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Business Wire 24-Jan-2019 8:30 AM
Fourth quarter revenue increased 6.0% over last year
Annual revenue of $1.998 billion sets all-time record
Declares regular quarterly dividend
Expands credit facility to $1.150 billion
Deluxe Corporation (NYSE:DLX), a leader in providing small businesses and financial institutions with products and services to drive customer revenue, announced its financial results for the fourth quarter and year ended December 31, 2018. Key financial highlights for the fourth quarter include:
4th Quarter2018 |
4th Quarter2017 |
% Change | ||||||||
Revenue | $524.7 million | $494.9 million | 6.0 | % | ||||||
Net Income | $63.5 million | $84.7 million | (25.0 | %) | ||||||
Diluted Earnings per Share – GAAP | $1.39 | $1.75 | (20.6 | %) | ||||||
Adjusted Diluted EPS – Non-GAAP(1) | $1.54 | $1.40 | 10.0 | % | ||||||
(1) | A reconciliation of diluted earnings per share (EPS) on a GAAP basis and adjusted diluted EPS on a non-GAAP basis is provided after the Forward-Looking Statements. Non-GAAP adjustments include restructuring and integration costs, transaction costs, CEO transition costs, asset impairment charges, loss on debt retirement, and one-time impacts of accounting for federal tax reform. | |
Revenue was within the Company's outlook range of $522 to $532 million and GAAP diluted earnings per share was at the high end of the outlook range of $1.32 to $1.39. During the quarter, the Company recognized non-GAAP adjustments of $0.15 per share. Of this amount, charges for restructuring, integration and CEO transition costs totaled $0.16 per share, and the company recorded a benefit of $0.01 per share related to federal tax reform. Adjusted diluted EPS was at the high end of the outlook range as the business segments performed well against expectations, the income tax rate was favorable and expense management initiatives continued.
"I am honored to join Deluxe at this critical moment in the Company's history," said Barry McCarthy, President and CEO of Deluxe. "Our strong fourth quarter performance and record full year revenue reflect the solid foundation from which we will accelerate our ongoing transformation to a technology-enabled solutions provider. Looking ahead, I will continue my deep dive into the business as we refine our strategic plan while remaining focused on driving long-term revenue growth and enhancing shareholder value."
Fourth Quarter 2018 Highlights
Segment HighlightsSmall Business Services
Financial Services
Direct Checks
Other Highlights
First Quarter 2019 |
Current Outlook(1/24/2019) |
||
Revenue(1) | $490 to $505 million | ||
Adjusted diluted EPS | $1.05 to $1.15 | ||
Full Year 2019(3) |
Current Outlook(1/24/2019) |
||
Revenue(1) | low-single digit increase over 2018 | ||
GAAP diluted EPS | increasing over 2018 | ||
Adjusted diluted EPS(2) | slight increase over 2018 | ||
(1) | Assumes no 2019 acquisition revenue in the current outlook for either the first quarter or full year. | |
(2) | The Adjusted diluted EPS outlook assumes no gains from sales of assets in 2019. 2018 reported adjusted diluted EPS included approximately $0.25 per share in gains on asset sales. Outlook for increasing adjusted diluted EPS is after the adjustment of $0.25 per share in 2018. | |
(3) | Management intends to provide a more detailed full year earnings outlook in conjunction with the first quarter 2019 earnings release. | |
Earnings Call InformationA live conference call will be held today at 11:00 a.m. ET (10:00 a.m. CT) to review the financial results. Listeners can access the call by dialing 1-615-247-0252 (access code 9815909). A presentation also will be available via a webcast on the investor relations website at www.deluxe.com/investor. Alternatively, an audio replay of the call will be available on the investor relations website or by calling 1-404-537-3406 (access code 9815909).
Upcoming Management Presentations
About Deluxe CorporationDeluxe is a growth engine for small businesses and financial institutions. Nearly 4.4 million small business customers access Deluxe's wide range of products and services, including customized checks and forms, as well as incorporation services, logo design, website development and hosting, email marketing, social media, search engine optimization and payroll services. For our approximately 4,600 financial institution customers, Deluxe offers industry-leading programs in checks, data analytics and customer acquisition and treasury management solutions, including fraud prevention and profitability. Deluxe is also a leading provider of checks and accessories sold directly to consumers. For more information, visit us at www.deluxe.com, www.facebook.com/deluxecorp or www.twitter.com/deluxecorp.
Forward-Looking StatementsStatements made in this release concerning Deluxe, "the Company's" or management's intentions, expectations, outlook or predictions about future results or events are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect management's current intentions or beliefs and are subject to risks and uncertainties that could cause actual results or events to vary from stated expectations, which variations could be material and adverse. Factors that could produce such a variation include, but are not limited to, the following: the impact that a deterioration or prolonged softness in the economy may have on demand for the Company's products and services; the inherent unreliability of earnings, revenue and cash flow predictions due to numerous factors, many of which are beyond the Company's control; declining demand for the Company's check and check-related products and services due to increasing use of other payment methods; intense competition in the check printing business; continued consolidation of financial institutions and/or additional bank failures, thereby reducing the number of potential customers and referral sources and increasing downward pressure on the Company's revenue and gross profit; risks that the Small Business Services segment strategies to increase its pace of new customer acquisition and average annual sales to existing customers, while at the same time maintaining its operating margins, are delayed or unsuccessful; the risk that pending and future acquisitions will not be consummated within the expected time periods or at all; risks that the Company's recent acquisitions do not produce the anticipated results or synergies; risks that the Company's cost reduction initiatives will be delayed or unsuccessful; performance shortfalls by one or more of the Company's major suppliers, licensors or service providers; unanticipated delays, costs and expenses in the development and marketing of products and services, including web services, financial technology and treasury management solutions; the failure of such products and services to deliver the expected revenues and other financial targets; risks related to security breaches, computer malware or other cyber-attacks; risks of interruptions to our website operations or information technology systems; risks of unfavorable outcomes and the costs to defend litigation and other disputes; and the impact of governmental laws and regulations. The Company's cash dividends are declared by the Board of Directors on a current basis and therefore, maybe subject to change. Our forward-looking statements speak only as of the time made, and we assume no obligation to publicly update any such statements. Additional information concerning these and other factors that could cause actual results and events to differ materially from the Company's current expectations are contained in the Company's Form 10-K for the year ended December 31, 2017.
Diluted EPS ReconciliationManagement believes that adjusted diluted EPS provides useful additional information for investors because it provides better comparability of ongoing performance to prior periods given that it excludes the impact of certain items during 2018 and 2017 (i.e., restructuring and integration costs, transaction costs, CEO transition costs, asset impairment charges, loss on debt retirement, and one-time impacts of accounting for federal tax reform) that impact the comparability of reported net income and which management believes to be non-indicative of ongoing operations. It is reasonable to expect that one or more of these excluded items will occur in future periods, but the amounts recognized can vary significantly from period to period and may not directly relate to the Company's ongoing operations. The presentation below is not intended as an alternative to results reported in accordance with generally accepted accounting principles (GAAP) in the United States of America. Instead, the Company believes that this information is a useful financial measure to be considered in addition to GAAP performance measures.
Reported earnings per share reconciles to adjusted EPS as follows:
Actual | ||||||||||||||||
4th Quarter2018 |
4th Quarter2017 |
Total Year2018 |
Total Year2017 |
|||||||||||||
Reported Diluted EPS | $1.39 | $1.75 | $3.29 | $4.72 | ||||||||||||
Asset impairment charges |
-- |
-- |
1.96 | 0.81 | ||||||||||||
Restructuring and integration costs | 0.11 | 0.06 | 0.34 | 0.13 | ||||||||||||
CEO transition costs | 0.04 | -- | 0.11 | -- | ||||||||||||
Transaction costs | 0.01 | 0.01 | 0.02 | 0.03 | ||||||||||||
Loss on debt retirement | -- | -- | 0.01 | -- | ||||||||||||
Impact of federal tax reform | (0.01 | ) | (0.42 | ) | (0.04 | ) | (0.42 | ) | ||||||||
Adjusted Diluted EPS | $1.54 | $1.40 | $5.69 | $5.27 | ||||||||||||
DELUXE CORPORATION | ||||||||||||||||
CONSOLIDATED CONDENSED STATEMENTS OF INCOME | ||||||||||||||||
(Dollars and shares in millions, except per share amounts) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
Quarter Ended December 31, | ||||||||||||||||
2018(1) |
2017(2) |
|||||||||||||||
Product revenue | $375.7 | $372.1 | ||||||||||||||
Service revenue | 149.0 | 122.8 | ||||||||||||||
Total revenue | 524.7 | 494.9 | ||||||||||||||
Cost of products | (147.0 | ) | (28.0 | %) | (137.2 | ) | (27.7 | %) | ||||||||
Cost of services | (68.2 | ) | (13.0 | %) | (53.8 | ) | (10.9 | %) | ||||||||
Total cost of revenue | (215.2 | ) | (41.0 | %) | (191.0 | ) | (38.6 | %) | ||||||||
Gross profit | 309.5 | 59.0 | % | 303.9 | 61.4 | % | ||||||||||
Selling, general and administrative expense | (216.2 | ) | (41.2 | %) | (201.0 | ) | (40.6 | %) | ||||||||
Restructuring and integration expense | (6.8 | ) | (1.3 | %) | (4.9 | ) | (1.0 | %) | ||||||||
Operating income | 86.5 | 16.5 | % | 98.0 | 19.8 | % | ||||||||||
Interest expense | (8.2 | ) | (1.6 | %) | (5.6 | ) | (1.1 | %) | ||||||||
Other income | 2.5 | 0.5 | % | 1.4 | 0.3 | % | ||||||||||
Income before income taxes | 80.8 | 15.4 | % | 93.8 | 19.0 | % | ||||||||||
Income tax provision | (17.3 | ) | (3.3 | %) | (9.1 | ) | (1.8 | %) | ||||||||
Net income | $63.5 | 12.1 | % | $84.7 | 17.1 | % | ||||||||||
Weighted-average dilutive shares outstanding | 45.5 | 48.1 | ||||||||||||||
Diluted earnings per share | $1.39 | $1.75 | ||||||||||||||
Capital expenditures | $19.7 | $13.1 | ||||||||||||||
Depreciation and amortization expense | 34.2 | 31.4 | ||||||||||||||
Number of employees-end of period | 6,701 | 5,886 | ||||||||||||||
Non-GAAP financial measure - EBITDA(3) | $123.2 | $130.8 | ||||||||||||||
Non-GAAP financial measure - Adjusted EBITDA(3) | 134.3 | 136.6 | ||||||||||||||
(1) | Effective January 1, 2018, we adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, and related amendments. Adoption of these standards resulted in an increase in revenue of $0.4 million and a decrease in net income of $0.3 million for the quarter ended December 31, 2018. We do not expect these standards to have a significant impact on our results of operations, financial position or cash flows on an ongoing basis. | |
(2) | Results have been revised to reflect the adoption of ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This standard requires that we revise prior periods to reclassify the net periodic benefit income related to our postretirement plans from cost of revenue and SG&A expense to other income. This revision had no impact on total revenue or net income. | |
(3) | Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles (GAAP) in the United States of America. We disclose EBITDA and Adjusted EBITDA because we believe they are useful in evaluating our operating performance compared to that of other companies in our industry, as the calculation eliminates the effects of long-term financing (i.e., interest expense), income taxes, the accounting effects of capital investments (i.e., depreciation and amortization) and in the case of Adjusted EBITDA, certain items (i.e., restructuring and integration costs; transaction costs; CEO transition costs; asset impairment charges and loss on debt retirement) that may vary for companies for reasons unrelated to overall operating performance. In our case, depreciation and amortization of intangibles and interest expense in the current year and in previous years have been impacted by acquisitions. Certain transactions in 2018 and 2017 also impacted the comparability of reported net income. We believe that measures of operating performance that exclude these impacts are helpful in analyzing our results. We also believe that an increasing EBITDA and Adjusted EBITDA depict increased ability to attract financing and an increase in the value of our business. We do not consider EBITDA and Adjusted EBITDA to be measures of cash flow, as they do not consider certain cash requirements such as interest, income taxes or debt service payments. We do not consider EBITDA or Adjusted EBITDA to be substitutes for operating income or net income. Instead, we believe that EBITDA and Adjusted EBITDA are useful performance measures that should be considered in addition to GAAP performance measures. EBITDA and Adjusted EBITDA are derived from net income as follows: | |
Quarter Ended December 31, |
||||||
2018 | 2017 | |||||
Net income | $63.5 | $84.7 | ||||
Interest expense | 8.2 | 5.6 | ||||
Income tax provision | 17.3 | 9.1 | ||||
Depreciation and amortization expense | 34.2 | 31.4 | ||||
EBITDA | 123.2 | 130.8 | ||||
Restructuring and integration costs | 7.4 | 5.4 | ||||
Transaction costs | 0.6 | 0.4 | ||||
CEO transition costs | 3.1 | — | ||||
Adjusted EBITDA | $134.3 | $136.6 | ||||
DELUXE CORPORATION | ||||||||||||||||
CONSOLIDATED CONDENSED STATEMENTS OF INCOME | ||||||||||||||||
(Dollars and shares in millions, except per share amounts) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
Year Ended December 31, | ||||||||||||||||
2018(1) |
2017(2) |
|||||||||||||||
Product revenue | $1,451.8 | $1,469.9 | ||||||||||||||
Service revenue | 546.2 | 495.7 | ||||||||||||||
Total revenue | 1,998.0 | 1,965.6 | ||||||||||||||
Cost of products | (547.6 | ) | (27.4 | %) | (529.7 | ) | (26.9 | %) | ||||||||
Cost of services | (244.1 | ) | (12.2 | %) | (213.1 | ) | (10.8 | %) | ||||||||
Total cost of revenue | (791.7 | ) | (39.6 | %) | (742.8 | ) | (37.8 | %) | ||||||||
Gross profit | 1,206.3 | 60.4 | % | 1,222.8 | 62.2 | % | ||||||||||
Selling, general and administrative expense | (845.6 | ) | (42.3 | %) | (830.1 | ) | (42.2 | %) | ||||||||
Restructuring and integration expense | (19.7 | ) | (1.0 | %) | (8.6 | ) | (0.4 | %) | ||||||||
Asset impairment charges | (101.3 | ) | (5.1 | %) | (54.9 | ) | (2.8 | %) | ||||||||
Operating income | 239.7 | 12.0 | % | 329.2 | 16.7 | % | ||||||||||
Interest expense | (27.1 | ) | (1.4 | %) | (21.4 | ) | (1.1 | %) | ||||||||
Other income | 8.6 | 0.4 | % | 5.0 | 0.3 | % | ||||||||||
Income before income taxes | 221.2 | 11.1 | % | 312.8 | 15.9 | % | ||||||||||
Income tax provision | (65.3 | ) | (3.3 | %) | (82.6 | ) | (4.2 | %) | ||||||||
Net income | $155.9 | 7.8 | % | $230.2 | 11.7 | % | ||||||||||
Weighted-average dilutive shares outstanding | 47.0 | 48.4 | ||||||||||||||
Diluted earnings per share | $3.29 | $4.72 | ||||||||||||||
Capital expenditures | $62.2 | $47.5 | ||||||||||||||
Depreciation and amortization expense | 131.1 | 122.7 | ||||||||||||||
Number of employees-end of period | 6,701 | 5,886 | ||||||||||||||
Non-GAAP financial measure - EBITDA(3) | $379.4 | $456.9 | ||||||||||||||
Non-GAAP financial measure - Adjusted EBITDA(3) | 511.4 | 523.3 | ||||||||||||||
(1) | Effective January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers, and related amendments. Adoption of these standards resulted in an increase in revenue of $0.7 million and an increase in net income of $0.6 million for the year ended December 31, 2018. We do not expect these standards to have a significant impact on our results of operations, financial position or cash flows on an ongoing basis. | |
(2) | Results have been revised to reflect the adoption of ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This standard requires that we revise prior periods to reclassify the net periodic benefit income related to our postretirement plans from cost of revenue and SG&A expense to other income. This revision had no impact on total revenue or net income. | |
(3) | See the prior discussion of EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are derived from net income as follows: | |
Year Ended December 31, | ||||||
2018 | 2017 | |||||
Net income | $155.9 | $230.2 | ||||
Interest expense | 27.1 | 21.4 | ||||
Income tax provision | 65.3 | 82.6 | ||||
Depreciation and amortization expense | 131.1 | 122.7 | ||||
EBITDA | 379.4 | 456.9 | ||||
Restructuring and integration costs | 21.2 | 9.1 | ||||
Transaction costs | 1.8 | 2.4 | ||||
CEO transition costs | 7.2 | — | ||||
Asset impairment charges | 101.3 | 54.9 | ||||
Loss on debt retirement | 0.5 | — | ||||
Adjusted EBITDA | $511.4 | $523.3 | ||||
DELUXE CORPORATION | ||||||
CONSOLIDATED CONDENSED BALANCE SHEETS | ||||||
(In millions) |
||||||
(Unaudited) |
||||||
December 31,2018 |
December 31,2017 |
|||||
Cash and cash equivalents | $59.7 | $59.2 | ||||
Other current assets | 390.7 | 333.8 | ||||
Property, plant and equipment-net | 90.3 | 84.6 | ||||
Intangibles-net | 360.0 | 384.3 | ||||
Goodwill | 1,160.6 | 1,130.9 | ||||
Other non-current assets | 243.1 | 216.0 | ||||
Total assets | $2,304.4 | $2,208.8 | ||||
Current portion of long-term debt | $0.8 | $44.0 | ||||
Other current liabilities | 382.2 | 381.8 | ||||
Long-term debt | 911.1 | 665.3 | ||||
Deferred income taxes | 48.7 | 50.5 | ||||
Other non-current liabilities | 39.9 | 52.2 | ||||
Shareholders' equity | 921.7 | 1,015.0 | ||||
Total liabilities and shareholders' equity | $2,304.4 | $2,208.8 | ||||
Shares outstanding | 44.6 | 48.0 | ||||
DELUXE CORPORATION | ||||||||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||||||||
(In millions) |
||||||||
(Unaudited) |
||||||||
Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
Cash provided (used) by: | ||||||||
Operating activities: | ||||||||
Net income | $155.9 | $230.2 | ||||||
Depreciation and amortization of intangibles | 131.1 | 122.7 | ||||||
Asset impairment charges | 101.3 | 54.9 | ||||||
Prepaid product discount payments | (23.8 | ) | (27.1 | ) | ||||
Other | (25.2 | ) | (42.3 | ) | ||||
Total operating activities | 339.3 | 338.4 | ||||||
Investing activities: | ||||||||
Purchases of capital assets | (62.2 | ) | (47.5 | ) | ||||
Payments for acquisitions | (214.3 | ) | (139.2 | ) | ||||
Other | 1.1 | 5.8 | ||||||
Total investing activities | (275.4 | ) | (180.9 | ) | ||||
Financing activities: | ||||||||
Net change in debt | 201.2 | (51.2 | ) | |||||
Dividends | (56.7 | ) | (58.1 | ) | ||||
Share repurchases | (200.0 | ) | (65.0 | ) | ||||
Shares issued under employee plans | 7.5 | 9.0 | ||||||
Other | (12.1 | ) | (11.7 | ) | ||||
Total financing activities | (60.1 | ) | (177.0 | ) | ||||
Effect of exchange rate change on cash | (3.3 | ) | 2.1 | |||||
Net change in cash and cash equivalents | 0.5 | (17.4 | ) | |||||
Cash and cash equivalents: Beginning of period | 59.2 | 76.6 | ||||||
Cash and cash equivalents: End of period | $59.7 | $59.2 | ||||||
DELUXE CORPORATION | ||||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||
(In millions) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
Quarter EndedDecember 31, |
Year EndedDecember 31, | |||||||||||||||
2018(1) |
2017(2) |
2018(1) |
2017(2) |
|||||||||||||
Revenue: | ||||||||||||||||
Small Business Services | $334.0 | $322.4 | $1,283.6 | $1,239.7 | ||||||||||||
Financial Services | 160.2 | 139.3 | 587.0 | 585.3 | ||||||||||||
Direct Checks | 30.5 | 33.2 | 127.4 | 140.6 | ||||||||||||
Total | $524.7 | $494.9 | $1,998.0 | $1,965.6 | ||||||||||||
Operating income:(3) | ||||||||||||||||
Small Business Services | $56.0 | $61.9 | $128.3 | $181.5 | ||||||||||||
Financial Services | 20.4 | 25.0 | 69.9 | 101.1 | ||||||||||||
Direct Checks | 10.1 | 11.1 | 41.5 | 46.6 | ||||||||||||
Total | $86.5 | $98.0 | $239.7 | $329.2 | ||||||||||||
Operating margin:(3) | ||||||||||||||||
Small Business Services | 16.8 | % | 19.2 | % | 10.0 | % | 14.6 | % | ||||||||
Financial Services | 12.7 | % | 17.9 | % | 11.9 | % | 17.3 | % | ||||||||
Direct Checks | 33.1 | % | 33.4 | % | 32.6 | % | 33.1 | % | ||||||||
Total | 16.5 | % | 19.8 | % | 12.0 | % | 16.7 | % | ||||||||
The segment information reported here was calculated utilizing the methodology outlined in the Condensed Notes to Unaudited Consolidated Financial Statements included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.
(1) | Effective January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers, and related amendments. Adoption of these standards resulted in an increase in revenue of $0.4 million and a decrease in net income of $0.3 million for the quarter ended December 31, 2018 and an increase in revenue of $0.7 million and an increase in net income of $0.6 million for the year ended December 31, 2018. We do not expect these standards to have a significant impact on our results of operations, financial position or cash flows on an ongoing basis. | |
(2) | Results have been revised to reflect the adoption of ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This standard requires that we revise prior periods to reclassify the net periodic benefit income related to our postretirement plans from cost of revenue and SG&A expense to other income. This revision had no impact on total revenue or net income. | |
(3) | Operating income includes the following restructuring and integration, transaction and CEO transition costs, as well as asset impairment charges: | |
Quarter EndedDecember 31, | Year EndedDecember 31, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Small Business Services | $6.8 | $2.9 | $115.2 | $60.4 | ||||||||
Financial Services | 4.0 | 2.6 | 15.8 | 5.6 | ||||||||
Direct Checks | 0.3 | 0.3 | 0.5 | 0.4 | ||||||||
Total | $11.1 | $5.8 | $131.5 | $66.4 | ||||||||
The table below is provided to assist in understanding the comparability of the Company's results of operations for the quarters and years ended December 31, 2018 and 2017. Management believes that operating income by segment, excluding restructuring and integration, transaction and CEO transition costs, as well as asset impairment charges, provides useful additional information for investors because it provides better comparability of ongoing performance to prior periods given that it excludes the impact of items that affect the comparability of reported operating results and which management believes to be non-indicative of ongoing operations. It is reasonable to expect that one or more of these excluded items will occur in future periods, but the amounts recognized can vary significantly from period to period and may not directly relate to the Company's ongoing operations. The presentation below is not intended as an alternative to results reported in accordance with generally accepted accounting principles (GAAP) in the United States of America. Instead, Management believes that this information is a useful financial measure to be considered in addition to GAAP performance measures.
DELUXE CORPORATION | ||||||||||||||||
ADJUSTED SEGMENT OPERATING INCOME | ||||||||||||||||
(In millions) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
Quarter EndedDecember 31, | Year EndedDecember 31, | |||||||||||||||
2018(1) |
2017(2) |
2018(1) |
2017(2) |
|||||||||||||
Adjusted operating income:(3) | ||||||||||||||||
Small Business Services | $62.8 | $64.8 | $243.5 | $241.9 | ||||||||||||
Financial Services | 24.4 | 27.6 | 85.7 | 106.7 | ||||||||||||
Direct Checks | 10.4 | 11.4 | 42.0 | 47.0 | ||||||||||||
Total | $97.6 | $103.8 | $371.2 | $395.6 | ||||||||||||
Adjusted operating margin:(3) | ||||||||||||||||
Small Business Services | 18.8 | % | 20.1 | % | 19.0 | % | 19.5 | % | ||||||||
Financial Services | 15.2 | % | 19.8 | % | 14.6 | % | 18.2 | % | ||||||||
Direct Checks | 34.1 | % | 34.3 | % | 33.0 | % | 33.4 | % | ||||||||
Total | 18.6 | % | 21.0 | % | 18.6 | % | 20.1 | % | ||||||||
(1) | Effective January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers, and related amendments. Adoption of these standards resulted in an increase in revenue of $0.4 million and a decrease in net income of $0.3 million for the quarter ended December 31, 2018 and an increase in revenue of $0.7 million and an increase in net income of $0.6 million for the year ended December 31, 2018. We do not expect these standards to have a significant impact on our results of operations, financial position or cash flows on an ongoing basis. | |
(2) | Results have been revised to reflect the adoption of ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This standard requires that we revise prior periods to reclassify the net periodic benefit income related to our postretirement plans from cost of revenue and SG&A expense to other income. This revision had no impact on total revenue or net income. | |
(3) | Reported operating income reconciles to adjusted operating income as follows: | |
Quarter EndedDecember 31, | Year EndedDecember 31, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Reported operating income | $86.5 | $98.0 | $239.7 | $329.2 | ||||||||
Non-GAAP adjustments: | ||||||||||||
Small Business Services | 6.8 | 2.9 | 115.2 | 60.4 | ||||||||
Financial Services | 4.0 | 2.6 | 15.8 | 5.6 | ||||||||
Direct Checks | 0.3 | 0.3 | 0.5 | 0.4 | ||||||||
Total | 11.1 | 5.8 | 131.5 | 66.4 | ||||||||
Adjusted operating income | $97.6 | $103.8 | $371.2 | $395.6 | ||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190124005164/en/