Deluxe Corporation

You are currently holding for today's deluxe second quarter 2026 earnings conference call. We are admitting additional participants and plan to be underway shortly. We appreciate your patience and ask that you please remain on the line. Ladies and gentlemen, thank you for standing by and welcome to the Deluxe Second Quarter 2026 Earnings Conference Call. All participants are currently in a listen-only mode, and today's call is being recorded. At this time, I would like to turn the conference over to your host, Vice President of Strategy and Investor Relations, Brian Anderson. Please go ahead.

Thank you, Operator, and welcome to the Deluxe Second Quarter 2026 Earnings Call. Joining me on today's call are Barry McCarthy, our President and Chief Executive Officer, and Chip Zint, our Chief Financial Officer. At the end of today's prepared remarks, we will take questions. Before we begin, and as seen on the current slide, I'd like to remind everyone that comments made today regarding management's intentions, projections, financial estimates, and expectations about the company's future strategy or performance are forward-looking in nature as defined in the Private Securities Litigation Reform Act of 1995. Additional information about factors that may cause actual results to differ from projections is set forth in the press release we furnished today, in our Form 10-K for the year ended December 31st, 2025, and in other company SEC filings. On the call today, we will discuss non-GAAP financial measures, including comparable adjusted revenue, adjusted and comparable adjusted EBITDA and EBITDA margin, adjusted and comparable adjusted EPS, and free cash flow. In our press release, today's presentation and our filings with the SEC, you'll find additional disclosures regarding non-GAAP measures, including reconciliation of these measures to the most comparable measures under U.S. GAAP. Within the materials, we are also providing reconciliations of GAAP EPS to adjusted EPS, which may assist with your modeling. As a reminder, all comparable adjusted metrics reflect the removal of impact from business exits, including prior year adjustments, to reflect removal of the safeguard business effective with the closing of that divestiture as of March 1st, 2026. Financial metrics discussed through the second quarter also exclude any historical financial results relating to the Solero acquisition, which closed on July 31st, 2026, and for which additional pro forma reporting in line with SEC requirements will be provided over the balance of the post-closing 2026 periods. And with that, I'll hand it over to Barry.

Thanks, Brian. And good evening, everyone. I'm pleased to report our strong performance through mid-year. Deluxe continues to deliver its financial goals while accelerating our strategic transformation into a payments and data company. During the second quarter, we once again delivered comparable adjusted growth across all key metrics. Revenue, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow. We were particularly pleased to see free cash flow increase 65% through Q2. We're now in our fourth consecutive year driving consistent operating leverage and growth across all core earnings metrics. This performance enabled further reduction of our pre-acquisition debt levels and improvement of our leverage ratio through the first half. We delivered this strong financial performance while accelerating our revenue mix shift towards payments and data. You'll recall in Q1 of this year, we reached a key milestone with just over 50% of our revenue being generated from non-print sources for the first time in our 111 year history. In the first half of the year, Our payments and data businesses together grew 11% and represented 52% of revenue, marking an acceleration of our progress. The addition of Solero, a leading merchant services provider, which closed last week, decisively shifts our revenue mix even further. More on Solero in a minute. At our December 2023 Investor Day, We outlined our plan to execute this financial and strategic transformation over three years. We delivered while achieving important cash flow and balance sheet commitments early. We're a team that executes consistently.