Q3 2023 Deluxe Corp Earnings Call
At least we furnished today.
In 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 todays 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.
Within the materials. We are also providing reconciliations of GAAP EPS to adjusted EPS, which may assist with your modeling.
Now I'll turn it over to Barry.
Thanks, Brian and good morning, everyone.
We have some important updates to share today. So our prepared remarks are a little longer than usual.
We have two primary topics, we'd like to cover this morning first our solid third quarter and year to date performance and increased 2023 earnings guidance.
Second the launch of an exciting enterprise wide initiative to deliver $100 million of incremental run rate free cash flow and $80 million of increased comparable adjusted EBITDA with the results ramping through 2025.
We call This initiative project North Star.
Northstar will begin delivering an increased adjusted EBITDA in Q4 of this year.
First a few comments regarding quarter and year to date performance.
Our overall third quarter performance met our expectations and was consistent with the increased full year guidance, we provided last quarter.
Chip will provide both reported and comparable adjusted numbers, but I will focus here on comparable adjusted results, which we believe best reflect the underlying business performance given our divestitures.
For the third quarter total revenue was flat year over year at $538 million, while EBITDA expanded 3% $202 million.
Year to date through the third quarter, our total revenue has grown 1%.
While EBITDA has expanded by 4% demonstrating our continued ability to drive efficiency in our cost base, while delivering profitable growth.
For perspective, we're on track to deliver our first full year of concurrent organic revenue and EBITDA growth in more than a decade.
Further in the third quarter, we delivered our third straight quarter of operating leverage with profit growing faster than revenue.
2023 will also be our third consecutive year of organic revenue growth.
On guidance, we are reiterating our 2023 revenue range, which we raised during our second quarter call.
We've also increased our full year EBITDA and adjusted EPS guidance to reflect both our year to date performance as well as in year impacts from the North star initiatives.
Chip will provide more details during his comments.
Overall, we're pleased with our execution through the third quarter of the year.
To provide some brief comments regarding our operating segments.
Overall payments segment revenue was flat in the third quarter below our expectations of mid single digit revenue growth.
The result was primarily impacted by some continued softness within the lockbox portion of our <unk> payments business.
You will recall, we signaled a volume softness in this area during last quarter's call.
In addition, this line of business was lapping a challenging prior year comp during the third quarter.
On a more positive note revenue growth improved during the third quarter for the other half of our payments business.
Within services, increasing sequentially to just over 2%.
You will recall that macroeconomic factors, including discretionary consumer spending trends and impacted year to date processing volume within this business.
We continue to actively monitor related reports, noting some recent improvement with the end retail spending trends, while the overall economic outlook remains somewhat uncertain.
As a reminder, our merchant services business also has a strong presence across several less discretionary areas, which continue to perform well.
Year to date through the third quarter merchant services revenue growth was roughly 3.5%.
And we remain confident that the merchant business will deliver mid single digit revenue growth for the full year.
Here's an example of why.
We achieved an important milestone during the quarter in merchant services that will help further accelerate our growth in the fourth quarter and beyond.
When with Fulton Financial Corporation.
Fulton has more than 200 banking center locations spanning five states across the mid Atlantic and northeastern United States with more than $27 billion in assets.
This expanded relationship alone could generate a few points of incremental growth next year for merchant services.
We won the business because of our superior customer support robust and reliable platform and our omni channel capabilities.
Fulton represents a significant milestone for our business demonstrating successful expansion into the middle market for our merchant services offerings.
The win is another example of the scalability of our competitive product offerings across both SMB and commercial markets and further validates our ability to cross sell merchant services to an existing deluxe customer.
You will recall bank cross selling was one of the core investment thesis for the first American acquisition.
Deluxe has 4000 financial institution customers, providing us with plenty of fertile ground to harvest for merchant services.
Yeah.
Moving now to our strong third quarter results for the data solutions segment.
We are particularly pleased with the continued exceptional performance within this segment as revenue increased over 24%.
These results accompanied more than a 45% growth of EBITDA during the quarter and were driven by a continuation of robust campaign execution across many of our Fi partners.
We have continued to see strong demand for our data driven marketing services in support of bank seeking low cost deposits as we noted in the last quarter. In addition to expansion of their business banking account offerings.
We also continued our expansion into non <unk> Fi and other less interest rate sensitive market verticals.
Shifting now to our print businesses comprised of our promotional solutions and checks segments.
Combined these businesses generate more than $1 $2 billion in annual revenue with an EBITDA margin rate in the low thirties.
On a blended basis. These businesses declined at low single digit rates and in many cases have recurring or reoccurring characteristics.
Consistent with expectations on a year to date basis.
Combined print businesses has seen revenue declines of less than 1%, while EBITDA margins have expanded by 50 basis points to just over 31.5%.
In the promotional solutions portion of our print business third quarter revenue declined seven 5%.
We did see some demand softness during the quarter and we executed our previously planned site closure impacting some of our production.
We have also shifted our focus on resources within this area toward products that are more reoccurring in nature with generally better margins and lower customer acquisition costs.
On a year to date basis EBITDA for the promo segment improved more than 15% on revenue growth just under 1% versus 2022.
Finally, our check business continued to deliver strong results with third quarter revenue declining 1%.
Lower than the market and better than our expectations.
Margins in the Czech business have also sustained within the mid Forty's expected level and EBITDA grew by 1% during the quarter, helping to contribute to our overall EBITDA leverage across the enterprise results.
We are pleased our check business continues to perform well and much better than many had expected.
Our winning market share and our investments in production efficiency are working.
The strength and predictability of this cash flow gives us even more confidence we have plenty of runway to complete our transformation into a payments and data company.
In summary, despite from third quarter specific headwinds our year to date performance, reflecting revenue growth of 1% and EBITDA growth of 4% demonstrates the scaling power of our business.
Our wins highlight our competitiveness.
Help us deliver sustained performance going forward.
Now to our second topic.
Project North Star.
First a little background.
As we have noted throughout this year. The locks are at an inflection point, where our payments and data businesses together are able to outpace the secular decline within our print businesses.
We have changed the company's trajectory.
That are now in our third consecutive year of organic revenue growth and we are on track to deliver full year operating leverage in 2023 for the first time in more than a decade.
Next we need to accelerate this performance to further drive shareholder value creation by expanding our EBITDA growth trajectory driving increased free cash flow and more rapidly paying down debt and improving our leverage ratio.
We have combined our execution plans into an integrated program, we call project North Star.
Northstar will increase our run rate cash flow by $100 million and comparable adjusted EBITDA incremental $80 million ramping through 2025.
We will deploy the improved cash flow to pay down debt and improve our leverage ratio consistent with our stated capital allocation priorities.
Importantly, north Star is not a change of our strategy of investing this cash flow from our print businesses into our payments and data businesses.
Rather the initiative integrates our plans to drive execution certainty.
The program incorporates clear hurdle rates and required returns on invested capital.
Our planning for this critical initiative, that's been underway for several months and we're leveraging external expertise from best in class consulting and advisory resources to reinforce our rigorous approach to driving this value.
I have five main points to highlight on Northstar.
One.
So we're taking a portfolio approach to derisk our execution on these multi year outcomes.
The program is comprised of more than a dozen separate work streams designed to work together to deliver the total value.
Two <unk>.
North Star is sequenced to focus on cash generation. So our early initiatives prioritized rapid time to value and high Rois C, which enables us to fund the investment in complex longer term initiatives consistent with our multi year planning horizon.
Three nor.
North Star is a balanced mix of structural cost reduction via Org design process and operational improvements. In addition to work streams to drive revenue growth.
For <unk>.
North Star is comprehensive and scale.
We are already involved over 100 of our current leaders in driving change across the organization.
And doing this north star is adding execution certainty to our companywide objectives and acting as a change agent for our talent and culture.
Five.
As part of North Star, we have already taken significant action to reorganize deluxe teams.
We have combined the like for like capabilities reduced management layers and consolidated core operations to run the company more efficiently and create the ability to invest in high impact talent to accelerate our growth businesses.
These steps initiated during the third quarter will contribute approximately $10 million of incremental run rate adjusted EBITDA to our forecasted fourth quarter outlook.
Finally to provide more details about our strategy and Northstar, specifically, we will be hosting an investor day in New York on December 5th.
During this session, we will provide additional detail regarding the north star initiatives and share related guidance ranges for the next few years.
The deluxe leadership team will provide insights into our current solutions.
Attractive growth prospects and the linkages across the portfolio of offerings to the Northstar outcomes.
Brian will provide additional details regarding this event at the end of today's call.
Before passing it over to chip.
I want to again, thank my fellow deluxe service for their continued commitment to our customers' success.
By helping our customers to do more than <unk> have changed the company's trajectory.
Delivering sustained organic revenue and EBITDA growth.
We are all proud of our momentum and look forward to the exciting future and benefits Northstar Realty yields.
Thank you Barry and good morning, everyone.
Before providing a few additional data points about northstar and covering the usual quarterly highlights I'd like to touch on one additional business developments since our last call.
During the third quarter, we made the decision to exit the U S payroll business through a partnership and executed conversion agreement with Paychex.
We are working to ensure a seamless transition of our existing clients across this line of business.
Results from the payroll business, where reflects migration of these customers to paychex as these conversions take place over the next several months.
As a result, our comparable adjusted results beginning in the fourth quarter will be impacted.
As a reminder, this business comprised approximately 1% of our payments segment revenue and this transaction remains a part of our methodical effort to simplify the portfolio.
Now onto the quarter.
On a reported basis total revenue decreased three 1% year over year, while total comparable adjusted revenue was flat at $537 $8 million.
We reported a third quarter GAAP net loss of $8 million or <unk> 18 per diluted share.
From net income of $14 $7 million or <unk> 34 per share in the third quarter of 2022.
Adjusted EBITDA came in at $101 9 million down two 6% from the prior year, but up 3% on a comparable adjusted basis.
Comparable adjusted EBITDA margins were 18, 9% up 50 basis points year over year.
Third quarter adjusted diluted EPS came in at 79.
Down from 99 in last year's third quarter. This decrease was primarily driven by higher interest expense and prior year earnings from exited businesses, partially offset by improved operational performance.
Now turning to our segment details starting with our growth businesses payments and data solutions.
Payments third quarter revenue was flat year over year at 169, and a half million dollars with merchant services growing two 1% and the balance of the payments business declining two 5%.
As Barry noted rates for the BTB payments portion of this segment, including our receivables and payable solutions were impacted by lockbox declines of eight 9%, resulting from ongoing volume softness and challenging prior year comparisons.
The third quarter of 2022, we temporarily processed a large amount of one time volume due to an extended outage experienced by competitor in the remittance space.
We continue to expect some lockbox volume softness to persist for the balance of 2023, but feel particularly good about margin and profitability due to our operational improvement initiatives in this area.
Growth for the merchant business expanded from the rates seen during the second quarter. Despite some continued uncertainty in the outlook for consumer discretionary spending levels, which we continue to monitor.
Payments adjusted EBITDA margins were 22, 2% up 90 basis points from the prior year.
Operational improvements across our lockbox sites continued to show progress driving much of the rate improvements seen versus prior year.
Margins were largely flat year over year across the balance of the payments business.
For 2023, we now expect to see low single digit payments revenue growth in.
And adjusted EBITDA margins in the low to mid 20% range.
On a reported basis data solutions revenue decreased 4% from the third quarter of 2000 $22 million to $64 million.
Comparable adjusted revenue increased 24, 5% year over year, driven by continued strong data driven marketing results as Barry noted in his comments.
Revenue strength also continues to benefit from our ability to deliver an expanded market verticals, while continuing to support marketing efforts surrounding evolving banking needs like low cost deposit gathering.
Data is adjusted EBITDA margins in the quarter decreased 10 basis points year over year landing at 23, 9%.
On a comparable adjusted basis, however, factoring for the divestiture of the web hosting business completed in the second quarter. This adjusted EBITDA margin reflected an increase of 370 basis points on the strong comparable adjusted revenue growth.
As we've discussed before the DM business is very campaign oriented and tends to be lumpy quarter to quarter. It is often necessary to consider a few quarters together to better understand the business trajectory.
For the balance of the current year, we expect Q4 <unk> results to experience negative growth, reflecting both our year to date outsized revenue growth as well as a challenging prior year comp from some significant campaign shifts into Q4 last year.
<unk> of these factors we continue to believe data solution results will deliver our existing full year guidance.
For the full year, we continue to expect low single digit revenue growth on a comparable adjusted basis.
<unk>, which includes declines within the web hosting business through the closing on June 29th of this year.
Further expect to see blended adjusted EBITDA margins in the low to mid 20% range for the full year.
Turning now to our print businesses promo and checks.
Promotional solutions third quarter revenue was $124 3 million down eight 7% versus last year on a reported basis promos comparable adjusted revenue decreased seven 5% as demand softened a bit across some of our extended distribution networks.
Promos adjusted EBITDA margin was flat year over year at 13, 4% as we maintain the mid teens margin profile achieved during the second half of 2022.
As Barry mentioned year to date comparable adjusted EBITDA for this business has grown by 15, 2% as we're taking a more focused approach targeting products with a more reoccurring purchase profile and better margins, which may impact overall promo revenue growth.
As a result for 2023, we now expect to see full year low single digit comparable adjusted revenue declines consistent with secular trends within our broader combined print portfolio with adjusted EBITDA margins holding in the mid teens.
<unk> third quarter revenue performed strongly decreasing one 3% from last year to $180 million check demand has remained durable relative to our low to mid single digit decline expectations and we continue to see positive impacts from our responsible price actions.
Third quarter adjusted EBITDA margins were sequentially improved 45, 2%, reflecting a 110 basis points increase year over year.
On a year to date basis check revenue was down one 5% versus the prior year period with margins effectively flat at 44, 3%.
For 2023, we continue to expect low to mid single digit revenue declines.
And adjusted EBITDA margins in the mid 40% range consistent with our long term expectations.
As Barry mentioned, we are pleased with the durability of cash flows from checks, giving us even more confidence we have ample runway to complete our transformation.
Turning now to our balance sheet and cash flow, we ended the quarter with a net debt level of $159 billion down sequentially from 163 billion at the end of the second quarter.
Our net debt to adjusted EBITDA ratio was three eight times at the end of the quarter consistent with the second quarter and our long term strategic target remains approximately three times.
Call that approximately 75% of our total debt remains at fixed rates.
<unk> of the swap that we entered into during the second quarter. We are now largely insulated against ongoing variability from potential rate hikes over the reasonable horizon.
Free cash flow defined as cash provided by operating activities less capital expenditures was $42 7 million, which compares to $23 million in the third quarter of 2022.
On a year to date basis, we have continued to see sequential growth for this important metric with the third quarter, representing continued improvement from our first quarter seasonally negative result.
Our board approved a regular quarterly dividend of <unk> 30 per share on all outstanding shares.
The dividend will be payable on December 4th 2023 to all shareholders of record as of market closing on November 20th 2023.
Our priorities for capital allocation remain consistent.
Reducing our debt and net leverage below our long term target of three times funding high return internal investments and paying our dividend, which is currently 30 per share per quarter and equates to a very attractive yield.
Continued to review the dividend with our board and our current focus is to grow out of that high yield through improving business performance.
As Barry noted in his comments, we're particularly enthusiastic to announce project North Star, which will further support our progress towards our long term objectives and accelerate debt Paydown via continued improved adjusted EBITDA and free cash flow generation, one of our key capital allocation priorities. This.
This will bring us back below our long term three times levered target over the coming periods.
To provide some additional financial details around the program we.
We are targeting $80 million of incremental comparable adjusted run rate EBITDA from these initiatives as well as incremental free cash flow of over $100 million annually ramping through 2025.
As Barry mentioned, you will see the first significant benefits from Northstar within our Q4 adjusted EBITDA performance, we will execute against additional Northstar work streams over the next 18 to 24 months and expect the initial will also lead to an improved free cash flow trajectory starting in 2025 inclusive of the impact of cash restructuring and integration.
Charges.
The overall program targets north of $100 million of profit improvements to offset the ongoing secular declines in the print businesses.
This will enable us to deliver the $80 million run rate EBITDA improvement in reported results by 2026.
We expect approximately $10 million of run rate incremental adjusted EBITDA within our Q4 outlook, primarily from cost optimization initiatives executed during the third quarter.
To date, we've taken restructuring charges of approximately $35 million with an expectation of up to another $80 million to $100 million over the next two years to execute the full North Star initiative.
These charges will be a function of severance obligations professional services fees and other restructuring related charges.
We will actively redeploy some of the savings realized from the North star initiatives over the next two years to continue funding high ROIC growth projects and payments and data solutions.
But the remainder of the free cash flow net of dividends used to pay down debt again in line with our capital allocation framework.
Our expectations would be for annual Capex to remain largely flat over the next two years as we continue to aggressively fund our transformation and corresponding core growth investments.
We plan to provide additional detailed 2024 guidance during our upcoming Investor day in early December when will further lay out the timing and trajectory of the improvements along the way to achievement of the full run rate benefits by 2026.
With respect to our current Q4 and full year 2023 guidance Northstar actions taken during Q3 allow us to further update guidance for the year given the execution of these initiatives to drive approximately $10 million of in year benefits.
More specifically today, we are updating our full year 2023 expectations for both earnings and free cash flow, while maintaining our revenue guidance keeping in mind all figures are approximate.
Reflect the impact of the web hosting divestiture, which closed on June 2019.
As detailed further within today's press release, we are updating our full year guidance as follows.
Reiterating revenue of $2 8 billion to $2 2 billion.
Creasing, adjusted EBITDA between $405 million and $420 million.
Raising adjusted EPS between $3 20, and $3 45.
And lowering our free cash flow range to between 60 and $80 million, which is reflective of the north star related cash expenditures noted previously.
While we are maintaining our revenue guidance range for the year as we've mentioned a few times today, we have seen some volume softness in parts of the business in the third quarter that we expect will continue through the balance of the year.
This outlook is likely to position us slightly below the midpoint of our revenue guidance range based on some of these recent trends.
These results remained consistent with our continued expectations for another year of comparable adjusted revenue growth with comparable adjusted EBITDA growth between zero and 4%.
As a reminder, adjusted EPS, while continuing to improve from our original guidance is still expected to decline year over year due to the full year impact of rising interest rates incremental depreciation and amortization and an estimated <unk> 15 impact from the web hosting divestiture earlier in the year.
And lastly, while I'm pleased with the third quarter free cash flow performance.
Additional forecast of cash charges related to project North Star will pressure, our previous guidance range and expectations for the fourth quarter.
Also in order to assist with your modeling our guidance assumes the following.
Interest expense of approximately $125 million and adjusted tax rate of 26%.
Depreciation and amortization of $165 million of which acquisition amortization is approximately $75 million.
And average outstanding share count of $43 9 million shares and.
And capital expenditures of approximately $100 million.
Among other things this guidance is subject to prevailing macroeconomic conditions, including Super spending global unrest interest rates labor supply issues inflation and the impact of divestitures.
To summarize we are pleased with our third quarter and year to date results and encouraged by our ongoing execution. The launch of project North Star is an exciting moment for the company and core to our ability to continue to increase operational efficiencies.
ROE EBITDA improved free cash flow pay down debt and further lower our leverage ratio.
Operator, we are now ready to take questions.
Okay.
In order to ask a question. Please press Star then the number 100 telephone keypad. Please limit yourselves to one question and one follow up question. If you have additional questions. Please re enter the queue.
We'll pause for just a moment to compile the Q&A roster.
And your first question is from the line of Lance Vitanza with TV Cowen. Please go ahead.
Thank you, thanks, gentlemen for taking the questions.
My first question is could you talk on the on the outlook for merchant services could you talk about what that outlook looks like given any potential regulatory changes that you are seeing potentially coming down the pike.
Prospects for new payment rails that kind of thing I'm, just trying to get a better sense for how you view the medium to longer term trajectory and opportunity there.
<unk>, it's Barry Thanks for the question.
I would tell you in general we of course pay attention to all the trends in all of the conversations going on around regulation, particularly around interchange, we don't anticipate that there'll be any material impact on us in the intermediate or long term as you know our sources of revenue.
Primarily from fees that merchants pay per transaction and while we do have some.
Income related to interchange.
We think that any pending any of the pending things that are out there would have limited impact on the business.
Last one I think a really big story for the quarter around merchant services business is our ability to expand up into the middle market around bank partnerships. The win on Fulton Bank is a really important milestone for the company is the segment of the market, where first American that we acquire.
You'll recall back in June of 2021, we just never have been competing for that business much less win and that that deal alone will add a couple of points to growth in the merchant business going forward and we're really excited about that because we think it is it demonstrates the ability to win large.
Deals to cross sell to existing deluxe customers, our merchant services business and.
And compete effectively with the feature set that we offer which is very robust and when up in that middle market. We're very excited about that and we think that is a great indication about the opportunities. We have had ahead of us.
And then for my follow up just actually on the data side could you talk more about the expansion to the high growth verticals beyond financial services and I'm wondering if there are any either new examples that you could talk about that maybe you didn't call out before or perhaps a discussion of some verticals that.
You'd like to get into but arent yet.
Yeah. So the very core of what we do in our data driven marketing business is that we ingest massive amounts of data from over 100 different data sources. So we believe we have the largest data lake of consumer and small business data anywhere in the United States we.
Put on top of that our artificial intelligence tools, our AI tools that extract data and help us identify and target individual consumers are small businesses to receive an offer and then we go one step further and actually deliver that offer to the customer the ultimate consumer on behalf of <unk>.
Our customer and.
And so all of that is really targeted at businesses that have high lifetime value. So you wouldn't be doing all of this effort for somebody to buy it.
One time consumable product. This is for businesses that have long argued a high value.
Long term relationships and so we've already expanded to a telecom unregulated utilities.
Our high end Internet merchants on home furnishing goods companies.
Our property and casualty insurance and so we've been very successful at expanding beyond our five.
Two of these additional market verticals that have high lifetime value.
On your question about where we would go next anywhere where a business has had a high lifetime value customer represents opportunity for us and because we built this massive scale data lake, which we've talked about the last few quarters. It gives us this opportunity to continue our growth trajectory expanding not only.
Within the financial institutions, but outside anywhere where there's a high lifetime value for a customer.
Thanks, guys I have a lot more questions, but I'll pass the baton.
Your next question is from the line of Charles Strausser with CGS Securities. Please go ahead.
Hi, good morning.
Just a quick question if you could talk about it.
Cash flow and Capex.
Honestly this year, that's kind of the.
The wrap up of the ERP implementation and the hope was that next year that Capex number would come down from $100 million this year.
Are you basically saying that the.
The savings.
From the ERP wind down, we're not going to be redeployed towards our initiatives.
Yeah, Hey, Charlie its chip good morning, So very pleased with the Q3 free cash flow number and Youre right, we signaled $100 million of free of Capex spend at the start of this year.
And we believe that that's a good figure to assume for the next two years roughly.
The spend we were doing around the ERP.
As we entered into this year was much less around capex and more to deal more to do with the final integration and restructuring charges on that program. So if you recall at the start of this year, we were getting through the end of the job. They're all of our restructuring spend was really going towards that now on the back end of the year, we're transitioning the project North Star.
This year, we've been doing the two things. So as we look ahead to next year. We do believe capex of approximately $100 million is still the right figure to allow us to continue to invest in growth in payments and data, but we do believe the restructuring side of spend this year is kind of the high watermark and next year can still be a slight reduction and we believe free cash flow will still remain.
Pain are healthy in the near term. These cash charges were talking about what northstar or not can all occur at one time.
And it's really going to allow us to improve free cash flows over time remain healthy in the near term and expand so we'll talk a lot more about free cash flow expectations at Investor day, and specifically the horizon over the next few years and our path to improve free cash flow conversion as a <unk>.
Rent as a percent of adjusted EBITDA.
Great. Thanks, and then on the data driven marketing side.
If you could expand a little bit more color there.
So the types of customers.
The growth in the quarter.
So we're really pleased as I said in our prepared remarks on this the exceptional performance, we're seeing in the data driven marketing business.
And the last two quarters in particular in addition to serving non F I channels.
We have had significant requests from our bank customers to help them.
Build their low cost or acquire low cost deposits and so we've been very quickly been able to receive the request use our new expanded database and our AI tools to rapidly deploy against an urgent need for bank customers to build low cost deposits and so.
In addition to winning and delivering on the non it by channel. We also had some nice.
Nice wins and very very quick delivery within the <unk> channel and Thats really whats helped grow here.
Why we have such great confidence in the long term.
Obviously like we said in our prepared remarks.
Not every quarter so it looked like the last two.
But we're really really proud of the trajectory of this business for the full year and for what we see in the future as well, yeah and I'll just add another comment about it. So obviously the data solutions segment is a bit messy. This year with the web hosting divestiture halfway through the year. If you take that aside the go forward portfolio.
We will grow roughly 6% for the full year. The DBM specific portion that is really the growth engine inside of there is going to grow closer to seven.
And so it's just a campaign oriented business campaigns can shift right at the edge of a quarter in one way or out the other end. So we feel really good about where we're going to be at.
And we just will have a decline here in the fourth quarter as we lap lap a tough comp, but we think that 7% growth figure that you're kind of delivered for the full year is a good gauge for where this business is having a long term.
Great. Thank you.
Your next question is from the line of Marc Riddick with Sidoti Riddick with Sidoti and company. Please go ahead.
Hey, good morning, So I wanted to jump into.
Certainly.
First wanted to thank you for for scheduling be Investor day could certainly for a lot of the questions I'm sure that a lot of the time.
But you'll be covering it at that time, but I wanted to sort of circle back into maybe some of the the process of setting up the program and maybe you could talk a little bit about maybe how.
At the conclusion of the ERP did that sort of lead to some of the learnings or some of the initial pillars that led to project North star or sort of maybe how that how project North star sort of Guy.
Gathered steam if you will over these last few months.
Yes, Mark this is Jeff I'll start with Barry can add more color. So I think at first I just want to reiterate that this project. We're going through is a really good investment that we believe will drive meaningful shareholder returns.
As we wrapped up the ERP and everything we've been doing over the last three years. The one thing. We know is that was necessary to get us here to this inflection point and the organization didn't have the capacity to take on this bigger project until we got through that so this is a logical transition to the next step as we said it's not a change in our strategy is really helping.
<unk> the path, we've been on and to really provide that execution certainty that we will get there.
So we're very confident we're very excited about this and we think its a great initiative and we're very pleased that we've already executed that $10 million worth of in Europe here in the fourth quarter, which annualize it gives us a $40 million run rate already going into next year again, partially offset by what will be secular declines, but that gives us the certainty that this is good.
To be successful and yield immediate results.
Wilson.
Sure.
Really confident about this and that we've already put points on the board that are going to deliver for shareholders starting in the fourth quarter.
We think is a is.
Really strong indication about the opportunity right in front of us that we're executing against.
Okay, Great and then I guess from the.
<unk>.
One of the things Thats sort of is <unk>.
Jumping out as the resilience of the checks.
What I talked about a little bit I guess, maybe at least from a from the vantage point of market share.
Well, if you could talk a little bit about that.
How we should sort of look at that and kind of what you experienced in the third quarter and what you think may be available to you.
At least vis vis.
The overall secular expectations. It certainly seems as though you are still gaining market share we're not looking at that wrong.
So first of all I really appreciate the question I think this is one of the things that maybe the market doesn't fully understand about the quality of the earnings and the cash flow that this company produces checks actually increased profitability in the third quarter and we are winning market share every time there is <unk>.
Bank consolidation, we tend to be the big winner and that we continue to improve the effectiveness of our program of selling checks through all of our bank and other non bank channel partners.
And so we really fundamentally believe that and we don't dispute the Czech consumption and usage is in decline, but we are able to win market share and we're also able to.
Rice effectively that helps us control of that that decline at a rate less than the market and we had a very long history of that and actually in the last couple of years, we've had in a period, where we had four consecutive quarters of revenue growth.
While holding on to really attractive margins in the mid Forty's.
That gives us a ton of confidence in our ability to continue transforming the company.
And.
Deliver the great cash flow that investors expect of us.
Really proud of that and we've got a great team that's working on it we've made we've made reasonable and responsible investments to improve and maintain our operating efficiency for the long term debt.
That also has given us about our product.
Superior product, which helps deliver us additional market share, helping us ensure that great cash flow for the foreseeable future.
No. That's certainly has gone quite well so so thank you for those details and are.
Looking forward to the Investor day, I'll turn it over there. Thank you.
Alright.
Once again, if you would like to ask a question simply press Star then the number one on your telephone keypad.
Yeah.
And at this time there appear to be no further questions I will now turn the call over to Mr. Anderson for any closing remarks.
Thanks, Dennis before we conclude I would like to mention that management will be participating at the Stephens annual investment conference in Nashville on November 15th.
More details regarding our Investor day presentations, which will take place from $8 30 to 11 a M. Eastern on the morning of December 5th at the Lotte New York Palace Hotel will also be posted on the Investor Relations site. Following this call. Thank.
Thank you again for joining us today, and we look forward to sharing more during our Investor day activities and again in early February as we share our full year 2023 results.
Okay.
Ladies and gentlemen, this does conclude the deluxe third quarter 2023 earnings conference call. We thank you for your participation you may now disconnect.
Yeah.
Okay.
Yeah.