In our press release, our presentation and our filings with the SEC, you will find additional disclosures regarding the non-GAAP measures, including reconciliations of these measures to the most comparable measures under U.S. GAAP. Also in the presentation, we are providing additional reconciliations of GAAP EPS to adjusted EPS, which should help with your modeling.

Now I'll turn it over to Barry.

Barry McCarthy

Thanks, Tom, and good morning, everyone. Deluxe is off to a solid start to 2023 with positive comparable adjusted revenue and EBITDA growth. You'll recall that last quarter, we began discussing both revenue and EBITDA on a comparable adjusted basis, which will exclude the inconsistencies caused by acquisitions or divestitures in the prior period. We're now in our third consecutive year of revenue growth on a comparable adjusted basis and we're delivering on our long-term promise of scale, growing profits faster than revenue. This has been an elusive goal for more than a decade. While there's still more to do, we're cautiously optimistic that this quarter represents our inflection point of improving margin and earnings leverage over time. Before we review the quarterly results, let me take a moment to offer a few business updates. First, in Q1, we completed our 3-year corporate infrastructure modernization program with the implementation of our ERP, clearly showing our ability to execute well on what is always a difficult project. Chip will provide additional details in a moment. Second, I want to offer some details on First American as we approach the second anniversary of the acquisition. First American, our merchant services platform business continues to meet or exceed our management case for the transaction. Pre-acquisition, the business was growing lower single digits and is now solidly a mid-single-digit grower, delivering 7% revenue growth this quarter. The progress we made on this acquisition highlights the operational and financial discipline and the power of our One Deluxe go-to-market model.