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What changed in DELUXE CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of DELUXE CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+330 added−393 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-24)

Top changes in DELUXE CORP's 2023 10-K

330 paragraphs added · 393 removed · 226 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

50 edited+43 added−61 removed15 unchanged
Biggest changeSince 2020, we have grown our programs and now offer 9 ERGs, including African American, Pacific Islander Middle Eastern Asian, disabled, Hispanic and Latino, veteran, LGBTQ+, parent and women. • In 2022, we earned the honor of becoming a Yellow Ribbon Company, a designation awarded by the state of Minnesota to those companies meeting the top criteria for supporting veterans and their families. • In 2022, we earned a top score of 100 on the Disability Equality Index and were named a “Best Place to Work for Disability Inclusion” for the third year in a row. • In 2022, The Human Rights Campaign Foundation’s Corporate Equality Index recognized us as a Best Place to Work for the LGBTQ+ Equality.
Biggest changeBelow are recent examples of our commitment to DEIB: • 33% of our directors identify as from diverse backgrounds, including the independent chair of our board of directors, who is a woman of color. • We offer 10 employee resource groups ("ERGs"), including African American, Pacific Islander Middle Eastern Asian, disabled, Hispanic and Latino, veteran, LGBTQ+, parent and women. • In both 2022 and 2023, The Human Rights Campaign Foundation’s Corporate Equality Index recognized us as a Best Place to Work for LGBTQ+ Equality. • In 2023, for the 15th consecutive year, we were included on the honor roll for Gender Diversity in Executive Roles and Board of Directors published by Twin Cities Business. • In 2023, we were named a VETS Indexes 3 Star Employer for our commitment to recruiting, hiring and developing our veterans and military connected community.
Our Checks business faces significant competition from another large check printer in our traditional financial institution sales channel, direct mail and internet-based sellers of personal and business checks, check printing software vendors, and certain significant retailers.
Our check business faces significant competition from another large check printer in our traditional financial institution sales channel, direct mail and internet-based sellers of personal and business checks, check printing software vendors, and certain significant retailers.
Capers was employed by Automatic Data Processing, Inc., a provider of human resources management software and services, from January 2017 to September 2019, most recently as Senior Vice President, General Manager, National Account Services Comprehensive Outsourcing Services and Operations. Jeffrey Cotter was named Chief Administrative Officer in January 2019. Mr.
Capers was employed by Automatic Data Processing, Inc., a provider of human resources management software and services, from January 2017 to September 2019, most recently as Senior Vice President, General Manager, National Account Services Comprehensive Outsourcing Services and Operations. 10 Jeffrey Cotter was named Chief Administrative Officer in January 2019. Mr.
OUR CODE OF ETHICS AND CORPORATE GOVERNANCE GUIDELINES We have adopted a Code of Ethics that applies to all of our employees and our board of directors. The Code of Ethics is available on our investor relations website, www.investors.deluxe.com, and also can be obtained free of charge upon written request to the attention of Investor Relations, Deluxe Corporation, P.O.
OUR CODE OF ETHICS AND CORPORATE GOVERNANCE GUIDELINES We have adopted a Code of Ethics that applies to our employees and our board of directors. The Code of Ethics is available on our investor relations website, www.investors.deluxe.com, and also can be obtained free of charge upon written request to the attention of Investor Relations, Deluxe Corporation, P.O.
GOVERNMENT REGULATION We are subject to numerous international, federal, state and local laws and regulations that affect our business activities in several areas, including, but not limited to, labor, advertising, taxation, data privacy and security, digital content, consumer reports, consumer protection, merchant processing, online payment services, real estate, e-commerce, intellectual property, health care, environmental matters, and workplace health and safety.
GOVERNMENT REGULATION We are subject to numerous international, federal, state and local laws and regulations that affect our business activities in several areas, including, but not limited to, labor, advertising, taxation, data privacy and security, consumer reports, consumer protection, merchant processing, online payment services, real estate, e-commerce, intellectual property, health care, environmental matters, and workplace health and safety.
Box 818095, Cleveland, Ohio 44181. Any changes or 10 waivers of the Code of Ethics will be disclosed on our website. In addition, our Corporate Governance Guidelines and the charters of the Audit, Compensation, Corporate Governance and Finance Committees of our board of directors are available on our website, www.investors.deluxe.com, or upon written request.
Box 818095, Cleveland, Ohio 44181. Any changes or waivers of the Code of Ethics will be disclosed on our website. In addition, our Corporate Governance Guidelines and the charters of the Audit and Finance, Compensation and Talent, and Corporate Governance Committees of our board of directors are available on our website, www.investors.deluxe.com, or upon written request.
This spirit of community is felt throughout our organization and is fostered by our paid volunteer time off (VTO) program for employees, which provides three paid VTO days per year.
This spirit of community is felt throughout our organization and is fostered by our paid volunteer time off ("VTO") program for employees, which provides 3 paid VTO days per year.
Further information about Deluxe Corporation is also available at www.deluxe.com, www.facebook.com/deluxecorp, www.linkedin.com/company/deluxe and www.twitter.com/deluxe. The content of these websites is not incorporated by reference in this Annual Report on Form 10-K or in any other report or document we file with the Securities and Exchange Commission.
Further information about Deluxe Corporation is also available at www.deluxe.com, www.facebook.com/deluxecorp, www.linkedin.com/company/deluxe and www.twitter.com/deluxe. The content of these websites is not incorporated by reference in this Annual Report on Form 10-K or in any other report or document we file with the SEC.
None of our employees are currently represented by labor unions. The foundation of our continuing success as a Trusted Payments and Data TM company is our ability to attract and retain diverse, exceptional and motivated talent. We accomplish this by providing a culture of inclusion, diversity, equity, development, opportunity and empowerment.
None of our employees are currently represented by labor unions. 7 The foundation of our continuing success as a modern payments and data company is our ability to attract and retain diverse, exceptional and motivated talent. We accomplish this by providing a culture of inclusion, diversity, equity, development, opportunity and empowerment.
It is also reflected in our partnership with the Deluxe Foundation, which enables employees to donate to not-for-profit organizations of their choosing and receive a matching donation, dollar for dollar, up to $2,000 per year. Our commitments go beyond monetary donations.
It is also reflected in our partnership with the Deluxe Foundation, which enables employees to donate to not-for-profit organizations of their choosing and receive a matching donation, dollar for dollar, up to $2,000 per year. Our commitment goes beyond monetary donations.
Community Engagement Our employee-owners believe in the power of connection, of activity and of giving back to the communities we serve. Our partnerships and charitable work in the communities we serve are an integral part of our core values.
Community Engagement Our employees believe in the power of connection, of activity and of giving back to the communities we serve. Our partnerships and charitable work in the communities we serve are an integral part of our core values.
We have moved from volume inventories of custom inks to onsite mixing systems. This has greatly reduced waste stream processing, with an added benefit of better response times for customers. • Materials – Over 90% of our check and forms paper is purchased from Forest Stewardship Council-certified supplier mills.
For example, we have moved from volume inventories of custom inks to utilizing onsite mixing systems, which has reduced waste stream processing, with an added benefit of better response times for customers. • Materials – Over 90% of our check and forms paper is purchased from Forest Stewardship Council-certified supplier mills.
We also employ recycling efforts that allow us to divert more of our waste out of landfills by being diligent in the segregation of our waste streams. • Carbon – We continue to review every aspect of our business, including the materials we use, how we manage our facilities and the the role we play in communities, to ensure our growth includes sustainable practices.
We also employ recycling efforts that allow us to divert more of our waste out of landfills by being diligent in the segregation of our waste streams. • Carbon – We continually review our business operations, including the materials we use, how we manage our facilities and the role we play in communities, to ensure our growth includes sustainable practices.
We provide our customers, partners, and shareholders information about our DEI program and our activities supporting social justice within the communities we serve. In addition, we are focused on furthering our DEI initiatives throughout our business and have, among other things, created a DEI council that is sponsored by our Chief Human Resources Officer.
We provide our customers, partners and shareholders information about our DEIB program and our activities supporting the communities we serve. In addition, we are focused on furthering our DEIB initiatives throughout our business and have, among other things, created a DEIB council that is sponsored by our Chief Human Resources Officer.
Results-Driven, Community-Focused, Collaborative Culture We focus on creating an environment where our employee-owners, also known as Deluxers, feel respected and valued, and where they can contribute to their full potential. To this end, an important component of our strategy is that all North American employees are granted restricted stock unit awards.
Results-Driven, Community-Focused, Collaborative Culture We focus on creating an environment where our employees, also known as Deluxers, feel respected and valued, and where they can contribute to their full potential. To this end, a key component of our strategy is that all of our employees are granted restricted stock unit awards, making them employee-owners.
Our heritage also reflects deep-seated roots in community support and volunteerism, which is reflected in our purpose statement: “Champions for business so communities thrive.” Additionally, our values focus on delivering results: • Customers First • Earn Trust • Innovation • Grit and Perseverance • Power of One In an effort to continue to improve our culture and engagement, we provide learning and development at all levels of the organization on a variety of topics, including, leadership development, mentoring, and diversity, equity and inclusion.
Our heritage reflects deep-seated roots in community support and volunteerism, which is reflected in our purpose statement: “Champions for business so communities thrive.” Additionally, our values focus on delivering results: • Customers First • Earn Trust • Innovation • Grit and Perseverance • Power of One To continue improving our culture and engagement, we provide employee learning and development at all levels of the organization on a variety of topics, including, leadership development, mentoring, and DEIB initiatives.
Garry Capers, Jr. joined us in September 2019 as Senior Vice President, Division President, Data Solutions, and in November 2021, added the Promotional Solutions segment to his responsibilities. Prior to joining us, Mr.
Capers joined us in September 2019 as President, Data Solutions, and in November 2021, added the Promotional Solutions segment to his responsibilities. Prior to joining us, Mr.
We take sustainability seriously and focus on the following areas: • Energy – We implemented several energy-saving measures during last year's construction of our facilities in Atlanta and Minneapolis, including installing LED lighting, daylight harvesting strategies, optimized HVAC systems and material selections that reduce carbon input and increase recycled content. • Waste – We are focused on understanding the waste stream in all of our facilities, with the goal of reducing the amount of waste we generate and recycling as much of our waste stream as practicable.
We take sustainability seriously and focus on the following areas: • Energy – We implemented several energy-saving measures during the construction of our hub facilities in Atlanta and Minneapolis, including installing LED lighting, utilizing daylight harvesting strategies and optimized HVAC systems, and selecting materials that reduce carbon input and increase recycled content. • Waste – We are focused on understanding the waste stream in our facilities, with the goal of reducing the amount of waste we generate and recycling as much of our waste stream as is practical.
We devote significant resources to addressing ESG throughout the enterprise, including waste reduction and process improvement efforts, enhancing our commitments to diversity, equity and inclusion (“DEI”) through our DEI Council and employee resource groups, promoting community awareness, giving back through our volunteer time off program, and continually improving our cybersecurity and privacy processes and controls to keep our data safe.
We devote significant resources to addressing ESG throughout the company, including responsible process improvement efforts, enhancing our commitments to diversity, equity, inclusion and belonging (“DEIB”) through our DEIB Council and employee resource groups, promoting community awareness, giving back through our volunteer time off program, and continually improving our cybersecurity and privacy processes and controls to keep our data safe.
Health, Wellness and Safety Creating a culture where all employee-owners feel supported and valued is paramount to our strategy. We continue to monitor developments related to COVID-19 and its variants, and we continue to take steps to ensure the safety of our employees and business partners. We also continue to provide a competitive benefits package focused on fostering work/life integration.
Health, Wellness and Safety Creating a culture where all employees feel supported and valued is paramount to our strategy, and we continue to take steps to ensure the safety of our employees and business partners. We also continue to provide a competitive benefits package focused on fostering work/life integration.
Herrick served as Vice President, Human Resources. Yogs Jayaprakasam joined us in May 2022 as Senior Vice President, Chief Technology and Digital Officer. Prior to joining us, Mr.
Jean Herrick was named Senior Vice President, Chief Human Resources Officer in June 2022. From January 2016 to June 2022, Ms. Herrick served as Vice President, Human Resources. Yogs Jayaprakasam joined us in May 2022 as Senior Vice President, Chief Technology and Digital Officer. Prior to joining us, Mr.
The markets for business forms and promotional products are highly competitive and fragmented. Current and potential competitors include traditional storefront printing companies, office superstores, wholesale printers, online printing companies, small business product resellers and providers of custom apparel and gifts.
Greater acceptance of electronic signatures has also contributed to the overall decline in printed products. The markets for business forms and promotional products are highly competitive and fragmented. Current and potential competitors include traditional storefront printing companies, office superstores, wholesale printers, online printing companies, small business product resellers, and providers of custom apparel and gifts.
ITEM 1. BUSINESS OUR BUSINESS More than 105 years ago, Deluxe Corporation began providing payment solutions. Our longevity is a testament to our innovation, our ability to evolve with our customers, and the trust they place in us.
ITEM 1. BUSINESS COMPANY OVERVIEW More than 105 years ago, Deluxe Corporation began providing payment solutions. Our longevity is a testament to our innovation, our ability to evolve with our customers, and the trust they place in us. We have transformed to a modern payments and data company that champions business so communities thrive.
Well-being in our organization is about having a holistic commitment to provide resources and support for our employees so that they can deliver for customers and shareholders. We offer several programs to benefit our employees and support work environments that encourage growth, innovation, and productivity.
Well-being in our organization is enabled by our commitment to provide resources and 8 support for our employees, allowing them to deliver for customers and shareholders. We offer several programs to benefit our employees and support work environments that encourage growth, innovation and productivity.
These segments provide the following products and services: Business Segment Category Percentage of 2022 consolidated revenue Description Payments Merchant services and other payment solutions 19.5 % Merchant in-store, online and mobile payment solutions; payables as a service, including eChecks, Medical Payment Exchange and Deluxe Payment Exchange; payroll and human resources services; fraud and security services Treasury management solutions 10.8 % Receivables as a service, including remittance and lockbox processing, remote deposit capture, receivables management, and payment acceptance Total 30.3 % Data Solutions Data-driven marketing solutions 7.9 % Solutions for marketing business-to-business and business-to-consumer Web and hosted solutions 4.0 % Web hosting and software-as-a-service (SaaS) solutions, including web design, logo design, financial institution profitability reporting, and business incorporation services Total 11.9 % Promotional Solutions Forms and other products 13.0 % Business forms and accessories, including envelopes, labels, stationery and more Marketing and promotional solutions 12.2 % Advertising specialties, promotional apparel and print services Total 25.2 % Checks Checks 32.6 % Printed business and personal checks 3 We sold our Australian web hosting business during 2022 and expect to complete the sale of our North American web hosting and logo design businesses in the first quarter of 2023, after which we will have completed an intentional strategic exit from this market.
These segments provide the following products and services: Business Segment Category Percentage of 2023 consolidated revenue Description Payments Merchant services and other payment solutions 20.5 % Merchant in-store, online and mobile payment solutions; payables as a service, including eChecks, Medical Payment Exchange and Deluxe Payment Exchange; and payroll and human resources services Treasury management solutions 11.0 % Automated receivables technology, including remittance and lockbox processing, remote deposit capture and cash application, as well as payment acceptance solutions Total 31.5 % Data Solutions Data-driven marketing solutions 8.8 % Solutions for marketing business-to-business and business-to-consumer Web and hosted solutions 2.1 % Web-based solutions, including financial institution profitability reporting and business incorporation services, and our former web hosting and logo design businesses that were fully divested in June 2023 Total 10.9 % Promotional Solutions Marketing and promotional solutions 12.7 % Business forms and accessories, including envelopes, labels, stationery and more Forms and other products 12.0 % Advertising specialties, promotional apparel and print services Total 24.7 % Checks Checks 32.9 % Printed business and personal checks 3 During the past 2 years, we made strategic decisions to exit certain of our businesses.
However, with recent stresses on the global supply chain and labor market, we are taking steps to secure multiple sources of supply for certain of the materials and services we utilize, including those related to certain higher margin printed products in our Promotional Solutions segment.
However, we have taken steps to secure multiple sources of supply for certain of the materials and services we utilize, including those related to certain printed products in our Promotional Solutions segment.
Tracey Engelhardt was named Senior Vice President, Division President, Checks in October 2019 and in May 2022, she added Chief of Operations to her responsibilities. From March 2017 to October 2019, Ms. Engelhardt served as Senior Vice President, Direct-to-Consumer. Jean Herrick was named Senior Vice President, Chief Human Resources Officer in June 2022. From January 2016 to June 2022, Ms.
Cotter joined us in June 2018 as Senior Vice President, General Counsel. Tracey Engelhardt was named President, Print in July 2023. Ms. Engelhardt was named Senior Vice President, Checks in October 2019 and in May 2022, she added Chief of Operations to her responsibilities. From March 2017 to October 2019, Ms. Engelhardt served as Senior Vice President, Direct-to-Consumer.
For example, Promotional Solutions holiday card and revenues from certain marketing services in Data Solutions are typically stronger in the fourth quarter of the year due to the holiday season, while sales of Promotional Solutions tax forms are stronger in the first and fourth quarters of the year.
SEASONALITY Historically, we have experienced seasonal trends with certain of our products and services. For example, Promotional Solutions holiday card revenue is typically stronger in the fourth quarter of the year due to the holiday season, while sales of Promotional Solutions tax forms are stronger in the first and fourth quarters of the year.
Name Age Present Position Executive Officer Since Barry McCarthy 59 President and Chief Executive Officer 2018 William "Chip" Zint 37 Senior Vice President, Chief Financial Officer 2022 Garry Capers, Jr. 46 Senior Vice President, Division President, Data Solutions and Promotional Solutions 2019 Jeffrey Cotter 55 Senior Vice President, Chief Administrative Officer and General Counsel 2018 Tracey Engelhardt 58 Senior Vice President, Division President, Checks and Chief of Operations 2012 Jean Herrick 54 Senior Vice President, Chief Human Resources Officer 2022 Yogaraj "Yogs" Jayaprakasam 45 Senior Vice President, Chief Technology and Digital Officer 2022 Amanda Parrilli 44 Senior Vice President, Chief Strategy, Transformation and Business Development Officer 2019 Michael Reed 51 Senior Vice President, Division President, Payments 2019 Barry McCarthy joined us in November 2018 as President and Chief Executive Officer.
Name Age Present Position Executive Officer Since Barry McCarthy 60 President and Chief Executive Officer 2018 William "Chip" Zint 39 Senior Vice President, Chief Financial Officer 2022 Debra Bradford 65 Senior Vice President, Division President, Merchant Services 2023 Garry Capers, Jr. 47 Senior Vice President, Chief Operations Officer 2019 Jeffrey Cotter 56 Senior Vice President, Chief Administrative Officer and General Counsel 2018 Tracey Engelhardt 59 Senior Vice President, Division President, Print 2012 Jean Herrick 55 Senior Vice President, Chief Human Resources Officer 2022 Yogaraj "Yogs" Jayaprakasam 46 Senior Vice President, Chief Technology and Digital Officer 2022 Barry McCarthy joined us in November 2018 as President and Chief Executive Officer.
AVAILABLE INFORMATION We make available, without charge, through our investor relations website, www.investors.deluxe.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after these items are electronically filed with or furnished to the SEC.
For more specific information about the effects of government regulation on our business, see Item 1A, "Legal and Compliance Risks – Governmental regulation is continuously evolving and could limit or harm our business ." We believe that the impact on our capital expenditures and earnings of complying with government regulations will not be materially different in the upcoming year than it was in 2023. 9 AVAILABLE INFORMATION We make available, without charge, through our investor relations website, www.investors.deluxe.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after these items are electronically filed with or furnished to the SEC.
This council is comprised of employee-owners across multiple functions and business segments. Its top priorities include implementing a comprehensive DEI learning and development plan to build awareness and drive inclusive behaviors; further developing our diversity pipeline through hiring, mentoring and coaching; and establishing goals and metrics to ensure progress.
This council is comprised of employees from multiple functions and business segments. Its top priorities include managing a comprehensive DEIB learning and development plan to build awareness and drive inclusive behaviors, and further developing our diversity pipeline through hiring, mentoring and coaching. As of December 31, 2023, our total workforce was approximately 57% female and 43% male.
The industry is continuously changing, highly innovative, and increasingly subject to regulatory scrutiny and oversight. The challenge for payment providers is to continually modernize their infrastructure to support new service offerings and to identify new revenue streams, as well as to invest in cloud computing and other digital technologies to more rapidly address evolving customer preferences.
The challenge is to continually modernize our technology to support new service offerings and to identify new revenue streams, as well as to invest in digital technologies to more rapidly address evolving customer preferences. Competition in the merchant services industry is intense.
Several of our top executives serve on boards for major not-for-profit organizations and other community organizations that align with our company values of diversity initiatives, rebuilding communities and education. 9 We continue our commitment to enriching our communities in the following ways: • Since 1992, we have partnered with Junior Achievement USA ® chapters in our local communities to inspire and prepare young people to succeed.
We continue our commitment to enriching our communities in the following ways: • Since 1992, we have partnered with Junior Achievement USA ® chapters in our local communities to inspire and prepare young people to succeed.
We also rely on third parties to provide a portion of the data used to maintain our proprietary and non-proprietary databases, including credit and non-credit data from the national credit bureaus and other data brokers. We have engaged a third-party global sourcing group to help manage our supply chain.
We also rely on third parties to provide a portion of the data used to maintain our proprietary and non-proprietary databases, including credit and non-credit data from the national credit bureaus and other data brokers. We believe that in the event one of our vendors fails to perform, we would be able to obtain an alternative source of supply.
We continue to focus on training and development programs and transparent communication channels through change pulse checks, surveys, senior leadership forums and employee resource groups.
We continue our focus on training and development programs and transparent communication channels through change pulse checks, employee surveys, senior leadership forums and employee resource groups. Diversity, Equity, Inclusion and Belonging We embrace DEIB in our workforce, customers and partners, valuing everyone's unique background, experiences, thoughts and talents.
We continue to focus our development and DEI programs on growing the number of female and minorities represented in leadership roles. Under the board’s oversight and guidance, we have taken significant actions to enhance our diverse and inclusive culture, protect and train our employees, and maintain our reputation as a great place to work.
Under the board’s oversight and guidance, we have taken significant actions to enhance our diverse and inclusive culture, protect and train our employees, and maintain our reputation as a great place to work. We continually strive to improve the attraction, retention, and advancement of diverse employees to grow and retain talent that represents the communities in which we operate.
We operate primarily in the U.S., but we also sell our products and services in Canada and portions of Europe and South America. We operate 4 business segments that are generally organized by product type.
We support millions of small businesses, thousands of financial institutions and hundreds of the world's largest consumer brands. We sell our products and services primarily in North America, and we operate 4 business segments that are generally organized by product type.
Volume is the key to staying cost-competitive, as it allows us to drive scale in our operations, and breadth of services is critical to staying relevant to customers.
We are competing against numerous financial technology ("Fintech") companies, including independent payment processors and credit card processing firms, as well as financial institution in-house capabilities. Volume is key to remaining cost-competitive, as it allows us to drive scale in our operations, and breadth of services is critical to staying relevant to customers.
Promotional Solutions The market for business forms and certain business accessories has been declining for several years, as continual technological improvements have provided businesses with alternative means to execute and record business transactions. Greater acceptance of electronic signatures has also contributed to the overall decline in printed products.
Pricing continues to be competitive in our financial institution sales channel, as financial institutions seek to maintain their previous levels of profitability, even as check usage declines. The market for business forms and certain business accessories has also been declining for several years, as continual technological improvements have provided businesses with alternative means to execute and record business transactions.
This council assesses and monitors our top enterprise ESG risks, goals and strategies and provides updates to our board of directors. We have implemented a stakeholder-focused ESG program in order to meet the needs and expectations of regulators, our customers, shareholders and employees.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES We have implemented a stakeholder-focused environmental, social and governance ("ESG") program to meet the needs and expectations of regulators, customers, shareholders and employees.
We employ a customer-focused approach, deploying dedicated sales teams across our 4 business segments to ensure we leverage the expertise within each segment to meet our customer's needs.
SALES AND MARKETING We employ a "One Deluxe" go-to-market model, deploying dedicated sales teams across our business segments to ensure we leverage the expertise within each segment to meet our customers' needs. We listen to our customers and their needs first. Then we bring the best of Deluxe to solve their problems.
Our customers rely on our solutions and platforms to help their finance and marketing teams pay, get paid and grow their business (as illustrated below), allowing our business segments to help each other deliver greater value for our customers and enabling our customers to build their businesses on our platforms for the long-term.
Our business segments help each other deliver greater value for our customers, enabling our customers to build their businesses on our platforms for the long-term. We employ a multi-channel sales and marketing approach, selling directly to financial institutions and major global brands.
We sold our Australian web hosting business during 2022 and expect to complete the sale of our North American web hosting and logo design businesses in the first quarter of 2023.
During 2022, we sold our Data Solutions Australian web hosting business, as well as our Promotional Solutions strategic sourcing and retail packaging businesses. During 2023, we sold our North American web hosting and logo design businesses, completing our exit from the web hosting space.
As of December 31, 2022, we had 5,863 employees, with 5,310 employees in the United States, 528 employees in Canada and the remainder located in Europe. Approximately 98% of our team is full-time employees, with 59% representing non-exempt roles working in production, processing or call center functions. We are proud of our strong history of positive, productive employee relations.
As of December 31, 2023, we had 5,170 employees, with 4,870 employees in the United States and 300 employees in Canada. We are proud of our strong history of positive, productive employee relations.
We employ a multi-channel sales and marketing approach, selling directly to financial institutions and major global brands. We also sell our products and services through scalable partnerships, enabling us to cost-effectively reach customers, specifically leveraging our financial institution partnerships, our e-commerce assets and other strategic partnerships.
We also sell our products and services through scalable partnerships, enabling us to cost-effectively reach customers, specifically leveraging our financial institution and other strategic partnerships. In addition, millions of in-bound customer contacts buying or reordering our products and services provide extensive cross-sell opportunities.
As of December 31, 2022, our total workforce was approximately 56% female and 44% male. Our team members located in the United States were comprised of approximately 55% white, 16% Black or African American, 11% Hispanic or Latino, 10% Asian American and 8% other.
Our team members located in the United States were comprised of approximately 50% white, 18% Black or African American, 12% Hispanic or Latino, 11% Asian American and 9% other. We continue to focus our development and DEIB programs on growing the number of female and minorities represented in leadership roles.
We utilize a shared services approach, which allows our businesses to leverage shared facilities to optimize capacity utilization and to enhance operational excellence. We continue to reduce costs by utilizing our assets and technologies more efficiently and by enabling employees to better leverage their capabilities and talents.
We do this by embedding lean operating principles into our processes, while emphasizing a culture of continuous improvement and innovation. We utilize a shared services approach, which allows our businesses to leverage shared facilities, to optimize capacity utilization and to enhance operational excellence.
For more information on risks related to data security, see Item 1A, "Operational Risks – Security breaches, computer malware or other cyberattacks involving the confidential information of our customers, employees or business partners could substantially damage our reputation, subject us to litigation and enforcement actions, and substantially harm our business and results of operations ." OUR MATERIALS, SUPPLIES AND SERVICE PROVIDERS The principal materials used in producing our main products are paper, plastics, ink, corrugated packaging and printing plate material, which we purchase from various sources.
Protecting the environment and our shared future is key to our business and to delivering the products our customers need. OUR MATERIALS, SUPPLIES AND SERVICE PROVIDERS The principal materials used in producing our main products are paper, plastics, ink, corrugated packaging and printing plate material, which we purchase from various sources.
We support Junior Achievement’s mission through foundation grants, awareness and employee volunteers. • We have partnered with the American Red Cross ® for decades, organizing blood drives at our locations and hosting fundraisers and bake sales to help fund the American Red Cross mission of preventing and alleviating human suffering in the face of emergencies. • In 2022, in partnership with Habitat for Humanity ® , we helped build new homes across the country, including inviting our technology partners to join us on a two day build in Chaska, Minnesota. • For Black History Month in 2022, we partnered with the Minnesota Timberwolves and Minnesota Lynx to film an original YouTube TM series called “The Come Up,” that focused on highlighting the significance of black excellence and the importance of uplifting the black community. • Our employees pledged $133,000 in donations under our 2022 employee giving campaign. • In 2022, our employees contributed more than 22,500 hours to our local communities through our VTO program.
We support Junior Achievement’s mission through foundation grants, awareness and employee volunteers. • We have partnered with the American Red Cross ® for decades, organizing blood drives at our locations and hosting fundraisers and bake sales to help fund the American Red Cross mission of preventing and alleviating human suffering in the face of emergencies. • In 2023, 580 Deluxe volunteers from Minneapolis, Atlanta, Kansas City and Fort Worth packed 120,000 meals that were donated to local food shelves. • Our employees donated $221,000 to nonprofit organizations in 2023. • In 2023, our employees contributed approximately 22,000 hours to our local communities through our VTO program.
OUR OPERATIONS / SUSTAINABLE PRACTICES We continue our focus on improving the customer experience by providing excellent service and quality, while increasing our productivity and reducing our costs. We accomplish this by embedding lean operating principles into our processes, while emphasizing a culture of continuous improvement.
Going forward, we will continue to invest in print efficiencies and process improvements to maintain margins, and we will prioritize higher margin promotional products that complement checks. OUR OPERATIONS We continue to focus on improving the customer experience by providing excellent service and quality, while increasing our productivity and reducing our costs.
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We are no longer solely a check printing company, but have transformed to a Trusted Payments and Data Company TM that champions business so communities thrive. We support millions of small businesses, thousands of financial institutions and hundreds of the world's largest consumer brands, while processing approximately $3 trillion in annual payment volume.
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Also during 2023, we executed agreements to exit our Payments payroll and human resources services business by allowing for the conversion of our U.S. and Canadian customers to other service providers. We expect these conversions will be completed during 2024.
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OUR STRATEGY Our vision is to be a trusted technology partner empowering businesses to pay, get paid and grow. To realize this vision, we will continue to leverage our strengths. • Our customers – Our products and services are utilized by customers of all sizes and maturities.
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During the first quarter of 2024, we realigned our organizational structure to better reflect our portfolio mix and offerings, and we updated our reportable segments to correspond with these changes. We did not operate under the new segment structure during 2023, and we continued to allocate resources and assess performance based on our current reportable segment structure.
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We continue to benefit from a long heritage of offering trusted service to our customers, which in turn, fuels meaningful cash flow that is redeployed to invest in our products, infrastructure and growth opportunities. • World-class payments and data products and platforms – We continue to invest in market-leading payments and data products and platforms that are proprietary to Deluxe, encouraging our customers to build their businesses on our platforms for the long-term. • Scale – We believe our volumes for many of our service offerings enable us to offer per-unit costs and reliability superior to our competitors.
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Our realigned reportable segments for the quarter ending March 31, 2024 are as follows: • Merchant Services – This segment includes the electronic credit and debit card authorization and payment systems and processing services that we provide primarily to small and medium-sized retail and service businesses. • B2B Payments – This segment includes treasury management solutions, including remittance and lockbox processing, remote deposit capture, automated receivables management, payment processing and cash application, as well as automated payables management, including Medical Payment Exchange and Deluxe Payment Exchange. • Data Solutions – This segment includes data-driven marketing solutions, financial institution profitability reporting and business incorporation services. • Print – This segment includes printed personal and business checks, printed business forms, business accessories and promotional products.
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We will continue to focus on scaling our technology and product management capabilities. • Sales and distribution channels – We have extensive market reach, with millions of small business and consumer customers and thousands of financial institution clients.
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OUR STRATEGY Our enterprise strategy is simple: to utilize the cash flows, customer relationships and brand equity from our print businesses to drive profitable organic growth in our other businesses.
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We will continue to maximize the deployment of these resources, including our sales force and our various strategic relationships, to cost-effectively reach customers.
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We are implementing this strategy with strong execution in 3 core areas: 1. cross-selling across our portfolio of products and services via our One Deluxe go-to-market model, 2. operational efficiency, and 3. a disciplined capital allocation framework.
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Since 2019, our focus has been on our transformational strategy, moving from a traditional manufacturing “company of companies” to a more technologically focused “company of products.” We worked to integrate the numerous technology platforms we obtained over the years through our various acquisitions to achieve a connected, modern technology platform.
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The actions we have taken since we began our transformation in 2019 allowed us to pivot from a legacy check printer into a modern payments and data company. We divested non-strategic businesses, and the remainder of our business experienced its third consecutive year of growth in 2023, with profits growing faster than revenue.
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We assembled a talented management team and built an organization focused on developing new and improved products. As a result, we are realizing the benefit of significant new client wins in all of our segments, and in 2022, we generated consolidated sales-driven revenue growth for the second consecutive year.
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Our largest cash generator, Checks, is outperforming the market, while holding margins steady in the mid-40% range. Having laid this groundwork, we have confidence in our ability to deliver greater shareholder return through our focus on growth in payments and data.
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In June 2021, we completed the acquisition of First American Payment Systems, L.P. (First American), a large-scale payments technology company that provides partners and merchants with comprehensive in-store, online and mobile payment solutions.
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We recently announced our North Star program, the goal of which is to further drive shareholder value by (1) expanding our earnings before interest, taxes, depreciation and amortization ("EBITDA") growth trajectory, (2) driving increased cash flow, (3) paying down debt, and (4) improving our leverage ratio.
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The acquisition enables us to expand significantly in the fast-growing payments sector, a sector known for generating significant recurring revenues and cash flows, and revenue from our growing Payments segment is expected to surpass that of our Checks segment during the first half of 2023.
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North Star is an integrated, multi-year plan that is a mix of cost reduction and growth initiatives, with the mix skewing toward cost reductions. On the cost side, much of the work is an evolution of our organizational design and ongoing infrastructure and operations transformation.
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We now have an even stronger foundation from which to pursue future acquisitions or strategic partnerships that will allow us to potentially realize significant revenue synergies, and we believe that our scaled back-end processing will readily support incremental volume. Moving into the next stage of our transformation, we remain focused on strategic growth and scaling our operations.
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We have already completed our initial organizational redesign, combining like-for-like roles, reducing layers and expanding spans of control.
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This includes maximizing our payments and data products, increasing recurring revenue streams, strengthening our talent and culture, and accelerating our portfolio rationalization efforts. For example, we sold our Australian web hosting business during 2022 and expect to complete the sale of our North American web hosting business in the first quarter of 2023.
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As we begin 2024, we are using technology and process automation to digitize and streamline our processes, and we are continuing to drive scale in our operations by consolidating many of our back-office functions, improving our marketing and sales capabilities, and leveraging the global labor market.
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We also sold two smaller product lines within our Promotional Solutions segment. The sale of these businesses allows us to focus our resources on the key growth areas of payments and data. As we invest in these growth areas, we continue efforts to lower costs and simplify and eliminate duplicative processes.
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On the revenue side, we are focused on priorities such as building our integrated software channel in merchant services, expanding our data business to serve additional industry verticals, and evaluating pricing opportunities. All of our North Star investments must meet our internal hurdle rate and generate a higher return than other uses of capital, such as paying down debt.
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We continue to review our real estate footprint, and in 2022, we closed 6 facilities, in addition to the 40 facilities we closed during 2021 and 2020. We are continually refining our operating model to match expected customer needs and anticipated volumes, as well as to gain efficiencies.
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The overall North Star program targets a $100 million run-rate improvement in free cash flow and an $80 million run-rate improvement in adjusted EBITDA by 2026. North Star is a critical next step to accelerate our shift into a profitable modern payments and data company.
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UPDATE ON COVID-19 IMPACT ON OUR BUSINESS The health and safety of our employees, our customers and their families is always our top priority. As of the date of this filing, all of our facilities are fully operational.
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This results in deeper customer relationships, and we move 4 from being a transactional vendor to a trusted partner. Then, as the relationship deepens, we uncover even more opportunities for future growth, giving us the opportunity to sell additional products and services.
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When COVID-19 struck, we implemented a variety of new policies and procedures, including additional cleaning, social distancing, and significantly restricting on-site visitors, to minimize the risk to our employees of contracting COVID-19.
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OUR BUSINESSES Payments merchant services We provide a full range of payment processing services primarily to small and medium-sized retail and service businesses, including nonprofit organizations. These services include credit card, debit card and electronic benefit transaction processing; check guarantee and conversion; and point-of-sale (“POS”) equipment leasing.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTo date, we have not incurred significant losses from payment-related fraud. However, such transactions negatively impact our results of operations and could subject us to penalties from payment card networks for inadequate fraud protection. 18 In addition, changes to the payment card networks' rules or how they are interpreted could have a significant impact on our business and financial results.
Biggest changeChanges to the payment card networks' rules or how they are interpreted could have a significant impact on our business and financial results. For example, changes in the rules regarding chargebacks may affect our ability to dispute chargebacks and the amount of losses we incur from chargebacks.
The integration of any acquisition involves numerous risks, including, among others: • the inability to successfully combine the businesses in a manner that permits us to achieve the revenue synergies and cost savings anticipated to result from the acquisition, which would result in the anticipated benefits of the acquisition not being realized in the anticipated timeframe or at all; • difficulties and/or delays in assimilating operations and ensuring that a strong system of information security and controls is in place; • the complexities of integrating a company with different products, services, markets and customers; • performance shortfalls due to the diversion of management's attention from other business concerns; • lost sales and customers as a result of certain customers, retail partners, financial institutions or other third parties deciding not to do business with us; • unanticipated integration costs; • complexities associated with implementing necessary controls for the acquired business activities to address our requirements as a public company; • difficulties in identifying and eliminating redundant and underperforming functions and assets; • the complexities of assimilating the acquired business into our corporate culture and management philosophies; • unidentified issues not discovered during our due diligence process, including product or service quality issues, intellectual property issues and tax or legal contingencies; • failure to address legacy distributor account protection rights; and • loss of key employees.
The integration of any acquisition involves numerous risks, including, among others: • the inability to successfully combine the businesses in a manner that permits us to achieve the revenue synergies and cost savings anticipated, which would result in the anticipated benefits of the acquisition not being realized in the anticipated timeframe or at all; • difficulties and/or delays in assimilating operations and ensuring that a strong system of information security and controls is in place; • the complexities of integrating a company with different products, services, markets and customers; • performance shortfalls due to the diversion of management's attention from other business concerns; • lost sales and customers as a result of certain customers, retail partners, financial institutions or other third parties deciding not to do business with us; • unanticipated integration costs; • complexities associated with implementing necessary controls for the acquired business activities to address our requirements as a public company; • difficulties in identifying and eliminating redundant and underperforming functions and assets; • the complexities of assimilating the acquired business into our corporate culture and management philosophies; • unidentified issues not discovered during our due diligence process, including product or service quality issues, intellectual property issues, and tax or legal contingencies; • failure to address legacy distributor account protection rights; and • loss of key employees.
The failure of our brand promotion activities to meet our expectations or our failure to provide a high-quality customer experience for any reason could adversely affect our ability to attract new customers and maintain customer relationships, which would adversely harm our business and results of operations. Our cost reduction initiatives may not be successful.
The failure of our brand promotion activities to meet our expectations or the failure to provide a high-quality customer experience for any reason could adversely affect our ability to attract new customers and maintain customer relationships, which would adversely harm our business and results of operations. Our cost reduction initiatives may not be successful.
In addition to the possibility of losing a significant client, the inability to recover prepaid product discount payments made to one or more of our larger financial institution clients, or the inability to collect accounts receivable or contractually required contract termination payments, could have a significant negative impact on our results of operations.
In addition to the possibility of losing a significant client, the inability to recover prepaid product discount payments made to one or more of our larger financial institution clients, or the inability to collect accounts receivable or contractually required contract termination payments, could have a negative impact on our results of operations.
Circumstances that could indicate a decline in the fair value of one or more of our reporting units include, but are not limited to, the following: • a downturn in economic conditions that negatively affects our actual and forecasted operating results; • changes in our business strategy, structure and/or the allocation of resources; • the failure of our growth strategy; • the inability of our acquisitions to achieve expected operating results; • changes in market conditions, including increased competition; 21 • the loss of significant customers; • a decline in our stock price for a sustained period; or • a material acceleration of order volume declines for checks and business forms.
Circumstances that could indicate a decline in the fair value of one or more of our reporting units include, but are not limited to, the following: • a downturn in economic conditions that negatively affects our actual and forecasted operating results; • changes in our business strategy, structure and/or the allocation of resources; • the failure of our growth strategy; • the inability of our acquisitions to achieve expected operating results; • changes in market conditions, including increased competition; • the loss of significant customers; • a decline in our stock price for a sustained period; or • a material acceleration of order volume declines for checks or business forms.
Contractual provisions with third parties, including cloud service providers, may limit our ability to recover losses resulting from the security breach of a business partner. There are international, federal and state laws and regulations requiring companies to notify individuals of information security breaches involving their personal data, the cost of which would negatively affect our financial results.
Contractual provisions with third parties, including cloud service providers, may limit our ability to recover losses resulting from the security breach of a business partner. 15 There are international, federal and state laws and regulations requiring companies to notify individuals of information security breaches involving their personal data, the cost of which would negatively affect our financial results.
Competition in the payments industry is intense. We are competing against numerous financial technology (Fintech) companies, including independent payment processors, credit card processing firms and treasury management service providers, as well as financial institution in-house capabilities. Volume is the key to staying cost-competitive, and breadth of services is critical to staying relevant to customers.
Competition in the payments industry is intense. We are competing against numerous financial technology ("Fintech") companies, including independent payment processors, credit card processing firms and treasury management service providers, as well as financial institution in-house capabilities. Volume is the key to remaining cost-competitive, and breadth of services is critical to staying relevant to customers.
We could lose current and potential customers if we are unable to develop products and services that meet changing demands in a timely manner. Additionally, we must continue to develop our skills, tools and capabilities to capitalize on existing and emerging technologies, and this requires significant investment, takes considerable time and ultimately, may not be successful.
We could lose current and potential customers if we are unable to develop products and services that meet changing demands in a timely manner. Additionally, we must continue to develop our skills, tools and capabilities to capitalize on existing and emerging technologies, and this requires significant investment, takes 12 considerable time and ultimately, may not be successful.
We use a variety of methods to promote our products and services, including a direct sales force, partner referrals, email marketing, purchased search results from online search engines, direct mail advertising, broadcast media, advertising banners, social media and other online links. Certain of these methods may become less effective or more expensive.
We use a variety of methods to promote our products and services, including a direct sales force, partner referrals, email marketing, purchased search results from online search engines, direct mail advertising, broadcast media, advertising banners, social media and other 11 online links. Certain of these methods may become less effective or more expensive.
Within our Data Solutions segment, our data-driven marketing services face intense competition from a wide variety of companies in the data solutions space, including advertising agencies, marketing technology firms, data aggregators and brokers, and source data providers. Adapting to new technology is a key challenge in this business, along with hiring and retaining the right people.
Within our Data Solutions segment, our data-driven marketing services face competition from a wide variety of companies in the data solutions space, including advertising agencies, marketing technology firms, data aggregators and brokers, and source data providers. Adapting to new technology is a key challenge in this business, along with hiring and retaining the right people.
We continue to closely monitor our supply chain to promptly address any further delays or disruptions, but we can provide no assurance that our ability to provide products to our customers will not be adversely impacted if our supply chain is compromised. Paper costs represent a significant portion of our materials expense.
We continue to closely monitor our supply chain to promptly address any delays or disruptions, but we can provide no assurance that our ability to provide products to our customers will not be adversely impacted if our supply chain is compromised. Paper costs represent a significant portion of our materials expense.
Moreover, we may find that we are unable to achieve business simplification and/or cost reduction goals without disrupting our business, negatively impacting efforts to grow our business or reducing the effectiveness of our sustainability practices. As a result, we may choose to delay or forgo certain cost reductions as business conditions require.
Moreover, we may find that we are unable to achieve business simplification and/or cost reduction goals without disrupting our business, negatively impacting efforts to grow our business or reducing the effectiveness of our sustainability practices. As a result, we may choose to delay or forgo certain cost 13 reductions as business conditions require.
Moreover, to the extent that any system failure or similar event results in damages to our customers or contractual counterparties, these customers and contractual counterparties could seek compensation from us for their losses, and those claims, even if unsuccessful, would likely be time-consuming and costly for us to address.
Moreover, to the extent that any system failure or similar event results in damages to our customers or contractual counterparties, those customers and contractual counterparties could seek compensation from us for their losses, and those claims, even if unsuccessful, would likely be time-consuming and costly for us to address.
A challenging economic environment could cause existing and potential customers to not purchase or to delay purchasing our products and services. Continued inflationary pressures could negatively impact our customers' ability to purchase our products and services, thereby negatively impacting our revenue and results of operations. A significant portion of our business relies on small business spending.
A challenging economic environment could cause existing and potential customers to not purchase or to delay purchasing our products and services. Continued inflationary 19 pressures could negatively impact our customers' ability to purchase our products and services, thereby negatively impacting our revenue and results of operations. A significant portion of our business relies on small business spending.
Competitive pressure may inhibit our ability to reflect increased costs in the prices of our products and services and/or 12 new marketing strategies may not be successful. Either of these occurrences would have an adverse impact on our ability to compete and our results of operations would be adversely affected.
Competitive pressure may inhibit our ability to reflect increased costs in the prices of our products and services and/or new marketing strategies may not be successful. Either of these occurrences would have an adverse impact on our ability to compete and our results of operations would be adversely affected.
If small business preferences change rapidly and we are unable to develop new products and services with comparable operating margins, our results of operations would be adversely affected. 14 Our business depends on our strong and trusted brand, and any failure to maintain, protect and enhance our brand would hurt our business.
If small business preferences change rapidly and we are unable to develop new products and services with comparable operating margins, our results of operations would be adversely affected. Our business depends on our strong and trusted brand, and any failure to maintain, protect and enhance our brand would hurt our business.
We could also lose our ability to accept and process credit and debit card payments, which would likely result in the loss of customers and the inability to attract new customers. We could also be exposed to time-consuming and 16 expensive litigation, government inquiries and/or enforcement actions.
We could also lose our ability to accept and process credit and debit card payments, which would likely result in the loss of customers and the inability to attract new customers. We could also be exposed to time-consuming and expensive litigation, government inquiries and/or enforcement actions.
These regulations and agreements typically limit our ability to use or disclose personal information for other than the purposes originally intended, which could limit business opportunities. Proposed privacy and cybersecurity regulations may also increase the cost of compliance for the protection of collected data.
These regulations and agreements typically limit our ability to use or disclose personal information for other than the purposes 18 originally intended, which could limit business opportunities. Proposed privacy and cybersecurity regulations may also increase the cost of compliance for the protection of collected data.
We sell checks for personal and business use and believe that there will continue to be demand for personal and business checks for the foreseeable future, although the total number of checks written in the U.S. has been in decline since the mid-1990s.
We sell checks for personal and business use and believe that there will continue to be demand for personal and business checks for the foreseeable future, although the total number of checks written in the U.S. has been in decline since the 1990s.
We may need to seek additional financing for larger acquisitions, which would increase our debt obligations and may not be available on terms that are favorable to us.
We may need to seek additional financing for larger acquisitions, which would increase our debt obligations, and such financing may not be available on terms that are favorable to us.
We are subject to risks associated with the cost and availability of paper, plastics, ink, promotional materials, merchant services point-of-sale equipment and other raw materials, as well as various third-party services we utilize, including delivery services. In addition, from time-to-time, the card networks, including Visa ® and Mastercard ® , increase the fees that they charge processors.
We are subject to risks associated with the cost and availability of paper, plastics, ink, promotional materials, merchant services point-of-sale equipment and other raw materials, as well as various third-party services we utilize, including delivery and data provider services. In addition, from time-to-time, the card networks, including Visa ® and Mastercard ® , increase the fees that they charge processors.
The number and significance of these claims and proceedings has increased as our businesses have evolved and expanded in scope. These claims, whether successful or not, could divert management's attention, result in costly and time-consuming litigation, or both. Accruals for identified claims or lawsuits are established based on our best estimates of the probable liability.
The number and significance of these claims and proceedings has increased as our businesses have evolved and expanded in scope. These claims, whether successful or not, could divert management's attention, result in costly and time-consuming litigation, or both. Accruals for identified claims or lawsuits are established based on our best estimate of the probable liability.
Increased use of alternative payment methods, or our inability to successfully offset the secular decline in check usage with new check supply clients or other sources of revenue, would have an adverse effect on our business, cash flows and results of operations. The use of business forms has also been declining.
Increased use of alternative payment methods, or our inability to successfully offset the secular decline in checks with new check supply clients or other sources of revenue, would have an adverse effect on our business, cash flows and results of operations. The use of business forms has also been declining.
We have developed a strong and trusted brand that has contributed significantly to the success of our business. We believe that maintaining and promoting our brand in a cost-effective manner is critical to achieving widespread acceptance of our products and services, expanding our base of customers, and attracting and retaining top talent throughout the organization.
We have developed a strong and trusted brand that has contributed significantly to the success of our business. We believe that maintaining and promoting our brand in a cost-effective manner is critical to achieving widespread acceptance of our products and services, expanding our base of customers, and attracting and retaining top talent.
If we are unable to implement improvements to our customer-facing technology in a timely manner, or if our customer-facing technology does not function as designed, we could find it increasingly difficult to attract new and returning visitors, which would result in decreased revenue. We face intense competition from other business enterprises, and we expect that competition will continue to increase.
If we are unable to implement improvements to our customer-facing technology in a timely manner, or if our customer-facing technology does not function as designed, we could find it increasingly difficult to attract new and returning visitors, which would result in decreased revenue. We face intense competition from other businesses, and we expect that competition will continue to increase.
We employ a defensive in-depth strategy, utilizing the concept of security layers and the CIA (confidential, integrity and availability) triad model. Computer systems and networks are, by nature, vulnerable to unauthorized access.
We employ a defense-in-depth strategy, utilizing the concept of security layers and the CIA (confidential, integrity and availability) triad model. Computer systems and networks are, by nature, vulnerable to unauthorized access.
Information regarding our 2022 impairment analyses can be found under the caption "Note 8: Fair Value Measurements" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
Information regarding our 2023 impairment analyses can be found under the caption "Note 8: Fair Value Measurements" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
In addition, we depend on a number of third parties, including vendors, developers and partners, that are critical to our business and to which we may grant access to our customer or employee data.
We depend on a number of third parties, including vendors, developers and partners, that are critical to our business and to which we may grant access to our customer or employee data.
Cost reduction initiatives have required, and will continue to require, up-front expenditures related to various actions, such as redesigning and streamlining processes, consolidating information technology platforms, standardizing technology applications, further enhancing our strategic supplier sourcing arrangements, improving real estate utilization and funding employee severance benefits.
Cost reduction initiatives have required, and will continue to require, up-front expenditures related to various actions, such as redesigning and streamlining processes, standardizing technology applications, further enhancing our strategic supplier sourcing arrangements, improving real estate utilization and funding employee severance benefits.
Our strategic plan could fall short of our expectations for many reasons, including, among others: • our failure to generate profitable revenue growth; • our inability to acquire new customers, retain our current customers and sell more products and services to current and new customers; • our failure to fully utilize new sales technology that enables a single view of our customers; • our inability to implement additional improvements to our technology infrastructure, our digital services offerings and other key assets to increase efficiency, enhance our competitive advantage and scale our operations; • our failure to develop new products and services; • our failure to effectively manage the growth, expanding complexity and pace of change of our business and operations; • our inability to effectively operate, integrate or leverage businesses we acquire; • the failure of new products and services to achieve widespread customer acceptance; • our inability to promote, strengthen and protect our brand; • an unexpected change in demand for checks or other products; • our failure to attract and retain skilled talent to execute our strategy and sustain our growth; • unanticipated changes in our business, markets, industry or the competitive landscape; and • general economic conditions.
Our strategic plan could fall short of our expectations for many reasons, including, among others: • our failure to generate profitable revenue growth; • our inability to acquire new customers, retain our current customers and sell more products and services to current and new customers; • our inability to implement additional improvements to our technology infrastructure, our digital services offerings and other key assets to increase efficiency, enhance our competitive advantage and scale our operations; • our failure to develop new products and services; • our failure to effectively manage the growth, expanding complexity and pace of change of our business and operations; • our inability to effectively operate, integrate or leverage businesses we acquire; • the failure of new products and services to achieve widespread customer acceptance; • our inability to promote, strengthen and protect our brand; • an unexpected change in demand for checks or other products; • our failure to attract and retain skilled talent to execute our strategy and sustain our growth; • unanticipated changes in our business, markets, industry or the competitive landscape; and • general economic conditions.
We also provide services that are instrumental in supporting our customers and their businesses, such as website/email hosting and remittance processing. Cybersecurity is one of the top risks identified by our Enterprise Risk Management Committee, as technology-based organizations such as ours are vulnerable to targeted attacks aimed at exploiting network and system weaknesses.
We also provide services that are instrumental in supporting our customers and their businesses, such as merchant services and remittance processing. Cybersecurity is one of the top risks identified by our Enterprise Risk Management Committee, as technology-based organizations such as ours are vulnerable to targeted attacks aimed at exploiting network and system weaknesses.
Even after such impacts subside, the U.S. economy may experience a recession, and our business could be adversely affected by a prolonged recession. Asset impairment charges would have a negative impact on our results of operations. Goodwill represented 46.5% of our total assets as of December 31, 2022.
Even after such impacts subside, the U.S. economy may experience a recession, and our business could be adversely affected by a prolonged recession. Asset impairment charges would have a negative impact on our results of operations. Goodwill represented 46.4% of our total assets as of December 31, 2023.
If interest rates were to continue to increase, our interest expense would increase, negatively affecting earnings and reducing cash flows available for working capital, capital expenditures and other investments. To address the risk associated with variable-rate debt, we entered into interest rate swaps to convert $500.0 million of our variable-rate debt to a fixed rate.
If interest rates were to continue to increase, our interest expense would increase, negatively affecting earnings and reducing cash flows available for working capital, capital expenditures and other investments. To address the risk associated with variable-rate debt, we entered into interest rate swaps to convert a portion of our variable-rate debt to a fixed rate.
One or more of these factors could impact our ability to successfully operate, integrate or leverage an acquisition and could materially and adversely affect our business and financial results. We have indicated that we plan to supplement sales-driven revenue growth with strategically targeted acquisitions over time.
One or more of these factors could impact our ability to successfully operate, integrate or leverage an acquisition and could materially and adversely affect our business and financial results. We may supplement sales-driven revenue growth with strategically targeted acquisitions over time.
Frequent or persistent interruptions in our operations could cause customers to believe that our products and services are unreliable, leading them to switch to our competitors or to avoid our products and services. In recent years, we shifted a substantial portion of our applications to a cloud-based environment.
Frequent or persistent interruptions in our operations could cause customers to believe that our products and services are unreliable, leading them to switch to our competitors or to avoid our products and services. A substantial portion of our applications reside in a cloud-based environment.
Any disruptions, delays or deficiencies in the design, implementation or operation of our systems, particularly any disruptions, delays or deficiencies that impact our operations, including smoothly executing the implementation of our ERP system, could adversely affect our ability to effectively run and manage our business.
Any disruptions, delays or deficiencies in the design, implementation or operation of our systems, particularly any disruptions, delays or deficiencies that impact our operations, could adversely affect our ability to effectively run and manage our business.
We have completed many acquisitions during the past several years, including the acquisition of First American in June 2021, which was the largest acquisition in our history. In addition, we purchased the operations of several small business distributors with the intention of growing revenue in our dealer channels.
We have completed many acquisitions, including the acquisition of First American Payment Systems, L.P. in June 2021, which was the largest acquisition in our history. In addition, we have, at times, purchased the operations of small business distributors with the intention of growing revenue in our dealer channels.
As a result of the COVID-19 pandemic, remote working arrangements became more widely accepted and it is more challenging for us to maintain and enhance our corporate culture and to navigate the flexible working arrangements that employees may demand.
As remote working arrangements have become more widely accepted, it is more challenging for us to maintain and enhance our corporate culture and to navigate the flexible working arrangements that employees may demand.
Individuals or third parties may be able to circumvent controls and/or exploit vulnerabilities that may exist, resulting in the disclosure or misuse of sensitive business and personal customer or employee information and data. We utilize third-party providers to help support and provide our services to customers.
Individuals or third parties may be able to circumvent controls and/or exploit vulnerabilities that may exist, resulting in the disclosure or misuse of sensitive business and personal customer or employee information and data.
You should carefully consider all of these risks and uncertainties before investing in our common stock. STRATEGIC RISKS If our long-term growth strategy is not successful, our business and financial results would be adversely impacted. Our vision is to be a trusted technology partner empowering businesses to pay, get paid and grow.
You should carefully consider all of these risks and uncertainties before investing in our common stock. STRATEGIC RISKS If our long-term growth strategy is not successful, our business and financial results would be adversely impacted.
Checks continue to be a significant portion of our business, accounting for 32.6% of our consolidated revenue in 2022, and providing a significant amount of the cash flows we invest in our growth businesses, although our Payments segment now rivals our Checks segment in terms of revenue.
Checks continue to be a significant portion of our business, accounting for 32.9% of our consolidated revenue in 2023, and providing a significant amount of the cash flows we invest in our growth businesses.
For example, changes in the rules regarding chargebacks may affect our ability to dispute chargebacks and the amount of losses we incur from chargebacks. Changes in network rules may also increase the cost of, impose restrictions on, or otherwise impact the development of, our retail point-of-sale solutions, which may negatively affect their deployment and adoption.
Changes in network rules may also increase the cost of, impose restrictions on, or otherwise impact the development of, our retail point-of-sale solutions, which may negatively affect their deployment and adoption.
Additionally, acquisitions may result in additional contingent liabilities, additional amortization expense, and/or future non-cash asset impairment charges related to acquired intangible assets and goodwill, and thus, could adversely affect our business, results of operations and financial condition. The use of checks and forms is declining and we may be unable to offset the decline with profitable revenue growth.
Additionally, acquisitions may result in additional contingent liabilities, additional amortization expense, and/or future non-cash asset impairment charges related to acquired intangible assets and goodwill, and thus, could adversely affect our business, results of operations and financial condition.
We expect inflationary pressures to continue into fiscal 2023, and this trend could have a material adverse impact if inflation rates significantly exceed our ability to continue to achieve price increases or if such price increases adversely impact demand for our products.
Increased levels of inflation have resulted in cost increases for certain of the materials and services we utilize. Inflationary pressures could continue into fiscal 2024, and this trend could have a material adverse impact if inflation rates significantly exceed our ability to achieve price increases or if such price increases adversely impact demand for our products.
The satisfactory performance, reliability and availability of our information technology systems, and those of our third-party service providers, is critical to our reputation and our ability to attract and retain customers.
Interruptions to our website operations or information technology systems or the failure to maintain our information technology platforms could damage our reputation and harm our business. The satisfactory performance, reliability and availability of our information technology systems, and those of our third-party service providers, is critical to our reputation and our ability to attract and retain customers.
We are also subject to additional requirements in certain of our contracts with financial institution clients and communications service providers, which are often more restrictive than the regulations, as well as confidentiality clauses in certain of our contracts related to small businesses’ customer information.
These laws and regulations require us to develop, implement and maintain certain policies and procedures related to payments. We are also subject to additional requirements in certain of our contracts with financial institution clients that are often more restrictive than the regulations, as well as confidentiality clauses in certain of our contracts related to small businesses’ customer information.
Emerging from the COVID-19 pandemic, we have experienced supply chain disruptions, including impacts on the supply of certain higher margin printed products in our Promotional Solutions segment, and the continuing Russia-Ukraine dispute could cause further disruption in the global supply chain.
We have, at times, experienced supply chain disruptions, including impacts on the supply of certain printed products in our Promotional Solutions segment, and continuing global unrest could cause further disruption in the global supply chain.
As of December 31, 2022, $684.4 million of our outstanding debt was subject to variable interest rates.
As of December 31, 2023, $357.5 million of our outstanding debt was subject to variable interest rates. 20
Additionally, while we have policies and procedures for managing these relationships, they inherently involve a lesser degree of 17 control over business operations, governance and compliance, thereby potentially increasing our financial, legal, reputational and operational risk.
Additionally, while we have policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, governance and compliance, thereby potentially increasing our financial, legal, reputational and operational risk. 16 If we are unable to attract, motivate and retain key personnel and other qualified employees, our business and results of operations could be adversely impacted.
We are currently devoting significant management 13 attention and resources to integrating the business practices and operations of First American and our previous acquisitions.
We have devoted significant management attention and resources to integrating the business practices and operations of our acquisitions.
Global events, such as the COVID-19 pandemic and the actions taken in response to it, as well as the Russia-Ukraine dispute, significantly increase economic uncertainty. Given the ongoing and dynamic nature of these events, we cannot predict the impact on our business, financial position or results of operations.
Global events, such as outbreaks of illnesses, pandemics like COVID-19, or other political and economic instability, significantly increase economic uncertainty. Given the ongoing and dynamic nature of these events, we cannot predict the impact on our business, financial position or results of operations.
Such events could have the effect of heightening or exacerbating many of the other risks described in this Risk Factors discussion. Security breaches, computer malware or other cyberattacks involving the confidential information of our customers, employees or business partners could substantially damage our reputation, subject us to litigation and enforcement actions, and substantially harm our business and results of operations.
Any of these factors could adversely affect our business, results of operations and financial condition. 14 OPERATIONAL RISKS Security breaches, computer malware or other cyberattacks involving the confidential information of our customers, employees or business partners could substantially damage our reputation, subject us to litigation and enforcement actions, and substantially harm our business and results of operations.
Failure to continue to improve our operating efficiency and to generate adequate savings to fund necessary investments could adversely affect our business if we are unable to remain competitive.
Failure to continue to improve our operating efficiency and to generate adequate savings to fund necessary investments could adversely affect our business if we are unable to remain competitive. We may be unable to successfully identify future acquisitions, integrate past and future acquisitions or realize the anticipated benefits of the transactions.
The complexity of compliance with these various regulations may increase our cost of doing business and may affect our clients, reducing their discretionary spending and thus, reducing their capacity to purchase our products and services. 19 Due to our increased use of the internet for sales and marketing, laws specifically governing digital commerce, the internet, mobile applications, search engine optimization, behavioral advertising, privacy and email marketing may have an impact on our business.
Due to our increased use of the internet for sales and marketing, laws specifically governing digital commerce, the internet, mobile applications, search engine optimization, behavioral advertising, privacy and email marketing may have an impact on our business.
Competition for employees is intense, even more so in the current challenging labor market. We have implemented various human capital initiatives, including employee wellness initiatives, the introduction of employee resource groups and a revised performance management process, to make Deluxe an attractive place to work.
In addition, we must develop our personnel to fulfill succession plans capable of maintaining continuity in the midst of the inevitable unpredictability of human capital. Competition for employees is intense. We have implemented various human capital initiatives, including employee wellness initiatives, employee resource groups and a revised performance management process, to make Deluxe an attractive place to work.
In addition, the RTP ® system run by The Clearing House Payments Company, LLC is a real-time payments system that currently reaches approximately 60% of U.S. bank accounts. The U.S. Federal Reserve has announced that it plans to develop its own real-time payments system, FedNow SM , with an expected launch in mid-2023.
In addition, the RTP ® system run by The Clearing House Payments Company, LLC is a real-time payments system that currently reaches approximately 65% of U.S. bank accounts, and the U.S. Federal Reserve's real-time payments system, FedNow ® , went live in July 2023.
Economic conditions have affected, and will continue to affect, our results of operations and financial position.
FINANCIAL RISKS Economic conditions may adversely affect trends in business and consumer spending, which may adversely impact demand for our products and services. Economic conditions have affected, and will continue to affect, our results of operations and financial position.
Further information about our strategy can be found under the caption " Our Strategy" appearing in Part I, Item 1 of this report. We may not achieve our long-term objectives, and investments in our business may fail to impact our financial results as anticipated.
We may not achieve our long-term objectives, and investments in our business may fail to impact our financial results as anticipated.
Any of the foregoing risks could result in harm to our business, results of operations and growth prospects. We may be unable to successfully identify future acquisitions, integrate past and future acquisitions and realize the anticipated benefits of the transactions.
Any of the foregoing risks could result in harm to our business, results of operations and growth prospects. The use of checks and business forms is declining and we may be unable to offset the decline with profitable revenue growth.
To successfully compete and grow, we must recruit, develop, motivate and retain personnel who can provide the needed expertise across the organization. In addition, we must develop our personnel to fulfill succession plans capable of maintaining continuity in the midst of the inevitable unpredictability of human capital.
We operate in a rapidly changing technological environment that requires a wide ranging set of expertise and intellectual capital. To successfully compete and grow, we must recruit, develop, motivate and retain personnel who can provide the needed expertise across the organization.
We have invested, and will continue to invest, significant resources to build out, maintain and improve our technology platforms and to integrate our various businesses. We are in the process of converting to a new ERP system.
Any failure to deliver an effective and secure product or any performance issue that arises with a new product or service could result in significant processing or reporting errors or other losses. We have invested, and will continue to invest, significant resources to build out, maintain and improve our technology platforms.
Removed
OPERATIONAL RISKS We are unable to predict the extent to which COVID-19 or other outbreaks, epidemics, pandemics, or public health crises may adversely impact our business, financial condition and results of operations.
Added
Our strategy is to utilize the cash flows, customer relationships and brand equity from our print businesses to drive profitable organic growth in our payments and data businesses. Further information about our strategy can be found under the caption " Our Strategy" appearing in Part I, Item 1 of this report.
Removed
Although the immediate impacts of the COVID-19 pandemic have declined, the sweeping nature of the pandemic makes it extremely difficult to predict how our business and operations may be affected in the longer term.
Added
Our inability to complete certain divestitures or the effects of divesting a business could have a material adverse effect on our business and financial results. From time to time, we may divest businesses that do not meet our strategic objectives.
Removed
The extent to which COVID-19 continues to impact our business depends on future developments, many of which are unknown, such as: the severity and duration of the pandemic, including the impact of COVID-19 variants; governmental, business and individuals' actions in response to the pandemic; vaccination rates; and the resulting impact on economic activity and the financial markets.
Added
For instance, we recently completed the exit from our web hosting business, and we are in the process of exiting our payroll and human resources services business. We may not be able to complete desired divestitures on favorable terms. Losses on the sales of, or lost earnings from, those businesses could negatively affect our profitability and margins.
Removed
There are no comparable recent events that provide guidance as to the effect the COVID-19 pandemic may have, and, as a result, the ultimate impact of the pandemic is highly uncertain and subject to change.
Added
Additionally, we may incur asset impairment charges related to potential divestitures that reduce our profitability.
Removed
In addition to the above impacts, at the onset of the COVID-19 pandemic in 2020, all of our employees who had the ability to work from home did so, and the success of our work-from-home model allowed us to accelerate certain site closures.
Added
Our divestiture activities may also present operational risks, including the diversion of management's attention from our other businesses, difficulties separating personnel and systems, the need to provide transition services to buyers, adverse effects on existing business relationships with suppliers and customers, and indemnities and potential disputes with the buyers.
Removed
Although our facilities re-opened in late 2021, a portion of our employees now work remotely on a permanent basis and many others work remotely for portions of each work week, which increases our cybersecurity and data security risk.
Added
In addition, certain of the services we deliver to the payments technology market are designed to process complex transactions and deliver reports and other information on those transactions, all at very high volumes and processing speeds.
Removed
Changes in the scope and severity of the pandemic may cause us to once again close certain of our facilities to protect the health of our employees, as a result of disruptions in the operation of our supply chain, or in response to a prolonged decrease in demand for our products and services.
Added
To date, we have not incurred material losses from payment-related fraud. However, such transactions negatively impact our results of operations and could subject us to penalties from payment card networks for inadequate fraud protection. We also may be liable if our merchants or other parties that have obligations to deliver goods or services to cardholders fail to satisfy their obligations.
Removed
Disruptions caused by future facility closures, along with the subsequent reintroduction of employees back into the workplace, could introduce operational risks, negatively impact productivity or result in claims by employees.
Added
For example, we may be subject to contingent liability for transactions originally acquired by us that are disputed by the cardholder and charged back to the merchants or other parties. These disputes could arise from fraud, misuse, unintentional use, settlement delay or failure, insufficiency of funds, returns, a failure to perform a service, or other reasons.
Removed
Other cascading effects of the COVID-19 pandemic, along with other outbreaks, epidemics, pandemics or public health crises that are not currently foreseeable, could materially increase our costs, negatively impact our revenue and adversely impact our results of operations and liquidity, possibly to a significant degree. We cannot predict the severity or duration of any 15 such impacts.
Added
If we are unable to collect this amount from the merchant or other party because of the merchant’s or other party’s insolvency or other reasons, we will bear the loss for the amount of the refund paid to the cardholder.
Removed
In addition, our information security risks have increased with the acquisition of companies with their own technologies, which we continue to integrate into our systems and processes. Until these technologies are integrated, we may experience a period of increased risk.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES As of December 31, 2022, we occupied 46 facilities throughout the U.S., 5 facilities in Canada and 2 facilities in Europe, where we conduct printing and fulfillment, payment processing, call center, data center and administrative functions.
Biggest changeITEM 2. PROPERTIES As of December 31, 2023, we occupied 37 facilities throughout the U.S. and 3 facilities in Canada, where we conduct printing and fulfillment, payment processing, call center, data center and administrative functions.
Removed
We closed 6 facilities during 2022, as we continued to assess our real estate footprint.
Added
We reduced the number of facilities by 13 during 2023, driven by the continued assessment of our real estate footprint and business exits.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of December 31, 2022, the number of shareholders of record was 5,073, excluding shareholders whose shares are held in the name of various dealers, clearing agencies, banks, brokers and other fiduciaries.
Biggest changeAs of December 31, 2023, the number of shareholders of record was 4,897, excluding shareholders whose shares are held in the name of various dealers, clearing agencies, banks, brokers and other fiduciaries. In October 2018, our board of directors authorized the repurchase of up to $500.0 million of our common stock. This authorization has no expiration date.
No shares were repurchased under this authorization during the fourth quarter of 2022 and $287.5 million remained available for repurchase as of December 31, 2022. 23 The table below compares the cumulative total shareholder return on our common stock for the last five fiscal years with the cumulative total return of the S&P MidCap 400 Index and the Dow Jones U.S.
No shares were repurchased under this authorization during the fourth quarter of 2023 and $287.5 million remained available for repurchase as of December 31, 2023. 22 The table below compares the cumulative total shareholder return on our common stock for the last five fiscal years with the cumulative total return of the S&P MidCap 400 Index and the Dow Jones U.S.
Support Services (DJUSIS) Index. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ASSUMES INITIAL INVESTMENT OF $100 DECEMBER 2022 The graph assumes that $100 was invested on December 31, 2017 in each of Deluxe common stock, the S&P MidCap 400 Index and the DJUSIS Index, and that all dividends were reinvested. Prepared by: Zack's Investment Research, Inc. Used with permission.
Support Services ("DJUSIS") Index. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ASSUMES INITIAL INVESTMENT OF $100 DECEMBER 2023 The graph assumes that $100 was invested on December 31, 2018 in each of Deluxe common stock, the S&P MidCap 400 Index and the DJUSIS Index, and that all dividends were reinvested. Prepared by: Zack's Investment Research, Inc. Used with permission.
All rights reserved. Copyright 1980-2023. Index Data: Copyright Standard and Poor's, Inc. Used with permission. All rights reserved. Index Data: Copyright Dow Jones, Inc. Used with permission. All rights reserved. ITEM 6. [RESERVED]
All rights reserved. Copyright 1980-2024. Index Data: Copyright Standard and Poor's, Inc. Used with permission. All rights reserved. Index Data: Copyright Dow Jones, Inc. Used with permission. All rights reserved. ITEM 6. [RESERVED]
Removed
The following table shows purchases of our common stock that were completed during the fourth quarter of 2022: Period Total number of shares purchased (1) Average price paid per share (1) Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (2) October 1, 2022 – October 31, 2022 371 $ 16.91 — 287,452,394 November 1, 2022 – November 30, 2022 7,957 19.41 — 287,452,394 December 1, 2022 – December 31, 2022 192 16.52 — 287,452,394 Total 8,520 19.24 — 287,452,394 (1) Under the terms of our 2022 Stock Incentive Plan, as well as our previous long-term incentive plans, participants may surrender shares that would otherwise be issued under equity-based awards to cover the withholding taxes due as a result of the exercise or vesting of such awards.
Removed
During the fourth quarter of 2022, we withheld 8,520 shares in conjunction with the vesting and exercise of equity-based awards. (2) In October 2018, our board of directors authorized the repurchase of up to $500.0 million of our common stock. This authorization has no expiration date.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeOther Information 94 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 94 Item 10. Directors, Executive Officers and Corporate Governance 94 Item 11. Executive Compensation 94 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 94 Item 13. Certain Relationships and Related Transactions, and Director Independence 95 Item 14.
Biggest changeOther Information 87 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 87 Item 10. Directors, Executive Officers and Corporate Governance 87 Item 11. Executive Compensation 87 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 87 Item 13. Certain Relationships and Related Transactions, and Director Independence 88 Item 14.
When we use the words or phrases “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” “outlook,” "forecast" or similar expressions in this Annual Report on Form 10-K, in future filings with the Securities and Exchange Commission, in our press releases, investor presentations and in oral statements made by our representatives, they indicate forward-looking statements within the meaning of the Reform Act.
When we use the words or phrases “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” “outlook,” "forecast" or similar expressions in this Annual Report on Form 10-K, in future filings with the Securities and Exchange Commission ("SEC"), in our press releases, investor presentations and in oral statements made by our representatives, they indicate forward-looking statements within the meaning of the Reform Act.
Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and apply only as of the date of this report. We assume no obligation to update this information.
Readers are cautioned that all forward-looking statements are based on current expectations and estimates and apply only as of the date of this report. We assume no obligation to update this information.
Principal Accountant Fees and Services 95 Item 15. Exhibits and Financial Statement Schedules 95 Item 16. Form 10-K Summary 99 Signatures 100 2 PART I Please note that this Annual Report on Form 10-K contains statements that may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 (the "Reform Act").
Principal Accountant Fees and Services 88 Item 15. Exhibits and Financial Statement Schedules 88 Item 16. Form 10-K Summary 92 Signatures 93 2 PART I Please note that this Annual Report on Form 10-K contains statements that may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 (the "Reform Act").
Item 6. [Reserved] 24 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 24 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 40 Item 8. Financial Statements and Supplementary Data 42 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 93 Item 9A. Controls and Procedures 93 Item 9B.
Item 6. [Reserved] 23 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 38 Item 8. Financial Statements and Supplementary Data 40 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 86 Item 9A. Controls and Procedures 86 Item 9B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

98 edited+46 added−73 removed60 unchanged
Biggest changePartially offsetting these increases in net income were the following factors: • a $38.9 million increase in interest expense resulting from the effect of increasing interest rates on our variable-rate debt and the additional debt issued in June 2021 to complete the First American acquisition; • increased transformational investments, primarily costs related to our technology infrastructure; • inflationary pressures on hourly wages, materials and delivery and supply chain disruptions within the Promotional Solutions segment that impacted certain of our higher margin printed products during the first half of 2022; • the continuing secular decline in checks, business forms and some Promotional Solutions business accessories; and • a $7.7 million increase in acquisition amortization, driven, in part, by the First American acquisition.
Biggest changeA reconciliation of free cash flow, net debt and liquidity to the comparable GAAP financial measures can be found in Consolidated Results of Operations . 2023 earnings vs. 2022 – Multiple factors drove the decrease in net income for 2023, as compared to 2022, including: • increased investments in the business, primarily costs related to our technology infrastructure and a $27.3 million increase in restructuring and integration expense as we continue to take actions to grow earnings and optimize our cost structure; • a $31.2 million increase in interest expense resulting from increasing interest rates on our variable-rate debt; • the continuing secular decline in checks, business forms and some Promotional Solutions business accessories; • inflationary pressures on hourly wages, materials and delivery; and • the impact of business exits.
When we use the words or phrases “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” “outlook,” "forecast" or similar expressions in this Annual Report on Form 10-K, in future filings with the Securities and Exchange Commission, in our press releases, investor presentations and in oral statements made by our representatives, they indicate forward-looking statements within the meaning of the Reform Act.
When we use the words or phrases “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” “outlook,” "forecast" or similar expressions in this Annual Report on Form 10-K, in future filings with the Securities and Exchange Commission ("SEC"), in our press releases, investor presentations and in oral statements made by our representatives, they indicate forward-looking statements within the meaning of the Reform Act.
This approach is a valuation technique under which we estimate future cash flows using the reporting unit's financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we project revenue and apply our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows.
This approach is a valuation technique under which we estimate future cash flows using the reporting unit's financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we project revenue and apply our fixed and variable cost 36 experience rates to the projected revenue to arrive at the future cash flows.
The financial information presented below for our reportable business segments is consistent with that presented under the caption “Note 17: Business Segment Information” in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report, where information regarding revenue for our product and service offerings can also be found.
The financial information presented below for our reportable business segments is consistent with that presented 31 under the caption “Note 17: Business Segment Information” in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report, where information regarding revenue for our product and service offerings can also be found.
We weigh many factors when completing these estimates, including, but not limited to, the nature of the acquired company’s business; its competitive position, strengths, and challenges; its historical financial position and performance; estimated customer retention rates; discount rates; and future plans 38 for the combined entity.
We weigh many factors when completing these estimates, including, but not limited to, the nature of the acquired company’s business; its competitive position, strengths and challenges; its historical financial position and performance; estimated customer retention rates; discount rates; and future plans for the combined entity.
We have determined that we are the principal in these transactions, and revenue is recorded for the gross amount of consideration. 39 Certain costs incurred to obtain customer contracts are required to be recognized as assets and amortized consistent with the transfer of goods or services to the customer.
We have determined that we are the principal in these transactions, and revenue is recorded for the gross amount of consideration. Certain costs incurred to obtain customer contracts are required to be recognized as assets and amortized consistent with the transfer of goods or services to the customer.
Please note that this MD&A discussion contains forward-looking statements that involve risks and uncertainties. Part I, Item 1A of this report outlines known material risks and important information to consider when evaluating our forward-looking statements.
Please note that this MD&A discussion contains forward-looking statements that involve risks and uncertainties. Part I, Item 1A of this report outlines known material risks and important information to consider when evaluating our forward-looking 23 statements.
The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides a “safe harbor” for forward-looking 24 statements to encourage companies to provide prospective information.
The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) includes the following sections: • Executive Overview that discusses what we do, our operating results at a high level and our financial outlook for the upcoming year; • Consolidated Results of Operations; Restructuring and Integration Costs; and Segment Results that includes a more detailed discussion of our revenue and expenses; • Cash Flows and Liquidity, Capital Resources and Other Financial Position Information that discusses key aspects of our cash flows, financial commitments, capital structure and financial position; and • Critical Accounting Estimates that discusses the estimates that involve a significant level of uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") includes the following sections: • Executive Overview that discusses what we do, our operating results at a high level and our financial outlook for the upcoming year; • Consolidated Results of Operations; Restructuring and Integration Expense; and Segment Results that includes a more detailed discussion of our revenue and expenses; • Cash Flows and Liquidity and Capital Resources that discusses key aspects of our cash flows, financial commitments, capital structure and financial position; and • Critical Accounting Estimates that discusses the estimates that involve a significant level of uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
The following discussion and analysis provides information we believe to be relevant to understanding our financial condition and results of operations. This discussion focuses on our financial results for the years ended December 31, 2022 and December 31, 2021.
The following discussion and analysis provides information we believe to be relevant to understanding our financial condition and results of operations. This discussion focuses on our financial results for the years ended December 31, 2023 and December 31, 2022.
As such, we defer costs related to obtaining check supply, treasury management solution and merchant services contracts. These amounts, which totaled $21.3 million as of December 31, 2022, are included in other non-current assets and are amortized on the straight-line basis as SG&A expense.
As such, we defer costs related to obtaining check supply, treasury management solution and merchant services contracts. These amounts, which totaled $21.1 million as of December 31, 2023, are included in other non-current assets and are amortized on the straight-line basis as SG&A expense.
A discussion of our results of operations for the year ended December 31, 2021, as compared to the year ended December 31, 2020, is included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 ("the 2021 Form 10-K"), filed with the SEC on February 28, 2022, and is incorporated by reference into this Form 10-K.
A discussion of our results of operations for the year ended December 31, 2022, as compared to the year ended December 31, 2021, is included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 ("the 2022 Form 10-K"), filed with the SEC on February 24, 2023, and is incorporated by reference into this Form 10-K.
We anticipate that we will continue to pay our regular quarterly dividend. However, dividends are approved by our board of directors each quarter and thus, are subject to change. CAPITAL RESOURCES The principal amount of our debt obligations was $1.66 billion as of December 31, 2022 and $1.70 billion as of December 31, 2021.
We anticipate that we will continue to pay our regular quarterly dividend. However, dividends are approved by our board of directors each quarter and thus, are subject to change. CAPITAL RESOURCES The principal amount of our debt obligations was $1.60 billion as of December 31, 2023 and $1.66 billion as of December 31, 2022.
As such, no goodwill impairment charges were recorded as a result of our 2022 annual impairment analysis. 37 When performing a quantitative analysis of goodwill, we first compare the carrying value of the reporting unit, including goodwill, to its estimated fair value.
As such, no goodwill impairment charges were recorded as a result of our 2023 annual impairment analysis. When performing a quantitative analysis of goodwill, we first compare the carrying value of the reporting unit, including goodwill, to its estimated fair value.
We were in compliance with our debt covenants as of December 31, 2022, and we anticipate that we will remain in compliance with our debt covenants throughout 2023.
We were in compliance with our debt covenants as of December 31, 2023, and we anticipate that we will remain in compliance with our debt covenants throughout 2024.
We do not manage our business based on product versus service revenue. Instead, we analyze our revenue based on the product and service offerings shown under the caption "Note 17: Business Segment Information" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
Instead, we analyze our revenue based on the product and service offerings shown under the caption "Note 17: Business Segment Information" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
Because of the substantial uncertainty and variability surrounding certain of these forward-looking reconciling items, including asset impairment charges; restructuring and integration costs; gains and losses on sales of businesses and facilities; and certain legal-related expenses, a reconciliation of the non-GAAP financial measure outlook guidance to the corresponding GAAP measure is not available without unreasonable effort.
Because of the substantial uncertainty and variability surrounding certain of these forward-looking reconciling items, including asset impairment charges; restructuring and integration expense; gains and losses on sales of businesses and long-lived assets; and certain legal-related expenses, a reconciliation of the non-GAAP financial measure outlook guidance to the corresponding GAAP measure is not available without unreasonable effort.
For those employee reductions included in our restructuring and integration accruals through December 31, 2022, we expect to realize cost savings of approximately $25 million in SG&A expense in 2023, in comparison to our 2022 results of operations.
For those employee reductions included in our restructuring and integration accruals through December 31, 2023, we expect to realize annual cost savings of approximately $8 million in cost of sales and $25 million in SG&A expense in 2024, in comparison to our 2023 results of operations.
As of December 31, 2022, amounts were available for borrowing under our revolving credit facility as follows: (in thousands) Total available Revolving credit facility commitment $ 500,000 Amount drawn on revolving credit facility (197,000) Outstanding letters of credit (1) (7,823) Net available for borrowing as of December 31, 2022 $ 295,177 (1) We use standby letters of credit primarily to collateralize certain obligations related to our self-insured workers' compensation claims, as well as claims for environmental matters, as required by certain states.
As of December 31, 2023, amounts were available for borrowing under our revolving credit facility as follows: (in thousands) Total available Revolving credit facility commitment $ 500,000 Amount drawn on revolving credit facility (252,000) Outstanding letters of credit (1) (7,486) Net available for borrowing as of December 31, 2023 $ 240,514 (1) We use standby letters of credit primarily to collateralize certain obligations related to our self-insured workers' compensation claims, as well as claims for environmental matters, as required by certain states.
The increases in net income and diluted EPS and the decrease in adjusted diluted EPS for 2022, as compared to 2021, were driven by the factors outlined in Executive Overview – 2022 results vs. 2021.
The decreases in net income, diluted EPS and adjusted diluted EPS for 2023, as compared to 2022, were driven by the factors outlined in Executive Overview – 2023 results vs. 2022.
Liquidity was as follows as of December 31: (in thousands) 2022 2021 Cash and cash equivalents $ 40,435 $ 41,231 Amount available for borrowing under revolving credit facility 295,177 362,619 Liquidity $ 335,612 $ 403,850 Adjusted diluted EPS – By excluding the impact of non-cash items or items that we believe are not indicative of current period operating performance, we believe that adjusted diluted EPS provides useful comparable information to assist in analyzing our current period operating performance and in assessing our future operating performance.
Liquidity was as follows as of December 31: (in thousands) 2023 2022 Cash and cash equivalents $ 71,962 $ 40,435 Amount available for borrowing under revolving credit facility 240,514 295,177 Liquidity $ 312,476 $ 335,612 Adjusted diluted EPS – By excluding the impact of non-cash items or items that we believe are not indicative of current period operating performance, we believe that adjusted diluted EPS provides useful comparable information to assist in analyzing our current period operating performance and in assessing our future operating performance.
Any adjustments required after the measurement period are recorded in the consolidated statements of income. The judgments required in determining the estimated fair values and expected useful lives assigned to each class of assets and liabilities acquired can significantly affect net income. For example, different classes of assets will have different useful lives.
The judgments required in determining the estimated fair values and expected useful lives assigned to each class of assets and liabilities acquired can significantly affect net income. For example, different classes of assets will have different useful lives.
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.
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.
Net cash provided by operating activities for the years ended December 31 reconciles to free cash flow as follows: (in thousands) 2022 2021 Net cash provided by operating activities $ 191,531 $ 210,821 Purchases of capital assets (104,598) (109,140) Free cash flow $ 86,933 $ 101,681 Net debt – Management believes that net debt is an important measure to monitor leverage and to evaluate the balance sheet.
Net cash provided by operating activities for the years ended December 31 reconciles to free cash flow as follows: (in thousands) 2023 2022 Net cash provided by operating activities $ 198,367 $ 191,531 Purchases of capital assets (100,747) (104,598) Free cash flow $ 97,620 $ 86,933 Net debt – Management believes that net debt is an important measure to monitor leverage and to evaluate the balance sheet.
As of December 31, 2022, we held cash and cash equivalents of $40.4 million and $295.2 million was available for borrowing under our revolving credit facility. We anticipate that capital expenditures will be approximately $100 million in 2023, as compared to $104.6 million for 2022, as we continue with important innovation investments and building scale across our product categories.
As of December 31, 2023, we held cash and cash equivalents of $72.0 million and $240.5 million was available for borrowing under our revolving credit facility. We anticipate that capital expenditures will be approximately $100 million in 2024, as compared to $100.7 million for 2023, as we continue with important innovation investments and building scale across our product categories.
CASH FLOWS AND LIQUIDITY As of December 31, 2022, we held cash and cash equivalents of $40.4 million, as well as restricted cash and restricted cash equivalents included in funds held for customers and in other non-current assets of $297.0 million.
CASH FLOWS AND LIQUIDITY As of December 31, 2023, we held cash and cash equivalents of $72.0 million, as well as restricted cash and restricted cash equivalents included in funds held for customers and in other non-current assets of $386.1 million.
In addition, the impact of the repatriation of Canadian earnings drove a 2.7 point decrease in the effective income tax rate. Information regarding other factors that impacted our effective income tax rates can be found under the caption "Note 10: Income Tax Provision" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
Information regarding other factors that impacted our effective income tax rates can be found under the caption "Note 10: Income Tax Provision" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
Total debt reconciles to net debt as follows as of December 31: (in thousands) 2022 2021 Total debt $ 1,644,276 $ 1,682,949 Cash and cash equivalents (40,435) (41,231) Net debt $ 1,603,841 $ 1,641,718 Liquidity – We define liquidity as cash and cash equivalents plus the amount available for borrowing under our revolving credit facility.
Total debt reconciles to net debt as follows as of December 31: (in thousands) 2023 2022 Total debt $ 1,592,851 $ 1,644,276 Cash and cash equivalents (71,962) (40,435) Net debt $ 1,520,889 $ 1,603,841 Liquidity – We define liquidity as cash and cash equivalents plus the amount available for borrowing under our revolving credit facility.
The decrease in adjusted diluted EPS was driven by the increase in interest expense resulting from the effect of increasing interest rates on our variable-rate debt and the debt issued in June 2021 to complete the First American acquisition, increased transformational investments, inflationary pressures on our cost structure, Promotional Solutions supply chain disruptions and the continuing secular decline in checks, business forms and some business accessories.
The decrease in adjusted diluted EPS was driven by the increase in interest expense resulting from the effect of increasing interest rates on our variable-rate debt, increased investments in the business, inflationary pressures on our cost structure, the continuing secular decline in checks, business forms and some business accessories, and the impact of business exits.
Net Income / Diluted Earnings per Share (in thousands, except per share amounts) 2022 2021 Change Net income $ 65,530 $ 62,772 4.4 % Diluted earnings per share 1.50 1.45 3.4 % Adjusted diluted EPS (1) 4.08 4.88 (16.4 %) (1) Information regarding the calculation of adjusted diluted EPS can be found in the following section entitled Reconciliation of Non-GAAP Financial Measures.
Net Income / Diluted Earnings per Share (in thousands, except per share amounts) 2023 2022 Change Net income $ 26,227 $ 65,530 (60.0 %) Diluted earnings per share 0.59 1.50 (60.7 %) Adjusted diluted EPS (1) 3.32 4.08 (18.6 %) (1) Information regarding the calculation of adjusted diluted EPS can be found in the following section entitled Reconciliation of Non-GAAP Financial Measures.
Our revenue mix by business segment was as follows: 2022 2021 Payments 30.3 % 25.2 % Data Solutions 11.9 % 13.0 % Promotional Solutions 25.2 % 27.0 % Checks 32.6 % 34.8 % Total revenue 100.0 % 100.0 % Consolidated Cost of Revenue (in thousands) 2022 2021 Change Total cost of revenue $ 1,032,116 $ 884,270 16.7% Total cost of revenue as a percentage of total revenue 46.1 % 43.7 % 2.4 pt.
Our revenue mix by business segment was as follows: 2023 2022 Payments 31.5 % 30.3 % Data Solutions 10.9 % 11.9 % Promotional Solutions 24.7 % 25.2 % Checks 32.9 % 32.6 % Total revenue 100.0 % 100.0 % 26 Consolidated Cost of Revenue (in thousands) 2023 2022 Change Total cost of revenue $ 1,029,577 $ 1,032,116 (0.2%) Total cost of revenue as a percentage of total revenue 47.0 % 46.1 % 0.9 pt.
It is reasonable to expect that one or more of the excluded items will occur in future periods, but the amounts recognized may vary significantly. 30 Diluted earnings per share for the years ended December 31 reconciles to adjusted diluted EPS as follows: (in thousands, except per share amounts) 2022 2021 Net income $ 65,530 $ 62,772 Net income attributable to non-controlling interest (135) (139) Net income attributable to Deluxe 65,395 62,633 Acquisition amortization 90,588 82,915 Restructuring and integration costs 63,136 58,947 Share-based compensation expense 23,676 29,477 Acquisition transaction costs 130 18,913 Certain legal-related (benefit) expense (730) 2,443 Gain on sales of businesses and facility (19,331) — Gain on debt retirements (1,726) — Adjustments, pretax 155,743 192,695 Income tax provision impact of pretax adjustments (1) (43,854) (45,783) Adjustments, net of tax 111,889 146,912 Adjusted net income attributable to Deluxe 177,284 209,545 Income allocated to participating securities (98) (156) Re-measurement of share-based awards classified as liabilities (512) (448) Adjusted income attributable to Deluxe available to common shareholders $ 176,674 $ 208,941 Weighted-average shares and potential common shares outstanding 43,310 42,827 Adjustment (2) — (16) Adjusted weighted-average shares and potential common shares outstanding 43,310 42,811 GAAP diluted earnings per share $ 1.50 $ 1.45 Adjustments, net of tax 2.58 3.43 Adjusted diluted EPS $ 4.08 $ 4.88 (1) The tax effect of the pretax adjustments considers the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s).
It is reasonable to expect that one or more of the excluded items will occur in future periods, but the amounts recognized may vary significantly. 29 Diluted earnings per share for the years ended December 31 reconciles to adjusted diluted EPS as follows: (in thousands, except per share amounts) 2023 2022 Net income $ 26,227 $ 65,530 Net income attributable to non-controlling interest (107) (135) Net income attributable to Deluxe 26,120 65,395 Acquisition amortization 74,839 90,588 Accelerated amortization 2,500 — Restructuring and integration expense 90,475 63,136 Share-based compensation expense 20,525 23,676 Acquisition transaction costs — 130 Certain legal-related expense (benefit) 2,195 (730) Gain on sale of businesses and long-lived assets (32,421) (19,331) Loss on sale of investment securities 1,323 — Gain on debt retirements — (1,726) Adjustments, pretax 159,436 155,743 Income tax provision impact of pretax adjustments (1) (39,684) (43,854) Adjustments, net of tax 119,752 111,889 Adjusted net income attributable to Deluxe 145,872 177,284 Income allocated to participating securities — (98) Re-measurement of share-based awards classified as liabilities (20) (512) Adjusted income attributable to Deluxe available to common shareholders $ 145,852 $ 176,674 Weighted-average shares and potential common shares outstanding 43,843 43,310 Adjustment (2) 46 — Adjusted weighted-average shares and potential common shares outstanding 43,889 43,310 GAAP diluted earnings per share $ 0.59 $ 1.50 Adjustments, net of tax 2.73 2.58 Adjusted diluted EPS $ 3.32 $ 4.08 (1) The tax effect of the pretax adjustments considers the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s).
New Accounting Pronouncements Information regarding accounting pronouncements not yet adopted can be found under the caption “Note 2: New Accounting Pronouncements” in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
As goodwill is not amortized, this would benefit net income in a given period, although goodwill is subject to annual impairment analysis. New Accounting Pronouncements Information regarding accounting pronouncements not yet adopted can be found under the caption “Note 2: New Accounting Pronouncements” in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
The decrease in adjusted EBITDA for 2022, as compared to 2021, was driven by inflationary pressures on delivery and materials and the secular decline in overall check volumes, partially offset by price increases, cost saving actions, the impact of new clients and strong demand for business checks.
Adjusted EBITDA for 2023 was flat as compared to 2022, as the secular decline in overall check volumes and inflationary pressures on delivery and materials were offset by price increases and the benefit of cost saving actions.
Our quarterly commitment fee ranges from 0.25% to 0.35%, based on our total leverage ratio, as defined in the credit agreement.
As of December 31, 2023, total commitments under our revolving credit facility were $500.0 million. Our quarterly commitment fee ranges from 0.25% to 0.35%, based on our total leverage ratio, as defined in the credit agreement.
Reconciliation of Non-GAAP Financial Measures Free cash flow – We define free cash flow as net cash provided by operating activities less purchases of capital assets. We believe that free cash flow is an important indicator of cash available for debt service and for shareholders, after making capital investments to maintain or expand our asset base.
We believe that free cash flow is an important indicator of cash available for debt service and for shareholders, after making capital investments to maintain or expand our asset base.
We review and update our contract-related estimates regularly, and we do not anticipate that revisions to our estimates would have a material effect on our results of operations, financial position or cash flows.
We review and update our contract-related estimates regularly, and we do not anticipate that revisions to our estimates would have a material effect on our results of operations, financial position or cash flows. Goodwill Impairment As of December 31, 2023, goodwill totaled $1.43 billion, which represented 46.4% of our total assets.
The 2022 amount included revenue of approximately $69 million that will not recur in 2023 due to our divestitures. We expect that adjusted EBITDA for 2023 will be between $390 million and $405 million, as compared to $418 million for 2022.
The 2023 amount included revenue of approximately $56 million that will not recur in 2024 due to business exits. We expect that adjusted EBITDA for 2024 will be between $400 million and $420 million, as compared to $417 million for 2023.
Checks Results for our Checks segment were as follows: (in thousands) 2022 2021 Change Total revenue $ 728,988 $ 703,055 3.7% Adjusted EBITDA 320,498 324,224 (1.1%) Adjusted EBITDA margin 44.0 % 46.1 % (2.1) pt.
Checks Results for our Checks segment were as follows: (in thousands) 2023 2022 Change Total revenue $ 721,089 $ 728,988 (1.1%) Adjusted EBITDA 320,333 320,498 (0.1%) Adjusted EBITDA margin 44.4 % 44.0 % 0.4 pt.
Diluted EPS of $1.50 for 2022, as compared to $1.45 for 2021, reflects the increase in net income as described in the preceding paragraphs. Adjusted diluted EPS for 2022 was $4.08 compared to $4.88 for 2021, and excludes the impact of non-cash items or items that we believe are not indicative of our current period operating performance.
Adjusted diluted EPS for 2023 was $3.32 compared to $4.08 for 2022, and excludes the impact of non-cash items or items that we believe are not indicative of our current period operating performance.
In addition, we realized cost savings from facility closures of approximately $4 million in 2022, in comparison to our 2021 results of operations, and we continue to evaluate our real estate footprint.
In addition, we realized cost savings from facility closures of approximately $3 million in 2023, in comparison to our 2022 results of operations, and we anticipate savings of approximately $3 million in 2024, in comparison to our 2023 results of operations.
Our solutions include merchant services, marketing services and data analytics, treasury management solutions, promotional products, and fraud and payroll solutions, as well as customized checks and business forms. We support millions of small businesses, thousands of financial institutions and hundreds of the world’s largest consumer brands, while processing approximately $3 trillion in annual payment volume.
Our solutions include merchant services, marketing services and data analytics, treasury management solutions, promotional products, and fraud and security solutions, as well as customized checks and business forms. We support millions of small businesses, thousands of financial institutions and hundreds of the world’s largest consumer brands. We are also a leading provider of checks and accessories sold directly to consumers.
We are also required to estimate the useful lives of the acquired intangible assets, which determines the amount of acquisition-related amortization expense we will record in future periods. Each reporting period, we evaluate the remaining useful lives of our amortizable intangibles to determine whether events or circumstances warrant a revision to the remaining period of amortization.
We are also required to estimate the useful lives of the acquired intangible assets, which determines the amount of acquisition-related amortization expense we will record in future periods.
The 2022 amount included adjusted EBITDA of approximately $21 million that will not recur in 2023 due to our divestitures. These estimates are subject to, among other things, completion of the sale of the remaining web hosting and logo design businesses by March 31, 2023, prevailing macroeconomic conditions, labor supply issues, inflation and the impact of other divestitures.
The 2023 amount included adjusted EBITDA of approximately $26 million that will not recur in 2024 due to business exits. These estimates are subject to, among other things, prevailing macroeconomic conditions, global unrest, labor supply issues, inflation and the impact of business exits.
Partially offsetting these increases in revenue was the continuing secular decline in order volume for checks, business forms and some Promotional Solutions business accessories, as well as the divestitures discussed in Executive Overview , which resulted in a decrease in revenue of approximately $32 million for 2022, as compared to 2021.
The decrease in total cost of revenue for 2023, as compared to 2022, was driven by reduced revenue volume from the continuing secular decline in checks, business forms and some Promotional Solutions business accessories, as well as a decrease of approximately $27 million from the business exits discussed under Executive Overview .
The calculations used to determine the fair value of the long-lived assets acquired, primarily intangible assets, can be complex and require significant judgment.
Business Combinations We allocate the purchase price of acquired businesses to the estimated fair values of the assets acquired and liabilities assumed as of the date of the acquisition. The calculations used to determine the fair value of the long-lived assets acquired, primarily intangible assets, can be complex and require significant judgment.
The probable significance of certain of these reconciling items is high and, based on historical experience, could be material. 31 Net income for the years ended December 31 reconciles to adjusted EBITDA and adjusted EBITDA margin as follows: (in thousands) 2022 2021 Net income $ 65,530 $ 62,772 Non-controlling interest (135) (139) Depreciation and amortization expense 172,552 148,767 Interest expense 94,454 55,554 Income tax provision 18,848 31,031 Restructuring and integration costs 63,136 58,947 Share-based compensation expense 23,676 29,477 Acquisition transaction costs 130 18,913 Certain legal-related (benefit) expense (730) 2,443 Gain on sales of businesses and facility (19,331) — Adjusted EBITDA $ 418,130 $ 407,765 Adjusted EBITDA margin 18.7 % 20.2 % RESTRUCTURING AND INTEGRATION COSTS Restructuring and integration expense consists of costs related to the consolidation and migration of certain applications and processes, including our financial and sales management systems.
The probable significance of certain of these reconciling items is high and, based on historical experience, could be material. 30 Net income for the years ended December 31 reconciles to adjusted EBITDA and adjusted EBITDA margin as follows: (in thousands) 2023 2022 Net income $ 26,227 $ 65,530 Non-controlling interest (107) (135) Depreciation and amortization expense 169,703 172,552 Interest expense 125,643 94,454 Income tax provision 13,572 18,848 Restructuring and integration expense 90,475 63,136 Share-based compensation expense 20,525 23,676 Acquisition transaction costs — 130 Certain legal-related expense (benefit) 2,195 (730) Gain on sale of businesses and long-lived assets (32,421) (19,331) Loss on sale of investment securities 1,323 — Adjusted EBITDA $ 417,135 $ 418,130 Adjusted EBITDA margin 19.0 % 18.7 % RESTRUCTURING AND INTEGRATION EXPENSE Restructuring and integration expense consists of costs related to initiatives to drive earnings and cash flow growth and also includes costs related to the consolidation and migration of certain applications and processes, including our financial management system.
It remains difficult to estimate the severity and duration of the current inflationary environment or supply chain and labor issues on our business, financial position or results of operations. In 2022, our interest expense began increasing as a result of the rising interest rate environment.
We have also experienced labor supply issues in certain portions of our business. It remains difficult to estimate the severity and duration of the inflationary environment or supply chain and labor issues on our business, financial position or results of operations.
Consolidated Selling, General & Administrative (SG&A) Expense (in thousands) 2022 2021 Change SG&A expense $ 993,250 $ 941,023 5.6% SG&A expense as a percentage of total revenue 44.4 % 46.5 % (2.1) pt.
Consolidated Selling, General & Administrative ("SG&A") Expense (in thousands) 2023 2022 Change SG&A expense $ 956,068 $ 993,250 (3.7%) SG&A expense as a percentage of total revenue 43.6 % 44.4 % (0.8) pt.
While we use our best estimates and assumptions, our fair value estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to 1 year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.
As a result, during the measurement period, which may be up to 1 year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Any adjustments required after the measurement period are recorded in the consolidated statements of income.
In addition, we have executed contracts with third-party service providers, primarily for information technology services, including cloud computing and professional services agreements related to the modernization of our technology platform, as well as agreements for outsourcing services, the purchase of data, and payment acceptance services. 35 These contracts obligate us to pay approximately $145 million in total, with approximately $60 million due during 2023, $40 million due during 2024 and the remainder due through 2027.
In addition, we have executed contracts with third-party service providers, primarily for information technology services, including cloud computing and professional services agreements related to our various restructuring initiatives, as well as agreements for outsourced services, the purchase of data, and payment acceptance services.
Despite the price changes, we continued to experience strong revenue volumes throughout 2022, demonstrating the strength of our business and the continued strong demand for our products. During the first half of 2022, we began experiencing some supply disruptions impacting certain higher margin printed products in our Promotional Solutions segment.
Despite the price changes, we continue to experience healthy revenue volumes, demonstrating the strength of our business and continued demand for our products. We have, at times, experienced some supply disruptions impacting certain printed products in our Promotional Solutions segment. We continue to closely monitor our supply chain to avoid delays or disruptions.
(in thousands) 2022 2021 Change Net cash provided by operating activities $ 191,531 $ 210,821 $ (19,290) Net cash used by investing activities (80,325) (1,066,601) 986,276 Net cash (used) provided by financing activities (48,601) 912,961 (961,562) Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents (10,681) (1,099) (9,582) Net change in cash, cash equivalents, restricted cash and restricted cash equivalents $ 51,924 $ 56,082 $ (4,158) Free cash flow (1) $ 86,933 $ 101,681 $ (14,748) (1) See Reconciliation of Non-GAAP Financial Measures within the Consolidated Results of Operations section, which defines and illustrates how we calculate free cash flow.
(in thousands) 2023 2022 Change Net cash provided by operating activities $ 198,367 $ 191,531 $ 6,836 Net cash used by investing activities (43,305) (80,325) 37,020 Net cash used by financing activities (37,679) (48,601) 10,922 Effect of exchange rate change on cash, cash equivalents, restricted cash and restricted cash equivalents 3,235 (10,681) 13,916 Net change in cash, cash equivalents, restricted cash and restricted cash equivalents $ 120,618 $ 51,924 $ 68,694 Free cash flow (1) $ 97,620 $ 86,933 $ 10,687 (1) See Reconciliation of Non-GAAP Financial Measures within the Consolidated Results of Operations section, which defines and illustrates how we calculate free cash flow.
Adjusted EBITDA margin decreased for 2022, as compared to 2021, as inflationary cost pressures and the addition of lower margin new clients exceeded the benefit of the pricing and cost savings actions. In 2023, we expect adjusted EBITDA margins will be in the mid-40% range.
Adjusted EBITDA margin for 2023 increased as compared to 2022, as inflationary cost pressures were more than offset by the benefit of the pricing and cost saving actions. For 2024, we expect adjusted EBITDA margin to remain in the mid 40% range.
The increase in interest expense for 2022, as compared to 2021, was due primarily to the increase in our weighted-average interest rate driven by the rising interest rate environment and the $500.0 million notes we issued in June 2021 to fund the First American acquisition with an interest rate of 8.0%.
The increase in interest expense for 2023, as compared to 2022, was due primarily to the increase in our weighted-average interest rate driven by the rising interest rate environment.
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 the 2023 annual impairment analysis of goodwill 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.
In addition, we recorded employee severance costs related to these initiatives, as well as our ongoing cost reduction initiatives across functional areas. Further information regarding restructuring and integration expense can be found under the caption "Note 9: Restructuring and Integration Expense" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
Further information regarding restructuring and integration expense can be found under the caption "Note 9: Restructuring and Integration Expense" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report. We expect that the benefits of the various North Star initiatives will ramp up over the coming quarters.
The majority of the employee reductions included in our restructuring and integration accruals as of December 31, 2022, as well as the related severance payments, are expected to be completed by mid-2023. As a result of our employee reductions, we realized cost savings of approximately $20 million in SG&A expense, in comparison to our 2021 results of operations.
These charges will include employee severance, professional services fees and other restructuring-related charges. The majority of the employee reductions included in our restructuring and integration accruals as of December 31, 2023, as well as the related severance payments, are expected to be completed by mid-2024.
Restructuring and Integration Expense (in thousands) 2022 2021 Change Restructuring and integration expense $ 62,529 $ 54,750 $ 7,779 We continue to pursue several initiatives designed to focus our business behind our growth strategy, to increase our efficiency and to integrate acquired businesses.
Restructuring and Integration Expense (in thousands) 2023 2022 Change Restructuring and integration expense $ 78,245 $ 62,529 $ 15,716 We continue to pursue several initiatives designed to focus our business behind our growth strategy and to increase our efficiency. The amount of restructuring and integration expense is expected to vary from period to period as we execute these initiatives.
In 2023, we expect adjusted EBITDA margins will be in the low-to-mid 20% range. Data Solutions Results for our Data Solutions segment were as follows: (in thousands) 2022 2021 Change Total revenue $ 267,525 $ 262,310 2.0% Adjusted EBITDA 68,214 70,172 (2.8%) Adjusted EBITDA margin 25.5 % 26.8 % (1.3) pt.
Data Solutions Results for our Data Solutions segment were as follows: (in thousands) 2023 2022 Change Total revenue $ 238,817 $ 267,525 (10.7%) Adjusted EBITDA 55,700 68,214 (18.3%) Adjusted EBITDA margin 23.3 % 25.5 % (2.2) pt.
It also includes costs related to the integration of acquired businesses into our systems and processes. These costs consist primarily of information technology consulting, project management services and internal labor, as well as other costs associated with our initiatives, such as training, travel, relocation and costs associated with facility closures.
These costs consist primarily of consulting, project management services and internal labor, as well as other costs associated with our initiatives, such as costs related to facility closures and consolidations. In addition, we have recorded employee severance costs across functional areas.
The assets and liabilities sold were not significant 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 million during 2021.
These businesses generated annual revenue of approximately $27 million in the Payments segment during 2023. 24 In May 2022, we completed the sale of our Australian web hosting business, and we also sold our Promotional Solutions strategic sourcing and retail packaging businesses during 2022.
These increases in adjusted EBITDA were partially offset by continued sales and information technology investments and inflationary pressures on our cost structure, primarily labor costs in our lockbox processing business. Adjusted EBITDA margin increased for 2022, as compared to 2021, as the benefit of the revenue increases exceeded the impact of the investments in the business and the inflationary pressures.
These increases in adjusted EBITDA were partially offset by continued information technology investments and inflationary pressures on labor costs, as well as the lower lockbox services volume. For 2024, we expect adjusted EBITDA margin to continue in the low to mid 20% range.
Promotional Solutions Results for our Promotional Solutions segment were as follows: (in thousands) 2022 2021 Change Total revenue $ 562,917 $ 546,473 3.0% Adjusted EBITDA 79,549 85,384 (6.8%) Adjusted EBITDA margin 14.1 % 15.6 % (1.5) pt.
Promotional Solutions Results for our Promotional Solutions segment were as follows: (in thousands) 2023 2022 Change Total revenue $ 541,650 $ 562,917 (3.8%) Adjusted EBITDA 80,751 79,549 1.5% Adjusted EBITDA margin 14.9 % 14.1 % 0.8 pt. 32 The decrease in total revenue for 2023, as compared to 2022, was driven primarily by the continuing secular decline in business forms and some accessories and some demand softness in our distributor network.
Adjusted EBITDA margin decreased for 2022, as compared to 2021, driven by planned technology investments, inflationary pressures and the unfavorable product mix. These decreases in adjusted EBITDA margin were partially offset by price increases, cost saving actions and operating leverage from the revenue growth.
These decreases in adjusted EBITDA were partially offset by the growth in data-driven marketing and the benefit of various cost reduction actions. Adjusted EBITDA margin decreased for 2023, as compared to 2022, as the shift toward data-driven marketing revenue was offset by expense management.
The increase in total revenue for 2022, as compared to 2021, was driven primarily by the impact of new client wins, price increases and strong demand for business checks. These increases in revenue were partially offset by the continuing secular decline in overall check volumes. In 2023, we are expecting mid-single digit percentage revenue declines.
The decrease in total revenue for 2023, as compared to 2022, was driven primarily by the continuing secular decline in overall check volumes, partially offset by price increases in response to the inflationary environment. For 2024, we expect the percentage revenue decline to be in the low to mid single digits, consistent with our long-term expectations.
The increase in adjusted EBITDA for 2022, as compared to 2021, was driven, in part, by price increases and the revenue growth in our payments and merchant services businesses. In addition, adjusted EBITDA benefited from the incremental contribution of the First American acquisition of $30.2 million.
The increase in adjusted EBITDA for 2023, as compared to 2022, was primarily driven by the revenue growth in merchant services, benefits from operational improvements across our lockbox sites, and price increases in response to the inflationary environment.
In 2023, we expect that revenue will decline approximately $12 million as a result of business exits, and that the remainder of the business will deliver low single-digit percentage revenue growth.
This increase was partially offset by the impact of certain of our customer's marketing campaigns being pulled into the fourth quarter of 2022. For 2024, we expect that revenue will decline approximately $27 million as a result of the business exits and that the remainder of the business will deliver mid-single digit percentage revenue growth.
Net cash provided by operating activities decreased $19.3 million for 2022, as compared to 2021, driven by a $40.5 million increase in interest payments as a result of rising interest rates and debt issued to complete the First American acquisition, as well as a $22.8 million increase in employee cash bonus payments related to our 2021 operating performance.
Partially offsetting these increases in operating cash flow was a $28.4 million increase in interest payments as a result of rising interest rates, as well as a $9.5 million increase in employee bonus payments related to our 2022 operating performance and a $9.3 million increase in income tax payments driven, in large part, by the timing of our federal tax payments.
Our capital structure for each period was as follows: December 31, 2022 December 31, 2021 (in thousands) Amount Period-end interest rate Amount Period-end interest rate Change Fixed interest rate (1) $ 975,000 6.6 % $ 700,000 6.9 % $ 275,000 Floating interest rate 684,375 6.6 % 1,002,125 2.4 % (317,750) Total debt principal 1,659,375 6.6 % 1,702,125 4.2 % (42,750) Shareholders’ equity 604,224 574,598 29,626 Total capital $ 2,263,599 $ 2,276,723 $ (13,124) (1) The fixed interest rate amount includes the amount of our variable-rate debt that is subject to interest rate swap agreements.
Further information concerning our outstanding debt, including our debt service obligations, can be found under the caption "Note 13: Debt” in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report. 34 Our capital structure for each period was as follows: December 31, 2023 December 31, 2022 (in thousands) Amount Period-end interest rate Amount Period-end interest rate Change Fixed interest rate (1) $ 1,246,659 7.0 % $ 975,000 6.6 % $ 271,659 Floating interest rate 357,528 7.9 % 684,375 6.6 % (326,847) Total debt principal 1,604,187 7.2 % 1,659,375 6.6 % (55,188) Shareholders’ equity 604,616 604,224 392 Total capital $ 2,208,803 $ 2,263,599 $ (54,796) (1) The fixed interest rate amount includes the amount of our variable-rate debt that is subject to interest rate swap agreements.
The decrease in adjusted EBITDA for 2022, as compared to 2021, was driven by the sale of the Australian web hosting business, which reduced adjusted EBITDA by approximately $3 million for 2022, and investments in our data-driven marketing platform, partially offset by the growth in data-driven marketing revenue.
The decrease in adjusted EBITDA for 2023, as compared to 2022, was driven by the business exits discussed under Executive Overview , which reduced adjusted EBITDA by approximately $13 million for 2023, as well as the decrease in North American web hosting revenue prior to the divestiture.
We have not repurchased any shares since the first quarter of 2020, when we suspended share repurchases in order to maintain liquidity during the COVID-19 pandemic. As of December 31, 2022, $287.5 million remained available for repurchase under the authorization.
We have not repurchased any shares under this authorization since the first quarter of 2020. As of December 31, 2023, $287.5 million remained available for repurchase under the authorization. Information regarding changes in shareholders' equity can be found in the consolidated statements of shareholders' equity appearing in Part II, Item 8 of this report.
Further information regarding the acquisition can be found under the caption "Note 6: Acquisition and Divestitures" and further information regarding our debt can be found under the caption "Note 13: Debt," both of which appear in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
Further information regarding these business exits can be found under the caption "Note 6: Acquisition and Divestitures" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report. 27 Interest Expense (in thousands) 2023 2022 Change Interest expense $ 125,643 $ 94,454 33.0% Weighted-average debt outstanding 1,676,858 1,682,676 (0.3%) Weighted-average interest rate 7.06 % 5.19 % 1.87 pt.
The decrease reflects a $40.5 million increase in interest payments as a result of rising interest rates in 2022 and debt issued to complete the First American acquisition in 2021, as well as a $22.8 million increase in employee cash bonus payments related to our 2021 operating performance.
Partially offsetting these increases in operating cash flow was a $28.4 million increase in interest payments as a result of rising interest rates, as well as a $9.5 million increase in employee bonus payments related to our 2022 operating performance and a $9.3 million increase in income tax payments driven, in large part, by the timing of our federal tax payments.
The increase in adjusted EBITDA for 2022, as compared to 2021, was driven by price increases, actions taken to reduce costs as we continually evaluate our cost structure, and revenue growth from new business in all of our segments and strong ongoing demand for our products.
Partially offsetting these decreases in adjusted EBITDA were price increases in response to the inflationary environment, the benefit of actions taken to reduce costs as we continually evaluate our cost structure, and the growth in data-driven marketing and merchant services revenue.
Based on the daily average amount of variable-rate debt outstanding during 2022, a one percentage point change in the weighted-average interest rate would have resulted in a $9.1 million change in interest expense.
Based on the amount of variable-rate debt outstanding as of December 31, 2023, a one percentage point change in the weighted-average interest rate would result in a $4 million change in interest expense for 2024. Income Tax Provision (in thousands) 2023 2022 Change Income tax provision $ 13,572 $ 18,848 (28.0%) Effective tax rate 34.1 % 22.3 % 11.8 pt.
Operating cash flow was also negatively impacted by a $19.9 million increase in income tax payments, as well as inflationary pressures, supply chain disruptions in our Promotional Solutions segment, and the continuing secular decline in checks, business forms and some business accessories.
Operating cash flow was also negatively impacted by the continuing secular decline in checks, business forms and certain Promotional Solutions business accessories, inflationary pressures on hourly wages, materials and delivery, and the impact of business exits. Free cash flow increased $10.7 million for 2023, as compared to 2022.
We believe that the sale of these businesses allows us to focus our resources on the key growth areas of payments and data, while allowing us to optimize our operations. Outlook for 2023 We expect that revenue for 2023 will be between $2.145 billion and $2.210 billion, as compared to 2022 revenue of $2.238 billion.
These businesses generated annual revenue of approximately $24 million in our Data Solutions segment and approximately $29 million in our Promotional Solutions segment during 2021. We believe that these business exits allow us to focus our resources on the key growth areas of payments and data, while allowing us to optimize our operations.
Adjusted EBITDA (in thousands) 2022 2021 Change Adjusted EBITDA $ 418,130 $ 407,765 2.5% Adjusted EBITDA as a percentage of total revenue (adjusted EBITDA margin) 18.7 % 20.2 % (1.5) pt.
Adjusted EBITDA (in thousands) 2023 2022 Change Adjusted EBITDA (1) $ 417,135 $ 418,130 (0.2%) Adjusted EBITDA as a percentage of total revenue (adjusted EBITDA margin) (1) 19.0 % 18.7 % 0.3 pt. (1) Information regarding the calculation of adjusted EBITDA and adjusted EBITDA margin can be found in the following section entitled Reconciliation of Non-GAAP Financial Measures.
Note that these savings were, and will continue to be, partially offset by increased labor and other costs, including costs associated with new employees as we restructure certain activities and strive for the optimal mix of employee skill sets that will support our growth strategy. SEGMENT RESULTS We operate 4 reportable business segments: Payments, Data Solutions, Promotional Solutions and Checks.
Note that these savings may be offset by increased labor and other costs, including inflationary impacts and investments in the business. SEGMENT RESULTS As of December 31, 2023, we operated 4 reportable business segments: Payments, Data Solutions, Promotional Solutions and Checks. These segments were generally organized by product type and reflected the way we managed the company.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+2 added−4 removed5 unchanged
Biggest changeThe term loan facility requires periodic principal payments through June 1, 2026, and the senior, unsecured notes mature in June 2029. Information regarding the maturities of our long-term debt can be found under the caption "Note 13: Debt" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
Biggest changeInformation regarding the maturities of our long-term debt can be found under the caption "Note 13: Debt" in the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Part I, Item 1 of this report. 38 Foreign currency exchange rate risk – We are exposed to changes in foreign currency exchange rates.
We also had $475.0 million of 8.0% senior, unsecured notes outstanding as of December 31, 2022. Including the related discount and debt issuance costs, the effective interest rate on these notes is 8.3%.
We also had $475.0 million of 8.0% senior, unsecured notes outstanding as of December 31, 2023. Including the related discount and debt issuance costs, the effective interest rate on these notes is 8.3%.
The interest rate swaps effectively convert $500.0 million of variable-rate debt to a fixed rate. Further information regarding the interest rate swaps can be found under the caption "Note 7: Derivative Financial Instruments" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
The interest rate swaps effectively convert $771.7 million of variable-rate debt to a fixed rate. Further information regarding the interest rate swaps can be found under the caption "Note 7: Derivative Financial Instruments" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
Interest is payable on amounts outstanding under our credit facility at a fluctuating rate of interest determined by reference to the eurodollar rate (derived from LIBOR) plus an applicable margin ranging from 1.5% to 2.5%, depending on our total leverage ratio, as defined in the credit agreement.
Interest is payable on amounts outstanding under our credit facility at a fluctuating rate of interest determined by reference to the Secured Overnight Financing Rate ("SOFR") plus an applicable margin ranging from 1.5% to 2.5%, depending on our total leverage ratio, as defined in the credit agreement.
Based on the daily average amount of outstanding variable-rate debt in our portfolio, a one-percentage-point change in our weighted-average interest rate would have resulted in a $9.1 million change in interest expense for 2022. 40 Our credit agreement matures on June 1, 2026, at which time any amounts outstanding under the revolving credit facility must be repaid.
Based on the amount of variable-rate debt outstanding as of December 31, 2023, a one percentage point change in the weighted-average interest rate would result in a change in interest expense of approximately $4 million in 2024. Our credit agreement matures on June 1, 2026, at which time any amounts outstanding under the revolving credit facility must be repaid.
As of December 31, 2022, our total debt outstanding was as follows: (in thousands) Carrying amount (1) Fair value (2) Interest rate (3) Senior, secured term loan facility $ 979,757 $ 987,375 6.6 % Senior, unsecured notes 467,519 390,042 8.0 % Amounts drawn on revolving credit facility 197,000 197,000 6.6 % Total debt $ 1,644,276 $ 1,574,417 6.6 % (1) The carrying amount has been reduced by unamortized discount and debt issuance costs of $15.1 million.
As of December 31, 2023, our total debt outstanding was as follows: (in thousands) Carrying amount (1) Fair value (2) Interest rate (3) Senior, secured term loan facility $ 872,408 $ 877,187 6.8 % Senior, unsecured notes 468,443 424,841 8.0 % Amounts drawn on revolving credit facility 252,000 252,000 6.8 % Total debt $ 1,592,851 $ 1,554,028 7.2 % (1) The carrying amount has been reduced by unamortized discount and debt issuance costs of $11.3 million.
The effect of exchange rate changes is expected to have a minimal impact on our earnings and cash flows, as our foreign operations represent a relatively small portion of our business. We have not entered into hedges against changes in foreign currency exchange rates. 41
Investments in, and loans and advances to, foreign subsidiaries and branches, as well as the operations of these businesses, are denominated in foreign currencies, primarily Canadian dollars. The effect of exchange rate changes is expected to have a minimal impact on our earnings and cash flows, as our foreign operations represent a relatively small portion of our business.
Removed
We are currently in the process of modifying our existing credit facility to utilize the Secured Overnight Financing Rate (SOFR), replacing LIBOR as the reference rate in the agreement, effective March 20, 2023. Subsequent to this modification, interest will be payable based on SOFR plus an applicable margin.
Added
The term loan facility requires periodic principal payments through June 1, 2026, and the senior, unsecured notes mature in June 2029.
Removed
The fair value of the interest rate swaps in effect as of December 31, 2022 was $3.6 million and was included in other current and other non-current assets on the consolidated balance sheet.
Added
We have not entered into hedges against changes in foreign currency exchange rates. 39
Removed
The fair value of the interest rate swap in effect as of December 31, 2021 was $3.0 million and was included in other non-current liabilities on the consolidated balance sheet.
Removed
Foreign currency exchange rate risk – We are exposed to changes in foreign currency exchange rates. Investments in, and loans and advances to, foreign subsidiaries and branches, as well as the operations of these businesses, are denominated in foreign currencies, primarily Canadian dollars.

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