Deluxe Reports Q1 Sales Increase of 6.5%

Deluxe Corp. announced its financial results for the first quarter ended March 31, 2015. Both revenue and adjusted diluted EPS were at the high end of the range in the prior outlook driven by strong operating results in all segments despite weaker than expected foreign exchange rates and an unfavorable effective tax rate.
 
“We delivered another strong quarter with both revenue and adjusted EPS at the top end of our outlook,” said Lee Schram, CEO of Deluxe. “With this strong start to the year, we continue to expect to deliver our sixth consecutive year of profitable revenue growth and our seventh consecutive year of cash flow from operations growth. 2015 is a special year for Deluxe as it represents our company’s 100th anniversary. Over the last 100 years, we have established Deluxe as a trusted partner to financial institutions and small businesses, offering products and services to help them grow and thrive. Looking ahead, we will continue our hard work to transform Deluxe to be more of a growth services provider for our clients.”
 
Revenue increased 6.5% year-over-year due to the Financial Services segment, which grew 20.5% to $111.5 million and included the results of Wausau Financial Systems, which was acquired in October 2014. Additionally, the Small Business Services segment grew 3.9% to $277 million. Revenue from marketing solutions and other services increased 31.5% year-over-year and accounted for 27.8% of consolidated revenue in the quarter.
 
Gross margin was 64.8% of revenue, up from 64.4% in the first quarter of 2014. The increase was primarily driven by a favorable products and services revenue mix and improvements in manufacturing productivity, partially offset by higher delivery and material costs.
 
Operating income increased 5.6% year-over-year and includes restructuring and transaction-related costs in both periods. Adjusted operating income, which excludes these items, increased 1.7% year-over-year from higher revenue and continued cost reductions.