Q3 2025 Deluxe Corp Earnings Call
Call is being recorded.
At this time I would like to turn the conference over to your host Vice President of strategy and Investor Relations. Brian Anderson. Please go ahead.
Thank you operator, and welcome to the Deluxe third quarter 2025 earnings call.
Joining me on today's call are Barry Mccarthy, our President and Chief Executive Officer, and chips, and our Chief Financial Officer.
At the end of today's prepared remarks, we will take questions.
Before we begin and as seen on the current slide I'd like to remind everyone that comments made today regarding management's intentions projections financial estimates and expectations about the company's future strategy or performance are forward looking in nature as defined in the private Securities Litigation Reform Act of 1095.
Speaker #1: Please stand by. The conference will begin shortly.
Additional information about factors that may cause actual results to differ from projections is set forth in the press release, we furnished today and our Form 10-K for the year ended December 31, 2024 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 and EBITA margin adjusted and comparable adjusted EPS and free cash flow.
Speaker #2: You are currently holding for today's DELUXE CORP quarterly earnings call . We are admitting additional participants and plan to be underway shortly . We appreciate your patience and ask that you please remain on the line .
All comparable adjusted metrics reflect the removal of impacts from business exits.
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 and with that I'll hand, it over to Barry.
Thanks, Brian and good evening everyone.
I am pleased to report our strong third quarter results. During the period, we drove organic growth across all key financial metrics revenue adjusted EBITDA EPS margin rate and year to date cash flows.
Speaker #2: Ladies and gentlemen , thank you for standing by . And welcome to the DELUXE CORP Quarterly Earnings Conference call . All participants are currently in a listen only mode , and today's call is being recorded .
Adjusted EBITDA grew significantly faster than revenue with margins expanding across each operating segment, demonstrating our ability to deliver consistent operating leverage.
Speaker #2: At this time , I would like to turn the conference over to your host , Vice President of Strategy and Investor Relations , Brian Anderson .
This was our 11th consecutive quarter of year over year, EBITDA expansion with profits growing faster than revenue.
Speaker #2: Please go ahead .
Speaker #3: Thank you . Operator and welcome to the deluxe third Quarter 2020 Earnings Call . Joining me on today's call are Barry McCarthy , our president and Chief Executive Officer .
Our strong expansion of earnings also drove robust cash flow results.
Year to date operating cash flows have expanded by more than 25% versus the prior nine month period.
Speaker #3: And Chip Zent , our chief financial officer . At the end of today's prepared remarks , we will take questions . Before we begin and has seen on the current slide , I'd like to remind everyone that comments made today regarding management's intentions , projections , financial estimates and 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 .
These profit and cash flow outcomes contributed to continued reduction of our overall debt aligning to our clear capital allocation priorities.
As a result of the strong performance through three quarters, we reached our targeted year end leverage ratio of three three times a full quarter ahead of our previously indicated pacing.
Speaker #3: Additional information about factors that may cause actual results to differ from projections is set forth in the press release . We furnished today in our form 10-K for the year ended December 31st , 2024 , 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 and EBITDA margin , adjusted and comparable adjusted EPs , and free cash flow .
We were particularly pleased with this result, as we continue to drive efficiencies on path to our 2026 year end debt to EBITDA target ratio below three times.
Based on these results we are raising our full year outlook range for adjusted EPS, while affirming all other guidance metrics narrowing to the midpoint or better of the prior ranges.
Speaker #3: All comparable adjusted metrics reflect the removal of impacts from business exits in our press release . Today's presentations and our filings with the SEC .
Chip will cover these updates and additional detail in a bit.
Speaker #3: You will find additional disclosures regarding the non-GAAP measures , including reconciliations of these measures to the most comparable measures under US GAAP within the materials , we are also providing reconciliation of GAAP EPs to adjusted EPs , which may assist with your modeling .
Our overall third quarter execution remained very strong, including the following enterprise level financial highlights.
Two 5% comparable adjusted revenue growth was driven by our fourth consecutive quarter of double digit year over year expansion for the data segment.
Speaker #3: And with that , I'll hand it over to Barry .
Speaker #4: Thanks , Brian , and good evening , everyone . I'm pleased to report our strong third quarter results during the period we drove organic growth across all three financial metrics revenue , adjusted EBITDA , EPs , margin rate , and year to date cash flows , adjusted EBITDA grew significantly faster than revenue , with margins expanding across each operating segment , demonstrating our ability to deliver consistent operating leverage .
Nearly 14% growth of total comparable adjusted EBITDA, reaching nearly $119 million for the period.
Expansion of margin rates by more than 200 basis points, reaching 22% of revenue.
Adjusted EPS growth of nearly 30% year over year to $1 <unk> per share.
Continued reduction of our net debt lowered by more than $20 million during the quarter contributing to our improved leverage ratio and year to date free cash flow expansion of just over 49% growing by more than $31 million versus the prior year period.
Speaker #4: This was our 11th consecutive quarter of year over year EBITDA expansion , with profits growing faster than revenue . Our strong expansion of earnings also drove robust cash flow results year to date .
Each of these third quarter results aligned directly to our overall value creation algorithm, providing a strong momentum as we approach the end of the year and continue our progress toward 2026 financial targets.
Speaker #4: Operating cash flows have expanded by more than 25% versus the prior nine month period . These profit and cash flow outcomes contributed to continued reduction of our overall debt , aligning to our clear capital allocation priorities .
Now I'll briefly review some financial and segment highlights for the period and the context of three ongoing strategic priorities number one shifting our revenue mix towards payments and data to deliver profitable organic growth.
Speaker #4: As a result of the strong performance through three quarters , we reached our targeted year end leverage ratio of 3.3 times a full quarter ahead of our previously indicated pacing .
Two driving operating efficiencies across the enterprise and three increasing EBITDA and cash flow to both lower net debt and improve our leverage ratio.
Speaker #4: We were particularly pleased with this result as we continue to drive efficiencies on path to our 2026 year end debt to EBITDA target ratio below three times , based on these results , we are raising our full year outlook range for adjusted EPs while affirming all other guidance metrics , narrowing to the midpoint or better of the prior ranges .
I'll discuss each of these three big strategic priorities in order, starting with our first priority shifting our revenue mix towards payments and data.
We're pleased with our progress here.
Through the third quarter blended payments and data segment revenue has grown nearly nine at 5%.
Speaker #4: Chip will cover these updates in additional detail in a bit. Our overall third quarter execution remained very strong, including the following.
Bind these segments are nearing revenue parity with our print businesses.
Through Q3 payments and data now account for 47% of total company revenue up nearly 400 basis points versus previous year.
Speaker #4: Enterprise level financial highlights 2.5% comparable adjusted revenue growth , driven by a fourth consecutive quarter of double digit year over year expansion . For the data segment , nearly 14% growth of total comparable adjusted EBITDA , reaching nearly $119 million for the period .
We're delivering our strategy to transition the company towards payments and data growth.
Leveraging robust cash flows from the print segment.
Beta was our standout performer again in Q3.
Growing revenue by 46% year over year.
Speaker #4: Expansion of margin rates by more than 200 basis points , reaching 22% of revenue . Adjusted EPs growth of nearly 30% year over year to $1.09 per share .
We remain very pleased with continued strong demand for revenue generating campaigns spanning deposit gathering lending and other product offerings supported by our proven end to end of data solutions.
Speaker #4: Continued reduction of our net debt lowered by more than $20 million during the quarter , contributing to our improved leverage ratio and year to date free cash flow expansion of just over 49% , growing by more than $31 million versus the prior year period .
Our growth over the past four quarters has been driven by both continuing strong <unk> demand and expansion of data offerings to other markets, whose target customers have high lifetime value.
Beyond the good news and data merchant services also continued its expansion as third quarter revenues expanded by around 5% versus the prior year period, improving sequentially as promised.
Speaker #4: Each of these third-quarter results aligned directly to our overall value creation algorithm, providing strong momentum as we approach the end of the year and continue our progress toward 2026.
We've reached our mid single digit expectations for this segment. Despite some persistent ongoing macroeconomic uncertainty.
Speaker #4: Financial targets . Now , I'll briefly review some financial and segment highlights for the period . In the context of three ongoing strategic priorities .
We continue to expand our merchant base, both through our direct to market channels as well as <unk> and embedded ISC partnerships.
Speaker #4: Number one , shifting our revenue mix towards payments and data to deliver profitable organic growth . Two , driving operating efficiencies across the enterprise and three increasing EBITDA and cash flow to both lower net debt and improve our leverage ratio .
Additionally, our one deluxe model continues to help accelerate merchant.
For example, we recently announced the expansion of our existing multi divisional relationship with People's Bank, a $9 5 billion dollar, Ohio based <unk> to now include merchant services.
This is another example of deluxe building trust by delivering in one area, giving us the opportunity to cross sell offerings from multiple other divisions.
Speaker #4: I'll discuss each of these three big strategic priorities in order , starting with our first priority , shifting our revenue mix towards payments and data .
Speaker #4: We're pleased with our progress here through the third quarter . Blended payments and data segment revenue has grown nearly 9.5% . Combined , these segments are nearing revenue parity with our print businesses through Q3 payments and data .
Moving to BTB payments.
Third quarter revenues for the segment declined modestly as we had signaled during the last quarter's call.
Importantly, we did continue to see both sequential revenue growth for <unk> add year to year year over year expansion of EBITDA margins, which improved 260 basis points on evolving mix and operating efficiencies across the segment.
Speaker #4: Now account for 47% of total company revenue , up nearly 400 basis points versus previous year . We're delivering our strategy to transition the company towards payments and data growth while leveraging robust cash flows from the print segment .
Further we continue to expect a return to growth within <unk> revenues as we exit 2025.
Within print during the third quarter, the stronger margin check portion of the business continued to perform in line with our long term expectations with revenues declining around 2%.
Speaker #4: Data was our standout performer again in Q3 , growing revenue by 46% year over year . We remain very pleased with continued strong FY demand for revenue generating campaigns spanning deposit gathering , lending and other product offerings .
As we discussed last quarter, the lower margin branded promo portion of the print segment has remained the primary area where demand headwinds persist.
Speaker #4: Supported by our proven end to end data solutions . Our growth over the past four quarters has been driven by both continuing strong FY demand and expansion of data offerings to other markets whose target customers have high lifetime value .
As expected topline pressure across the product group again resulted in fairly immaterial impacts to segment profits.
To summarize this first strategic priority <unk>.
Revenue growth from our combined payments and data businesses delivered overall third quarter growth more than offsetting expected headwinds and anticipated secular declines, particularly in print.
Speaker #4: Beyond the good news, merchant services also continued its expansion, as third quarter revenues expanded by around 5% versus the prior year period, improving sequentially.
Speaker #4: As promised , we've reached our mid-single digit expectations for the segment . Despite some persistent ongoing macroeconomic uncertainty , we continue to expand our merchant base both through our direct to market channels as well as fee and embedded ISV partnerships .
These results are consistent with our long term strategy.
Now onto our second big strategic priority.
Driving efficiencies across the business to improve margins and sustain our operating leverage.
Ongoing cost discipline across the enterprise contributed to our success expanding margins and improving overall operating leverage during the third quarter.
Speaker #4: Additionally , our one deluxe model continues to help accelerate merchant . For example , we recently announced the expansion of our existing Multidivisional relationship with people's Bank , a $9.5 billion Ohio based FYE to now include merchant services .
We delivered lower overall corporate expense will spend improving by just over two and a half million dollars.
Inclusive of these savings the overall enterprise reduced SG&A expenses by more than $15 million.
Speaker #4: This is another example of deluxe building trust . By delivering in one area , giving us the opportunity to cross-sell offerings from multiple other divisions .
This reflected a reduction of roughly 7% year over year during the third quarter.
Overall, we were very pleased to deliver adjusted EBITDA margin expansion across all four operating segments simultaneously.
Speaker #4: Moving to B2B payments . Third quarter revenues for the segment declined modestly , as we had signaled during the last quarter's call . Importantly , we did continue to see both sequential revenue growth for B2B and year to year , year over year expansion of EBITDA margins , which improved 260 basis points on evolving mix and operating efficiencies across the segment .
Now onto our third big strategic priority <unk>.
Increasing adjusted EBITDA, driving cash flows and lowering both our net debt and leverage ratio.
As I noted earlier, we continued to convert our expanding earnings base into strong cash flow results and to reduce our debt levels through the third quarter.
Speaker #4: Further , we continue to expect to return to growth within B2B revenues as we exit 2025 within print . During the third quarter .
This resulted in realization of our targeted year end leverage ratio of three three times one quarter ahead of our previously signaled expectations.
Speaker #4: The stronger margin check portion of the business continued to perform in line with our long term expectations . With revenues declining around 2% .
Our third quarter free cash flow of just under $44 million reflected a 37% cash to EBITDA conversion rate.
Speaker #4: As we discussed last quarter , the lower margin branded promo portion of the print segment has remained the primary area where demand headwinds persist .
This result demonstrated continued improvement aligned to our targeted long term yields remaining above 30%.
Speaker #4: As expected , top line pressure across the product group again resulted in fairly immaterial impacts to segment profits . To summarize , this first strategic priority revenue growth from our combined payments and data businesses delivered overall .
To summarize overall.
We are making clear progress on all three big strategic priorities.
One shifting the mix towards payments and data to driving operating efficiencies and three increase in cash flow, reducing debt and lowering our leverage ratio.
Speaker #4: Third quarter growth more than offsetting expected headwinds and anticipated secular declines , particularly in print . These results are consistent with our long term strategy .
As our overall third quarter and year to date results illustrate we are achieving this progress through disciplined capital allocation and strong execution.
Speaker #4: Now on to our second big strategic priority driving efficiencies across the business to improve margins and sustain our operating leverage . Ongoing cost discipline across the enterprise contributed to our success .
Our value creation algorithm forward.
Our pipeline remains strong across each operating segment and we have positive momentum as we sprint towards the 2025 finish line and prepare to launch 2026.
Speaker #4: Expanding margins and improving overall operating leverage . During the third quarter , we delivered lower overall corporate expense with spend improving by just over $2.5 million , inclusive of these savings , the overall enterprise reduced G&A expenses by more than $15 million .
Finally, before passing it to chip I want to again to take a moment to thank my fellow <unk>.
As we celebrate the company's 110th anniversary this year, our strong enduring culture and clear commitment to meeting and exceeding our customers' needs while driving value for shareholders truly reflects the deluxe difference.
Speaker #4: This reflected a reduction of roughly 7% year over year during the third quarter. Overall, we were very pleased to deliver adjusted EBITDA margin expansion across all four operating segments simultaneously.
With that I'll turn it over to chip.
Thank you Barry and good evening everyone.
As Barry noted in his opening we were very pleased with our third quarter progress and particularly our better than anticipated delevering pace.
Speaker #4: Now, on to our third big strategic priority: increasing adjusted EBITDA, driving cash flows, and lowering both our net debt and leverage ratio. As I noted earlier, we continued to convert our expanding earnings base into strong cash flow results and to reduce our debt levels through the third quarter.
Continuing expansion of our comparable adjusted EBITDA and EPS growth rates accompanying our strong year to date free cash flow conversion highlight our progress through three quarters of the year.
Over recent quarters, we've shown continued improvement in the health of our core fundamentals and quality of earnings continues to improve as we execute our clear strategy.
Speaker #4: This resulted in realization of our targeted year end leverage ratio of 3.3 times , one quarter ahead of our previously signaled expectations . Our third quarter free cash flow of just under $44 million reflected a 37% cash to EBITDA conversion rate .
I'll begin this evening, providing some additional detail around our consolidated highlights for the period.
Before moving onto the individual operating segment results, our balance sheet and cash flow progress and updated full year 2025 guidance ranges.
For the third quarter, we reported total revenue of $542 million, increasing two 2% against prior year reported results, while expanding two 5% on a comparable adjusted basis.
Speaker #4: This result demonstrated continued improvement , aligned to our targeted long term yield remaining above 30% . To summarize , overall , we are making clear progress on all three big strategic priorities .
We reported GAAP net income of $33 $7 million or <unk> 74 per share for the period, improving from $8 9 million or <unk> 20 per share in the third quarter of 2024.
Speaker #4: One shifting the mix towards payments and data two driving operating efficiencies and three increasing cash flow , reducing debt and lowering our leverage ratio as our overall third quarter and year to date results illustrate , we are achieving this progress through disciplined capital allocation and strong execution , pushing our value creation algorithm forward .
This increase was driven by improved operating results aligned with expansion of revenues during the quarter as well as lower overall, SG&A and restructuring related expenses.
The prior year period.
Comparable adjusted EBITDA was $118 9 million up 13, 8% versus the third quarter of 2024.
Speaker #4: Our pipeline remains strong across each operating segment , and we have positive momentum as we sprint towards the 2025 finish line and prepare to launch 2026 .
Comparable adjusted EBITDA margins improved to 22% of revenue expanding by 220 basis points versus the prior year third quarter as Barry referenced.
Speaker #4: Finally , before passing this to Chip , I want to again to take a moment to thank my fellow DELUXE CORP as we celebrate the company's 110th anniversary this year , our strong , enduring culture and clear commitment to meeting and exceeding our customers needs while driving value for shareholders .
Q3 comparable adjusted diluted EPS of $1 nine ish.
Expanded by 29, 8% from 84 and 2024 driven by the operating income drivers previously noted net of a slightly higher year over year share count.
Speaker #4: Truly reflects the deluxe difference . With that , I'll turn it over to Chip . Thank you , Barry , and good evening everyone .
Turning now to our operating segment results beginning with the merchant services business.
Our merchant segment grew revenues by four 8% year over year, finishing the quarter at $98 million while.
Speaker #4: As Barry .
Speaker #5: Noted in his opening , we were very pleased with our third quarter progress and particularly our better than anticipated Delevering pace . Continuing expansion of our comparable adjusted EBITDA and EPs growth rates .
<unk>, a sequential quarterly acceleration trend from two 9% second quarter growth.
This result reflected largely stable core merchant processing volumes as well as channel partner additions and planned in your pricing actions.
Speaker #5: Accompanying our strong year to date free cash flow conversion highlight our progress through three quarters of the year over recent quarters , we've shown continued improvement in the health of our core fundamentals and quality of earnings continues to improve as we execute our clear strategy .
As is customary these growth drivers netted against normal course merchant attrition activity and reflected macroeconomic conditions continuing to signal some ongoing uncertainty pressuring areas of discretionary spend.
Speaker #5: I'll begin this evening providing some additional detail around our consolidated highlights for the period before moving on to individual operating segment results . Our balance sheet and cash flow progress , and updated full year 2020 guidance ranges for the third quarter , we reported total revenue of $540.2 million , increasing 2.2% against prior year reported results , while expanding 2.5% on a comparable adjusted basis .
Segment, adjusted EBITDA finished at $24 million, improving to $6 million or 14, 6% versus the prior year with margins expanding 180 basis points to 28% driven by both the improved sequential revenue growth and ongoing cost efficiencies.
We continue to expect full year merchant segment revenue growth in the low single digit range with fourth quarter revenues remaining strong as demonstrated over previous quarters.
Speaker #5: We reported GAAP net income of $33.7 million , or $0.74 per share , for the period , improving from $8.9 million , or $0.20 per share , in the third quarter of 2020 .
We also continue to anticipate a low 20% adjusted EBITDA margin profile.
Both these expectations are consistent with our prior guidance commentary for the segment.
Speaker #5: For this increase was driven by improved operating results aligned with expansion of revenues during the quarter . As well as lower overall G&A and restructuring related expenses versus the prior year period .
Moving to BW payments for the third quarter <unk> segment revenues finished at $73 $1 million sequentially, improving from the prior quarter, but declining two 7% versus the prior year result, consistent with the quarterly cadence expectation within our prior quarter commentary.
Speaker #5: Comparable adjusted EBITDA was $118.9 million , up 13.8% versus the third quarter of 2020 . For comparable adjusted EBITDA , margins improved to 22% of revenue , expanding by 220 basis points versus the prior year .
<unk> adjusted EBITDA expanded during the quarter, finishing at $16 8 million.
Reflecting growth of nine 8% versus the prior year period.
Speaker #5: Third quarter . As Barry referenced , Q3 comparable adjusted diluted EPs of $1.09 , expanded by 29.8% from $0.84 in 2020 . Four , driven by the operating income drivers previously noted , net of a slightly higher year over year share count .
Third quarter, adjusted EBITDA margins of 23% for the segment reflected a 260 basis points expansion versus 2024 as Barry noted.
The segment's sustained its focus on driving efficiencies across lockbox operations, while optimizing SG&A to align to the anticipated onboarding and implementation efforts for new <unk> wins across the portfolio.
Speaker #5: Turning now to our operating segment results beginning with the merchant services business , the merchant segment grew revenues by 4.8% year over year , finishing the quarter at $98 million , while continuing a sequential quarterly acceleration trend from 2.9% .
We continue to expect low single digit full year revenue growth for <unk>, implying a return to an improved fourth quarter exit growth rate for the business as we enter 2026.
Speaker #5: Second quarter growth . This result reflected largely stable core merchant processing volumes , as well as channel partner additions and planned in-year pricing actions .
Margins are expected to remain in the low to mid 20% range consistent with overall year to date levels within the segment.
Moving onto data solutions.
Speaker #5: As is customary , these growth drivers netted against normal course merchant attrition activity and reflected macroeconomic conditions continuing to signal some ongoing uncertainty , pressuring areas of discretionary spend .
This segment extended its revenue growth trajectory during the third quarter as demand for core marketing campaign execution across key Fi partners continued to accelerate.
Q3 data segment revenues finished at $89 $2 million, reflecting growth of 46% versus the third quarter of 2024.
Speaker #5: Segment adjusted EBITDA finished at $20.4 million , improving $2.6 million , or 14.6% , versus the prior year , with margins expanding 180 basis points to 20.8% , driven by both the improved sequential revenue growth and ongoing cost efficiencies .
This growth reflected a fourth consecutive quarter of strong double digit demand growth for core bank customer marketing campaigns.
Our Fi clients have increasingly turned to our proven data enabled audience development and targeted marketing capabilities to support revenue generation across their core lines of business.
Speaker #5: We continue to expect full year merchant segment revenue growth in the low single digit range , with fourth quarter revenues remaining strong as demonstrated over previous quarters .
Data adjusted EBITDA finished at $29 1 million growing 66, 3% versus the prior year, while adjusted EBITDA margins expanded by 400 basis points to reach 32, 6% for the quarter.
Speaker #5: We also continue to anticipate a low 20% adjusted EBITDA margin profile . Both these expectations are consistent with our prior guidance commentary for the segment .
Speaker #5: Moving to B2B payments for the third quarter , B2B segment revenues finished at $73.1 million sequentially , improving from the prior quarter , but declining 2.7% versus the prior year result .
These results were primarily reflective of the level of revenue expansion during the period.
This segment further benefited from operating expense efficiencies inclusive of volume related savings.
Speaker #5: Consistent with the quarterly cadence expectation within our prior quarter commentary , B2B adjusted EBITDA expanded during the quarter , finishing at $16.8 million , reflecting growth of 9.8% versus the prior year period .
Specifically.
Over the last six quarters as the data business has grown rapidly we have realized volume related vendor rebates benefiting segment margins beyond our long term expectation of the low 20% EBITDA margin range.
Looking ahead with baseline volumes now set up these increased levels, we would no longer anticipate having this magnitude of rebates and anticipate overall segment EBITDA margins beginning to return to the previously signaled low twenties range beginning in the fourth quarter.
Speaker #5: Third quarter adjusted EBITDA margins of 23% for the segment reflected a 260 basis points expansion versus 2024 , as Barry noted , the segment sustained its focus on driving efficiencies across lockbox operations while optimizing G&A to align to the anticipated onboarding and implementation efforts for new B2B wins across the portfolio .
We also expect some typical fourth quarter revenue moderation as the holiday period is seasonally lower for marketing activity across segments served by our core data offerings.
Speaker #5: We continue to expect low single digit full year revenue growth for B2B , implying a return to an improved fourth quarter exit growth rate for the business .
We will also begin to lap our more challenging prior year results.
Despite this forecasted moderation, we expect to see strong growth continue.
Speaker #5: As we enter 2026 . Margins are expected to remain in the low to mid 20% range , consistent with overall year to date levels within the segment .
With fourth quarter revenues remaining above the long term mid to high single digit growth expectations.
To summarize for the data segment strong year to date growth for this segment leads to an expectation of a solid double digit full year revenue growth for 2025 with EBITDA margins in the mid to high 20% range.
Speaker #5: Moving on to data solutions, this segment extended its revenue growth trajectory during the third quarter as demand for core marketing campaign execution across key Fi partners continued to accelerate. Q3 data segment revenues finished at $89.2 million, reflecting growth of 46% versus the third quarter of 2024.
Turning lastly to our print lines of business.
Print segment third quarter revenue was $279 9 million.
Reflecting an overall decline of five 9% versus the prior year.
Speaker #5: This growth reflected a fourth consecutive quarter of strong double digit demand growth for core bank customer marketing campaigns . Our fee clients have increasingly turned to our proven data enabled audience development and targeted marketing capabilities to support revenue generation across their core lines of business data .
Branded promotional products continued to see the primary revenue headwinds declining 14, 7% year over year improved from last quarter, while remaining concentrated towards lower margin noncore product offerings.
As Barry noted legacy check continued to perform well consistent with our recent history declining two 1% for the period.
Speaker #5: Adjusted EBITDA finished at $29.1 million , growing 66.3% versus the prior year , while adjusted EBITDA margins expanded by 400 basis points to reach 32.6% for the quarter .
Forms and other business products declined seven 8% during the quarter.
On a combined basis. These two core areas blend to an overall three 6% rate of year over year decline consistent with our low to mid single digit history and long term expectations for the segment.
Speaker #5: These results were primarily reflective of the level of revenue expansion during the period . The segment further benefited from operating expense efficiencies , inclusive of volume related savings , specifically , over the last six quarters .
The 4% rate of adjusted EBIT decline seen within print for the quarter aligns to the blended rate of decline for the more core print product focus areas.
Speaker #5: As the data business has grown rapidly , we have realized volume related vendor rebates benefiting segment margins beyond our long term expectation of the low 20% EBITDA margin range .
This result drove an overall print margin rate of 33, 4% remaining solidly in line with our longer term low <unk> target for the segment.
Speaker #5: Looking ahead with baseline volumes now set at these increased levels , we would no longer anticipate having this magnitude of rebates and anticipate overall segment EBITDA margins beginning to return to the previously signaled low 20s range beginning in the fourth quarter .
Importantly, and despite shorter cycle promo revenue challenges, we expanded margin rate by 60 basis points versus our prior year Q3 results.
These healthy ongoing margin results reflect the overall continued segment mix shifts towards stronger margin offerings.
Speaker #5: We also expect some typical fourth quarter revenue moderation as the holiday period is seasonally lower for marketing activity across segments served by our core data offerings .
Our continued focus on driving operating expense discipline and.
And cost efficiencies realized across our scaled print fulfillment operations.
Speaker #5: We will also begin to lap our more challenging prior year results . Despite this forecasted moderation , we expect to see strong growth continue with fourth quarter revenues remaining above the long term mid to high single digit growth expectations .
Consistent with our strategy. We remained focused on core profit drivers for the print segment leveraging in house production of checks and printed forms and accessories for.
For the near term.
We expect the noncore branded promo portion of print revenue to continue to decline faster than the higher margin offerings within this segment.
Speaker #5: To summarize , for the data segment , strong year to date growth for this segment leads to an expectation of a solid double digit full year revenue growth for 2025 , with EBITDA margins in the mid to high 20% range .
Eliminating impact on overall printed profitability.
On balance.
We continue to anticipate revenue declines in the mid single digit range across the overall print segment for the full year with adjusted EBITDA margins remaining in the low thirties, consistent with our longer term flat rate outlook.
Speaker #5: Turning lastly to our print lines of business, the print segment's third quarter revenue was $279.9 million, reflecting an overall decline of 5.9% versus the prior year.
Turning now to our third quarter balance sheet and cash flow progress.
Speaker #5: Branded promotional products continued to see the primary revenue headwinds declining 14.7% year over year improved from last quarter , while remaining concentrated towards lower margin non-core product offerings .
We finished Q3 with a net debt level of 142 billion, reflecting a reduction of just over $44 $5 million versus our 2024 year end level of 1.4 dollars 7 billion.
Speaker #5: As Barry noted , legacy check continued to perform well , consistent with our recent history , declining 2.1% for the period . Forms and other business products declined 7.8% during the quarter on a combined basis , these two core areas blend to an overall 3.6% rate of year over year decline , consistent with our low to mid single digit history and long term expectations for the segment .
As Barry referenced this result reflected a sequential improvement of just over $25 million versus our second quarter ending debt balance.
With our clear commitment to debt reduction as a top capital allocation priority.
We were particularly pleased to finish the quarter with a net debt to adjusted EBITDA ratio of three three times showing continued improvement of our leverage position from the three six times ratio reported at the end of 2024.
Speaker #5: The 4% rate of adjusted EBITDA decline seen within print for the quarter aligns with the blended rate of decline for the more core print product focus areas.
Reaching our targeted 2025 year end leverage ratio on an accelerated basis demonstrated our ongoing commitment to balance sheet improvement. Additionally.
Speaker #5: This result drove an overall print margin rate of 33.4% , remaining solidly in line with our longer term low 30s target for the segment .
This result will reduce our ongoing interest obligation as we now move to a lower interest here for variable rate borrowings per our credit agreement terms.
Speaker #5: Importantly , and despite shorter cycle promo revenue challenges , we expanded margin rate by 60 basis points versus our prior year Q3 results .
Our long term strategic leverage target remains at three times or better by the end of 2026.
Speaker #5: These healthy , ongoing margin results reflect the overall continued segment mix shift toward stronger margin offerings , the continued focus on driving , operating expense discipline and cost efficiencies realized across our scaled print fulfillment operations , consistent with our strategy , we remain focused on core profit drivers for the print segment , leveraging in-house production of checks and printed forms and accessories for the near term .
Free cash flow defined as cash provided by operating activities less capital expenditures finished at $95 $9 million for the year to date period.
This reflected improvement of $31 $6 million from the results reported through the first three quarters of the prior year and finished within roughly $4 million of our full year 2020 for free cash flow result.
Our year to date improvement continued to be driven by strong operating results in core working capital efficiency. In addition to significantly lower restructuring spend versus the prior year period.
Speaker #5: We expect the non-core branded promo portion of print revenue to continue to decline faster than the higher margin offerings within the segment , limiting impact on overall print profitability .
Finally, we remain well positioned from both a liquidity and go forward capital structure perspective, following our December 2020 for refinancing.
Speaker #5: On balance , we continue to anticipate revenue declines in the mid-single digit range across the overall print segment for the full year , with adjusted EBITDA margins remaining in the low 30s .
As of the end of the third quarter, we maintained over $390 million of available revolver capacity with all material debt maturities extended to the 2029 horizon.
Speaker #5: Consistent with our longer term flat rate outlook . Turning now to our third quarter balance sheet and cash flow progress , we finished Q3 with a net debt level of $1.42 billion , reflecting a reduction of just over $44.5 million versus our 2024 year end level of 1.47 billion .
Before turning to guidance consistent with prior quarters, our board approved a regular quarterly dividend of <unk> 30 per share on all outstanding shares.
The dividend will be payable on December one 2025 to all shareholders of record as of market closing on November 17th 2025.
Speaker #5: As Barry referenced , this result reflected a sequential improvement of just over $20.5 million versus our second quarter ending debt balance . Consistent with our clear commitment to debt reduction as a top capital allocation priority , we were particularly pleased to finish the quarter with a net debt to adjusted EBITDA ratio of 3.3 times , showing continued improvement of our leverage position from the 3.6 times ratio reported at the end of 2024 , reaching our targeted 2025 year end leverage ratio on an accelerated basis demonstrated our ongoing commitment to balance sheet improvement .
As mentioned previously our <unk>.
Year to date execution and momentum provide confidence to raise our overall range of expectations for adjusted EPS.
Further we are affirming our existing guidance for revenue adjusted EBITDA and free cash flow.
Each within a narrow range at or above the midpoint of our prior outlook for the year.
With that context, our updated full year guidance figures are shown on the current slide keeping in mind all figures are approximate.
Revenue of $2 1 billion to $2, one 3 billion, which represents a range of flat to positive 1% comparable adjusted growth versus 2024.
Speaker #5: Additionally , this result will reduce our ongoing interest obligation as we now move to a lower interest tier for variable rate borrowings per our credit agreement .
Adjusted EBITDA of $425 million to $435 million, reflecting between 5% and 7% comparable adjusted growth.
Speaker #5: Terms . Our long term strategic leverage target remains at three times or better by the end of 2026 . Free cash flow , defined as cash provided by operating activities , less capital expenditures finished at $95.9 million for the year to date period .
Adjusted EPS of $3 45.
To $3 60.
Now a range of 6% to 10% comparable adjusted growth.
And free cash flow of $140 million to $150 million.
Speaker #5: This reflected improvement of $31.6 million from the results reported through the first three quarters of the prior year , and finished within roughly $4 million of our full year 2020 for free cash flow result .
Finally to further assist with your modeling our guidance assumes the following.
Interest expense of approximately $123 million in.
And adjusted tax rate of 26%.
Speaker #5: Our year to date improvement continued to be driven by strong operating results and core working capital efficiency . In addition to significantly lower restructuring spend versus the prior year period .
Depreciation and amortization of $133 million of which acquisition amortization is approximately $45 million.
And average outstanding share count of $45 5 million shares.
Speaker #5: Finally , we remain well positioned from both a liquidity and go forward capital structure perspective following our December 2024 refinancing . As of the end of the third quarter , we maintained over $390 million of available revolver capacity with all material debt maturities extended to the 2029 horizon .
And capital expenditures between 90 and $100 million.
This guidance remains subject to among other things prevailing macroeconomic conditions as noted previously including interest rates labor supply issues inflation and the impact of divestitures.
In summary, we remain pleased with our continued strong performance shown in the third quarter and year to date periods as the underlying core fundamentals of the business continue to improve.
Speaker #5: Before turning to guidance consistent with prior quarters , our board approved a regular quarterly dividend of $0.30 per share on all outstanding shares .
Speaker #5: The dividend will be payable on December 1st , 2025 to all shareholders of record as of market closing on November 17th , 2025 .
Revenue mix continues to rotate towards the growing payments and data segments.
Adjusted EBITDA and EBITDA margins continue to expand.
Speaker #5: As mentioned previously , our year to date execution and momentum provide confidence to raise our overall range of expectations for adjusted EPs . Further , we are affirming our existing guidance for revenue , adjusted EBITDA and free cash flow , each within a narrow range at or above the midpoint of our prior outlook for the year .
Free cash flow conversion continues to improve.
And the balance sheet is the healthiest, it's been since 2021 as we achieve our anticipated year end leverage ratio ahead of schedule.
All of this is a result of the clear strategy and capital allocation priorities, we have been executing against over recent years and we look forward to continuing this momentum.
Speaker #5: With that context , our updated full year guidance figures are shown on the current slide . Keeping in mind all figures are approximate revenue of 2.11 billion to $2.13 billion , which represents a range of flat to positive 1% , comparable adjusted growth versus 2024 adjusted EBITDA of 425 to $435 million , reflecting between 5% and 7% comparable adjusted growth .
Operator, we are now ready to take questions.
Thank you.
If you are dialed in via the telephone and we'd like to ask a question. Please signal by pressing star one on your telephone keypad.
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<unk> pumped on the phone line will indicate when your line is open.
Speaker #5: Adjusted EPs of $3.45 to $3.60 . Now a range of 6 to 10% . Comparable adjusted growth and free cash flow of 140 to $150 million .
State your name and company before posing a question.
Again, Please press star one to ask a question.
And we will take our first question.
Speaker #5: Finally , to further assist with your modeling , our guidance assumes the following interest expense of approximately $123 million and adjusted tax rate of 26% .
Hey, Barry this is Scott.
Please go ahead.
Thank you Hey, Jeff Hey, Barry how are you. This is correct Northcoast research.
Speaker #5: Depreciation and amortization of $133 million , of which acquisition amortization is approximately $45 million . And average outstanding share count of 45.5 million shares and capital expenditures between 90 and $100 million .
Jeff I wanted to talk about free cash flow impressive increase in guidance.
Maybe you can talk to the drivers behind it.
The sustainability of the free cash flow as we move into next year.
Speaker #5: This guidance remains subject to , among other things , prevailing macroeconomic conditions . As noted previously , including interest rates , labor supply issues , inflation , and the impact of divestitures .
Yes sure. Thank you kartik good to see you.
I think you know over the last few years, we've been really focused on improving the free cash flow not only absolute dollar, but on a conversion rate and as we've outlined over the last couple of quarters. The goal of adding $100 million of annual run rate free cash flow coming into 2026 was one of the core tenants of the Northstar program.
Speaker #5: In summary , we remain pleased with our continued strong performance shown in the third quarter and year to date periods as the underlying core fundamentals of the business continue to improve revenue mix continues to rotate towards the growing payments and data segments .
And so we came into the year this year and we laid out for you exactly how we would get there at achieving the original guidance and ultimately raising it to where we did would be a function of improved profitability.
Speaker #5: Adjusted EBITDA and EBITDA margins continue to expand . Free cash flow conversion continues to improve , and the balance sheet is the healthiest it's been since 2021 .
Having lower restructuring spend and continuing to execute strong working capital efficiency in terms of maintaining a solid DSO and a solid GPO and so what you have seen throughout this year is us just execute on that strategy.
Speaker #5: As we achieve our anticipated year-end leverage ratio ahead of schedule, all of this is a result of the clear strategy and capital allocation priorities.
As we sit here today executing nearly in line with what we delivered for the full year a year ago that obviously gives us confidence in narrowing our guidance range up to the upper end and obviously puts us on a good path to be able to deliver that full run rate $100 million as we go into next year. So very pleased with the progress we've made improving the EBA.
Speaker #5: We have been executing against over recent years , and we look forward to continuing this momentum . Operator we are now ready to take questions .
Speaker #2: Thank you . If you are dialed in via the telephone and would like to ask a question , please signal by pressing star one on your telephone keypad .
And the underlying profitability of the business as well as pulling back on the restructuring spending winding down that program and delivering that improved free cash flow conversion that we've been talking about.
Speaker #2: If you are using a speakerphone , please make sure your mute function is turned off to allow your signal to reach our equipment .
Barry on the merged since I talked about People's Bank here in Ohio.
Speaker #2: A voice prompt on the phone line will indicate when your line is open . Please state your name and company before posting your question again .
While partner and I'm wondering if you talk about a little bit about the pipeline for your distribution partners, whether it be financial institutions Isps.
Speaker #2: Please press star one to ask a question, and we will take our first question.
Or any other channel you're kind of focused on right now.
Sure. So let me just talk a little bit more about the peoples bank.
Speaker #6: Hey , Chip . Hey , Barry . This is Carl .
When because I think it's really.
Speaker #2: Please go ahead .
A good small view of how effective our one deluxe go to market.
Speaker #6: Hey , Chip . Oh . Thank you . Hey , Chip . Hey , Barry . How are you ? This is Karthik Northcoast research .
Our solution our processes.
Speaker #6: Hey , Jim . I wanted to talk about free cash flow . Impressive increase in guidance , and maybe you can talk through the drivers behind it .
So as we mentioned in our as I mentioned in my prepared comments I talked about how we can we can convert success in one part of the company into success across many parts of the company by building Trust and delivering what the customer needs and peoples Bank is the latest example, though we can talk about which is followed that exact playbook in that.
Speaker #6: And the sustainability of the free cash flow as we move into next year.
Speaker #5: Yeah , sure . Thank you . Kartik , good to see you . I think , you know , over the last few years we've been really focused on improving the free cash flow , not only absolute dollar , but on a conversion rate .
<unk> model, where we start with one place we expand to multiple others and in this case now and also includes the merchant business.
Speaker #5: And as we've outlined over the last couple quarters , the goal of adding $100 million of annual run rate free cash flow coming into 2026 was one of the core tenets of the North Star program .
And then we have a very strong healthy pipeline of additional opportunities for us in financial institutions, but also in Isps, our integrated software vendors and we have recently hired a new sales leader in the ISP space that we think will also help us accelerate our efforts there.
Speaker #5: And so we came into the year this year , and we laid it out for you exactly how we would get there , achieving the original guidance and ultimately raising it to where we did would be a function of improved profitability , having lower restructuring spend and continuing to execute strong working capital efficiency in terms of maintaining a solid DSO and a solid DPO .
But I really think the main message here is the effectiveness of our one deluxe model, where we can land and build a relationship with a customer deliver on our promises and our commitments and then expand that relationship over time and merchant as a clear beneficiary of that which was central to our original hypothesis of moving into the merchant space.
Speaker #5: And so what you have seen throughout this year is us just execute on that strategy . So as we sit here today , executing nearly in line with what we delivered for the full year , a year ago , that obviously gives us confidence in narrowing our guidance range up to the upper end and obviously puts us on a good path to be able to deliver that full run rate .
Perfect. Thank you very much I appreciate it.
Certainly thing.
Thank you.
We'll take our next question.
Speaker #5: $100 million . As we go into next year . So very pleased with the progress we've made improving the EBITDA and the underlying profitability of the business , as well as pulling back on the restructuring , spending winding down that program and delivering that improved free cash flow conversion that we've been talking about .
Hi, This is Charlie Strausser of CJS.
Hey, Charlie Hey, Charlie.
It's just a couple of quick questions. So another impressive quarter from data.
I'm.
Hoping that you could expand a little bit further as to kind of what the key drivers were and how sustainable this kind of growth can be.
Speaker #6: Hey , Barry , on the merchant side , you talked about people's Bank here in Ohio as a partner . And I'm wondering if you talk about a little bit about the pipeline for your distribution partners , whether it be financial institutions , ISV or any other channel .
Yes.
Quarters in a row now where data has had some really good strength. There you know maybe a little bit more about that.
Sure Charlie Youll recall that we had made an investment in building our infrastructure. So that we have what we believe is the largest data lake of consumer and small business data, we think in the country and then of course, we put our proprietary AI tools that sit on top of that data Lake.
Speaker #6: You're kind of focused on right now ?
Speaker #4: Sure . So let me just tell you a little bit more about the people's Bank . Win , because I think it's really a good small view of how effective our one deluxe go to market product solution .
<unk> to help build.
Speaker #4: Our our process is . So as we mentioned in our as I mentioned in my prepared comments , I talked about how we can we can convert success in one part of the company into success across many parts of the company by building trust and delivering what the customer needs and people's Bank is the latest example that we can talk about , which is follow that exact playbook and that exact model where we start with one place we expand to multiple others .
Quite high quite high converting lead lifts, helping those institutions are organizations identify a target end market to a customer that's likely to be interested in the the offering of that organization.
In this particular moment in time financial institutions are increasing their investment specifically around all of their core products, whether it is <unk>.
Speaker #4: And in this case now and also includes the merchant business . And we have a very strong , healthy pipeline of additional opportunities for us in financial institutions , but also in ISVs are integrated software vendors .
Low cost deposits, but it's also things like high reward credit cards, it's around lines and loans and many other bank products.
And we can see some great uptake on that and we think that that is sustainable Charlie now probably not at the rate we've been talking about it and chip did a good job I think of setting that expectation.
Speaker #4: And we have recently hired a new sales leader in the ISV space that we think will also help us accelerate our efforts . There .
But we have a very unique offering here that we can show a specific return on our marketing on a marketing expense that delivers a customer with measurable value to a financial institution and that is a very compelling proposition for financial institutions, but we're also expanding as you know Charlie beyond financials.
Speaker #4: But I really think the main message here is the effectiveness of our one deluxe model , where we can land and build a relationship with the customer , deliver on our promises and our commitments , and then expand that relationship over time .
Speaker #4: And merchant is a clear beneficiary of that , which was central to our original hypothesis of moving into the merchant space .
Institutions into other market verticals, where theres, a high lifetime value for that customer and it's worth a significant marketing investment to acquire that customer and we continue to make inroads there and we feel very good and bullish about this business.
Speaker #6: Perfect . Thank you very much . I appreciate it .
Speaker #4: Certainly .
Speaker #7: Thank .
Speaker #2: Thank you . And we will take our next question .
Speaker #8: Hi , it's Charlie Strawser at CJS .
Over the intermediate long term as well as what's right in front of us in Q4.
Speaker #5: Hey , Charlie .
Speaker #4: Hi , Charlie .
Speaker #8: Just a couple of quick questions . Another impressive quarter from data . And hoping that you can expand a little bit further as to kind of what the key drivers were and how sustainable this kind of growth can be .
Excellent yeah very impressive thank you.
Just a follow up question on the print segment.
Margins were above where they've been.
As in recent memory.
What was what was this all from us.
Speaker #8: You know , a number of quarters in a row now where data has had , you know , some really good strength there , you know , maybe a little bit more about that .
Basically driven by promo, having better margins or is it across the board.
Color there that'd be great.
Yeah.
Charlie we've been saying for a while there we have three core strategic initiatives for the company, we want to shift our mix towards payments and data, we want to drive efficiency across our portfolio and we want our crews eat increase EBITDA free cash flow to lower debt and our leverage ratio in the case of the print business, we had a great cash generator.
Speaker #4: Sure , Charlie . You'll recall that we had made an investment in building our infrastructure so that we have what we believe is the largest data lake of consumer and small business data .
Speaker #4: We think , in the country . And then , of course , we put our proprietary AI tools that sit on top of that data lake to help build high quality , high converting lead lists , helping those institutions or organizations identify , target and market to a customer that's likely to be interested in the the offering of that organization in this particular moment in time .
<unk> in the Czech business and that had a very solid and very predictable Q3 with.
We continue to struggle a bit in the.
Promo business with just headwinds in the industry. We've also been very clear, we're going to focus on profitable volume, we're not going to play the game that others. In this space are playing which is taking a product or making sales that have little or no margin and so we're walking away from deals that we just don't think we can make a decent profit on.
Speaker #4: Financial institutions are increasing their investment , specifically around all of their core products , whether it is low cost deposits , but it's also things like high reward credit cards .
And you can see that in the revenue part of that equation, but when should come down to what's really important here is that we're able to largely hold onto the EBITDA and as you can see we're expanding margin here as well. So we think it's just a matter of being really choice full and really fully in alignment with our strategy of our key three.
Speaker #4: It's around lines and loans and many other bank products , and we can see some great uptake on that . And we think that is that is sustainable .
Speaker #4: Charlie . Now , probably not . At the rate we've been talking about . And Chip did a good job , I think of setting that expectation .
Speaker #4: But we have a very unique offering here that we can show a specific return on a marketing , on a marketing expense that delivers a customer with measurable value to a financial institution .
Big strategic initiatives around shifting mix of payments and data driving efficiency, increasing EBITDA free cash flow lowering debt and a leverage ratio that we're being very choice full and disciplined about the business, we take and making sure. We do have is operated with great efficiency chip do you want to build on that yes, I think you said it well, but Charlie.
Speaker #4: And that is a very compelling proposition for financial institutions . But we're also expanding , as you know , Charlie , beyond financial institutions , into other market verticals where there's a high lifetime value for that customer and it's worth a significant marketing investment to acquire that customer .
You think about the extra materials. We've added the last few quarters, you can see while promo the promo side is still struggling and declining a bit higher than we would like it has improved.
Speaker #4: And we continue to make inroads there . And we feel very good and bullish about this business over the intermediate long term , as well as what's right in front of us in Q4 .
To Barry's point, the real story is how check continues to deliver solid results decline better than long term expectations and how those two things together.
Speaker #8: Excellent . Yeah . Very impressive . Thank you . And just a follow up question on the print segment , margins were above where they've been in , you know , at least in recent memory .
All of our really solid mix story to the business. So I think Barry said it all right. When you put that altogether and you add on top of it the focus on efficiency that we've been delivering over the last two years as part of our efficiency improvement program. It's all leading to this solid sustainable low <unk> margin rate that we've been talking about for print that you can see it.
Speaker #8: And you know , what was what was this all from ? Is basically driven by promo having better margins . Or is it across the board , you know , a little more color there .
Speaker #8: That'd be great .
Speaker #4: You know , Charlie , we've been saying for a while that we have three core strategic initiatives for the company . We want to shift our mix towards payments and data .
Is really stabilizing and so we're very proud of that result, and very pleased with how that team is executing.
Speaker #4: We want to drive efficiency across our portfolio . We want to increase EBITDA , free cash flow to lower debt . And our leverage ratio in the case of the print business , we have a great cash generator in the Czech business and that had a very solid and very predictable Q3 .
Great. Thanks, So can I sneak one more in kind of a bigger picture thing as we.
Approach year end here any initial thoughts for next year.
That was a really good try Charlie where we'll be back at the next call with good guidance for next year.
Speaker #4: We continue to struggle a bit in the promo business with just headwinds in the industry . We've also just been very clear we're going to focus on profitable volume .
I appreciate it thank you.
Thank you.
Once again, if you would like to ask a question. Please signal by pressing star one.
Speaker #4: We're not going to play the game that others in the space are playing , which is taking product or making sales that have little or no margin .
And we will go to our next question.
Hey, guys, it's Jonathan from TV Cowen.
Speaker #4: And so we're walking away from deals that we just don't think we can make a decent profit on . And you can see that in the the revenue part of that equation .
Just one question for me now that you reinsured.
Speaker #4: But when you come down to what's really important here is that we're able to largely hold on to the EBITDA. As you can see, we're expanding margin here as well.
Leverage targets and congrats on that.
How are you balancing capital between let's say debt reduction potential buy backs, some M&A and maybe even some reinvestments in.
Speaker #4: So we think it's just a matter of being really choiceful and really fully in alignment with our strategy . Our key three big strategic initiatives around shifting mix to payments and data , driving efficiency , increasing EBITDA , free cash flow and lowering debt , and the leverage ratio that we're being very choiceful and disciplined about the business .
And the growth segments like payments and data. Thank you.
Yeah, well first of all thank you for acknowledging that progress Jonathan I think you know we've been very committed to this goal of bringing the leverage ratio down and getting ultimately at or below three times sometime next year. So obviously the works not done yet very pleased with the execution and progress that allowed us to reach our original target for year end.
Speaker #4: We take and making sure we do have is operated with great efficiency . Chip , do you want to build on that ?
Speaker #5: Yeah , I think you said it well , but Charlie , if you think about the extra materials we've added the last few quarters , you can see while promo , the promo side is still struggling and declining a bit higher than we would like .
<unk> 25, a bit faster, but nothing really changes our capital allocation priorities remain we're still focused on paying down that debt and bringing the leverage ratio down we're still marching down the path towards that three times or better by the end of next year and we're going to continue to invest internally for high return growth that helps berries number one strategic.
Speaker #5: It has improved . But to Barry's point , the real story is how check continues to deliver solid results . Decline better than long term expectations , and how those two things together deliver a really solid mix story to the business .
Shifting the mix to payments and data and then obviously, we'll keep returning value to shareholders through the dividend. So very very pleased with the progress, but don't expect anything to change we're going to keep executing based off this updated guidance range. We've provided I would say we're now in a place to land year end around three and a quarter depending on the rounding so continued.
Speaker #5: So I think Barry said it all right . When you put that all together and you add on top of it the focus on efficiency that we've been delivering over the last two years as part of our efficiency improvement program , it's all leading to this solid , sustainable , low 30s margin rate that we've been talking about for print that you can see is really stabilizing .
Great progress and we're continuing on that journey to get at or below three times by the end of next year.
Speaker #5: And so we're very proud of that result and very pleased with how that team is executing .
Speaker #8: Great . Thanks . And sneak one more in kind of a bigger picture thing as we approach year end here . Any initial thoughts for next year ?
Thank you.
And we will take our next question.
Yeah.
Speaker #4: That was a really good try , Charlie . We're we'll be back at the next call with good guidance for next year .
Hi, good evening, it's a bucket of concern.
Sidoti here I was sort of you sort of covered it quite a bit are already wanted to sort of touch on how we should think about the hum how capex might flow out through we have for the year is it reasonable to think that we might see.
Speaker #8: Appreciate it . Thank you .
Speaker #2: Thank you once again . If you would like to ask a question , please signal by pressing star one . And we will go to our next question .
<unk> levels next year or how should we think about the potential for whether it's technology driven investments or the like how that might play into Capex next year, just generally not not a specific guide on numbers I suppose, but just sort of generally.
Speaker #6: Hey guys . It's Donovan from .
Speaker #9: TV Cowan . Just one question for me . Now that you've reached your your leverage target . And congrats on that . How are you balancing capital between the say that reduction potential buybacks , some M&A and maybe even some reinvestment in in the growth segments like payments and data .
Yeah. So again to reiterate we've been holding in this $90 million to $100 million guidance range for all of this year and we're executing pretty well in that store.
Stopping short of providing full guidance, but where we are is a very comfortable level for us like I said, we continue to focus on.
Speaker #9: Thank you .
Speaker #5: Yeah . Well first of all , thank you for acknowledging that progress , Jonathan . I think , you know , we've been very committed to this goal of bringing the leverage ratio down and getting ultimately at or below three times .
Good internal return projects that can allow us to drive that strategic initiative to shift the mix and so we're obviously not going to starve the business, but we also feel good about the progress we've made so as we get into next year. We will go through our normal process of evaluating all of the investment opportunities inside the business and stack rank them based off the best returns helping drive the law.
Speaker #5: Sometime next year . So obviously the work's not done yet . Very pleased with the execution . And progress that allowed us to reach our original target for year end 25 a bit faster .
Term strategy and I would expect Capex will settle somewhere around where it is right now, but again stopping short of guidance, we'll wait to see where the final demands of the business land and what are the best returns inside the four walls to deliver the best outcome for both investors and our customers.
Speaker #5: But nothing really changes. Our capital allocation priorities remain. We're still focused on paying down that debt and bringing the leverage ratio down.
Speaker #5: We're still marching down the path towards that three times or better by the end of next year . And we're going to continue to invest internally for high return growth .
Speaker #5: That helps berries . Number one , strategic priority , shifting the mix to payments and data . And then obviously we'll keep returning value to shareholders through the dividend .
Great and then I guess and admittedly this might be a bit of a squishy question, but are there any parts of the business.
Speaker #5: So very very pleased with the progress . But don't expect anything to change . We're going to keep executing based off this updated guidance range .
Where you would like to expand bandwidth as far as internal whether its personnel.
Speaker #5: We've provided . I would say we're now on a place to land year end , around three and a quarter , depending on the rounding .
Or or the like are there any areas that you feel as though you might need to expand bandwidth in the near term to take advantage of opportunities.
Speaker #5: So continuing great progress . And we're continuing on that journey to get at or below three times by the end of next year .
So I appreciate the question Mark we we regularly look at our resource allocation or capital allocation.
Speaker #2: Thank you . And we will take our next question .
And where we're spending for maximum return.
We don't anticipate any need for a surge in any one of our businesses, we are investing appropriately, particularly in the payments and data the growth businesses for the future.
Speaker #10: Hi . Good evening . It's marketing from here . I was sort of you sort of covered it quite a bit already . I wanted to sort of touch on how we should think about the how CapEx might flow out through .
I mentioned earlier, we're putting a bit more investment towards sales, particularly in the merchant business.
But we like the mix of what we have today and how we are investing to grow.
Speaker #10: We have for the years it reasonable to think that we might see similar levels next year , or how should we think about the potential for whether it's technology driven investments or the like , how that might play into CapEx next year ?
And really like how it played out for us in Q3.
Excellent congratulations thank you very much.
Speaker #10: Just generally not not a specific guide on numbers , I suppose , but just sort of generally .
Thanks Mark.
Thank you.
And at this time, we have no further questions I would now like to turn the call back.
Speaker #5: Yeah . So again , to reiterate , we've been holding in this 90 to $100 million guidance range for all of this year .
Speaker #5: And we're executing pretty well in that stopping short of providing full guidance . But where we are is a very comfortable level for us .
Thanks Rachel.
Before we conclude I'd like to share that management will be participating at the citizens financial services Conference in New York and the Stephens Annual investment conference in Nashville on November 18th and 19th respectively and at the Bank of America Leveraged Finance conference on December 2nd and third during the fourth quarter for which additional information will be posted on the Investor Relations.
Speaker #5: Like I said , we continue to focus on good internal return projects that can allow us to drive that strategic initiative to shift the mix .
Speaker #5: And so we're obviously not going to starve the business , but we also feel good about the progress we've made . So as we get into next year , we'll go through our normal process of evaluating all the investment opportunities inside the business and stack rank them based off the best returns , helping drive the long term strategy .
Site.
Thank you again for joining us today, and we look forward to speaking with you all again in early February as we share our fourth quarter and full year 2025 results.
Speaker #5: And I would expect CapEx will settle somewhere around where it is right now . But again , stopping short of guidance will wait to see where the final demands of the business land and what are the best returns inside the four walls to deliver the best outcome for both investors and our customers ?
Thank you. This concludes today's call. Thank you for your participation.
May now disconnect.
Speaker #10: Great . And then I guess , admittedly , this might be a bit of a squishy question , but are there any parts of the business where you would like to expand bandwidth as far as internal , whether it's personnel or or the like ?
Speaker #10: Are there any areas that that you feel as though you might need to expand bandwidth in the near term to , to to take advantage of opportunities ?
Speaker #4: So appreciate the question mark . We we regularly look at our resource allocation or capital allocation . And where we're spending for maximum return .
Speaker #4: We don't anticipate any need for a surge in any one of our businesses . We are investing appropriately , particularly in the payments and data .
Speaker #4: The growth businesses for the future . I mentioned earlier , we're putting a bit more investment toward sales , particularly in the merchant business .
Speaker #4: But we like the mix of what we have today and how we're investing to grow and really like how it played out for us in Q3 .
Speaker #10: Excellent . Congratulations . Thank you very much .
Speaker #5: Thanks , Mark .
Speaker #7: Thanks .
Speaker #2: Thank you . And at this time , we have no further questions . I would now like to turn the call back .
Speaker #3: Thanks , Rachel . Before we conclude , I'd like to share that management will be participating at the Citizens Financial Services Conference in New York and the Stephens annual Investment Conference in Nashville on November 18th and 19th , respectively .
Speaker #3: And at the Bank of America Leveraged Finance Conference on December 2nd and third . During the fourth quarter , for which additional information will be posted on the Investor Relations website .
Speaker #3: Thank you again for joining us today. We look forward to speaking with you all again in early February as we share our fourth quarter and full year 2025 results.