Deluxe Corp. Reports Second Quarter 2014 Financial Results
Deluxe Corporation, St. Paul, Minn., a leader in providing small businesses and financial institutions with products and services to drive customer revenue, announced its financial results for the second quarter that ended June 30, 2014. The company's revenue for the period was $405.4 million, a 6.3 percent increase over the same period last year. Net income was up 3.9 percent to $50.1 million.
"Deluxe delivered another very strong quarter beating our revenue and earnings outlook," said Lee Schram, CEO of Deluxe. "Our focus on Marketing Solutions and Services continues to deliver strong results and revenue increased 20 percent over last year's level, now accounting for 23 percent of total revenue in the quarter. In April, we announced a 20 percent dividend increase and have repurchased $52 million of stock year-to-date. As we look ahead, we are well positioned to deliver a fifth consecutive year of revenue growth in 2014."Second Quarter 2014 Highlights:
- Revenue increased 6.3 percent year-over-year, with the strongest performance in the Small Business Services segment which grew 8.7%, followed by Financial Services which grew 6.5 percent.
- Revenue from marketing solutions and other services increased 19.7 percent year-over-year and accounted for 23.1 percent of total revenue in the quarter.
- Gross margin was 64.0 percent of revenue, down from 65.0 percent in the second quarter of 2013. The decline was primarily driven by a higher services revenue mix and higher delivery and material costs.
- Selling, general and administrative (SG&A) expense increased 5.5 percent from last year primarily due to additional SG&A expense from acquisitions and higher performance-based compensation and medical costs. SG&A as a percent of revenue was 42.8 percent in the quarter compared to 43.1 percent of revenue last year.
- Operating income increased 3.0 percent year-over-year and includes restructuring and transaction-related costs in both periods. Adjusted operating income, which excludes these items, increased 2.3 percent year-over-year from higher revenue per order and continued cost reductions partially offset by higher performance-based compensation and medical costs.
- Diluted EPS increased 5.3 percent year-over-year driven primarily by stronger operating performance and lower shares outstanding.