10-Q 1 dlx-20230930.htm DELUXE CORPORATION 10-Q 09.30.2023 dlx-20230930
000002799612/312023Q3falsehttp://fasb.org/us-gaap/2023#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2023#Assets00000279962023-01-012023-09-3000000279962023-10-25xbrli:shares00000279962022-12-31iso4217:USD00000279962023-09-30iso4217:USDxbrli:shares0000027996us-gaap:ProductMember2023-07-012023-09-300000027996us-gaap:ProductMember2022-07-012022-09-300000027996us-gaap:ProductMember2023-01-012023-09-300000027996us-gaap:ProductMember2022-01-012022-09-300000027996us-gaap:ServiceMember2023-07-012023-09-300000027996us-gaap:ServiceMember2022-07-012022-09-300000027996us-gaap:ServiceMember2023-01-012023-09-300000027996us-gaap:ServiceMember2022-01-012022-09-3000000279962023-07-012023-09-3000000279962022-07-012022-09-3000000279962022-01-012022-09-3000000279962023-06-300000027996us-gaap:CommonStockMember2023-06-300000027996us-gaap:AdditionalPaidInCapitalMember2023-06-300000027996us-gaap:RetainedEarningsMember2023-06-300000027996us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300000027996us-gaap:NoncontrollingInterestMember2023-06-300000027996us-gaap:RetainedEarningsMember2023-07-012023-09-300000027996us-gaap:NoncontrollingInterestMember2023-07-012023-09-300000027996us-gaap:CommonStockMember2023-07-012023-09-300000027996us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300000027996us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300000027996us-gaap:CommonStockMember2023-09-300000027996us-gaap:AdditionalPaidInCapitalMember2023-09-300000027996us-gaap:RetainedEarningsMember2023-09-300000027996us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300000027996us-gaap:NoncontrollingInterestMember2023-09-3000000279962022-06-300000027996us-gaap:CommonStockMember2022-06-300000027996us-gaap:AdditionalPaidInCapitalMember2022-06-300000027996us-gaap:RetainedEarningsMember2022-06-300000027996us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000027996us-gaap:NoncontrollingInterestMember2022-06-300000027996us-gaap:RetainedEarningsMember2022-07-012022-09-300000027996us-gaap:NoncontrollingInterestMember2022-07-012022-09-300000027996us-gaap:CommonStockMember2022-07-012022-09-300000027996us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300000027996us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-3000000279962022-09-300000027996us-gaap:CommonStockMember2022-09-300000027996us-gaap:AdditionalPaidInCapitalMember2022-09-300000027996us-gaap:RetainedEarningsMember2022-09-300000027996us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000027996us-gaap:NoncontrollingInterestMember2022-09-300000027996us-gaap:CommonStockMember2022-12-310000027996us-gaap:AdditionalPaidInCapitalMember2022-12-310000027996us-gaap:RetainedEarningsMember2022-12-310000027996us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000027996us-gaap:NoncontrollingInterestMember2022-12-310000027996us-gaap:RetainedEarningsMember2023-01-012023-09-300000027996us-gaap:NoncontrollingInterestMember2023-01-012023-09-300000027996us-gaap:CommonStockMember2023-01-012023-09-300000027996us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300000027996us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-3000000279962021-12-310000027996us-gaap:CommonStockMember2021-12-310000027996us-gaap:AdditionalPaidInCapitalMember2021-12-310000027996us-gaap:RetainedEarningsMember2021-12-310000027996us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000027996us-gaap:NoncontrollingInterestMember2021-12-310000027996us-gaap:RetainedEarningsMember2022-01-012022-09-300000027996us-gaap:NoncontrollingInterestMember2022-01-012022-09-300000027996us-gaap:CommonStockMember2022-01-012022-09-300000027996us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300000027996us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300000027996us-gaap:TradeAccountsReceivableMember2023-01-012023-09-300000027996us-gaap:InventoryValuationReserveMember2023-01-012023-09-300000027996us-gaap:InventoryValuationReserveMember2022-01-012022-09-300000027996us-gaap:ForeignGovernmentDebtSecuritiesMemberdlx:FundsHeldForCustomersMember2023-09-300000027996dlx:FundsHeldForCustomersMember2023-09-300000027996us-gaap:GeographicDistributionDomesticMemberus-gaap:MoneyMarketFundsMemberus-gaap:CashAndCashEquivalentsMember2022-12-310000027996us-gaap:ForeignGovernmentDebtSecuritiesMemberdlx:FundsHeldForCustomersMember2022-12-310000027996dlx:FundsHeldForCustomersMember2022-12-310000027996dlx:InternaluseComputerSoftwareIntangibleAssetMember2023-09-300000027996dlx:InternaluseComputerSoftwareIntangibleAssetMember2022-12-310000027996us-gaap:CustomerRelatedIntangibleAssetsMember2023-09-300000027996us-gaap:CustomerRelatedIntangibleAssetsMember2022-12-310000027996us-gaap:TechnologyBasedIntangibleAssetsMember2023-09-300000027996us-gaap:TechnologyBasedIntangibleAssetsMember2022-12-310000027996us-gaap:DistributionRightsMember2023-09-300000027996us-gaap:DistributionRightsMember2022-12-310000027996us-gaap:TradeNamesMember2023-09-300000027996us-gaap:TradeNamesMember2022-12-310000027996dlx:SoftwareforResaleMember2023-09-300000027996dlx:SoftwareforResaleMember2022-12-310000027996dlx:InternaluseComputerSoftwareIntangibleAssetMember2023-01-012023-09-300000027996us-gaap:DistributionRightsMember2023-01-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMember2022-12-310000027996dlx:DataSolutionsMemberus-gaap:OperatingSegmentsMember2022-12-310000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMember2022-12-310000027996us-gaap:OperatingSegmentsMemberdlx:ChecksMember2022-12-310000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMember2023-01-012023-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMember2023-01-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMember2023-09-300000027996dlx:DataSolutionsMemberus-gaap:OperatingSegmentsMember2023-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMember2023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:ChecksMember2023-09-300000027996us-gaap:NotesReceivableMember2023-01-012023-09-300000027996dlx:LoansandnotesreceivablefromdistributorsMember2022-12-310000027996dlx:LoansandnotesreceivablefromdistributorsMember2021-12-310000027996dlx:LoansandnotesreceivablefromdistributorsMember2023-01-012023-09-300000027996dlx:LoansandnotesreceivablefromdistributorsMember2022-01-012022-09-300000027996dlx:LoansandnotesreceivablefromdistributorsMember2023-09-300000027996dlx:LoansandnotesreceivablefromdistributorsMember2022-09-300000027996dlx:OnetotwointernalgradememberMemberdlx:LoansandnotesreceivablefromdistributorsMember2023-09-300000027996dlx:LoansandnotesreceivablefromdistributorsMemberdlx:ThreetofourinternalgradeMember2023-09-300000027996dlx:FundsHeldForCustomersMember2022-09-300000027996us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-12-310000027996us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-12-310000027996us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-12-310000027996us-gaap:AccumulatedTranslationAdjustmentMember2022-12-310000027996us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-01-012023-09-300000027996us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-01-012023-09-300000027996us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-01-012023-09-300000027996us-gaap:AccumulatedTranslationAdjustmentMember2023-01-012023-09-300000027996us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-09-300000027996us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-09-300000027996us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-09-300000027996us-gaap:AccumulatedTranslationAdjustmentMember2023-09-300000027996us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-12-310000027996us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-12-310000027996us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310000027996us-gaap:AccumulatedTranslationAdjustmentMember2021-12-310000027996us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-012022-09-300000027996us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-01-012022-09-300000027996us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-09-300000027996us-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-09-300000027996us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-09-300000027996us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-09-300000027996us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-09-300000027996us-gaap:AccumulatedTranslationAdjustmentMember2022-09-300000027996dlx:NorthAmericanWebHostingAndLogoDesignBusinessesMembersrt:ScenarioForecastMember2023-06-012023-12-310000027996dlx:NorthAmericanWebHostingAndLogoDesignBusinessesMember2023-04-012023-06-300000027996dlx:NorthAmericanWebHostingAndLogoDesignBusinessesMember2022-01-012022-12-310000027996dlx:AmountOfAdjustmentToPriorPeriodGainOnDisposalMemberdlx:NorthAmericanWebHostingAndLogoDesignBusinessesMember2023-07-012023-09-300000027996dlx:NorthAmericanWebHostingAndLogoDesignBusinessesMember2023-01-012023-09-300000027996dlx:USBasedPayrollBusinessMember2023-07-012023-09-300000027996dlx:USBasedPayrollBusinessMember2022-01-012022-12-310000027996dlx:AustralianWebHostingBusinessMember2022-05-012022-05-310000027996dlx:AustralianWebHostingBusinessMember2021-01-012021-12-310000027996dlx:AustralianWebHostingBusinessMember2022-04-012022-06-300000027996dlx:PromotionalSolutionsBusinessExitsMember2021-01-012021-12-310000027996dlx:LancasterCaliforniaFacilityMember2022-05-012022-05-310000027996dlx:LancasterCaliforniaFacilityMember2022-04-012022-06-300000027996dlx:AmortizingInterestRateSwapJune2023Member2023-06-202023-06-200000027996dlx:AmortizingInterestRateSwapJune2023Member2023-09-300000027996dlx:AmortizingInterestRateSwapJune2023Member2023-06-20xbrli:pure0000027996dlx:InterestRateSwapMarch2023Member2023-03-200000027996dlx:InterestRateSwapMarch2023Member2023-09-300000027996dlx:InterestRateSwapSeptember2022Member2022-09-200000027996dlx:InterestRateSwapSeptember2022Member2023-09-300000027996dlx:InterestRateSwapSeptember2022Member2022-12-310000027996dlx:InterestRateSwapJuly2019Member2019-07-190000027996dlx:InterestRateSwapJuly2019Member2022-12-310000027996us-gaap:ForeignGovernmentDebtMemberdlx:FundsHeldForCustomersMember2023-09-300000027996us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentDebtMemberdlx:FundsHeldForCustomersMember2023-09-300000027996us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentDebtMemberus-gaap:FairValueInputsLevel2Memberdlx:FundsHeldForCustomersMember2023-09-300000027996us-gaap:FairValueMeasurementsRecurringMember2023-09-300000027996us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-09-300000027996us-gaap:CashAndCashEquivalentsMember2023-09-300000027996us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Member2023-09-300000027996us-gaap:FairValueInputsLevel1Memberdlx:FundsHeldForCustomersMember2023-09-300000027996us-gaap:FairValueInputsLevel1Member2023-09-300000027996dlx:OtherCurrentAndNoncurrentAssetsMember2023-09-300000027996us-gaap:FairValueInputsLevel3Memberdlx:OtherCurrentAndNoncurrentAssetsMember2023-09-300000027996dlx:CurrentPortionOfLongTermDebtAndLongTermDebtMember2023-09-300000027996dlx:CurrentPortionOfLongTermDebtAndLongTermDebtMemberus-gaap:FairValueInputsLevel2Member2023-09-300000027996us-gaap:MoneyMarketFundsMemberus-gaap:CashAndCashEquivalentsMember2022-12-310000027996us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:CashAndCashEquivalentsMember2022-12-310000027996us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Member2022-12-310000027996us-gaap:ForeignGovernmentDebtMemberdlx:FundsHeldForCustomersMember2022-12-310000027996us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentDebtMemberdlx:FundsHeldForCustomersMember2022-12-310000027996us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentDebtMemberus-gaap:FairValueInputsLevel2Memberdlx:FundsHeldForCustomersMember2022-12-310000027996us-gaap:FairValueMeasurementsRecurringMember2022-12-310000027996us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310000027996us-gaap:CashAndCashEquivalentsMember2022-12-310000027996us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Member2022-12-310000027996us-gaap:FairValueInputsLevel1Memberdlx:FundsHeldForCustomersMember2022-12-310000027996us-gaap:FairValueInputsLevel1Member2022-12-310000027996dlx:OtherCurrentAndNoncurrentAssetsMember2022-12-310000027996us-gaap:FairValueInputsLevel3Memberdlx:OtherCurrentAndNoncurrentAssetsMember2022-12-310000027996dlx:CurrentPortionOfLongTermDebtAndLongTermDebtMember2022-12-310000027996dlx:CurrentPortionOfLongTermDebtAndLongTermDebtMemberus-gaap:FairValueInputsLevel2Member2022-12-310000027996us-gaap:CostOfSalesMember2023-07-012023-09-300000027996us-gaap:CostOfSalesMember2022-07-012022-09-300000027996us-gaap:CostOfSalesMember2023-01-012023-09-300000027996us-gaap:CostOfSalesMember2022-01-012022-09-300000027996us-gaap:OperatingExpenseMember2023-07-012023-09-300000027996us-gaap:OperatingExpenseMember2022-07-012022-09-300000027996us-gaap:OperatingExpenseMember2023-01-012023-09-300000027996us-gaap:OperatingExpenseMember2022-01-012022-09-300000027996dlx:ExternalconsultingfeesMember2023-07-012023-09-300000027996dlx:ExternalconsultingfeesMember2022-07-012022-09-300000027996dlx:ExternalconsultingfeesMember2023-01-012023-09-300000027996dlx:ExternalconsultingfeesMember2022-01-012022-09-300000027996us-gaap:EmployeeSeveranceMember2023-07-012023-09-300000027996us-gaap:EmployeeSeveranceMember2022-07-012022-09-300000027996us-gaap:EmployeeSeveranceMember2023-01-012023-09-300000027996us-gaap:EmployeeSeveranceMember2022-01-012022-09-300000027996dlx:InternallaborMember2023-07-012023-09-300000027996dlx:InternallaborMember2022-07-012022-09-300000027996dlx:InternallaborMember2023-01-012023-09-300000027996dlx:InternallaborMember2022-01-012022-09-300000027996us-gaap:OtherRestructuringMember2023-07-012023-09-300000027996us-gaap:OtherRestructuringMember2022-07-012022-09-300000027996us-gaap:OtherRestructuringMember2023-01-012023-09-300000027996us-gaap:OtherRestructuringMember2022-01-012022-09-300000027996us-gaap:EmployeeSeveranceMember2022-12-310000027996us-gaap:EmployeeSeveranceMember2023-09-3000000279962022-01-012022-12-310000027996dlx:TermLoanFacilityMember2023-09-300000027996dlx:TermLoanFacilityMember2022-12-310000027996us-gaap:UnsecuredDebtMember2023-09-300000027996us-gaap:UnsecuredDebtMember2022-12-310000027996us-gaap:RevolvingCreditFacilityMember2023-09-300000027996us-gaap:RevolvingCreditFacilityMember2022-12-3100000279962021-06-010000027996dlx:TermLoanFacilityMember2021-06-010000027996dlx:SwinglineSubFacilityMember2021-06-010000027996us-gaap:LetterOfCreditMember2021-06-010000027996srt:ScenarioForecastMemberdlx:TermLoanFacilityMember2024-04-012024-06-300000027996srt:ScenarioForecastMemberdlx:TermLoanFacilityMember2025-01-012025-03-310000027996srt:ScenarioForecastMemberdlx:TermLoanFacilityMember2024-07-012024-09-300000027996srt:ScenarioForecastMemberdlx:TermLoanFacilityMember2023-10-012023-12-310000027996srt:ScenarioForecastMemberdlx:TermLoanFacilityMember2024-10-012024-12-310000027996srt:ScenarioForecastMemberdlx:TermLoanFacilityMember2025-04-012025-06-300000027996srt:ScenarioForecastMemberdlx:TermLoanFacilityMember2024-01-012024-03-310000027996srt:ScenarioForecastMemberdlx:TermLoanFacilityMember2025-07-012025-09-300000027996srt:ScenarioForecastMemberdlx:TermLoanFacilityMember2026-01-012026-03-310000027996srt:ScenarioForecastMemberdlx:TermLoanFacilityMember2025-10-012025-12-310000027996srt:MinimumMember2021-06-012021-06-010000027996srt:MaximumMember2021-06-012021-06-010000027996srt:ScenarioForecastMember2023-07-012024-03-310000027996srt:ScenarioForecastMember2024-04-012026-03-310000027996srt:ScenarioForecastMember2023-10-012026-03-310000027996us-gaap:UnsecuredDebtMember2021-06-010000027996us-gaap:UnsecuredDebtMember2021-06-012021-06-010000027996us-gaap:UnsecuredDebtMember2022-09-300000027996us-gaap:UnsecuredDebtMember2023-01-012023-09-300000027996us-gaap:UnsecuredDebtMember2023-07-012023-09-3000000279962022-07-292022-07-2900000279962018-10-24dlx:segment0000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMember2023-07-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMember2022-07-012022-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMember2022-01-012022-09-300000027996dlx:DataSolutionsMemberus-gaap:OperatingSegmentsMember2023-07-012023-09-300000027996dlx:DataSolutionsMemberus-gaap:OperatingSegmentsMember2022-07-012022-09-300000027996dlx:DataSolutionsMemberus-gaap:OperatingSegmentsMember2023-01-012023-09-300000027996dlx:DataSolutionsMemberus-gaap:OperatingSegmentsMember2022-01-012022-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMember2023-07-012023-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMember2022-07-012022-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMember2022-01-012022-09-300000027996us-gaap:OperatingSegmentsMemberdlx:ChecksMember2023-07-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:ChecksMember2022-07-012022-09-300000027996us-gaap:OperatingSegmentsMemberdlx:ChecksMember2023-01-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:ChecksMember2022-01-012022-09-300000027996us-gaap:OperatingSegmentsMember2023-07-012023-09-300000027996us-gaap:OperatingSegmentsMember2022-07-012022-09-300000027996us-gaap:OperatingSegmentsMember2023-01-012023-09-300000027996us-gaap:OperatingSegmentsMember2022-01-012022-09-300000027996us-gaap:CorporateNonSegmentMember2023-07-012023-09-300000027996us-gaap:CorporateNonSegmentMember2022-07-012022-09-300000027996us-gaap:CorporateNonSegmentMember2023-01-012023-09-300000027996us-gaap:CorporateNonSegmentMember2022-01-012022-09-300000027996us-gaap:OperatingSegmentsMemberdlx:ChecksrevenueMemberdlx:ChecksMember2023-07-012023-09-300000027996dlx:ChecksrevenueMember2023-07-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:MerchantServicesAndOtherPaymentsSolutionsMemberdlx:PaymentsMember2023-07-012023-09-300000027996dlx:MerchantServicesAndOtherPaymentsSolutionsMember2023-07-012023-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMemberdlx:MarketingandpromotionalsolutionsMember2023-07-012023-09-300000027996dlx:MarketingandpromotionalsolutionsMember2023-07-012023-09-300000027996dlx:FormsandotherproductsMemberdlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMember2023-07-012023-09-300000027996dlx:FormsandotherproductsMember2023-07-012023-09-300000027996dlx:DataSolutionsMemberdlx:DatadrivenmarketingsolutionsMemberus-gaap:OperatingSegmentsMember2023-07-012023-09-300000027996dlx:DatadrivenmarketingsolutionsMember2023-07-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMemberdlx:TreasurymanagementsolutionsMember2023-07-012023-09-300000027996dlx:TreasurymanagementsolutionsMember2023-07-012023-09-300000027996dlx:DataSolutionsMemberdlx:WebandhostedsolutionsMemberus-gaap:OperatingSegmentsMember2023-07-012023-09-300000027996dlx:WebandhostedsolutionsMember2023-07-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:ChecksrevenueMemberdlx:ChecksMember2022-07-012022-09-300000027996dlx:ChecksrevenueMember2022-07-012022-09-300000027996us-gaap:OperatingSegmentsMemberdlx:MerchantServicesAndOtherPaymentsSolutionsMemberdlx:PaymentsMember2022-07-012022-09-300000027996dlx:MerchantServicesAndOtherPaymentsSolutionsMember2022-07-012022-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMemberdlx:MarketingandpromotionalsolutionsMember2022-07-012022-09-300000027996dlx:MarketingandpromotionalsolutionsMember2022-07-012022-09-300000027996dlx:FormsandotherproductsMemberdlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMember2022-07-012022-09-300000027996dlx:FormsandotherproductsMember2022-07-012022-09-300000027996dlx:DataSolutionsMemberdlx:DatadrivenmarketingsolutionsMemberus-gaap:OperatingSegmentsMember2022-07-012022-09-300000027996dlx:DatadrivenmarketingsolutionsMember2022-07-012022-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMemberdlx:TreasurymanagementsolutionsMember2022-07-012022-09-300000027996dlx:TreasurymanagementsolutionsMember2022-07-012022-09-300000027996dlx:DataSolutionsMemberdlx:WebandhostedsolutionsMemberus-gaap:OperatingSegmentsMember2022-07-012022-09-300000027996dlx:WebandhostedsolutionsMember2022-07-012022-09-300000027996us-gaap:OperatingSegmentsMemberdlx:ChecksrevenueMemberdlx:ChecksMember2023-01-012023-09-300000027996dlx:ChecksrevenueMember2023-01-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:MerchantServicesAndOtherPaymentsSolutionsMemberdlx:PaymentsMember2023-01-012023-09-300000027996dlx:MerchantServicesAndOtherPaymentsSolutionsMember2023-01-012023-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMemberdlx:MarketingandpromotionalsolutionsMember2023-01-012023-09-300000027996dlx:MarketingandpromotionalsolutionsMember2023-01-012023-09-300000027996dlx:FormsandotherproductsMemberdlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMember2023-01-012023-09-300000027996dlx:FormsandotherproductsMember2023-01-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMemberdlx:TreasurymanagementsolutionsMember2023-01-012023-09-300000027996dlx:TreasurymanagementsolutionsMember2023-01-012023-09-300000027996dlx:DataSolutionsMemberdlx:DatadrivenmarketingsolutionsMemberus-gaap:OperatingSegmentsMember2023-01-012023-09-300000027996dlx:DatadrivenmarketingsolutionsMember2023-01-012023-09-300000027996dlx:DataSolutionsMemberdlx:WebandhostedsolutionsMemberus-gaap:OperatingSegmentsMember2023-01-012023-09-300000027996dlx:WebandhostedsolutionsMember2023-01-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:ChecksrevenueMemberdlx:ChecksMember2022-01-012022-09-300000027996dlx:ChecksrevenueMember2022-01-012022-09-300000027996us-gaap:OperatingSegmentsMemberdlx:MerchantServicesAndOtherPaymentsSolutionsMemberdlx:PaymentsMember2022-01-012022-09-300000027996dlx:MerchantServicesAndOtherPaymentsSolutionsMember2022-01-012022-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMemberdlx:MarketingandpromotionalsolutionsMember2022-01-012022-09-300000027996dlx:MarketingandpromotionalsolutionsMember2022-01-012022-09-300000027996dlx:FormsandotherproductsMemberdlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMember2022-01-012022-09-300000027996dlx:FormsandotherproductsMember2022-01-012022-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMemberdlx:TreasurymanagementsolutionsMember2022-01-012022-09-300000027996dlx:TreasurymanagementsolutionsMember2022-01-012022-09-300000027996dlx:DataSolutionsMemberdlx:DatadrivenmarketingsolutionsMemberus-gaap:OperatingSegmentsMember2022-01-012022-09-300000027996dlx:DatadrivenmarketingsolutionsMember2022-01-012022-09-300000027996dlx:DataSolutionsMemberdlx:WebandhostedsolutionsMemberus-gaap:OperatingSegmentsMember2022-01-012022-09-300000027996dlx:WebandhostedsolutionsMember2022-01-012022-09-300000027996country:USus-gaap:OperatingSegmentsMemberdlx:PaymentsMember2023-07-012023-09-300000027996dlx:DataSolutionsMembercountry:USus-gaap:OperatingSegmentsMember2023-07-012023-09-300000027996dlx:PromotionalSolutionsMembercountry:USus-gaap:OperatingSegmentsMember2023-07-012023-09-300000027996country:USus-gaap:OperatingSegmentsMemberdlx:ChecksMember2023-07-012023-09-300000027996country:US2023-07-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMemberus-gaap:NonUsMember2023-07-012023-09-300000027996dlx:DataSolutionsMemberus-gaap:OperatingSegmentsMemberus-gaap:NonUsMember2023-07-012023-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMemberus-gaap:NonUsMember2023-07-012023-09-300000027996us-gaap:OperatingSegmentsMemberus-gaap:NonUsMemberdlx:ChecksMember2023-07-012023-09-300000027996us-gaap:NonUsMember2023-07-012023-09-300000027996country:USus-gaap:OperatingSegmentsMemberdlx:PaymentsMember2022-07-012022-09-300000027996dlx:DataSolutionsMembercountry:USus-gaap:OperatingSegmentsMember2022-07-012022-09-300000027996dlx:PromotionalSolutionsMembercountry:USus-gaap:OperatingSegmentsMember2022-07-012022-09-300000027996country:USus-gaap:OperatingSegmentsMemberdlx:ChecksMember2022-07-012022-09-300000027996country:US2022-07-012022-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMemberus-gaap:NonUsMember2022-07-012022-09-300000027996dlx:DataSolutionsMemberus-gaap:OperatingSegmentsMemberus-gaap:NonUsMember2022-07-012022-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMemberus-gaap:NonUsMember2022-07-012022-09-300000027996us-gaap:OperatingSegmentsMemberus-gaap:NonUsMemberdlx:ChecksMember2022-07-012022-09-300000027996us-gaap:NonUsMember2022-07-012022-09-300000027996country:USus-gaap:OperatingSegmentsMemberdlx:PaymentsMember2023-01-012023-09-300000027996dlx:DataSolutionsMembercountry:USus-gaap:OperatingSegmentsMember2023-01-012023-09-300000027996dlx:PromotionalSolutionsMembercountry:USus-gaap:OperatingSegmentsMember2023-01-012023-09-300000027996country:USus-gaap:OperatingSegmentsMemberdlx:ChecksMember2023-01-012023-09-300000027996country:US2023-01-012023-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMemberus-gaap:NonUsMember2023-01-012023-09-300000027996dlx:DataSolutionsMemberus-gaap:OperatingSegmentsMemberus-gaap:NonUsMember2023-01-012023-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMemberus-gaap:NonUsMember2023-01-012023-09-300000027996us-gaap:OperatingSegmentsMemberus-gaap:NonUsMemberdlx:ChecksMember2023-01-012023-09-300000027996us-gaap:NonUsMember2023-01-012023-09-300000027996country:USus-gaap:OperatingSegmentsMemberdlx:PaymentsMember2022-01-012022-09-300000027996dlx:DataSolutionsMembercountry:USus-gaap:OperatingSegmentsMember2022-01-012022-09-300000027996dlx:PromotionalSolutionsMembercountry:USus-gaap:OperatingSegmentsMember2022-01-012022-09-300000027996country:USus-gaap:OperatingSegmentsMemberdlx:ChecksMember2022-01-012022-09-300000027996country:US2022-01-012022-09-300000027996us-gaap:OperatingSegmentsMemberdlx:PaymentsMemberus-gaap:NonUsMember2022-01-012022-09-300000027996dlx:DataSolutionsMemberus-gaap:OperatingSegmentsMemberus-gaap:NonUsMember2022-01-012022-09-300000027996dlx:PromotionalSolutionsMemberus-gaap:OperatingSegmentsMemberus-gaap:NonUsMember2022-01-012022-09-300000027996us-gaap:OperatingSegmentsMemberus-gaap:NonUsMemberdlx:ChecksMember2022-01-012022-09-300000027996us-gaap:NonUsMember2022-01-012022-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  __________ to ___________

Commission file number: 1-7945
deluxelogo2020ba01.jpg

DELUXE CORPORATION
(Exact name of registrant as specified in its charter) 
MN41-0216800
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
801 S. Marquette Ave.MinneapolisMN55402-2807
(Address of principal executive offices)
(Zip Code)

(651) 483-7111
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $1.00 per shareDLXNYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes    ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). ☒ Yes   ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☒Accelerated Filer☐
Non-accelerated Filer ☐Smaller Reporting Company ☐
Emerging Growth Company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes   ☒ No

The number of shares outstanding of registrant’s common stock as of October 25, 2023 was 43,692,545.

1

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

DELUXE CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share par value)September 30,
2023		December 31,
2022
ASSETS  
Current assets:  
Cash and cash equivalents, including securities carried at fair value of $5,000 as of December 31, 2022
$42,189 $40,435 
Trade accounts receivable, net of allowance for credit losses
203,971 206,617 
Inventories and supplies49,259 52,267 
Funds held for customers, including securities carried at fair value of $8,068 and $8,126, respectively
151,961 302,291 
Prepaid expenses32,297 36,642 
Revenue in excess of billings
36,693 38,761 
Other current assets20,906 27,024 
Total current assets537,276 704,037 
Deferred income taxes1,473 1,956 
Long-term investments
62,076 47,783 
Property, plant and equipment, net of accumulated depreciation of $336,158 and $379,988, respectively
121,066 124,894 
Operating lease assets58,839 47,132 
Intangibles, net of accumulated amortization of $856,782 and $823,589, respectively
410,679 458,979 
Goodwill1,430,564 1,431,385 
Other non-current assets262,696 260,354 
Total assets$2,884,669 $3,076,520 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$163,080 $157,055 
Funds held for customers151,900 305,138 
Accrued liabilities187,019 218,404 
Current portion of long-term debt86,106 71,748 
Total current liabilities588,105 752,345 
Long-term debt1,546,329 1,572,528 
Operating lease liabilities59,280 48,925 
Deferred income taxes27,894 45,510 
Other non-current liabilities63,675 52,988 
Commitments and contingencies (Note 13)
Shareholders' equity:  
Common shares $1 par value (authorized: 500,000 shares; outstanding: September 30, 2023 – 43,691; December 31, 2022 – 43,204)
43,691 43,204 
Additional paid-in capital94,173 79,234 
Retained earnings489,677 518,635 
Accumulated other comprehensive loss(28,650)(37,264)
Non-controlling interest495 415 
Total shareholders’ equity599,386 604,224 
Total liabilities and shareholders’ equity$2,884,669 $3,076,520 


See Condensed Notes to Unaudited Consolidated Financial Statements

2


DELUXE CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(unaudited)
Quarter Ended
September 30,		Nine Months Ended
September 30,
(in thousands, except per share amounts)2023202220232022
Product revenue$304,840 $317,250 $938,872 $956,662 
Service revenue233,004 237,788 716,024 717,344 
Total revenue537,844 555,038 1,654,896 1,674,006 
Cost of products(118,050)(113,608)(361,938)(345,488)
Cost of services (137,077)(142,617)(413,799)(424,044)
Total cost of revenue(255,127)(256,225)(775,737)(769,532)
Gross profit282,717 298,813 879,159 904,474 
Selling, general and administrative expense(233,891)(243,816)(726,880)(753,140)
Restructuring and integration expense(22,935)(15,188)(60,067)(46,614)
(Loss) gain on sale of businesses and long-lived assets(4,324)1,804 17,618 19,331 
Operating income21,567 41,613 109,830 124,051 
Interest expense(32,034)(23,799)(93,982)(65,471)
Other income, net1,316 3,075 4,562 7,492 
(Loss) income before income taxes(9,151)20,889 20,410 66,072 
Income tax benefit (provision)1,194 (6,129)(9,186)(19,536)
Net (loss) income(7,957)14,760 11,224 46,536 
Net income attributable to non-controlling interest(26)(35)(80)(106)
Net (loss) income attributable to Deluxe$(7,983)$14,725 $11,144 $46,430 
Total comprehensive (loss) income$(5,716)$12,066 $19,838 $50,380 
Comprehensive (loss) income attributable to Deluxe(5,742)12,031 19,758 50,274 
Basic (loss) earnings per share(0.18)0.34 0.26 1.08 
Diluted (loss) earnings per share(0.18)0.34 0.25 1.06 


See Condensed Notes to Unaudited Consolidated Financial Statements


3

DELUXE CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited)

(in thousands)Common sharesCommon shares
par value		Additional paid-in capitalRetained earningsAccumulated other comprehensive lossNon-controlling interestTotal
Balance, June 30, 202343,613 $43,613 $89,380 $511,058 $(30,891)$469 $613,629 
Net loss— — — (7,983)— 26 (7,957)
Cash dividends ($0.30 per share)
— — — (13,398)— — (13,398)
Common shares issued88 88 575 — — — 663 
Common shares retired(10)(10)(190)— — — (200)
Employee share-based compensation
— — 4,408 — — — 4,408 
Other comprehensive income
— — — — 2,241 — 2,241 
Balance, September 30, 2023
43,691 $43,691 $94,173 $489,677 $(28,650)$495 $599,386 


(in thousands)Common sharesCommon shares
par value		Additional paid-in capitalRetained earningsAccumulated other comprehensive lossNon-controlling interestTotal
Balance, June 30, 202243,080 $43,080 $67,417 $510,897 $(24,954)$351 $596,791 
Net income— — — 14,725 — 35 14,760 
Cash dividends ($0.30 per share)
— — — (13,280)— — (13,280)
Common shares issued66 66 713 — — — 779 
Common shares retired(10)(10)(213)— — — (223)
Employee share-based compensation
— — 5,939 — — — 5,939 
Other comprehensive loss
— — — — (2,694)— (2,694)
Balance, September 30, 2022
43,136 $43,136 $73,856 $512,342 $(27,648)$386 $602,072 


See Condensed Notes to Unaudited Consolidated Financial Statements



4

DELUXE CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (continued)
(unaudited)

(in thousands)Common sharesCommon shares
par value		Additional paid-in capitalRetained earningsAccumulated other comprehensive lossNon-controlling interestTotal
Balance, December 31, 2022
43,204 $43,204 $79,234 $518,635 $(37,264)$415 $604,224 
Net income— — — 11,144 — 80 11,224 
Cash dividends ($0.90 per share)
— — — (40,102)— — (40,102)
Common shares issued626 626 1,716 — — — 2,342 
Common shares retired(139)(139)(2,444)— — — (2,583)
Employee share-based compensation
— — 15,667 — — — 15,667 
Other comprehensive income
— — — — 8,614 — 8,614 
Balance, September 30, 2023
43,691 $43,691 $94,173 $489,677 $(28,650)$495 $599,386 

(in thousands)Common sharesCommon shares
par value		Additional paid-in capitalRetained earningsAccumulated other comprehensive lossNon-controlling interestTotal
Balance, December 31, 2021
42,679 $42,679 $57,368 $505,763 $(31,492)$280 $574,598 
Net income— — — 46,430 — 106 46,536 
Cash dividends ($0.90 per share)
— — — (39,851)— — (39,851)
Common shares issued646 646 2,470 — — — 3,116 
Common shares retired(189)(189)(5,408)— — — (5,597)
Employee share-based compensation
— — 19,426 — — — 19,426 
Other comprehensive income
— — — — 3,844 — 3,844 
Balance, September 30, 2022
43,136 $43,136 $73,856 $512,342 $(27,648)$386 $602,072 


See Condensed Notes to Unaudited Consolidated Financial Statements

5

DELUXE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Nine Months Ended
September 30,
(in thousands)20232022
Cash flows from operating activities:  
Net income$11,224 $46,536 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation14,968 18,595 
Amortization of intangibles110,017 110,353 
Operating lease expense14,387 14,397 
Amortization of prepaid product discounts25,291 26,258 
Deferred income taxes(20,406)(21,791)
Employee share-based compensation expense15,889 18,766 
Gain on sale of businesses and long-lived assets(17,618)(19,331)
Other non-cash items, net36,593 22,940 
Changes in assets and liabilities:  
Trade accounts receivable(3,846)(878)
Inventories and supplies(625)(14,540)
Other current assets10,306 (11,826)
Payments for cloud computing arrangement implementation costs(6,944)(16,608)
Other non-current assets(10,566)(11,808)
Accounts payable10,429 (1,090)
Prepaid product discount payments(21,798)(23,920)
Other accrued and non-current liabilities(52,395)(12,635)
Net cash provided by operating activities114,906 123,418 
Cash flows from investing activities:  
Purchases of capital assets(80,809)(73,454)
Proceeds from sale of businesses and long-lived assets39,872 25,248 
Other(9,798)(1,144)
Net cash used by investing activities(50,735)(49,350)
Cash flows from financing activities:  
Proceeds from issuing long-term debt and swingline loans531,000 511,000 
Payments on long-term debt and swingline loans(545,532)(524,175)
Net change in customer funds obligations(150,936)(88,079)
Employee taxes paid for shares withheld(2,583)(5,597)
Cash dividends paid to shareholders(40,140)(39,613)
Other(5,399)(3,097)
Net cash used by financing activities(213,590)(149,561)
Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents
993 (14,107)
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents(148,426)(89,600)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year337,415 285,491 
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period (Note 3)$188,989 $195,891 


See Condensed Notes to Unaudited Consolidated Financial Statements

6
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

NOTE 1: CONSOLIDATED FINANCIAL STATEMENTS

The consolidated balance sheet as of September 30, 2023, the consolidated statements of comprehensive (loss) income for the quarters and nine months ended September 30, 2023 and 2022, the consolidated statements of shareholders’ equity for the quarters and nine months ended September 30, 2023 and 2022 and the consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022 are unaudited. The consolidated balance sheet as of December 31, 2022 was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles (GAAP). In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial statements are included. Adjustments consist only of normal recurring items, except for any items discussed in the notes below. Interim results are not necessarily indicative of results for a full year or future results. The consolidated financial statements and notes are presented in accordance with instructions for Form 10-Q and do not contain certain information included in our annual consolidated financial statements and notes. The consolidated financial statements and notes appearing in this report should be read in conjunction with the consolidated audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Form 10-K").

The preparation of our consolidated financial statements requires us to make certain estimates and assumptions affecting the amounts reported in the consolidated financial statements and related notes. We base our estimates on historical experience and on various other factors and assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of our assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Actual results may differ significantly from our estimates and assumptions.

Comparability – The consolidated statement of cash flows for the nine months ended September 30, 2022 has been modified to conform to the current year presentation. We included proceeds from issuing shares within other financing activities. Previously, this amount was shown separately.


NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

In March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-02, Troubled Debt Restructurings and Vintage Disclosures. This standard modifies the accounting for troubled debt restructurings by creditors and modifies certain disclosure requirements. We adopted this standard on January 1, 2023 and elected to apply it prospectively to modifications occurring on or after January 1, 2023. Adoption of this standard did not impact our financial position as of September 30, 2023 or our results of operations for the nine months ended September 30, 2023.

In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No 2021-01, Reference Rate Reform (Topic 848): Scope, which clarified the scope and application of the original guidance. Effective March 20, 2023, we modified our existing credit facility and our September 2022 interest rate swap agreement (Note 7) to utilize the Secured Overnight Financing Rate (SOFR) as the reference rate in the agreements. In accounting for these modifications, we adopted the reference rate reform guidance on a prospective basis as allowed under the provisions of ASU No. 2022-06, Deferral of the Sunset Date of Topic 848. Adoption of these standards did not have a material impact on our consolidated financial statements.


NOTE 3: SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION

Trade accounts receivable – Net trade accounts receivable was comprised of the following:
(in thousands)September 30,
2023		December 31,
2022
Trade accounts receivable – gross$210,570 $210,799 
Allowance for credit losses(6,599)(4,182)
Trade accounts receivable – net(1)
$203,971 $206,617 

(1) Includes unbilled receivables of $57,134 as of September 30, 2023 and $43,902 as of December 31, 2022.

7
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


Changes in the allowance for credit losses for the nine months ended September 30, 2023 and 2022 were as follows:
Nine Months Ended
September 30,
(in thousands)20232022
Balance, beginning of year$4,182 $4,130 
Bad debt expense5,191 2,410 
Write-offs and other(2,774)(3,006)
Balance, end of period$6,599 $3,534 

Inventories and supplies – Inventories and supplies were comprised of the following:
(in thousands)September 30,
2023		December 31,
2022
Finished and semi-finished goods$40,453 $40,715 
Raw materials and supplies18,508 17,952 
Reserve for excess and obsolete items(9,702)(6,400)
Inventories and supplies, net of reserve$49,259 $52,267 

Changes in the reserve for excess and obsolete items were as follows for the nine months ended September 30, 2023 and 2022:

Nine Months Ended
September 30,
(in thousands)20232022
Balance, beginning of year$6,400 $5,132 
Amounts charged to expense3,859 2,552 
Write-offs and other(557)(2,161)
Balance, end of period$9,702 $5,523 

Available-for-sale debt securities – Available-for-sale debt securities were comprised of the following:
 September 30, 2023
(in thousands)CostGross unrealized gainsGross unrealized lossesFair value
Funds held for customers:(1)
Canadian and provincial government securities$9,380 $— $(1,312)$8,068 
Available-for-sale debt securities$9,380 $— $(1,312)$8,068 

(1) Funds held for customers, as reported on the consolidated balance sheet as of September 30, 2023, also included cash of $143,893.


8
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

 December 31, 2022
(in thousands)CostGross unrealized gainsGross unrealized lossesFair value
Cash equivalents:
Domestic money market fund$5,000 $— $— $5,000 
Funds held for customers:(1)
Canadian and provincial government securities9,190 — (1,064)8,126 
Available-for-sale debt securities$14,190 $— $(1,064)$13,126 
 
(1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2022, also included cash of $294,165.

Expected maturities of available-for-sale debt securities as of September 30, 2023 were as follows:
(in thousands)Fair value
Due in one year or less$3,364 
Due in two to five years1,670 
Due in six to ten years3,034 
Available-for-sale debt securities$8,068 

Further information regarding the fair value of available-for-sale debt securities can be found in Note 8.

Revenue in excess of billings – Revenue in excess of billings was comprised of the following:
(in thousands)September 30,
2023		December 31,
2022
Conditional right to receive consideration$26,482 $26,520 
Unconditional right to receive consideration(1)
10,211 12,241 
Revenue in excess of billings$36,693 $38,761 

(1) Represents revenues that are earned but not currently billable under the related contract terms.

Intangibles – Intangibles were comprised of the following:
 September 30, 2023December 31, 2022
(in thousands)Gross carrying amountAccumulated amortizationNet carrying amountGross carrying amountAccumulated amortizationNet carrying amount
Internal-use software$539,892 $(395,304)$144,588 $529,306 $(395,514)$133,792 
Customer lists/relationships479,240 (339,481)139,759 497,882 (312,986)184,896 
Technology-based intangibles97,633 (51,591)46,042 99,613 (47,478)52,135 
Partner relationships74,429 (12,292)62,137 74,682 (9,094)65,588 
Trade names39,367 (23,267)16,100 44,185 (26,510)17,675 
Software to be sold36,900 (34,847)2,053 36,900 (32,007)4,893 
Intangibles$1,267,461 $(856,782)$410,679 $1,282,568 $(823,589)$458,979 

9
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


Amortization of intangibles was $34,941 for the quarter ended September 30, 2023, $35,855 for the quarter ended September 30, 2022, $110,017 for the nine months ended September 30, 2023 and $110,353 for the nine months ended September 30, 2022. Based on the intangibles in service as of September 30, 2023, estimated future amortization expense is as follows:
(in thousands)Estimated
amortization
expense
Remainder of 2023$40,786 
2024101,903 
202573,407 
202646,238 
202734,394 

In the normal course of business, we acquire and develop internal-use software. We also, at times, purchase customer list and partner relationship assets. The following intangibles were capitalized during the nine months ended September 30, 2023:
(in thousands)AmountWeighted-average amortization period
(in years)
Internal-use software$66,734 3
Partner relationships773 1
Acquired intangibles$67,507 3

Goodwill – Changes in goodwill by reportable segment and in total were as follows for the nine months ended September 30, 2023:
(in thousands)PaymentsData SolutionsPromotional SolutionsChecksTotal
Balance, December 31, 2022:
    
Goodwill, gross$896,681 $432,984 $252,775 $434,812 $2,017,252 
Accumulated impairment charges— (392,168)(193,699)— (585,867)
Goodwill, net of accumulated impairment charges
896,681 40,816 59,076 434,812 1,431,385 
Currency translation adjustment and other(828)— 7 — (821)
Balance, September 30, 2023
$895,853 $40,816 $59,083 $434,812 $1,430,564 
Balance, September 30, 2023:
    
Goodwill, gross$895,853 $432,984 $252,782 $434,812 $2,016,431 
Accumulated impairment charges— (392,168)(193,699)— (585,867)
Goodwill, net of accumulated impairment charges$895,853 $40,816 $59,083 $434,812 $1,430,564 

10
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

Other non-current assets – Other non-current assets were comprised of the following:
(in thousands)September 30,
2023		December 31,
2022
Postretirement benefit plan asset$84,508 $79,343 
Cloud computing arrangement implementation costs63,112 71,547 
Prepaid product discounts41,365 44,824 
Deferred contract acquisition costs(1)
22,490 21,300 
Loans and notes receivable from distributors, net of allowance for credit losses(2)
12,442 13,259 
Other38,779 30,081 
Other non-current assets$262,696 $260,354 

(1) Amortization of deferred contract acquisition costs was $8,088 for the nine months ended September 30, 2023 and $5,872 for the nine months ended September 30, 2022.

(2) Amount includes the non-current portion of loans and notes receivable. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $979 as of September 30, 2023 and $961 as of December 31, 2022.

Changes in the allowance for credit losses related to loans and notes receivable from distributors were as follows for the nine months ended September 30, 2023 and 2022:
Nine Months Ended
September 30,
(in thousands)20232022
Balance, beginning of year$1,024 $2,830 
Bad debt (benefit) expense(46)1,221 
Other— (402)
Balance, end of period$978 $3,649 

Past due receivables and those on non-accrual status were not material as of September 30, 2023 or December 31, 2022.

We categorize loans and notes receivable into risk categories based on information about the ability of borrowers to service their debt, including current financial information, historical payment experience, current economic trends and other factors. The highest quality receivables are assigned a 1-2 internal grade. Those that have a potential weakness requiring management's attention are assigned a 3-4 internal grade.

The following table presents loans and notes receivable from distributors, including the current portion, by credit quality indicator and by year of origination, as of September 30, 2023. There were no write-offs or recoveries recorded during the nine months ended September 30, 2023.

Loans and notes receivable from distributors amortized cost basis by origination year
(in thousands)202020192018PriorTotal
Risk rating:
1-2 internal grade$1,040 $385 $3,761 $9,213 $14,399 
3-4 internal grade— — — — — 
Loans and notes receivable$1,040 $385 $3,761 $9,213 $14,399 

11
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


Changes in prepaid product discounts during the nine months ended September 30, 2023 and 2022 were as follows:
 Nine Months Ended
September 30,
(in thousands)20232022
Balance, beginning of year$44,824 $56,527 
Additions(1)
21,809 18,721 
Amortization(25,291)(26,258)
Other23 (399)
Balance, end of period$41,365 $48,591 
 (1) Prepaid product discounts are generally accrued upon contract execution. Payments for prepaid product discounts were $21,798 for the nine months ended September 30, 2023 and $23,920 for the nine months ended September 30, 2022.

Accrued liabilities – Accrued liabilities were comprised of the following:
(in thousands)September 30,
2023		December 31,
2022
Employee bonuses, including sales incentives$39,991 $57,398 
Deferred revenue(1)
25,905 47,012 
Interest15,557 7,314 
Restructuring14,606 8,528 
Customer rebates14,453 12,153 
Operating lease liabilities13,882 12,780 
Wages and payroll liabilities, including vacation7,953 20,264 
Prepaid product discounts4,191 4,179 
Other50,481 48,776 
Accrued liabilities$187,019 $218,404 
 
(1) Revenue recognized for amounts included in deferred revenue at the beginning of the period was $37,972 for the nine months ended September 30, 2023 and $41,222 for the nine months ended September 30, 2022.

Supplemental cash flow information – The reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets was as follows:
(in thousands)September 30,
2023		September 30,
2022
Cash and cash equivalents$42,189 $45,535 
Restricted cash and restricted cash equivalents included in funds held for customers143,893 147,614 
Non-current restricted cash included in other non-current assets2,907 2,742 
Total cash, cash equivalents, restricted cash and restricted cash equivalents$188,989 $195,891 



12
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

NOTE 4: (LOSS) EARNINGS PER SHARE

The following table reflects the calculation of basic and diluted (loss) earnings per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted (loss) earnings per share because their effect would have been antidilutive. 
 Quarter Ended
September 30,		Nine Months Ended
September 30,
(in thousands, except per share amounts)2023202220232022
(Loss) earnings per share – basic:  
Net (loss) income$(7,957)$14,760 $11,224 $46,536 
Net income attributable to non-controlling interest(26)(35)(80)(106)
Net (loss) income attributable to Deluxe(7,983)14,725 11,144 46,430 
Income allocated to participating securities(9)(10)(29)(33)
(Loss) income attributable to Deluxe available to common shareholders$(7,992)$14,715 $11,115 $46,397 
Weighted-average shares outstanding43,663 43,116 43,498 42,974 
(Loss) earnings per share – basic$(0.18)$0.34 $0.26 $1.08 
(Loss) earnings per share – diluted:
Net (loss) income$(7,957)$14,760 $11,224 $46,536 
Net income attributable to non-controlling interest(26)(35)(80)(106)
Net (loss) income attributable to Deluxe(7,983)14,725 11,144 46,430 
Income allocated to participating securities(9)— (29)(22)
Re-measurement of share-based awards classified as liabilities
— (162)— (507)
(Loss) income attributable to Deluxe available to common shareholders$(7,992)$14,563 $11,115 $45,901 
Weighted-average shares outstanding43,663 43,116 43,498 42,974 
Dilutive impact of potential common shares— 234 273 310 
Weighted-average shares and potential common shares outstanding
43,663 43,350 43,771 43,284 
(Loss) earnings per share – diluted$(0.18)$0.34 $0.25 $1.06 
Antidilutive options excluded from calculation1,450 1,815 1,450 1,815 



13
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

NOTE 5: OTHER COMPREHENSIVE INCOME (LOSS)

Reclassification adjustments – Information regarding amounts reclassified from accumulated other comprehensive loss to net (loss) income was as follows:
Accumulated other comprehensive loss componentsAmounts reclassified from accumulated other comprehensive lossAffected line item in consolidated statements of comprehensive (loss) income
Quarter Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2023202220232022
Amortization of postretirement benefit plan items:
Prior service credit$355 $355 $1,066 $1,066 Other income
Net actuarial loss(568)(225)(1,705)(674)Other income
Total amortization(213)130 (639)392 Other income
Tax benefit (expense)17 (79)49 (237)Income tax benefit (provision)
Amortization of postretirement benefit plan items, net of tax(196)51 (590)155 Net (loss) income
Realized loss on debt securities— — — (8)Revenue
Tax benefit— — — 2 Income tax benefit (provision)
Realized loss on debt securities, net of tax— — — (6)Net (loss) income
Realized gain (loss) on cash flow hedges
984 53 2,191 (412)Interest expense
Tax (expense) benefit
(264)(15)(588)109 Income tax benefit (provision)
Realized gain (loss) on cash flow hedges, net of tax
720 38 1,603 (303)Net (loss) income
Currency translation adjustment(1)
— — (863)(5,550)(Loss) gain on sale of businesses and long-lived assets
Total reclassifications, net of tax$524 $89 $150 $(5,704)

(1) Relates to the sale of our North American web hosting business during the quarter ended June 30, 2023 and the sale of our Australian web hosting business during the quarter ended June 30, 2022. Further information can be found in Note 6.

Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss for the nine months ended September 30, 2023 and 2022 were as follows:
(in thousands)Postretirement benefit plans
Net unrealized loss on debt securities(1)
Net unrealized gain on cash flow hedges(2)
Currency translation adjustmentAccumulated other comprehensive loss
Balance, December 31, 2022
$(26,872)$(909)$2,593 $(12,076)$(37,264)
Other comprehensive (loss) income before reclassifications
— (183)8,487 460 8,764 
Amounts reclassified from accumulated other comprehensive loss
590 — (1,603)863 (150)
Net current-period other comprehensive income (loss)
590 (183)6,884 1,323 8,614 
Balance, September 30, 2023
$(26,282)$(1,092)$9,477 $(10,753)$(28,650)

(1) Other comprehensive loss before reclassifications is net of an income tax benefit of $63.

(2) Other comprehensive income before reclassifications is net of income tax expense of $3,114.


14
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

(in thousands)Postretirement benefit plans
Net unrealized loss on debt securities(1)
Net unrealized gain on cash flow hedges(2)
Currency translation adjustmentAccumulated other comprehensive loss
Balance, December 31, 2021
$(15,431)$(344)$(2,261)$(13,456)$(31,492)
Other comprehensive (loss) income before reclassifications
— (566)4,712 (6,006)(1,860)
Amounts reclassified from accumulated other comprehensive loss
(155)6 303 5,550 5,704 
Net current-period other comprehensive (loss) income
(155)(560)5,015 (456)3,844 
Balance, September 30, 2022
$(15,586)$(904)$2,754 $(13,912)$(27,648)

(1) Other comprehensive loss before reclassifications is net of an income tax benefit of $197.

(2) Other comprehensive income before reclassifications is net of income tax expense of $1,701.


NOTE 6: DIVESTITURES

During the past 2 years, we have exited certain of our businesses. We believe that these divestitures allow us to focus our resources on the key growth areas of payments and data, while allowing us to optimize our operations.

2023 divestiture / business exit – In June 2023, we completed the sale of our North American web hosting and logo design businesses for net cash proceeds of $31,230. We received $27,880 of these proceeds during the quarter ended June 30, 2023, with the remainder to be paid by the end of 2023. These businesses generated annual revenue of approximately $66,000 during 2022, primarily in our Data Solutions segment. During the quarter ended September 30, 2023, we recorded an out-of-period correcting adjustment that decreased the gain recognized on this sale by $4,457. This adjustment was not material to the current or any historical interim or annual period. During the nine months ended September 30, 2023, we recognized a pretax gain of $17,486 on this sale. The assets and liabilities sold were not material to our consolidated balance sheet.

In September 2023, we decided to exit our U.S.-based payroll business, and we executed a customer conversion agreement with another service provider. During the quarter ended September 30, 2023, we received advance consideration of $10,000 under this agreement, which is included in proceeds from sale of businesses and long-lived assets on the consolidated statement of cash flows. A corresponding liability is reflected in accrued liabilities on the consolidated balance sheet as of September 30, 2023. The final amount of consideration under the agreement will be determined in mid-2024, and any income recognized will be based on actual customer conversion and retention activity. This business generated revenue of approximately $7,000 in our Payments segment during 2022.

2022 divestitures – In May 2022, we completed the sale of our Australian web hosting business for net cash proceeds of $17,620. This business generated annual revenue in our Data Solutions segment of $23,766 during 2021. During the quarter ended June 30, 2022, we recognized a pretax gain of $15,166 on this sale. The assets and liabilities sold were not material to our consolidated balance sheet.

In April 2022, we sold the assets of our Promotional Solutions strategic sourcing business, and in August 2022, we sold the assets of our Promotional Solutions retail packaging business. These businesses generated annual revenue of approximately $29,000 during 2021. Neither the gain on these sales nor the assets and liabilities sold were material to our consolidated financial statements.

Facility sale – In May 2022, we sold our former facility located in Lancaster, California for net cash proceeds of $6,929, and we recognized a pretax gain on the sale of $2,361 during the quarter ended June 30, 2022. The sale was a result of our continued real estate rationalization process.

NOTE 7: DERIVATIVE FINANCIAL INSTRUMENTS

As part of our interest rate risk management strategy, we have entered into interest rate swaps, which we designated as cash flow hedges, to mitigate variability in interest payments on a portion of our variable-rate debt (Note 12). In March 2023, we modified our September 2022 interest rate swap agreement to utilize SOFR as the reference rate in the agreement. Information

15
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

regarding our accounting for this modification can be found in Note 2. In June 2023, we entered into a 3-year interest rate swap agreement with a variable notional amount that resets quarterly. Our derivative instruments were comprised of the following:

September 30,
2023		December 31,
2022
(in thousands)Notional amountInterest rateMaturityBalance sheet locationFair value
asset / (liability)		Fair value
asset / (liability)
June 2023 amortizing interest rate swap:
$287,901 4.249 %June 2026Other non-current assets$3,201 $— 
March 2023
interest rate swap:
200,000 4.003 %March 2026Other non-current assets3,964 — 
September 2022 interest rate swap:
300,000 3.990 %September 2025Other non-current assets5,837 2,409 
July 2019 interest rate swap:
200,000 1.798 %March 2023Other current assets— 1,184 

Changes in the fair values of the interest rate swaps are recorded in accumulated other comprehensive loss on the consolidated balance sheets and are subsequently reclassified to interest expense as interest payments are made on the variable-rate debt. The fair values of the derivatives are calculated based on the applicable reference rate curve on the date of measurement. The cash flow hedges were fully effective as of September 30, 2023 and December 31, 2022, and their impact on consolidated net (loss) income and the consolidated statements of cash flows was not material. We also expect that the amount that will be reclassified to interest expense during the next 12 months will not be material.


NOTE 8: FAIR VALUE MEASUREMENTS

2023 annual goodwill impairment analysis – Our impairment of goodwill policy can be found under the caption "Note 1: Significant Accounting Policies" in the Notes to Consolidated Financial Statements appearing in the 2022 Form 10-K. This policy explains our methodology for assessing the impairment of goodwill.

In completing the 2023 annual impairment analysis as of July 31, 2023, we elected to perform qualitative analyses for all of our reporting units. These qualitative analyses evaluated factors, including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the most recent quantitative analyses completed in prior periods. In completing these assessments, we noted no changes in events or circumstances that indicated that it was more likely than not that the fair value of any reporting unit was less than its carrying amount. As such, no goodwill impairment charges were recorded as a result of our 2023 annual impairment analysis.

Recurring fair value measurements – Funds held for customers and cash and cash equivalents included available-for-sale debt securities (Note 3). These securities included a mutual fund investment that invests in Canadian and provincial government securities and as of December 31, 2022, included a domestic money market fund. The mutual fund investment is not traded in an active market and its fair value is determined by obtaining quoted prices in active markets for the underlying securities held by the fund. The cost of the money market fund held as of December 31, 2022, which was traded in an active market, approximated its fair value because of the short-term nature of the investment. Unrealized gains and losses, net of tax, are included in accumulated other comprehensive loss on the consolidated balance sheets. The cost of securities sold is determined using the average cost method. Realized gains and losses are included in revenue on the consolidated statements of comprehensive (loss) income and were not material for the quarters or nine months ended September 30, 2023 and 2022.


16
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

Information regarding the fair values of our financial instruments was as follows:
 Fair value measurements using
September 30, 2023Quoted prices in active markets for identical assets
(Level 1)		Significant other observable inputs
(Level 2)		Significant unobservable inputs
(Level 3)
(in thousands)Balance sheet locationCarrying valueFair value
Measured at fair value through comprehensive (loss) income:
Available-for-sale debt securities
Funds held for customers$8,068 $8,068 $— $8,068 $— 
Derivative assets (Note 7)Other non-current assets13,002 13,002 — 13,002 — 
Amortized cost:
CashCash and cash equivalents42,189 42,189 42,189 — — 
CashFunds held for customers143,893 143,893 143,893 — — 
CashOther non-current assets2,907 2,907 2,907 — — 
Loans and notes receivable from distributors
Other current assets and other non-current assets13,421 12,279 — — 12,279 
Long-term debtCurrent portion of long-term debt and long-term debt1,632,435 1,561,272 — 1,561,272 — 


17
DELUXE CORPORATION
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

 Fair value measurements using
December 31, 2022Quoted prices in active markets for identical assets
(Level 1)		Significant other observable inputs
(Level 2)		Significant unobservable inputs
(Level 3)
(in thousands)Balance sheet locationCarrying valueFair value
Measured at fair value through comprehensive income:
Available-for-sale debt securities
Cash and cash equivalents$5,000 $5,000 $5,000 $— $— 
Available-for-sale debt securities
Funds held for customers8,126 8,126 — 8,126 — 
Derivative assets (Note 7)Other current assets and other non-current assets3,593 3,593 — 3,593 — 
Amortized cost:
CashCash and cash equivalents35,435 35,435 35,435 — — 
Cash
Funds held for customers294,165 294,165 294,165 — — 
Cash
Other non-current assets2,815 2,815 2,815 — — 
Loans and notes receivable from distributors
Other current assets and other non-current assets14,220 13,315 — — 13,315 
Long-term debt
Current portion of long-term debt and long-term debt1,644,276 1,574,417