Q2 2019 Earnings Call
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Good morning, maybe your conference I'd number please.
I don't have a conversation.
Five to 99173.
Maybe the spelling of your first the last name please.
Ryan Healy B R y and H.E.A.L. Eli.
The company name please.
Era A.I.E.R.A.
It was a <unk> correct Sir.
Correct.
<unk> share of 75 cents and adjusted diluted earnings per share of one dollar and 64 cents.
Adjusted diluted earnings per share ended at the top end of our outlook.
Overall, we delivered a solid second quarter hitting the financial targets, we set for the business, while making significant progress on the transformation.
More on that in a few months in a few minutes, but first let me turn the call over to Keith for more on quarterly results.
Thanks Barry.
Compared to our guidance, we delivered a solid second quarter financial performance.
We produced strong operating cash flow to enable investment in our business, including making substantial progress in our transformation investments.
Total revenue was $494 million, a 1.2% increase year over year.
While overall revenue was within our outlook as Barry noted, we're not satisfied with our organic revenue performance.
Decrease of about 3%.
As we outlined last quarter, we plan to re segment, how we operate and report our business later this year as part of our overall strategy to drive organic growth.
For now we are continuing to operate and report results in the current segment structure.
Small business services revenue was $308.5 million and declined about 2.9% in total or about 3.4% organically.
Financial services revenue was $156.1 million it grew nearly 12.1% in total but declined about 1.6% organically.
Direct checks revenue was $29.4 million.
Declining 5.8% year over year, but performed slightly better than our expectations.
Currently our largest group of products is marketing solutions and other services or MLS.
For the quarter, Nevertheless ended at $215 million growing to 43.6% of total revenue.
Checks ended the quarter at $196 million or 39.8% of total revenue and forms and accessories was $82 million or about 16.6% of total revenue.
Diluted earnings per share for the second quarter was 75 cents and includes aggregate non-GAAP adjustments of 89 cents per share.
When excluding these adjustments adjusted diluted EPS was $1.64 cents per share at the high end of our outlook.
Last year adjusted diluted EPS was $1.67 cents per share.
A reconciliation from diluted EPS to adjusted diluted EPS is included in our earnings release.
The fundamental health of the enterprise is strong and we continue to deliver substantial adjusted EBITDA and free cash flow, allowing us to reinvest earnings back into the business to fund our transformation while at the same time, returning capital to shareholders through the payment of a regular dividends and common stock repurchases.
Reported EBITDA was $86.5 million for the quarter and includes $31 million of expenses related to restructuring integration and other costs as well as non-GAAP adjustments.
Excluding these amounts adjusted EBITDA was $117.5 million or about 23.8% of total revenue.
Adjusted EBITDA declined about $8 million and adjusted EBITDA margin compressed 180 basis points.
Year over year compression resulted from mix changes in existing businesses.
Price concessions attrition of existing business in the onetime impact from the migration of one of our web properties.
Moving onto the balance sheet and cash flow statement at the end of the quarter, we were drawn $951 million on the credit facility increasing from the beginning of the year, primarily due to additional common stock repurchases in planned investment spend.
In mid July we completed an interest rate swap on our credit facility, we locked in fixed interest rates for $200 million of debt and we now have a mix of about 80% floating rate debt and 20% fixed rate debt.
As a result, we should see a 2018 interest expense benefit of about $200000 against forward floating rates.
Through the first six months cash provided by operating activities was $105 million and capital expenditures were $32 million.
Free cash flow defined as cash provided by operating activities less capital expenditures was $73 million in the quarter and declined by $46 million from last year.
The primary driver of lower free cash flow was lower adjusted EBITDA, the cash payment of certain legal related costs and previously disclosed investments in our transformation.
In the second quarter, we repurchased $29 million of common stock, bringing year to date share repurchases to $79 million.
We currently have about $341 million of share buyback authorization remaining at the end of the second quarter.
We don't provide an outlook for share repurchases that we may continue to operate two mystically buy stock in the open market from time to time.
To the extent, we generate excess cash we plan to reduce the amount outstanding against our credit facility.
Moving on our acquisition pause in the first half allowed us to make progress integrating previous acquisitions into our business. We completed our integration of ink head into our primary ERP and with additional activity underway on others. So we're advancing our acquisition integration as expected.
Looking ahead to our third quarter and full year 2019 outlook.
We expect third quarter revenue to be in the range of $490 million to $505 million and we expect diluted EPS to be in the range of 69 cents to 79 cents per share.
We expect adjusted diluted EPS to be in the range of $1.60 cents to one dollar and 70 cents per share.
For the full year, we are tightening our revenue outlook, we expect revenue between $2.005 billion in 2.04 or $5 billion, which remains in line with our previous outlook for low single digit revenue increase from last year.
We expect diluted EPS in the range of $3.45 per share to $3.75 per share and we continue to expect adjusted diluted EPS in the range of $6.65 per share to $6.95 per share for the year.
We provide a reconciliation from diluted EPS to adjusted diluted EPS in the earnings.
Released but I think it's important to discuss the integration related adjustments of one dollar in 26 cents per share or about $75 million for the year.
This adjustment is for the restructuring integration and other costs.
In our previous outlook, we had already included approximately $32 million or 54 cents per share for these expenses.
That were previously underway.
Based on our work we completed since last the last call. We are increasing that total by $6 million to $38 million.
The additional expenses are primarily related to severance and site closure activities.
Our continued work to transform the company May result in additional restructuring expense as we progress through the year.
Additionally, on our last call, we announced we would incrementally invest between 30 and $60 million per year for the next two years to transform our infrastructure and position the company for growth.
Collectively we call this program New day.
We said, we will provide a more refined estimate on this call and consistent with that commitment. We are revising our 2019 estimate to a range of $35 million to $40 million.
Basically in the middle of the range, we previously expected.
So the $75 million for restructuring integration and other costs.
Is the combination of the $38 million I previously discussed in this new day investment of $35 million to $40 million.
We identified a small amount of capital also required for the new day investments, but we reprioritized capital projects and our funding those investments within our Capex guidance.
While additional work is necessary to fully scope out the full implementation plans for each investment we've made substantial progress and are on plan to complete this work.
The expected financial impact has been included in our third quarter and full year outlook.
We are pleased with the progress on the new day initiatives here are few highlights.
Salesforce will be our single CRM platform to replace 15 separate CRM tools in place today.
Sale Salesforce will also be central to our E Commerce engine.
Several portions of our business have already gone live since our last earnings call and user acceptance testing began last week ahead of schedule for other portions of the business.
Our network capacity has sex successfully been expanded and our Microsoft platform has been updated to the latest suite of collaboration tools, including desktop and mobile video conferencing. We are already experiencing dynamic collaboration that provides for faster decision, making and will in this will facilitate lower travel expenses.
Not previously possible.
Microsoft has advised us that our adoption of these tools has been among the fastest of any global client.
We are not surprised is that as yet another proof point about the new deluxe.
Workday implementation is on track to be operational by the end of 2019.
This will replace multiple human capital management systems currently in place as a result of dozens of previously Unintegrated acquisitions.
User acceptance testing began last week as well in here too we are ahead of schedule.
Caldera was selected as our big data platform and Anna planned for enterprise planning.
Both of these implementations are on track and these platforms will allow us to operate far more efficiently and support our organic growth strategy.
The Big remaining systems decision is the selection of a common ERP.
As we disclosed on our last call. The company has about 52 different systems operating today.
We obviously have an opportunity to realize meaningful efficiencies by moving to a common enterprise wide process with implementation of a modern ERP.
We have been actively evaluating alternative and best in class implementation partners and we expect to reach a decision later this year.
We recognize the complexity of implementing a new year, ERP, and we're being appropriately cautious and responsible on our pace, but we are confident in our ability to deliver.
During future calls, we will update you on our progress and give additional visibility and timing of future investments.
Now I will turn the call back to Barry.
Thanks Keith.
I'm so proud of the accomplishments our team has made since I joined deluxe late last year and I'm glad to be able to walk you through some of the details on those efforts and accomplishments today.
As as much from the team and they delivered.
While still early we can feel our momentum is beginning to build.
I've had the opportunity to me, even more employee owners across our fine company and their enthusiasm and a dedication to deluxe is inspiring.
I also had the opportunity to meet with a number of investors during the second quarter and I'm grateful for the overwhelming investor support for our new more focused strategy.
I heard many of you asked for additional details about our strategy and our execution plan and will provide you more today.
I want to be clear upfront.
Previously the company strategy was about diversification and using the company's great cash flow to buy in organic growth.
The company was very successful for our time on this pathway and now we're ready as a company to realize the potential of those acquisitions.
However, as Steve highlighted earlier, the acquisitions have not yet yielded the organic growth the company expected.
In 2018 prior to my arrival the company repeatedly adjusted revenue guidance downward primarily due to acquisition delays and acquisition underperformance.
As you can see from our new day and in essence, we're now making the necessary investments to integrate these acquisitions that moved the company to a modern technology platform.
I understand the company and often discussed cross selling and organic growth, but had not made the investments in the systems processes talent or culture to drive that growth.
For example, the company has not had a head of sales for over a decade.
We are addressing each of these head on now.
It had become evident to me our management team and our board is that of course adjustment was required.
To help us we hired a leading global strategy consultancy to help frame a better future and we shared the results of that effort on our last call.
We're now aiming at a much more fundamental transformation than rather new diversification.
Our new strategy is focused on winning with existing customers markets and product families.
Yes about profitable organic growth and focused on two key growth markets payments and cloud.
Weve on Thats, the outstanding cash flow from promotional products are checked businesses into these growth areas and we will supplement our organic growth with targeted and strategic acquisitions.
But we will no longer allow ourselves to be exclusively dependent upon acquisitions for growth.
This more focused strategy requires us to change our go to market philosophy, many operational processes and critical underlying technology and systems.
All of this is necessary to position the company for organic growth, which is at the very core of our go forward strategy.
In 2023, we believe this new more focused strategy will deliver sustainable mid single digit organic revenue growth and adjusted EBITDA margins in the low to mid Twentys.
In 2023, we expect the strategy to yield $300 million of net new organic revenue.
For total GAAP reported revenue of about $2.3 billion.
Yes, we are undertaking material change.
I have experience with this and have led organizations through similar transformations throughout my career.
Through centralizing and streamlining processes, focusing on the customer and building a sales culture I have consistently driven profitable organic growth.
Consistent with how that then managed similar transactions in the past we've established an experienced team of the luxe leaders solely focused on delivering the change.
This internal transformation leadership office or TLO is supported by World class external experts from leading consultancy, who provide another layer of expertise and insight.
We are leveraging their best in class implementation solutions and project management skills to drive the transformer transformation as efficiently as possible to minimize disruption in our core operations.
We had a very methodical practical and responsible process to manage change and we sequence the initiatives to minimize risk.
As Keith outlined earlier, our team is doing a great job with already made measurable progress on key initiatives and remain on schedule and on budget.
Importantly, we are advancing our transformation without missing a beat.
Delivering the quarter and the year we've committed.
This is the new deluxe.
Now I'll move on to an update on the progress Weve made implementing our business strategy.
As we've discussed on the second quarter earnings call in the future will focus our efforts on four primary business areas.
Payments cloud of promotional products and checks.
The first growth areas payments, a multibillion dollar market growing at 10% 15% annually.
Our payments offerings fits into three sub categories first Treasury management solutions.
We believe we can grow market share with our existing market, leading software and solutions.
Additionally, we continue to see green shoots of opportunity is integrated receivables, which expand beyond financial institutions.
We have a strong sales pipeline and a healthy backlog of customers in our implementation queue.
The second area is payroll.
Where our solution is a great fit for small business one of our areas of greatest strength.
And the third area is helping businesses large and small pay and get paid.
Our new E checks product is well positioned in the fast growing disbursements space and we are having great conversations with our small business clients about their payments needs.
The second growth area cloud based solutions is also a multibillion dollar market growing at double digits annually.
Our interest in cloud is focused in three sub categories.
First cloud based services, including loyalty offerings logo design profitability tools and bank account switching tool solutions.
Second cloud based web design and web hosting.
We already have a strong presence in this space hosting millions of web sites directly and indirectly through partners.
We've recently been selected as a preferred hosting and web service provider by Ingram micro a global antenna technology and logistics company operating in 64 countries with 33000 employees.
We expect to announce more on this win in the near future.
This is another example of the new deluxe.
Third cloud delivered data and analytics, such as though those offerings from FMCG and data mix.
We saw a year over year growth in this area in the second quarter and we're beginning to see early signs of returning growth in the home mortgage refunded refinancing market as a result of expectations for lower mortgage interest rates.
We're excited our strategy to expand the data driven marketing deeper into small businesses is showing early signs of success and we'll provide updates on this business in quarter two was to come.
As part of this acceleration, we recently signed a new deal with one of our existing strategic data partners.
Expanding the reach of our data within the small business lending vertical.
Again, we see this as another early proof point about the new deluxe.
The third area promotional products includes print retail packaging banners business forms and other promotional products designed to help customers manage and promote their brands.
We are actively conducting national searches for the leaders of payments cloud and promotional products and expect to have those positions filled later this year.
We're very pleased with the caliber of talent, we are attracting with deep experience in each of these areas who want to be part of our transformation story.
Prior to placing these new leaders, we have existing executive leadership, assisting with our transformation and I'm also deeply involved in the day to day operations in these areas.
The fourth area has checks Tracy annual Hearts and experienced a loss leader with deep industry knowledge will be our general manager for checks.
Checks generate strong margins and cash flow and traces leadership. We believe we can maintain this profitability and capture new market share.
Recapping our strategy.
Our overarching objective is to position the company for an acceleration of profitable organic revenue growth.
We believe managing our business and four key areas payments cloud promotional products and checks.
Well allow us to focus much more clearly on the acceleration of organic revenue growth.
Payments and cloud are multibillion dollar markets with the great secular growth trend and great earnings multiples.
And importantly, these are markets, where we have the right to win and where we already have significant business.
As an additional tailwind we see opportunities in the markets we're in.
With Mega mergers that more on the Fintech space specifically.
We're positioning ourselves to benefit by having a fast and nimble company skilled at selling more to our existing customers.
We are keeping our debt low to give us maximum flexibility to grow and respond to market opportunities.
I've heard a question from many of you about our approach to capital allocation and future willingness to accumulate debt to deliver our strategy.
Tier two I want to be very clear.
This company is fundamentally healthy and has no need to take unnecessary risk.
I have spent many years in a greatly over leveraged environment and have no plans or intentions of taking this quality company in that direction.
You should expect to see us make fewer more meaningful acquisitions over time to supplement our organic growth.
Every decision will be taken in view of maximizing shareholder value with the least amount of risk.
Now, let me give you an update on the progress and emerging momentum our had our team has from an operating perspective.
First sales.
We announced this Monday that we completed a national search for our Chief revenue Officer and are pleased that Chris Thomas' joined deluxe and this new role.
Chris brings a breadth of capabilities to deluxe to help us create a world class enterprise selling organization.
He has past experience at DXP technology, Hewlett Packard, and Pegasus Logistics group, where he built and transform the global sales organizations to accelerate organic growth and transform the corporate culture to be very sales driven.
His experience is a great match for our strategy and we are pleased to have a leader of Christmas caliber join the World class team. We are building to help define and shape our sales culture.
As Keith mentioned earlier, we announced our relationship with Salesforce as our enterprise CRM platform with a single view of our customer and data insights previously unavailable to us we will identify substantial cross selling opportunities across the millions of our existing customers.
I recently participated in the Salesforce Investor Day in New York, giving me the platform to share our fundamental transformation story with tech investors.
Even before Christmas arrival, we can began implementing a new discipline into our tele sales centers to rapidly test new scripts offers and promotions, which we expect will yield measurable improvements in cross selling results.
Additionally, we have closed several important deals, including the Ingram, Michael micro and data deals I mentioned earlier.
You will hear more in the coming weeks about our exciting progress.
Second product and innovation.
We've also made progress strengthening our product innovation and development teams, we brought all product development activities under one deluxe later to provide consistent innovation and product delivery.
For the first time, we'll have common methodologies and commercialization practices and enabling us to unlock the full potential of our products.
We're currently developing new solutions to support our Treasury management and E payments initiatives and more.
We are moving at great new speed.
For example in Q2, we developed an extension to our payments product offerings called Principlist mail print plus male combines the speed and convenience of sending an electronic payment with the experience of receiving a physical business check the end recipient controls this entire experience.
With just a click prince plus male automatically generates and Prince high security paper checks from our secure processing facilities and mailed them for our customers and same day.
Within the first few weeks since launch.
We brought up more than 500 customers on this new capability and expect to continue to enhance the offering through the rest of the year.
Clearly this is also evidence of the new deluxe.
Additionally, under Amanda Perrelli, our new Vice President of strategy and planning, we're establishing a new portfolio management program to further focus our investments and accelerate organic growth.
Third efficiency.
I've said before will self fund much of our go forward investments in structural efficiencies.
We've made great progress on the second quarter rationalizing operations closing certain real estate locations and simplifying processes, allowing us to redeploy resources to accelerate growth.
Earlier, both Keith and I gave our perspective on our platform investments that will not only help us accelerate our growth, but should deliver material savings over time.
The fourth area of focus is culture.
We hire Jane Elliott to be our chief Human Resources Officer, who has led through similar trends of transformations during her career.
We are reorganizing the executive leadership team to align with our new strategy.
We've initiated a broad organizational restructuring to reduce the number of management layers with seven to four and expand areas that control.
The new organization will be nimble provide clear accountability and result in faster decision, making.
In April we made all North American deluxe employees shareholders.
And the impact is already exceeding my expectations.
We're seeing a whole new level of dialogue focused on teamwork and creative problem solving.
Our employees are fully aligned with shareholders and motivated and rewarded to think and act like owners because every north American employ is now an owner.
Today, we've given you the highlights of the changes underway and the momentum we are building.
We're delivering the performance results we promised.
Even as we aspire to do better in the future.
We're working at a rapid pace to transform the company to drive organic growth.
I know you probably have more questions and I want to update you on our plans for an investor day.
We're tentatively planning an investor day for February 2020 , which will allow our new gms to get established and provide you with detail about their exciting businesses.
We will have organized the event to showcase our new management team our strategy, an incredible product suite, including live product demos.
We will send out a save the date E mail along with more detailed at Gener agenda later in the year.
Between now and next earnings.
You should expect to hear us publicized details of key wins and new partnerships.
These will be more examples of the new deluxe.
In closing.
Our momentum is clearly emerging and our transformation is well underway.
It won't happen overnight, but my optimism for our future continues to grow and I'm more energized and excited about our opportunity than when I joined just eight months ago.
Now Keith and I will open the call for questions.
Thank you ladies and gentlemen, if you have a question at this time. Please press Star then one key on your Touchtone telephone. If your question has been answered or you wish to move yourself from the queue. Please press the pound key.
Again that is star then one to ask a question. Our first question comes from Charlie Strauzer with CJS Securities.
Hi, good morning.
Hi, Charlie.
I just have a little discussion about the new day investments and I. Appreciate you, giving some more clarity there, but maybe drill down a little bit more for us if you could explain the.
The split there of the $35 million to $40 million.
In terms of expense versus Capex.
And or is it is the capex on top of that amount and how should that progress through the back half of this year as well.
Sure. So this is Keith thanks, Charlie.
That guidance was for it expense so the Theres capital. In addition to that amount, but we were able to reprioritize what was already in our capital plan to accommodate for that.
Got it so so basically the.
I know you're not spending any additional capex, but is there.
But you got it the capex of what the what's related to new date.
We didnt break we didnt break that out specifically.
As we move forward and look at the ERP platform I think there's more of an opportunity for capital treatment in these no.
Got it and then do you plan to call up 35 to 40 million as kind of a onetime.
non-GAAP expenses in <unk>, when you calculate the adjusted EBITDA.
So Charlie Thats for this year.
But I didn't hear the full part of your question.
No I'm, just saying like when you back out things for adjusted EBITDA will you be backing out that.
These investments as well, yes, exactly nothing got inclusive of the 75 million.
Got it and how should we think about the the progression of that 30 540 million in the back half of the year Q3 versus Q4.
So probably about two thirds in the rest of the year.
Got it okay. Thank you very much.
Thank you and our next question comes from Jamie Clement with Buckingham.
Hey, good morning, gentlemen.
Hey, Jamie right, Hey, Barry as you all think about enterprise selling.
What are some of the initial.
Hi, you know high priority a high potential verticals do you all think you're going to be focusing on.
A great question and we've been very public that we are two primary markets, our small business and financial services or financial institutions.
Well, we think there are other enterprise classes, where we think we have a special right to win which include health care.
Real estate and construction, we already have a great footprint in those markets and our products seem to have I have great take up there and we think there's great growth prospects for us.
But I want to be clear Jamie were that that's where we're starting.
We are you know if there's others for example, we had a nice toehold already in automotive as another sector.
And as we dig deeper here and as Chris goes longer. He has been here for three days now I think we'll find additional market verticals and clearly part of our strategy will be to deliver solutions that are targeting specific market verticals.
Okay. Thanks, Bert Thanks, very much that just a couple of like just independent questions. If I look at the checks business you know page 14 to 4% to 5% decline you haven't attracts column you know the I think typically the company has guided to decline. This there were a couple of hundred basis points higher than that greater than that I think in the quarter Youre, maybe checks revenue I think based on your chart was maybe down he bought like direct checks was actually surprisingly strong I think compared to where it's been so can you help me kind of give you you know can you give us some updated thoughts on the checks business and going forward and projected rates of decline in that sort of thing.
Hey, Jamie that yeah. So you know we've seen a couple of quarters, where direct checks has been a little stronger than what was expected.
What I would I think the differences maybe in the past as we make sure first of all we're guiding to a check revenue words for checked units. So you got to make sure wouldn't which when were talking through but the pricing is really where we're seeing a little bit of competition. I think we we've seen checks perform fairly well, but we said the last couple of calls even though it's tougher to raise prices in the checks. These <unk>, but the business is solid we still see a continued to its still declining, but it's declining to pretty measurable rate and we're able to forecast fairly well you know what I'm just kind of getting at is I I think that like I, just I did the math quickly here and I think your checks revenue.
Was down 8.4% only during the quarter.
Why on the chart on page 14 is the rate only four to five.
Oh come out to look into that and it's.
I'm I'm not sure. That's a good question okay. Okay. No no problem, we can talk about anything.
Sorry anyway, Barry other big Big picture kind of question about kind of multi year targets and you know what you laid out on this call with you know potentially $2.3 billion of revenue on low to mid 20% margins I want to bring this up because this question has come up to me.
You know simple math.
You know if if one were to take you know a theoretical 2023 of $2.3 billion and multiply that by 22.5%.
You get to about $518 million of adjusted EBITDA, that's not far from where you all were in 2017, and 2018 and given the momentum that you're seeing and and and and you know all the initiatives that you guys are undertaking.
Or are you really trying to send the message that like.
You know gold scenario three years from now that your EBITDA is only going to be flat versus where it was last year because that doesn't sound to me like what you're saying you sound much more optimistic than that.
Well I think we are much more optimistic I mean, they are message we're trying to be very clear that we think that we will deliver net check decline <unk> incremental $300 million.
Profitable revenue to the company.
In calendar year 2023.
Kept the company outperform that you know, we're optimistic and hopeful but we also want to be realistic than setting expectations that were just at the beginning of our transformation you know our new sales leader and then here three days and we are starting to hit the go forward.
And you know we are.
The reason, we're focusing the two segments that we've highlighted which our payments and cloud because not only do they have strong secular growth. If we can just plant our flag and stand at the intersection which we believe we have a right to do an a bigger basis than we have today, we win because the sectors grow OCO sectors also have terrific margins and we think that combination you know gives us the fuel to deliver what we think is a reasonable promise.
Okay. Okay. That's that's very fair and I and I totally get that it's early I. Just you know it's like you know if people just do the simple math based on you know those bullet points. You know it's it's it's not you know it's not like a massively compelling number versus all the opportunities that you have at the moment you're building. That's that's the reason why I was breaking up all right I get it Jamie in there we've been very purposeful at target in these markets because they give us.
Great opportunity.
You know were early so we were in the business of meeting or beating expectations. So we don't want to set outlet I outsized expectations too early.
Okay, that's very fair and I appreciate the time.
Thank you. Our next question comes from Chris Mcginnis with Sidoti income.
Hi, good morning, Thanks for taking my questions.
Right.
One I guess just thinking about the organic growth you know I'm <unk>.
Coming along at some point here.
I go lots happening with integration and changes within the business itself.
I guess, how long you think.
You should see organic growth in terms of the model since seemingly were.
The company was close to it you know at some point you reference that obviously earlier and with luck. There's some headwinds there, but now that you have everything in place it's going to take some time to implement all these initiatives but.
When do you see or I think the expectation of organic growth in terms of the model itself.
Yeah. Thanks for the question I think there's actually two parts to that question I want to answer both of them.
The first part of the question is I know it was a follow up question from the last time, we were all together about our company's ability to execute against our technology initiative.
I hope you heard very very clearly from us today that we are exceeding or on track or exceeding our expectations and our own schedules and doing better than budget on each of the technology platforms that we are investing in.
So we are doing exactly what we said we were going to do on exactly the schedule, we were going to do it on exactly the price points. We said we were going to deliver it so that part of the execution and I think we feel very very confident about much of the work will be completed this year. We told you several of the initiatives will be completed in this calendar year. Let's go live dates at the first of the year, we feel very confident about that.
Seconds, which is when to expect organic growth and when does this deliver for organic growth.
You know again, Chris has done here now three days, but even before Chris Scott here. We started working on you know initiatives to drive organic revenue growth and cross sell in our and our Telesales center as well as in parts of our sales organization and I'm optimistic that that will start yielding some you know early results next year I can't give you any forecast about how much or how fast.
But we would expect to see some fruit from that labor.
Next year and I think as we get closer to next year, Chris Chris gets more established and you know has better visibility and insight into the pipeline. You know we will give you updates as this unfolds.
I appreciate that and then just one more follow up question, you mentioned partnerships and some of the meeting we had I I was just wondering how does that look going forward and how do you I didn't hear today off and maybe I missed it in your commentary, but could you maybe just talk a little bit about that and how the opportunity for you.
Yeah, well I mean, I think the first one I pointed out as Ingram micro Ingram micro becomes a customer of ours, but really they're a partner where they're going to take our products, they're going to replace existing products. They haven't their sweet and replaced them with our product and then we become especially marketing partners to deliver our solution to their customer.
We love that model, because we're able to leverage the great relationship on the terrific brand of the companies like Ingram has and the relationships they have with their customers and we have great products and service and solution delivery and we make great partners.
Coming soon to be able to tell you more about the data deal that I announced which is also about a partnership.
But we also think there's many one of the the distinctions between I think the old strategy of the company and the new strategy is the old strategy was very focused on having to own and control and asset in order for it to yield value and the new strategy, we really looked at partners as a way to go much faster to generate new revenue leveraging the best of what is available combining it with what we have which is an unbelievable unmatched customer reach.
I'm going to remind everybody 5 million small businesses 4800 financial institutions.
4 billion plus a web sites that are hosted on our platform. Nobody I mean, there is no. One that has the same type of scale and reach that we have so by packaging our products together, putting them together and compelling solutions offerings, along with those of partners that we will be building over time, we think we've got a great distribution channel and a great way to reach a small businesses and financial institutions with more products and services.
Great. Thanks for the color really appreciate it thanks for all the color on your commentary earlier.
Great.
Thank you and our next question comes from Charlie Strauzer with CJS Securities.
Hey, just a quick follow up just on the FSS segments.
You know the recent acquisitions of FMCG and data mix have been challenged to you know this is the way to I guess put it from last year just wanted to see if there's any progress you know kind of going on you know kind of an update there and how that's progressing back hopefully towards the right way.
Yeah. So.
I would take them separately, but what I would tell you is overall that you know we are pleased with the progress that were making with those assets.
Those assets were disappointing in their performance in 2018 FMCG specifically.
Grew it just didn't grow at the rate that the company I think had expected it to.
And specific to data mix as interest rates continue to decline, we believe that positions data mix for nice growth acceleration because of the position we have and the quality of the service, we provide and the relationships we have with those mortgage lenders.
So you know, we expect to see a steady oh improvements and growth in those businesses as we go forward.
Great and then Remainco a recent acquisition how's that <unk> been performing since you had your hands on it so to speak.
You know Remainco I think has is doing fine and what we really like about the remainco assets combined with our Wausau software it really puts us in a truly unique position in the marketplace. Wausau as you know is the leading software that many builders the defacto leader for financial institutions and other builders that are managing lockbox operations and receivables. It is the standard that is what most people use. So now in addition to having the industry standard software, we're actually able to bolt on services with that we're actually able to operate lock boxes on behalf of clients.
We see a nice opportunity here to grow market share as financial institutions look to outsource that solution to a third party that's got more scale and honest they can do it at a better rate as well as the pillars that are looking for efficiencies. So we think the combination of having a software and then absolutely certain services to the level that gives us a great opportunity going forward and then of course that becomes our launch pad for the future of integrated receivables, which is not just lockbox operation or you know taking it check payments, but it's all the things around excepting it recurring payments et cetera, and we think it gives us a great position for we think it's coming next.
It's a great grant term on growing share as we can actually win some outsourcing business and we think it gives us great positioning for the future for when things come next around integrated receivables.
Excellent. Thank you that's helpful.
Speakers I'm showing no further questions in the queue at this time I'd like to turn the call back over to Mr., Barry Mccarthy for any further remarks.
Well. Thank you everyone for participating on the call and for your question.
So in summary, here is where I'd like to leave us.
First our momentum is building our sales culture is starting to show initial signs of success, we have a new sales leader key wins to announce shortly a growing pipeline a new win a proven telesales model and a nice treasury management backlog awaiting implementation.
To our new strategy is focused on payments cloud promotional products and Chuck.
And we have material business in each area already and a right to win in each.
Right, we're changing our go to market strategy to drive organic growth by investing in the systems processes talent and culture.
We're on track and on budget Rolling out our new enablement technology.
For.
We've begun to rationalize our real estate footprint and reduce the complexity in layers and our organizational structure. So it can be more nimble and move forward much faster than previously possible and drive more organic revenue growth.
In closing I'd like to thank our exceptional deluxe employee owners, who give their all every day to deliver for our customers and shareholders.
I'm grateful for their commitment and together, we will unlock the incredible potential to become the new with deluxe a trusted tech enabled solutions company.
Now I will turn the call back Ed for some final comments.
Thanks, Barry I, Jamie you had a question I do want to respond to that I think you were asking about the 4% to 5% decline in checks when we've got the slides in the investor deck in the presentation here that shows long term, we expect that market in the checks. These to go down 45% I think what you're looking at is a quarterly result, which by quarter. We have promotional activity. We've got client wins, we've got pricing. So by quarter, you can see the check revenue decline more or less than the win rate, but I think the answer to your question is your comparative quarterly estimates of what we expect the market to do over the long term it definitely gentlemen, it later, but in closing I just want to let everybody know we've got some conferences coming up we were at the conference in New York City CGS Securities have their Nike valuable New ideas conference and within that so thank you for that on September 19th we will be in New York at the field Q1 7th annual Best ideas Conference.
And while not a third quarter event, we do hope that you can join us at our Investor Day in February 2020, and we plan to provide you some more details in the coming months regarding the timing of the location of that exciting event.
Thank you all for joining us today that concludes the deluxe second quarter 2019 earnings call.
Well, ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may all disconnect and have a wonderful day.