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What changed in DELUXE CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of DELUXE CORP's 2023 and 2024 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 2024 report.

+524 added−537 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-22)

Top changes in DELUXE CORP's 2024 10-K

524 paragraphs added · 537 removed · 344 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

49 edited+64 added−57 removed2 unchanged
Biggest changeThese 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.
Biggest changeBusiness Segment Category Percentage of 2024 consolidated revenue Description Merchant Services Merchant services solutions 18.1 % Merchant in-store, online, and mobile payment solutions that provide tools to accept electronic payments, such as debit cards, credit cards, and other forms of payment B2B Payments Treasury management solutions 10.6 % Automated receivables technology, including remittance and lockbox processing, remote deposit capture, and cash application, as well as payment acceptance solutions Other payment solutions 3.0 % Integrated accounts payable disbursements, including eChecks, Medical Payment Exchange, and Deluxe Payment Exchange+, as well as fraud and security services Total 13.6 % Data Solutions Data-driven marketing solutions 10.1 % Data, analytics, and marketing services for business-to-business and business-to-consumer marketing Other web-based solutions 0.9 % Financial institution profitability reporting and business incorporation services Total 11.0 % Print Checks 33.1 % Printed business and personal checks Promotional solutions 12.4 % Branded promotional, print, apparel, and digital storefront solutions Forms and other business products 11.3 % Business essentials, including business forms, envelopes, labels, stationery, and more Total 56.8 % 3 Over the past three years, we made strategic decisions to exit certain of our businesses.
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.
Our check business faces significant competition from another large check printer in our traditional financial institution sales channel, as well as from direct mail and internet-based sellers of personal and business checks, check printing software vendors, and certain major retailers.
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.
In 2022, we sold our Australian web hosting business, as well as our strategic sourcing and retail packaging businesses. In 2023, we sold our North American web hosting and logo design businesses, completing our exit from the web hosting space.
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.
The increased acceptance of electronic signatures has further contributed to the decline in printed products. The markets for business forms and promotional products are highly competitive and fragmented, with competitors including traditional storefront printing companies, office superstores, wholesale printers, online printing companies, small business product resellers, and providers of custom apparel and gifts.
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.
Our business segments collaborate to deliver greater value to our customers, enabling them 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, small and medium-sized businesses across multiple industries, and major global brands.
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.
We achieve this by integrating lean operating principles into our processes and fostering a culture of continuous improvement and innovation. Our shared services approach allows our businesses to leverage common facilities, optimize capacity utilization, and enhance operational excellence.
Jayaprakasam also served American Express Company as Vice President, Enterprise Platforms for Sales, Marketing and Data Platforms from May 2020 to June 2021, and as Vice President, Enterprise Platforms for Sales and Marketing from November 2017 to May 2020.
Jayaprakasam also served American Express Company as Vice President, Enterprise Platforms for Sales, Marketing, and Data Platforms from May 2020 to June 2021, and as Vice President, Enterprise Platforms for Sales and Marketing from November 2017 to May 2020. Brian Mahony joined us in February 2025 as Senior Vice President, President, Merchant Services. Prior to joining us, Mr.
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 also depend on third parties to supply a portion of the data necessary for maintaining our proprietary and non-proprietary databases, which includes credit and non-credit information from national credit bureaus and other data suppliers. We believe that if one of our vendors fails to deliver, we would be able to obtain an alternative source of supply.
Zint held several positions with NCR Corporation, an enterprise technology provider, most recently as Vice President of Finance and Chief Financial Officer of Hardware from January 2019 to July 2020 and Vice President, Corporate Financial Planning and Analysis from May 2017 to January 2019.
Chip Zint joined us in August 2020 as Vice President of Corporate Finance and was named Senior Vice President, Chief Financial Officer in October 2022. Prior to joining us, Mr. Zint held several positions with NCR Corporation, an enterprise technology provider, most recently as Vice President of Finance and Chief Financial Officer of Hardware from January 2019 to July 2020.
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.
Name Age Present Position Executive Officer Since Barry McCarthy 61 President and Chief Executive Officer 2018 William "Chip" Zint 40 Senior Vice President, Chief Financial Officer 2022 Garry Capers, Jr. 48 Senior Vice President, Chief Operations Officer 2019 Jeffrey Cotter 57 Senior Vice President, Chief Administrative Officer and General Counsel 2018 Kimberly Cross 55 Senior Vice President, Chief Human Resources Officer 2024 Tracey Engelhardt 60 Senior Vice President, President, Print 2012 Yogaraj "Yogs" Jayaprakasam 47 Senior Vice President, Chief Technology and Digital Officer 2022 Brian Mahony 53 Senior Vice President, President, Merchant Services 2025 John Rubinetti III 54 Senior Vice President, President, B2B Payments 2024 10 Barry McCarthy joined us in November 2018 as President and Chief Executive Officer.
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.
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.
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.
Tracey Engelhardt was named Senior Vice President, Checks in October 2019, and in May 2022, she added Chief of Operations to her responsibilities. In July 2023, Ms. Engelhardt was named President, Print. Yogs Jayaprakasam joined us in May 2022 as Senior Vice President, Chief Technology and Digital Officer. Prior to joining us, Mr.
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 support for Junior Achievement’s mission is demonstrated through foundation grants, raising awareness, and employee volunteerism. • Our longstanding partnership with the American Red Cross ® involves organizing blood drives at our facilities and hosting various fundraisers to support their mission of preventing and alleviating human suffering during emergencies. • In 2024, 756 Deluxe volunteers from Minneapolis, Chicago, Kansas City, Fort Worth, and Atlanta packed 171,392 meals for local food shelves. • Our employees donated $183,000 to nonprofit organizations through Deluxe in 2024. • In 2024, our employees contributed 15,546 hours to community service through our VTO program.
We are responsibly expanding our technology investment in our growth businesses by creating a digital-first platform that is cloud-based, data driven and built with scalable components. This enables growth by allowing us to build and commercialize our products more rapidly. We are also replacing legacy systems and processes with digital solutions.
We are making responsible investments in technology within our growth businesses aimed at creating a digital-first platform that is cloud-based, data driven, and built with scalable components. This approach facilitates growth by enabling us to develop and commercialize products and services more rapidly.
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.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE PRACTICES Key environmental, social, and governance (ESG) principles are deeply embedded in our mission, operating philosophy, and core values. We have developed a stakeholder-focused ESG program to address the needs and expectations of regulators, customers, shareholders, and employees.
We also purchase stock business forms and promotional apparel produced by third parties. In addition, we have entered into agreements with third-party providers for delivery services and information technology services, including telecommunications, network server and transaction processing services, as well as various other services.
Additionally, we procure stock business forms and promotional products and apparel from third-party producers. We have also established agreements with third-party providers for delivery services and information technology services, such as telecommunications, network server management, and transaction processing, among other services.
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.
OUR STRATEGY Our enterprise strategy is straightforward: leverage the cash flows, customer relationships, and brand equity from our print business to fuel profitable organic growth in our other businesses. To execute this strategy, we are focusing on three key areas: 1.
These benefits range from standard medical, dental, life and disability insurance to programs that provide additional support for our employees' mental, physical, financial and social wellbeing. We provide paid parental leave and infertility, adoption and surrogacy assistance.
We offer a variety of programs to benefit our employees and support work environments that encourage growth, innovation, and productivity. These benefits include standard medical, dental, life, and disability insurance, as well as programs that address mental, physical, financial, and social well-being. We provide paid parental leave and assistance with infertility, adoption, and surrogacy.
The complexity of complying with existing and new laws and regulations is significant, and regulators may adopt new laws or regulations at any time.
Navigating the complexities of these existing laws and regulations is a significant challenge, and there is always the possibility that regulators may introduce new laws or regulations at any time.
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.
Additionally, in 2023, we entered into agreements to exit our payroll and human resources services business, facilitating the transition of our U.S. and Canadian customers to other service providers. These customer conversions were substantially completed during 2024, and this business generated 0.5% of our consolidated revenue during 2024.
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.
We sell our products and services through scalable partnerships, which enable us to reach customers cost-effectively by leveraging our financial institution and other strategic partnerships.
Beginning in 2023, we began offering unlimited flexible time off to our salaried employees. By enabling our employees to thrive in their personal lives, we provide tools for our employees to best deliver for customers and shareholders while at work.
Long-term employees have the opportunity to take a sabbatical, and we offer unlimited flexible time off for our salaried employees. By supporting our employees in their personal lives, we equip them with the tools they need to deliver for customers and shareholders while at work.
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.
Garry Capers, Jr. joined us in September 2019 as President, Data Solutions, and in November 2021, added the former Promotional Solutions segment to his responsibilities. Mr. Capers was named Chief Operations Officer in July 2023. Jeffrey Cotter joined us in June 2018 as Senior Vice President, General Counsel, and added Chief Administrative Officer to his responsibilities in January 2019.
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.
These regulations impact various aspects of our activities, including labor practices, advertising, taxation, data privacy and security, consumer reports, consumer protection, merchant processing, online payment services, real estate, e-commerce, intellectual property, healthcare, environmental issues, and workplace health and safety.
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.
OUR CODE OF ETHICS AND CORPORATE GOVERNANCE GUIDELINES We have implemented a Code of Ethics that is applicable to our directors, employees, contractors, agents, and anyone acting on our behalf. The Code of Ethics can be accessed on our website at www.investors.deluxe.com/governance/governance-documents.
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.
In 2023, we launched our North Star program with the objective of enhancing shareholder value by (1) accelerating our adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth, (2) increasing cash flow, (3) reducing debt, and (4) improving our leverage ratio. North Star is a comprehensive, multi-year plan that balances cost reduction and growth opportunities.
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.
The North Star program aims to achieve a $100 million run-rate improvement in free cash flow and an $80 million run-rate improvement in adjusted EBITDA by 2026. SALES AND MARKETING We utilize 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.
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.
Our mission in operations is to prioritize efficiency, always with the goal of serving our customers and business partners better. 6 OUR MATERIALS, SUPPLIES, AND SERVICE PROVIDERS The primary materials we use to manufacture our main products include paper, plastics, ink, corrugated packaging, and printing plate material, all of which are sourced from various suppliers.
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.
We take pride in our longstanding tradition of fostering positive and productive employee relations. None of our employees are currently represented by labor unions. The cornerstone of our continued success as a trusted Payments and Data company is our ability to attract and retain an exceptional and motivated workforce.
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.
Pricing remains competitive in our financial institution sales channel, as these institutions strive to maintain profitability levels despite the decline in check usage. The market for business forms and business accessories has also been shrinking for several years, driven by technological advancements that offer increasingly digital methods for executing and recording business transactions.
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.
Community Engagement Our employees are deeply committed to fostering connections, staying active, and giving back to the communities we serve. These values are embedded in our core principles and are evident through our various partnerships and charitable initiatives.
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.
Our dedication extends beyond financial contributions. We uphold our commitment to community enrichment through several key initiatives: • For many years, we have partnered with Junior Achievement USA ® chapters in our local communities to inspire and prepare young people for success.
Our mission is to empower all employees to bring their full authentic selves to work and to foster an environment that reflects the diverse communities we serve. We strive to cultivate a culture and vision that supports and enhances our ability to recruit, develop and retain diverse talent at every level.
Our mission is to empower all employees to bring their full talents to work and to foster an environment that mirrors the diverse communities and customer base we serve. We are committed to cultivating a culture where our employees, regardless of their reporting level or background, feel respected and supported.
We partner with Care.com ® to offer services for employees to find tutors, nannies, children’s daycare and eldercare, and we offer an employee assistance program that provides employees with confidential counseling. We also offer employees tuition and travel assistance, and qualified long-term employees have the opportunity to take a sabbatical.
Through our partnership with Care.com ® , we offer services to help employees find tutors, nannies, childcare, and eldercare. Our employee assistance program provides confidential counseling services. Additionally, we offer tuition assistance and a 401(k) retirement plan with a company match.
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.
We prioritize listening to our customers and first understanding their needs. Then we bring the best of Deluxe to address their challenges, fostering deeper customer relationships. This approach transforms us from a transactional vendor into a trusted partner. As these relationships deepen, we uncover additional opportunities for growth, allowing us to offer more products and services.
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.
Our Corporate Governance Guidelines, along with the charters for the Audit and Finance Committee, Compensation and Talent Committee, and Corporate Governance Committee of our board of directors, are also available on our website at www.investors.deluxe.com/governance/governance-documents . These documents can also be obtained by sending a written request to the address mentioned above.
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.
The industry is characterized by rapid innovation and is subject to increasing regulatory scrutiny and oversight. Our challenge lies in consistently updating our technology to support new service offerings, identifying new revenue streams, and investing in digital technologies to meet evolving customer preferences.
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.
This spirit of community engagement is pervasive throughout our organization, supported by our paid volunteer time off (VTO) program, which grants employees three paid VTO days per year. Additionally, our collaboration with the Deluxe Foundation allows employees to contribute to not-for-profit organizations of their choice, with the foundation matching donations dollar for dollar, up to $2,000 per year.
Existing and potential financial institution clients may also develop and use their own in-house systems. We believe our competitive advantages are our expertise, strong relationships and innovative solutions, and we estimate that a sizeable portion of the potential market remains untapped.
We distinguish ourselves through our expertise, strong industry relationships, and innovative solutions in a competitive market that includes diversified software providers, independent developers, and financial institutions with in-house systems. Despite the competition, we see significant opportunities ahead, as we believe a large portion of the potential market remains untapped.
Objectives for our operations include focusing on process efficiency by reengineering our ways of working, using intelligent automation and other tools, and continuing to build better tools to enable us to more effectively target potential customers with our sales and marketing efforts.
Our operational objectives include improving process efficiency through reengineering our workflows, utilizing intelligent automation and other tools, and developing better methods to target potential customers with our sales and marketing efforts. A prime example of these objectives in action is our investment in print infrastructure.
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.
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 of complying with government regulations on our capital expenditures and earnings will remain stable in the upcoming year, with no material deviation from the impact in 2024.
The majority of merchant services revenue is generated by services priced as a percentage of transaction value or a specified fee per transaction, depending on the payment type or the market. We distribute our services through multiple sales channels, processing approximately $40 billion in annual transaction volume.
Our services encompass credit card, debit card, and electronic benefit transaction processing, as well as check guarantee and conversion. The majority of our merchant services revenue is derived from fees structured either as a percentage of transaction value or as a fixed fee per transaction, depending on the payment type or market.
These reports can also be accessed via the SEC website, www.sec.gov. A printed copy of this report may be obtained without charge by calling 651-787-1068, by sending a written request to the attention of Investor Relations, Deluxe Corporation, P.O. Box 818095, Cleveland, Ohio 44181, or by sending an email request to investor.relations@deluxe.com.
If you prefer a printed copy of any of these reports, you can request one at no cost by calling 651-787-1068, or by sending a written request to the Corporate Secretary at Deluxe Corporation, 801 Marquette Ave South, Minneapolis, MN 55402, or by sending an email request to investor.relations@deluxe.com.
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.
Cross-selling: We are maximizing opportunities across our portfolio of products and services through our One Deluxe go-to-market model, ensuring that we offer comprehensive solutions to our customers. 2. Operational efficiency: We are continuously enhancing our operational processes to drive efficiency, reduce costs, and improve overall performance. 3.
This business has sales and operating synergies with checks, providing items such as forms, envelopes and deposit tickets, which are often printed on the same equipment. We also support our print customers by selling relationship-deepening products, such as branding solutions and marketing materials.
However, checks remain an essential payment method for certain consumers and businesses. Our checks business is complemented by our business essentials product line, which includes forms, envelopes, and deposit tickets, often printed on the same equipment. Additionally, we support our print customers by selling relationship-enhancing products like branded promotional, print, apparel, and digital storefront solutions.
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.
Additionally, we will focus on promoting higher-margin promotional products that complement our check offerings. Our growth strategy is supported by the talent, client-focused approach, strong credibility, brand reputation, and resulting stable cash flows from our Print business. OUR OPERATIONS We remain dedicated to enhancing the customer experience by delivering exceptional service and quality, while simultaneously boosting productivity and reducing costs.
This builds on our strong position in the check printing space, allowing us to manage our margins and to redirect cost savings into our payments and data businesses. Maximizing our 6 technology is also key to executing our strategy.
We have implemented equipment that supports “Print On Demand,” enabling us to offer customers the same variety of choices with reduced waste, labor, and inventory. This strengthens our position in the check printing space, allowing us to manage margins effectively and reinvest in our growth businesses. Leveraging technology is also crucial to executing our strategy.
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.
ITEM 1. BUSINESS COMPANY OVERVIEW In 2025, Deluxe Corporation will proudly celebrate its 110th anniversary, marking over a century of business excellence. Our enduring success is a testament to our innovation, our ability to adapt to the evolving needs of our customers, and the trust they place in us.
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.
Kimberly Cross joined us in October 2024 as Senior Vice President, Chief Human Resources Officer. Prior to joining us, Ms. Cross was employed by Fiserv, a financial services technology company, most recently as Senior Vice President, Head of Human Resources for Merchant Solutions from October 2019 to October 2024.
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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.
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We have transformed into a trusted Payments and Data company, serving small and medium-sized businesses, financial institutions, and some of the world's largest consumer brands. Effective January 1, 2024, we realigned our organizational structure to better reflect our portfolio mix and offerings, and we updated our reportable segments to align with these changes.
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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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Our products and services are delivered through four business segments, primarily catering to clients and customers across North America.
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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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Disciplined capital allocation: We are employing a disciplined capital allocation framework to ensure that our investments are strategically aligned with our growth objectives and deliver the highest returns. By concentrating on these areas, we aim to sustain and enhance our growth trajectory while maintaining a strong financial foundation.
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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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The steps we took since we began our transformation enabled us to transition from a traditional check printing company into a trusted Payments and Data company. Having substantially completed our infrastructure modernization efforts and the divestiture of non-strategic businesses, we have now redirected our focus toward growth investments.
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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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This shift is aimed at driving scale and accelerating profit growth at a pace that surpasses revenue growth. Our operations continue to benefit from our disciplined pricing actions and comprehensive cost management practices.
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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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On the cost side, much of the work is an evolution of our organizational design and ongoing infrastructure and operations transformation. We have successfully completed the material elements of our organizational redesign, which included consolidating similar roles, reducing hierarchical layers, and expanding spans of control. We are also leveraging technology and process automation to digitize and streamline 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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Additionally, we are scaling our operations by consolidating back-office functions and tapping into the global labor market. On the revenue growth side, our priorities include developing an integrated software channel in Merchant Services, expanding our Data Solutions business to cater to more industry verticals, and enhancing our marketing and sales capabilities.
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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 have made significant progress on all of the remaining North Star initiatives and anticipate continued positive impacts on our results of operations throughout the coming year. All investments under the North Star program are required to meet our internal hurdle rate and provide a higher return compared to other uses of capital, such as debt repayment.
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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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In addition, inbound customer contacts who are buying or reordering our products and services provide extensive cross-selling opportunities, enhancing our ability to meet a broader range of customer needs. 4 OUR BUSINESSES Merchant Services We offer a comprehensive suite of payment processing services tailored primarily to small and medium-sized retail and service businesses, including nonprofit organizations and government entities.
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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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We distribute our services through various sales channels, processing payments through multiple methods, both in-person and online, as well as via recurring payments. The payment processing market is experiencing continuous growth and transformation, driven by the global increase in digital payment methods and transaction volumes.
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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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The competition in the merchant services sector is intense, with numerous financial technology companies, independent payment processors, credit card processing firms, and financial institutions' in-house capabilities vying for market share. To remain cost-competitive, achieving high transaction volumes is essential as it enables operational scale, while offering a broad range of services is crucial to maintaining customer relevance.
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Payments are processed using a variety of methods, including in-person and online, and via recurring payments. This market continues to expand and evolve, with digital payment vehicles and transaction volumes growing around the world. The industry is continuously changing, highly innovative, and increasingly subject to regulatory scrutiny and oversight.
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We believe our competitive edge lies in our skilled workforce, robust infrastructure, and strong relationships. Many of our employees are industry experts with long tenures at the company. Our customer onboarding process is fully digital, and our settlement platform provides complete control over settlement times and flexible merchant agreements.
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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.
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Additionally, we own most of our technology, including gateways, merchant onboarding, risk management, clearing, and settlement technologies. This ownership allows us to launch new products and services more rapidly and maintain a scalable cost structure.
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We believe our competitive advantages are our people, our infrastructure and our relationships. Many of our employees are experts in the industry and have been with the company for many years. Additionally, we own the majority of our technology rather than leasing it, specifically our gateways, merchant onboarding, risk management, clearing and settlement technologies.
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Our primary target market consists of small and medium-sized businesses due to their higher margins, lower customer concentration risk, greater growth potential compared to enterprise clients, and higher loyalty compared to micro-business customers. Our strategy focuses on gaining market share by offering more omnichannel and embedded services to our merchants and expanding our integrated software partnerships.
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This allows us to launch new products and services faster and to have scalability in our cost structure. Going forward, our focus in this business is to gain share by offering more omnichannel and embedded services to our merchants and growing our integrated software partnerships. Payments treasury management solutions We help businesses pay and get paid.
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B2B Payments We simplify the way businesses manage payments by offering comprehensive solutions for invoicing and reconciliation across all payment types and channels. Our solutions help our clients stay organized and efficient by automating the reconciliation process and integrating seamlessly with their accounting systems. This automation eliminates the need for manual work, saving valuable time.
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Our solutions reconcile and manage our customers' invoices with all types and channels of payments, including paper and digital payments. Our software and workflow tools automatically reconcile millions of payments, and we seamlessly integrate those payments with our customers' accounting software.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur 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.
Biggest changeWe may not achieve our goals, and investments in our business may not yield the expected financial results. 11 Several factors could cause our strategic plan to fall short of our expectations, including but not limited to: • Failure to generate profitable revenue growth; • Inability to acquire new customers, retain existing ones, and sell more products and services to both current and new customers; • Challenges in implementing further improvements to our technology infrastructure, digital services offerings, and other key assets to boost efficiency, enhance our competitive advantage, and scale our operations; • Failure to develop new products and services; • Inability to effectively manage the growth, increasing complexity, and rapid changes in our business and operations; • Difficulties in operating, integrating, or leveraging acquired businesses; • New products and services not achieving widespread customer acceptance; • Inability to promote, strengthen, and protect our brand; • Unexpected changes in demand for checks or other products; • Failure to attract and retain skilled talent necessary to execute our strategy and sustain growth; • Unanticipated changes in our business, markets, industry, or competitive landscape; and • General economic conditions.
Greater acceptance of electronic signatures also has contributed to the overall secular decline in printed products. It is difficult to predict the pace at which these alternative products and services will replace standardized business forms.
Greater acceptance of electronic signatures has also contributed to the overall secular decline in printed products. It is difficult to predict the pace at which these alternative products and services will replace standardized business forms.
However, we cannot control the actions of our third-party providers, and any cyberattacks or security breaches they experience could adversely affect our ability to service our customers or otherwise conduct our business.
However, we cannot control the actions of our third-party providers, and any cyberattacks or security breaches they experience could adversely affect our ability to service our customers or conduct our business.
Continual technological improvements, including the lower price and higher performance capabilities of personal computers, printers and mobile devices, have provided small business customers with alternative means to execute and record business transactions. Additionally, electronic transaction systems, off-the-shelf business software applications, web-based solutions and mobile applications have been designed to replace preprinted business forms.
Continuous technological improvements, including the lower price and higher performance capabilities of personal computers, printers, and mobile devices, have provided small business customers with alternative means to execute and record business transactions. Additionally, electronic transaction systems, off-the-shelf business software applications, web-based solutions, and mobile applications have been designed to replace preprinted business forms.
If our business partners or key employees are the subject of adverse news reports or negative publicity, our reputation may be tarnished and our results of operations could be adversely affected. A component of our brand promotion strategy is building on our relationship of trust with our customers, which we believe can be achieved by providing a high-quality customer experience.
If our business partners or key employees are the subject of negative news reports or publicity, our reputation may suffer, and our results of operations could be adversely affected. A key component of our brand promotion strategy is building on our relationship of trust with our customers, which we believe can be achieved by providing a high-quality customer experience.
In addition, although we are a leading check printer in the U.S., we face considerable competition in the check printing portion of the payments industry from another large check printer in our traditional financial institution sales channel, from direct mail and internet-based sellers of personal and business checks, from check printing software vendors, and from certain significant retailers.
Although we are a leading check printer in the U.S., we face significant competition in the check printing portion of the payments industry from another large 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 major retailers.
We have invested, and will continue to invest, in website development, design and technology, and customer service and production operations. Our ability to provide a high-quality customer experience is also dependent on external factors, including the reliability and performance of our suppliers, telecommunications providers and third-party carriers.
We have invested, and will continue to invest, in website development, design and technology, and customer service and production operations. Our ability to provide a high-quality customer experience also depends on external factors, including the reliability and performance of our suppliers, telecommunications providers, and third-party carriers.
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 cost reduction initiatives have required, and will continue to require, up-front expenditures related to various actions, including redesigning and streamlining processes, standardizing technology applications, further enhancing our strategic supplier sourcing arrangements, improving real estate utilization, and funding employee severance benefits.
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.
Additionally, acquisitions may result in additional contingent liabilities, increased amortization expense, and/or future non-cash asset impairment charges related to acquired intangible assets and goodwill, which could adversely affect our business, results of operations, and financial condition.
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 may need to seek additional financing for larger acquisitions, which would increase our debt obligations, and such financing may not be available on favorable terms.
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.
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. 13 Our business relies on our strong and trusted brand, and any failure to maintain, protect, and enhance our brand would negatively impact our business.
Our brand value also depends on our ability to protect and use our customers' data in a manner that meets expectations.
Our brand value also hinges on our ability to protect and use our customers' data in a manner that meets their expectations.
The secure and uninterrupted operation of our networks and systems, as well as the processing, maintenance and confidentiality of the sensitive information that resides on our systems, is critical to our business operations and strategy. We have a risk-based information/cybersecurity program dedicated to protecting our data and solutions.
The secure and uninterrupted operation of our networks and systems, as well as the processing, maintenance, and confidentiality of the sensitive information they contain, is critical to our business operations and strategy. We have implemented a risk-based information/cybersecurity program dedicated to protecting our data and solutions.
To be successful, our technology-based products and services must keep pace with technological developments and evolving industry standards, address the ever-changing and increasingly sophisticated needs of our customers, and achieve market acceptance. Additionally, we must differentiate our service offerings from those of our competitors and from the in-house capabilities of our customers.
To succeed, our technology-based products and services must keep pace with technological advancements and evolving industry standards, address the ever-changing and increasingly sophisticated needs of our customers, and achieve market acceptance. Additionally, we must differentiate our product and service offerings from those of our competitors and from the in-house capabilities of our clients.
The introduction of competing products and services using new technologies, the evolution of industry standards or the introduction of more attractive products or services, including continued increases in the digitization of payments, could make some of our products and services less desirable, or even obsolete.
The introduction of competing products and services using new technologies, the evolution of industry standards, or the emergence of more attractive products or services, including the continued digitization of payments, could render some of our products and services less desirable or even obsolete.
Customer awareness of our brand, as well as the perceived value of our brand, depends largely on the success of our marketing efforts, our ability to continue to provide useful, reliable, secure and innovative products and services, and our ability to maintain trust and be a technology leader.
Customer awareness and the perceived value of our brand largely depend on the success of our marketing efforts, our ability to consistently provide useful, reliable, secure, and innovative products and services, and our ability to maintain trust and be seen as a technology leader.
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.
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; indemnities and potential disputes with the buyers; a decline in employee morale; and regulatory and compliance issues.
We can provide no assurance that our strategy will be successful, either in the short term or in the long term, that it will generate a positive return on our investment or that it will not materially reduce our adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") margins.
We cannot guarantee that our strategy will be successful in the short term or long term, that it will generate a positive return on our investment, or that it will not materially reduce our adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins.
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.
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 adversely affect our business, cash flows, and results of operations. Similarly, the use of business forms has been declining.
Our work environment may not meet the needs or expectations of our employees or may be perceived as less favorable compared to other companies' polices, which could negatively impact our ability to hire and retain qualified personnel.
Our work environment might not meet the needs or expectations of our employees or could be perceived as less favorable compared to other companies' policies, which could hinder our ability to hire and retain qualified personnel.
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.
We have cultivated a strong and trusted brand that has contributed significantly to our business success. Maintaining and promoting our brand in a cost-effective manner is crucial for achieving widespread acceptance of our products and services, expanding our customer base, and attracting and retaining top talent.
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.
Several circumstances could indicate a decline in the fair value of one or more of our reporting units, including: • A downturn in economic conditions that adversely affects our actual and forecasted operating results; • Changes in our business strategy, structure, or resource allocation; • 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 sustained decline in our stock price; or • A material acceleration in the decline of order volumes for checks or business forms.
Because techniques used to obtain unauthorized access, disable or degrade service, or sabotage computer systems change frequently, may be difficult to detect immediately, and generally are not recognized until they are launched against a target, we may be unable to implement adequate preventive measures.
Techniques used to gain unauthorized access, disable or degrade service, or sabotage computer systems are constantly evolving, often difficult to detect immediately, and are generally not recognized until they are launched against a target. As a result, we may be unable to implement adequate preventive measures.
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.
We employ various 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. However, some of these methods may become less effective or more costly over time.
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.
If our brand promotion activities do not achieve the desired outcome or if we fail to provide a high-quality customer experience for any reason, our ability to attract new customers and maintain customer relationships could be adversely affected, which would harm our business and results of operations. Our cost reduction initiatives may not be successful.
If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business could be materially and adversely affected. There is also the risk that adverse publicity, whether or not justified, could adversely affect our business.
If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business could be materially and adversely affected. Additionally, adverse publicity, whether justified or not, could harm our business.
Additionally, as our product and service offerings become more technologically focused, and with expanded regulatory expectations for supervision of third-party service providers, additional portions of our business could become subject to direct federal regulation and/or examination.
Moreover, as our product and service offerings become more technologically advanced, and with heightened regulatory expectations for third-party service provider oversight, additional portions of our business could become subject to direct federal regulation and/or examination.
Such situations may require us to record an impairment charge for a portion of goodwill. We are also required to assess the carrying value of other long-lived assets, including intangible assets.
These situations may necessitate recording an impairment charge for a portion of goodwill. Additionally, we are required to assess the carrying value of other long-lived assets, including intangible assets.
If any of our significant information technology systems suffer severe damage, disruption or shutdown, and our disaster recovery and business continuity plans do not effectively resolve the issue in a timely manner, our results of operations would be adversely affected, and our business interruption insurance coverage may not be adequate to compensate us fully for any losses we may incur.
If any of our major information technology systems suffer severe damage, disruption, or shutdown, and our disaster recovery and business continuity plans fail to resolve the issue promptly, our results of operations would be adversely affected. Our business interruption insurance may not fully compensate us for any losses incurred.
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.
Disruptions to our website operations or information technology systems, or the inability to maintain our information technology platforms, could harm our reputation and negatively impact our business. The performance, reliability, and availability of our information technology systems, as well as those of our third-party service providers, is crucial to our reputation and our ability to attract and retain customers.
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.
Given our increased reliance on 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 affect our business.
More restrictive rules, such as new privacy laws, consumer protection “dark patterns” restrictions, search engine marketing restrictions, “anti-spam” regulations or email privacy rules, could decrease marketing opportunities, decrease traffic to our websites and/or increase the cost of obtaining new customers.
More restrictive regulations, such as new privacy laws, consumer protection restrictions on “dark patterns,” search engine marketing limitations, “anti-spam” regulations, or email privacy rules, could reduce marketing opportunities, decrease website traffic, and/or increase the cost of acquiring new customers.
Our ability to enhance our current products and services and to develop and introduce innovative products and services will significantly affect our future success. The impact is magnified by the intense competition we face.
Our future success depends on our ability to enhance our current products and services and to develop and introduce innovative offerings. The impact of technological changes is magnified by the intense competition we face.
The rate and the extent to which digital payments will replace checks, whether as a result of legislative developments, changing payment systems, personal preference or otherwise, cannot be predicted with certainty.
The rate and extent to which digital payments will replace checks, whether due to legislative developments, changing payment systems, personal preferences, or other factors, cannot be predicted with certainty.
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.
Global events, such as illness outbreaks and pandemics like COVID-19, along with political and economic instability, including uncertainties surrounding trade policies, treaties, and tariffs, as well as war or other hostilities, significantly increase economic uncertainty. Given the ongoing and dynamic nature of these events, we cannot predict their impact on our business, financial position, or results of operations.
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.
It is important to carefully consider all of these risks and uncertainties before making an investment in our common stock. STRATEGIC RISKS If our long-term growth strategy does not succeed, our business and financial results would be adversely impacted.
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.
Our strategy involves leveraging the cash flows, customer relationships, and brand equity from our Print segment to drive profitable organic growth in our other businesses. More details about our strategy can be found under the caption " Our Strategy ," located in Part I, Item 1 of this report.
If we are unable to attract and retain customers in a cost-effective manner or effectively operate a multichannel customer experience, our business and results of operations would be adversely affected. Our success depends on our ability to attract new and returning customers in a cost-effective manner.
If we are unable to attract and retain customers in a cost-effective manner or effectively manage a multichannel customer experience, our business and results of operations could be negatively impacted. Our success depends on our ability to draw in new customers and retain existing ones in a cost-efficient way.
Furthermore, under payment card association rules and our contracts with debit and credit card processors, if there is a breach of payment card information that we store or that is stored by third parties with which we do business, we could be liable to the payment card issuing banks for their cost of issuing new cards and other related expenses.
Furthermore, under payment card association rules and our contracts with debit and credit card processors, a breach of payment card information stored by us or our third-party partners could make us liable to the payment card issuing banks for the cost of issuing new cards and other related expenses.
If we cannot collect or pursue collection of such amounts from the applicable merchant or ISO, we may have to bear the cost of such fines or penalties, negatively impacting our results of operations. LEGAL AND COMPLIANCE RISKS Governmental regulation is continuously evolving and could limit or harm our business.
If we are unable to collect these amounts from the respective merchant or ISO, we may have to absorb the cost of these fines or penalties, which would negatively affect our results of operations. 18 LEGAL AND COMPLIANCE RISKS Governmental regulation is continuously evolving and could limit or harm our business.
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.
This requires significant investment, takes considerable time, and ultimately, may not be successful. Any of these risks could harm our business, results of operations, and growth prospects. The use of checks and business forms is declining, and we may be unable to offset this decline with profitable revenue growth.
In addition, third parties may assert patent and other intellectual property infringement claims against us and/or our clients, which could include aggressive and opportunistic enforcement of patents by non-practicing entities. Any such claims could result in litigation against us and could also result in proceedings being brought against us by various federal and state agencies that regulate our businesses.
Additionally, third parties may bring patent and other intellectual property infringement claims against us and/or our clients, which could include aggressive enforcement of patents by non-practicing entities. Such claims could lead to litigation against us and may also result in proceedings initiated by various federal and state regulatory agencies overseeing our business operations.
Rapid, significant, and disruptive technological changes impact the markets for our products and services, including changes in payment and internet browser technologies and the use of artificial intelligence and machine learning, as well as developments in technologies supporting our regulatory and compliance obligations and in-store, digital, mobile and social commerce.
These include advancements in payment and internet browser technologies, the use of artificial intelligence and machine learning, and developments in technologies supporting our regulatory and compliance obligations, as well as in-store, digital, mobile, and social commerce.
Events resulting in the inability of these third parties to perform their obligations, such as work slowdowns, extended labor strikes, labor shortages or inclement weather, could adversely impact our results of operations by requiring us to secure alternate providers at higher costs. Postal rates are dependent on the operating efficiency of the U.S.
Disruptions that prevent these third parties from fulfilling their obligations, such as work slowdowns, extended labor strikes, labor shortages, or adverse weather conditions, could negatively impact our results of operations by forcing us to find alternative providers at higher costs. Postal rates are dependent on the operating efficiency of the U.S.
For example, response rates for direct mail advertising have been decreasing for some time, internet search engines could modify their algorithms or increase prices for purchased search results, or certain partner referrals could decline. Because we offer a diverse portfolio of products and services, we may also face challenges in increasing customer awareness of all of our offerings.
For instance, response rates for direct mail advertising may decline, internet search engines might change their algorithms or increase prices for purchased search results, and partner referrals could decrease. Additionally, given our diverse portfolio of products and services, we may face challenges in raising customer awareness of all our offerings.
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.
Even after such impacts subside, the U.S. economy may experience a recession, which could further adversely affect our business. 20 Asset impairment charges have a negative impact on our results of operations. As of December 31, 2024, goodwill accounted for 50.3% of our total assets.
If our strategy is not successful, or if there is market perception that our strategy is not successful, our reputation and brand may be damaged and our stock price may fall.
If our strategy fails, or if there is a perception in the market that our strategy is failing, our reputation and brand could be damaged, and our stock price may decline.
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.
As our business has grown and diversified, the number and significance of these claims and proceedings has increased. 19 These claims, regardless of their merit, could divert management's attention and result in costly and time-consuming litigation. We establish accruals for identified claims or lawsuits based on our best estimate of the probable liability.
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.
Information regarding our 2024 impairment analyses can be found under the caption "Note 8: Fair Value Measurements" in the Notes to Consolidated Financial Statements located in Part II, Item 8 of this report. In the past, we have encountered situations where it was necessary to write down the value of certain assets.
This would increase our cost of doing business and could slow our ability to introduce new products and services and otherwise adapt to a rapidly changing business environment. Third-party claims could result in costly and distracting litigation and, in the event of an unfavorable outcome, could have an adverse effect on our business, financial condition and results of operations.
This would increase our costs and could slow our ability to introduce new products and services, thereby hindering our ability to adapt to a rapidly changing business environment. Third-party claims can lead to expensive and distracting litigation, and an unfavorable outcome could negatively impact our business, financial condition, and results of operations.
The time and expense associated with finding suitable businesses, technologies or services to acquire can be disruptive to our ongoing business and may divert management’s attention. We cannot predict whether suitable acquisition candidates can be identified or acquired on acceptable terms or whether any acquired products, technologies or businesses will contribute to our revenue or earnings to any material extent.
We cannot predict whether suitable acquisition candidates can be identified or acquired on acceptable terms or whether any acquired products, technologies, or businesses will contribute to our revenue or earnings to any 14 material extent.
Likewise, general publicity regarding information security breaches at other companies could lead to the perception among the general public that e-commerce is not secure. This could decrease traffic to our websites, negatively affect our financial results and limit future business opportunities.
Additionally, general publicity about information security breaches at other companies could create a perception that e-commerce is not secure, reducing traffic to our websites, negatively affecting our financial results, and limiting future business opportunities.
Postal Service ("USPS") and on legislative mandates imposed upon the USPS. Postal rates have increased in recent years and the USPS has incurred significant financial losses. This may result in continued changes to the breadth and/or frequency of USPS mail delivery services. In addition, fuel costs have fluctuated over the past several years.
Postal Service (USPS) and legislative mandates imposed on the USPS. In recent years, postal rates have risen, and the USPS has faced significant financial challenges, which could lead to changes to the scope and frequency of USPS mail delivery services. Additionally, fuel costs have fluctuated over the past several years.
ITEM 1A. RISK FACTORS We routinely encounter and address risks, many of which could cause our future results to be materially different than we currently anticipate. These risks include, but are not limited to, the principal factors listed below and the other matters set forth in this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS We regularly encounter and manage various risks, many of which could materially impact our future results in ways that differ from our current expectations. These risks include, but are not limited to, the key factors listed below and the other matters detailed in this Annual Report on Form 10-K.
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.
Any one or a combination of these factors could hinder our ability to successfully operate, integrate, or leverage an acquisition, which could, in turn, have a material and adverse effect on our business operations and financial performance. We may supplement sales-driven revenue growth with strategically targeted acquisitions over time.
Multichannel marketing is rapidly evolving and we must keep pace with the changing expectations of our customers and new developments by our competitors.
Although we continually invest in enhancing our user experience, the success of these investments is uncertain. Multichannel marketing is rapidly evolving, and we must keep pace with changing customer expectations and new developments by our competitors.
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.
We could also lose our ability to accept and process credit and debit card payments, leading to the loss of customers and difficulty attracting new customers. Moreover, we could face time-consuming and costly litigation, government inquiries, and enforcement actions.
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 compete against numerous financial technology companies, including independent payment processors, credit card processing firms, and treasury management service providers, as well as the in-house capabilities of financial institutions. Remaining cost-competitive requires high transaction volumes, and offering a broad range of services is essential to remaining relevant to customers.
If we are unsuccessful in defending a claim regarding information security breaches, we may be forced to pay damages, penalties and fines, and our insurance coverage may not be adequate to compensate us fully for any losses that may occur.
If we are unsuccessful in defending a claim regarding information security breaches, we may be forced to pay damages, penalties, and fines, and our insurance coverage may not fully compensate us for any losses incurred. Contractual provisions with third parties, including cloud service providers, may limit our ability to recover losses resulting from a security breach by a business partner.
In order to provide our Visa and Mastercard transaction processing services, we must be either a direct member or be registered as a merchant processor or service provider of Visa and Mastercard. Registration as a merchant processor or service provider is dependent upon our being sponsored by members of each organization in certain jurisdictions.
To offer Visa and Mastercard transaction processing services, we must either be a direct member or be registered as a merchant processor or service provider for these networks. This registration relies on sponsorship from members of each organization in certain regions.
As such, when our suppliers increase paper prices, we may not be able to obtain better pricing from alternative suppliers. We depend upon third-party providers for delivery services and for certain outsourced products.
Consequently, when our suppliers 17 raise paper prices, we may not be able to secure better pricing from alternative sources or pass these increases on to our customers. We rely on third-party providers for delivery services and certain outsourced products.
These mandatory disclosures regarding an information security breach often lead to widespread negative publicity. If we were required to make such a disclosure, it may cause our clients and customers to lose confidence in the effectiveness of our information security measures.
Mandatory disclosure of an information security breach often leads to widespread negative publicity. Such disclosure could cause our clients and customers to lose confidence in our information security measures.
Current and future economic conditions that affect inflation, business and consumer spending, including levels of business and consumer confidence, unemployment levels, consumer spending and the availability of credit, as well as uncertainty or volatility in our customers' businesses, may adversely affect our business and results of operations.
Factors such as inflation, business and consumer spending levels, business and consumer confidence, unemployment rates, and the availability of credit, as well as uncertainty or volatility in our customers' businesses, can adversely affect our business and results of operations. In a challenging economic environment, existing and potential customers may delay or forgo purchasing our products and services.
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.
Any failure to provide a secure and effective product, or any performance issue with new products or services or as a result of software or process updates, could lead to significant processing or reporting errors or other losses. We have invested, and will continue to invest, substantial resources to building, maintaining, and improving our technology platforms.
In addition, if we were to experience a material information security breach, we may be required to expend significant amounts of management time and financial resources to remedy, protect against or mitigate the effects of the breach, and we may not be able to remedy the situation in a timely manner, or at all.
Any of these events would negatively affect our business, financial condition, and results of operations. In the event of a material information security breach, we may need to expend significant management time and financial resources to remedy, protect against, or mitigate the effects of the breach. We may not be able to resolve the situation promptly, or at all.
We have established a vendor security program that assesses the risk of these partners, and certain of our third-party relationships are subject to security requirements as specified in written contracts.
We rely on numerous third parties, including vendors, developers, and partners, who are critical to our business and may have access to our customer or employee data. We have established a vendor security program to assess the risk of these partners, and certain third-party relationships are subject to security requirements specified in written contracts.
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.
For instance, in 2023, we completed the exit from our web hosting business, and in 2024, we substantially completed the exit from our payroll and human resources services business. However, we may not always be able to complete desired divestitures on favorable terms.
Intense competition and secular declines in the use of checks and business forms compels us to continually improve our operating efficiency in order to maintain or improve profitability.
Given the intense competition faced by all our businesses and the ongoing secular decline in the use of checks and business forms, we are compelled to continually improve our operating efficiency to maintain and improve our profitability.
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.
Additionally, some of the services we provide to the payments technology market are designed to handle complex transactions and deliver reports at high volumes and speeds.
In addition, some agreements with our financial institution sponsors give them substantial discretion in approving certain aspects of our business practices, including our solicitation, application and qualification procedures for merchants and the terms of our agreements with merchants. Our sponsors' discretionary actions under these agreements could have a material adverse effect on our business and results of operations.
Additionally, some agreements with our financial institution sponsors grant them substantial discretion over certain business practices, including our merchant solicitation, application, and qualification procedures, as well as the terms of our merchant agreements. The discretionary actions of our sponsors under these agreements could materially and adversely affect our business and results of operations.
If a merchant or an independent sales organization ("ISO") customer fails to comply with the applicable requirements of the card associations and networks, we or the merchant or ISO could be subject to a variety of fines or penalties that may be levied by the card associations or networks.
Furthermore, if a merchant or an independent sales organization (ISO) fails to adhere to the card associations' and networks' requirements, we or the merchant or the ISO could face various fines or penalties imposed by the card associations or networks.
We can provide no assurance that key personnel, including our executive officers, will continue to be employed, or that in the event we have to replace key employees, that labor costs will not increase. Failure to retain or attract key personnel could have a material adverse effect on our business, financial condition and results of operations.
We cannot guarantee that key personnel, including our executive officers, will remain with the company, or that replacing key employees will not lead to increased labor costs. The inability to retain or attract key personnel could have a significant adverse impact on our business, financial condition, and results of operations.
We place no priority or likelihood based on these descriptions or order of presentation. We are also subject to general risks and uncertainties that affect many other companies, including overall economic, industry and market conditions. Additional risks not presently known to us, or that we currently believe are immaterial, may also adversely affect us.
The order of presentation does not reflect any priority or likelihood. Additionally, we face general risks and uncertainties common to many other companies, such as overall economic, industry, and market conditions. There may also be additional risks that are currently unknown to us or that we currently believe are immaterial, which could negatively affect us.
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.
In our Data Solutions segment, our data-driven marketing services compete with a wide array of companies in the data solutions space, including advertising agencies, marketing technology firms, marketing fulfillment providers, data aggregators and brokers, and source data providers.
Despite our efforts to protect our intellectual property, third parties may infringe or misappropriate our intellectual property or otherwise independently develop substantially equivalent products or services that do not infringe on our intellectual property rights. Policing unauthorized use of our intellectual property is difficult.
Despite our efforts, third parties may still infringe upon or misappropriate our intellectual property, or independently develop products or services that are substantially similar and do not violate our intellectual property rights. Enforcing our intellectual property rights and preventing unauthorized use is both complex and resource-intensive.
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.
Pricing remains competitive in our financial institution sales channel, as these institutions strive to maintain profitability levels despite the decline in check usage.
However, our technologies, systems and networks are likely to be the target of future attacks due to the increasing threat landscape for all technology businesses, and we can provide no assurance that future incidents will not be material.
To-date, these threats and incidents have not materially impacted our customers, business, or financial results. However, given the increasing threat landscape for all technology businesses, our technologies, systems, and networks are likely to be targeted in future attacks, and we cannot guarantee that future incidents will not be material.
As a result of global economic conditions in past years, a number of financial institutions sought additional capital, merged with other financial institutions and, in some cases, failed. The failure of one or more of our larger financial institution clients, or large portions of our customer base, could adversely affect our operating results.
Additionally, our business relies on the health of the financial services industry. Past global economic conditions have led to financial institutions seeking additional capital, merging with other institutions, or, in some cases, failing. The failure of one or more of our major financial institution clients, or a significant portion of our customer base, could adversely affect our operating results.
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.
Checks remain a significant portion of our business, accounting for 33.1% of our consolidated revenue in 2024, and they provide a significant amount of the cash flows we invest in our growth businesses. We sell checks for both personal and business use and believe that there will continue to be demand for these checks for the foreseeable future.
We could experience temporary interruptions in our websites, transaction and payment processing systems, network infrastructure, service technologies, printing production facilities or customer service operations for a variety of reasons, including, among others, human error, software errors or design faults, security breaches, power loss, telecommunications failures, equipment failures, electrical disruptions, labor issues, vandalism, fire, flood, extreme weather, terrorism and other events beyond our control.
We may face temporary interruptions in our websites, transaction and payment processing systems, network infrastructure, service technologies, printing production facilities, or customer service operations due to various factors such as human error, software issues, security breaches, power outages, telecommunications failures, equipment malfunctions, electrical disruptions, vandalism, natural disasters, terrorism, and other uncontrollable events.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CISO also provides periodic updates to the finance and audit committee of the board of directors, which is responsible for ensuring that we have implemented appropriate risk reviews and discusses, with management and the board, our financial and enterprise risk assessment and risk management practices and policies, as well as reports to the board any material risks identified in the course of performing its responsibilities.
Biggest changeThe CISO provides periodic updates to the board of directors, ensuring that comprehensive risk reviews are conducted and that our cyber risk assessment, practices, and policies are thoroughly discussed with management. Additionally, our Assurance and Risk Advisory Services group delivers periodic updates to the Audit and Finance committee of the board of directors covering financial and enterprise risks, including cybersecurity.
Our Chief Executive Officer, Chief Financial Officer, General Counsel, Chief Technology and Digital Officer, CISO and Chief Compliance Officer are responsible for assessing such incidents for materiality, ensuring that any required notification or communication occurs and determining, among other things, whether any prohibition on the trading of our common stock by insiders should be imposed prior to the disclosure of information about a material cybersecurity event.
Our Chief Executive Officer, Chief Financial Officer, General Counsel, Chief Technology and Digital Officer, CISO, and Chief Compliance Officer are responsible for assessing such incidents for materiality, ensuring that any required notification or communication occurs, and determining whether any prohibition on the trading of our common stock by insiders should be imposed before disclosing information about a material cybersecurity event.
We conduct due diligence on these third parties with respect to their security and business controls, and we have established monitoring procedures in an effort to mitigate risks related to data breaches or other security incidents originating from these third parties.
We conduct due diligence on these third parties regarding their security and business controls and have established monitoring procedures to mitigate risks related to data breaches or other security incidents originating from these third parties.
We maintain cybersecurity insurance coverage that insures us for costs resulting from cyberattacks, although this coverage may not reimburse us for all losses.
We maintain cybersecurity insurance coverage to cover costs resulting from cyberattacks, although this coverage may not reimburse us for all losses.
For further discussion of the risks associated with cybersecurity incidents 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 ." 21
For further discussion of the risks associated with cybersecurity incidents see Item 1A, "Operational Risks – Security breaches, computer malware, or other cyberattacks involving the confidential information we maintain could significantly damage our reputation, expose us to litigation and enforcement actions, and substantially harm our business and results of operations ."
In the event a cybersecurity incident is identified, our Cybersecurity Incident Response team will act in accordance with our incident management plans to communicate to our executive leadership team and to coordinate the response to any incident.
In the event of a cybersecurity incident, our Cybersecurity Incident Response team will act according to our incident management plans to communicate with our executive leadership team and coordinate the response.
ITEM 1C. CYBERSECURITY We are a trusted partner to enterprises of all sizes, and this is a responsibility we take seriously. The secure and uninterrupted operation of our networks and systems, as well as the processing, maintenance and confidentiality of the sensitive information that resides on our systems, is critical to our business operations and strategy.
ITEM 1C. CYBERSECURITY We are a trusted partner for businesses of all sizes, and we take this responsibility seriously. Ensuring the secure and continuous operation of our networks and systems, as well as the processing, maintenance, and confidentiality of the sensitive information they contain, is vital to our business operations and strategy.
We may, from time to time, engage third-party consultants, legal advisors or audit firms in evaluating and testing our risk management systems and assessing and remediating certain potential cybersecurity incidents. These assessments inform our annual and multi-year cybersecurity strategies and our product security plans.
We may also engage third-party consultants, legal advisors, or audit firms to evaluate and test our risk management systems and assess and remediate potential cybersecurity incidents. These assessments inform our annual and multi-year cybersecurity strategies and our product security plans.
We have an Enterprise Risk Management Committee that is led by our Assurance and Risk Advisory Services group, our Chief Financial Officer and our Chief Administrative Officer, with participation from our executive leadership team and senior-level staff, including our Chief Compliance Officer and the CISO.
Our Enterprise Risk Management Committee, led by our Assurance and Risk Advisory Services group, Chief Financial Officer, and Chief Administrative Officer, collaborates with our executive leadership team and senior-level staff, including the Chief Compliance Officer and the CISO, to evaluate and oversee our primary enterprise risks, including cybersecurity.
We devote significant resources to addressing security vulnerabilities through enhancing security and reliability features in our products and services, providing employee security training, monitoring our operations 24 hours a day and 7 days a week, reviewing and auditing our systems against independent security control frameworks, and performing security maturity assessments.
The CISO has over two decades of experience with global technology organizations across various industries. We allocate significant resources to addressing security vulnerabilities by enhancing security and reliability features in our products and services, providing employee security training, monitoring our operations 24/7, reviewing and auditing our systems against independent security control frameworks, and conducting security maturity assessments.
Each year, we process hundreds of millions of records containing data related to individuals and businesses. In addition, certain of our products are hosted solutions, and the amount of data we store for our customers on our servers, including personal, important business and other potentially sensitive information, has been increasing.
We process records containing confidential data related to individuals and businesses. Additionally, some of our products are hosted solutions, and the volume of data we store for our customers, including personal, critical business, and other potentially sensitive information, has been growing. Technology-based organizations like ours are susceptible to targeted attacks that aim to exploit network and system vulnerabilities.
In addition, our operations 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.
In addition, our operations rely on several third parties, including vendors, developers, and partners, who are critical to our business and may have access to our confidential data regarding consumers, employees, contractors, suppliers, and other business partners.
Technology-based organizations such as ours are vulnerable to targeted attacks aimed at exploiting network and system applications or weaknesses. A successful cyberattack could result in the disclosure or misuse of sensitive business and personal information and data, cause interruptions in our operations, damage our reputation and deter clients and consumers from ordering our products and services.
A successful cyberattack could lead to the disclosure or misuse of sensitive business and personal information, disrupt our operations, damage our reputation, and deter clients and consumers from using our products and services. It could also result in litigation, the termination of client contracts, government inquiries, and/or enforcement actions.
It could also result in litigation, the termination of client contracts, government inquiries and/or enforcement actions. Any of these events could have a material adverse effect on our business, prospects, results of operations and/or financial position. We have implemented a risk-based information/cybersecurity program dedicated to protecting our data and solutions.
Any of these events would have a material negative impact on our business, prospects, results of operations, and financial position. We have established a risk-based information/cybersecurity program dedicated to safeguarding our data and solutions. Our privacy policies, along with associated controls and procedures, provide a comprehensive framework to guide the handling of data.
Our information security program is led by our Chief Information Security Officer ("CISO") and the Information Security department, which establishes the policies, standards and strategies to manage security risk. The CISO has more than two decades of experience with global technology organizations across multiple industries.
We employ a defense-in-depth strategy, utilizing multiple security layers and the CIA (confidential, integrity, and availability) triad model. Our information security program is led by our Chief Information Security Officer (CISO) and the Information Security department, which sets the policies, standards, and strategies to manage security risk.
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Our privacy policies, together with associated controls and procedures, provide a comprehensive framework to inform and guide the handling of data. We employ a defense-in-depth strategy, utilizing the concept of security layers and the CIA (confidential, integrity and availability) triad model.
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This committee assesses and monitors our top enterprise risks, including cybersecurity, and provides quarterly updates to the board of directors.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeNone of our owned properties are mortgaged or held subject to any significant encumbrance. We believe that existing leases will be renegotiated as they expire or that suitable alternative properties will be leased on acceptable terms. We also believe that our properties are sufficiently maintained and are adequate and suitable for our business needs as presently conducted.
Biggest changeApproximately 20% of our facilities are owned, while the remaining 80% are leased. Collectively, our facilities encompass approximately two million square feet of floor space. None of our owned properties are mortgaged or subject to significant encumbrances. We believe that existing leases will be renegotiated upon expiration or that we will secure suitable alternative properties on acceptable terms.
ITEM 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.
ITEM 2. PROPERTIES As of December 31, 2024, we operated out of 36 facilities across the U.S., two facilities in Canada, and one in India. These locations support various functions, including printing and fulfillment, payment processing, call centers, data centers, and administrative tasks. Due to our shared services model, many of these facilities serve multiple business segments.
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Because of our shared services approach to most of our business functions, many of our facilities are utilized for the benefit of more than one of our business segments. Approximately 20% of our facilities are owned, while the remaining 80% are leased. Our facilities have a combined floor space of approximately 2 million square feet.
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We also believe that our properties are well-maintained and adequately meet our current business needs. 22
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We reduced the number of facilities by 13 during 2023, driven by the continued assessment of our real estate footprint and business exits.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We record provisions with respect to identified claims or lawsuits when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Claims and lawsuits are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter.
Biggest changeITEM 3. LEGAL PROCEEDINGS We record provisions for identified claims or lawsuits when it is probable that a liability has been incurred and the loss amount can be reasonably estimated. Claims and lawsuits are reviewed on a quarterly basis, and provisions are taken or adjusted to reflect the current status of each matter.
Recorded liabilities were not material to our financial position, results of operations or liquidity, and we do not believe that any of the currently identified claims or litigation will materially affect our financial position, results of operations or liquidity upon resolution. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur.
The recorded liabilities were not material to our financial position, results of operations, or liquidity, and we do not believe that any of the currently identified claims or litigation will have a material impact on our financial position, results of operations, or liquidity upon resolution. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur.
We believe the recorded reserves in our consolidated financial statements are adequate in light of the probable and estimable outcomes.
We believe that the reserves recorded in our consolidated financial statements are adequate, considering the probable and estimable outcomes.
If an unfavorable ruling were to occur, it may cause a material adverse impact on our financial position, results of operations or liquidity in the period in which the ruling occurs or in future periods.
Should an unfavorable ruling occur, it may have a material adverse effect on our financial position, results of operations, or liquidity in the period the ruling is made or in future periods.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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.
Biggest changeAs of December 31, 2024, the number of shareholders of record was 4,695, excluding shareholders whose shares were 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 million of our common stock. This authorization does not have an expiration date.
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.
Support Services (DJUSIS) Index. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ASSUMES INITIAL INVESTMENT OF $100 DECEMBER 2024 The graph assumes that $100 was invested on December 31, 2019 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.
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.
No shares were repurchased under this authorization during the fourth quarter of 2024 and $287 million remained available for repurchase as of December 31, 2024. 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.
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]
All rights reserved. Copyright 1980-2025. 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]

Item 6. [Reserved]

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

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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.
Biggest changeOther Information 84 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 84 Item 10. Directors, Executive Officers and Corporate Governance 84 Item 11. Executive Compensation 85 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 85 Item 13. Certain Relationships and Related Transactions, and Director Independence 85 Item 14.
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 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 38 Item 8. Financial Statements and Supplementary Data 40 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 83 Item 9A. Controls and Procedures 83 Item 9B.
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").
Principal Accountant Fees and Services 85 Item 15. Exhibits and Financial Statement Schedules 86 Item 16. Form 10-K Summary 89 Signatures 90 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 7. Management's Discussion & Analysis

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

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Biggest changeThe 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.
Biggest changeNet income for the years ended December 31 reconciles to adjusted EBITDA and adjusted EBITDA margin as follows: (in thousands) 2024 2023 Net income $ 52,945 $ 26,227 Net income attributable to non-controlling interest (143) (107) Depreciation and amortization expense 165,544 169,703 Interest expense 123,281 125,643 Income tax provision 23,552 13,572 Restructuring and integration expense 50,450 90,475 Share-based compensation expense 19,944 20,525 Certain legal-related (benefit) expense (34) 2,195 Asset impairment charges 7,743 — Gain on sale of businesses and long-lived assets (31,207) (32,421) Loss on sale of investment securities — 1,323 Adjusted EBITDA $ 412,075 $ 417,135 Adjusted EBITDA margin 19.4 % 19.0 % Adjusted diluted EPS – We believe that adjusted diluted EPS is a valuable metric for providing comparable information that assists in analyzing our current period operating performance and assessing our future operating performance.
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 located in Part II, Item 8 of this report.
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.
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 located in Part II, Item 8 of this report, where information regarding revenue for our product and service offerings can also be found.
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.
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 and our operating results at a high level; • 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 judgment and uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
For this reason, our internal management reporting also includes these financial measures, which should be considered in addition to, and not as superior to or as a substitute for, GAAP financial measures. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
Consequently, our internal management reporting also includes these financial measures, which should be considered in addition to, and not as superior to or as a substitute for, GAAP financial measures. We strongly encourage investors and shareholders to review our financial statements and publicly filed reports in their entirety and not to rely solely on any single financial measure.
Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and therefore, may not result in useful comparisons. The reconciliation of our non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in Consolidated Results of Operations .
Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and therefore, may not facilitate useful comparisons. The reconciliation of our non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the Consolidated Results of Operations section.
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.
When we use terms such as “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, these indicate forward-looking statements within the meaning of the Reform Act.
Information regarding the maturities of our long-term debt, our operating and finance lease obligations and contingent liabilities can be found under the captions "Note 13: Debt," "Note 14: Leases" and "Note 15: Other Commitments and Contingencies," all of which appear in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
Detailed information regarding the maturities of our long-term debt, our operating and finance lease obligations, and contingent liabilities can be found in the Notes to Consolidated Financial Statements under the captions "Note 13: Debt," "Note 14: Leases," and "Note 15: Other Commitments and Contingencies," located 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.
Additional details 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 located in Part II, Item 8 of this report.
A limitation of using the free cash flow measure is that not all of our free cash flow is available for discretionary spending, as we may have mandatory debt payments and other cash requirements that must be deducted from our cash available for future use.
One limitation of using the free cash flow measure is that not all of our free cash flow is available for discretionary spending. We may have mandatory debt payments and other cash requirements that must be deducted from our available cash.
This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). In addition, we discuss free cash flow, net debt, liquidity, adjusted diluted earnings per share ("EPS"), consolidated adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") and consolidated adjusted EBITDA margin, all of which are non-GAAP financial measures.
This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). Additionally, we discuss non-GAAP financial measures such as free cash flow, net debt, adjusted diluted earnings per share (EPS), consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), and consolidated adjusted EBITDA margin.
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.
Please be aware that this MD&A discussion contains forward-looking statements that involve risks and uncertainties. Part I, Item 1A of this report details known material risks and important information to consider when evaluating our forward-looking 24 statements.
As a result of our employee reductions, including those related to our North Star program, we realized cost savings of approximately $7 million in cost of sales and $25 million in SG&A expense in 2023, in comparison to our 2022 results of operations.
As a result of these employee reductions, including those related to our North Star program, we realized cost savings of approximately $10 million in cost of sales and $25 million in SG&A expense in 2024, compared to our 2023 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.
For those employee reductions included in our restructuring and integration accruals through December 31, 2024, we expect to realize annual cost savings of approximately $5 million in cost of sales and $7 million in SG&A expense in 2025, compared to our 2024 results of operations.
Cost of revenue consists primarily of raw materials used to manufacture our products, shipping and handling costs, third-party costs for outsourced products and services, payroll and related expenses, information technology costs, depreciation and amortization of assets used in the production process and in support of digital service offerings, and related overhead.
Cost of revenue primarily consists of raw materials used to manufacture our products, shipping and handling costs, third-party costs for outsourced products and services, payroll and related expenses, information technology costs, depreciation and amortization of assets used in the production process and in support of digital service offerings, and related overhead. 27 The decrease in total cost of revenue for 2024, compared to 2023, was driven by several factors.
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.
The following discussion and analysis provides information we believe is essential for understanding our financial condition and results of operations. This discussion focuses on our consolidated financial results for the years ended December 31, 2024 and December 31, 2023.
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.
For a discussion of our consolidated results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022, please refer to Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 ("the 2023 Form 10-K"), which was filed with the SEC on February 22, 2024, and is incorporated by reference into this Form 10-K.
As such, adjusted diluted EPS is one of the key financial performance metrics we use to assess the operating results and performance of the business and to identify strategies to improve performance.
Adjusted diluted EPS is one of the key financial performance metrics we use to evaluate the operating results and performance of the business, and It helps us identify strategies to improve performance.
Our MD&A discussion is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. Our accounting policies are discussed under the caption “Note 1: Significant Accounting Policies” in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report.
Our MD&A discussion is based on our consolidated financial statements, which have been prepared in accordance with GAAP. Our accounting policies are detailed under the caption “Note 1: Significant Accounting Policies” in the Notes to Consolidated Financial Statements located in Part II, Item 8 of this report. We regularly review the accounting policies used in reporting our financial results.
Further information regarding the terms and maturities of our debt, as well as our debt covenants, 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.
Further information regarding the refinancing of our debt can be found under the caption "Note 13: Debt" in the Notes to Consolidated Financial Statements located in Part II, Item 8 of this report.
CRITICAL ACCOUNTING ESTIMATES Our critical accounting estimates are those that are most important to the portrayal of our financial condition and results of operations, or which place the most significant demands on management's judgment about the effect of matters that are inherently uncertain, and the impact of different estimates or assumptions could be material to our financial condition or results of operations.
CRITICAL ACCOUNTING ESTIMATES Our critical accounting estimates are those that are most important to accurately portraying our financial condition and results of operations, or that place significant demands on management's judgment regarding the effects of inherently uncertain matters, and different estimates or assumptions could materially impact our financial condition or results of operations.
Identification of reporting units includes an analysis of the components that comprise each of our operating segments, which considers, among other things, the manner in which we operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form a reporting unit if the components have similar economic characteristics.
Identification of reporting units involves analyzing the components that comprise each of our operating segments, considering factors such as the manner in which we operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form a reporting unit if they have similar economic characteristics.
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.
Based on the amount of variable-rate debt outstanding as of December 31, 2024, a one percentage point change in the weighted-average interest rate would result in a $6 million change in interest expense for 2025. Income Tax Provision (in thousands) 2024 2023 Change Income tax provision $ 23,552 $ 13,572 73.5% Effective tax rate 30.8 % 34.1 % (3.3) pt.
When we are responsible for satisfying a performance obligation, based on our ability to control the product or service provided, we are considered the principal and revenue is recognized for the gross amount of consideration.
If we are responsible for satisfying a performance obligation based on our control over the product or service, we are considered the principal and recognize revenue for the gross amount of consideration.
When another party is involved in providing goods or services to a customer, we must determine whether our obligation is to provide the specified good or service itself (i.e., we are the principal in the transaction) or to arrange for that good or service to be provided by the other party (i.e., we are an agent in the transaction).
When another party is involved in providing goods or services to a customer, we determine whether our obligation is to provide the specified good or service ourselves or to arrange for the good or service to be provided by the other party.
We are currently pursuing several initiatives designed to support our growth strategy and to increase our efficiency, including several initiatives that we collectively refer to as our North Star program.
Additionally, we have recorded employee severance costs across functional areas. We are currently pursuing several initiatives designed to support our growth strategy and to increase our efficiency, including several initiatives that we collectively refer to as our North Star program.
We anticipate that net cash generated by operations, along with cash and cash equivalents on hand and availability under our credit facility, will be sufficient to support our operations, including our contractual obligations and debt service requirements, for the next 12 months, as well as our long-term capital requirements.
We believe that net cash generated by operations, combined with cash and cash equivalents on hand, and the availability under our credit facility, will be sufficient to support our operations over the next 12 months. This includes meeting our contractual obligations, debt service requirements, and addressing our long-term capital needs.
Further information regarding these costs can be found in Restructuring and Integration Expense in this MD&A discussion.
Further information regarding these costs can be found in the Restructuring and Integration Expense section .
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.
We regularly review and update our contract-related estimates and do not expect that revisions to our estimates will have a material impact on our results of operations, financial position, or cash flows. Goodwill Impairment As of December 31, 2024, our goodwill totaled $1.42 billion, representing 50.3% of our total assets.
The decrease in SG&A expense for 2023, as compared to 2022, was driven, in part, by various cost reduction actions, including workforce adjustments, marketing optimization and real estate rationalization, as well as a decrease related to the business exits discussed under Executive Overview of approximately $15 million for 2023.
The decrease in SG&A expense for 2024, compared to 2023, was primarily due to various cost management actions, including workforce adjustments, marketing optimization, and real estate rationalization. Additionally, there was a reduction of approximately $11 million related to the business exits discussed in the Executive Overview section.
We believe that these non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide useful information to assist investors in analyzing our current period operating performance and in assessing our future operating performance.
We believe that these non-GAAP financial measures, when reviewed alongside GAAP financial measures, can provide valuable insights for investors analyzing our current period operating performance and assessing our future operating performance.
When the other party is primarily responsible for satisfying a performance obligation, we are considered the agent and revenue is recognized in the amount of any fee or commission to which we are entitled. We sell certain products and services through a network of distributors.
If the other party is primarily responsible for satisfying the performance obligation, we are considered the agent and recognize revenue in the amount of any fee or commission we are entitled to.
Sales tax collected concurrent with revenue-producing activities is excluded from revenue. Amounts billed to customers for shipping and handling are included in revenue, while the related costs incurred for shipping and handling are reflected in cost of products and are accrued when the related revenue is recognized.
Amounts billed to customers for shipping and handling are included in revenue, while the related costs are recorded in cost of products and accrued when the related revenue is recognized.
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.
As of December 31, 2024, we were in compliance with our debt covenants.
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).
While it is reasonable to expect that one or more of the excluded items will occur in future periods, the amounts recognized may vary significantly. 30 Diluted EPS for the years ended December 31 reconciles to adjusted diluted EPS as follows: (in thousands, except per share amounts) 2024 2023 Net income $ 52,945 $ 26,227 Net income attributable to non-controlling interest (143) (107) Net income attributable to Deluxe 52,802 26,120 Acquisition amortization 55,489 74,839 Accelerated amortization 16,866 2,500 Restructuring and integration expense 50,450 90,475 Share-based compensation expense 19,944 20,525 Certain legal-related (benefit) expense (34) 2,195 Asset impairment charges 7,743 — Gain on sale of businesses and long-lived assets (31,207) (32,421) Loss on sale of investment securities — 1,323 Loss on debt retirement 1,934 — Adjustments, pretax 121,185 159,436 Income tax provision impact of pretax adjustments (1) (26,640) (39,684) Adjustments, net of tax 94,545 119,752 Adjusted net income attributable to Deluxe 147,347 145,872 Income allocated to participating securities (8) — Re-measurement of share-based awards classified as liabilities (47) (20) Adjusted income attributable to Deluxe available to common shareholders $ 147,292 $ 145,852 Adjusted weighted-average shares and potential common shares outstanding (2) 44,738 43,889 GAAP diluted EPS $ 1.18 $ 0.59 Adjustments, net of tax 2.11 2.73 Adjusted diluted EPS $ 3.29 $ 3.32 (1) The tax effect of the pretax adjustments takes into account the tax treatment and related tax rate(s) applicable to each adjustment in the relevant tax jurisdiction(s).
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.
We anticipate that capital expenditures will be between $90 and $100 million in 2025, compared to $94 million in 2024, as we continue to scale our product categories and invest in innovation. As of December 31, 2024, we held cash and cash equivalents of $34 million, with an additional $374 million available for borrowing under our revolving credit facility.
CONSOLIDATED RESULTS OF OPERATIONS Consolidated Revenue (in thousands) 2023 2022 Change Total revenue $ 2,192,260 $ 2,238,010 (2.0%) The decrease in total revenue for 2023, as compared to 2022, was driven, in part, by the business exits discussed in Executive Overview , which resulted in a decrease in revenue of approximately $52 million for 2023, as well as the continuing secular decline in order volume for checks, business forms and some Promotional Solutions business accessories.
CONSOLIDATED RESULTS OF OPERATIONS Consolidated Revenue (in thousands) 2024 2023 Change Total revenue $ 2,121,761 $ 2,192,260 (3.2%) The decrease in total revenue for 2024, compared to 2023, was driven by several factors, including the continuing secular decline in order volumes for checks, business forms, and certain business accessories, as well as the business exits discussed in the Executive Overview section, which led to a reduction in revenue of approximately $45 million.
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.
The majority of the employee reductions included in our restructuring and integration accruals as of December 31, 2024, along with the related severance payments, are anticipated to be completed by mid-2025.
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.
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 located 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.
Further information regarding restructuring and 31 integration expense can be found under the caption "Note 9: Restructuring and Integration Expense" in the Notes to Consolidated Financial Statements located in Part II, Item 8 of this report.
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.
As of December 31, 2024, $287 million remained available for repurchase. Information regarding changes in shareholders' equity can be found in the consolidated statements of shareholders' equity located in Part II, Item 8 of this report.
We also expect 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.
We expect to maintain our regular quarterly dividend payments. However, dividends are subject to approval by our board of directors each quarter and, therefore, may change.
We do not consider adjusted EBITDA to be a measure of cash flow, as it does not consider certain cash requirements such as interest, income taxes, debt service payments or capital investments.
Additionally, we believe that an increasing adjusted EBITDA and adjusted EBITDA margin indicate an increase in the company's value. It is important to note that we do not consider adjusted EBITDA to be a measure of cash flow, as it does not account for certain cash requirements such as interest, income taxes, debt service payments, or capital investments.
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.
Additional information can be found under the caption "Note 6: Divestitures" in the Notes to Consolidated Financial Statements located in Part II, Item 8 of this report. 28 Interest Expense (in thousands) 2024 2023 Change Interest expense $ 123,281 $ 125,643 (1.9%) Weighted-average debt outstanding 1,584,453 1,676,858 (5.5%) Weighted-average interest rate 7.15 % 7.06 % 0.09 pt.
We anticipate that net cash generated by operations, along with cash and cash equivalents on hand and availability under our credit facility, will be sufficient to support our operations, including our contractual obligations and our debt service requirements, for the next 12 months, as well as our long-term capital requirements.
We believe that net cash generated from our operations, combined with cash and cash equivalents on hand, and the availability under our credit facility, will be sufficient to support our operations over the next 12 months. This includes meeting our contractual obligations, debt service requirements, and addressing our long-term capital needs. We expect to maintain our regular quarterly dividend payments.
Carrying value is based on the assets and liabilities associated with the operations of the reporting unit, which often requires the allocation of shared and corporate items among reporting units. We utilize a discounted cash flow model to calculate the estimated fair value of a reporting unit.
When a quantitative analysis is necessary, we compare the carrying value of the reporting unit, including goodwill, to its estimated fair value. The carrying value is based on the assets and liabilities associated with the reporting unit's operations, often requiring the allocation of shared and corporate items among reporting units.
In some instances, we reasonably could have used different accounting estimates and, in other instances, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results may differ from our estimates.
This forms the basis for making judgments about the carrying values of assets and liabilities. 36 In some cases, we could have reasonably used different accounting estimates and in other cases, changes in the accounting estimates are likely to occur from period to period. Therefore, actual results may differ from our estimates.
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.
However, dividends are subject to approval by our board of directors each quarter and, therefore, may change. 35 CAPITAL RESOURCES As of December 31, 2024, the principal amount of our debt obligations was $1.52 billion, compared to $1.60 billion as of December 31, 2023.
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.
Our revenue mix by business segment was as follows: 2024 2023 Merchant Services 18.1 % 16.6 % B2B Payments 13.6 % 13.7 % Data Solutions 11.0 % 9.7 % Print 56.8 % 57.5 % All other 0.5 % 2.5 % Total revenue 100.0 % 100.0 % Consolidated Cost of Revenue (in thousands) 2024 2023 Change Total cost of revenue $ 995,311 $ 1,029,577 (3.3%) Total cost of revenue as a percentage of total revenue 46.9 % 47.0 % (0.1) pt.
Significant estimates and judgments are reviewed by management on an ongoing basis and by the Audit and Finance committee of our board of directors at the end of each quarter prior to the public release of our financial results. 35 Revenue Recognition Product revenue is recognized when control of the goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods.
Significant estimates and judgments are reviewed by management on an ongoing basis and by the Audit and Finance Committee of our board of directors at the end of each quarter, prior to the public release of our financial results.
Further information regarding all of our goodwill impairment analyses can be found under the caption " Note 8: Fair Value Measurements" in the Notes to Consolidated Financial Statements appearing in Item II, Part 8 of this report.
Detailed information regarding our outstanding debt, including our debt service obligations, can be found under the caption "Note 13: Debt” in the Notes to Consolidated Financial Statements located in Part II, Item 8 of this report.
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.
We have also experienced labor supply issues in certain portions of our business. The severity and duration of inflation, as well as supply chain and labor issues, remains difficult to predict and could continue to impact our business, financial position, and results of operations. We also monitor trends in small business sentiment and consumer discretionary spending.
(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.
(in thousands) 2024 2023 Change Net cash provided by operating activities $ 194,281 $ 198,367 $ (4,086) Net cash used by investing activities (69,842) (43,305) (26,537) Net cash used by financing activities (267,255) (37,679) (229,576) Effect of exchange rate change on cash, cash equivalents, restricted cash, and restricted cash equivalents (6,064) 3,235 (9,299) Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents $ (148,880) $ 120,618 $ (269,498) Free cash flow (1) $ 99,892 $ 97,620 $ 2,272 (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.
Certain of our financial institution contracts require prepaid product discounts in the form of cash payments we make to our financial institution clients. These prepaid product discounts are included in other non-current assets on our consolidated balance sheets and are generally amortized as reductions of revenue on the straight-line basis over the contract term.
These prepaid product discounts are recorded in other non-current assets on the consolidated balance sheets and are generally amortized as reductions of revenue on the straight-line basis over the contract term. Sales tax collected during revenue-producing activities is excluded from revenue.
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.
Adjusted EBITDA margin for 2024 decreased compared to 2023, as the benefits from our pricing and cost management actions were more than offset by the inflationary cost pressures and the increased bad debt expense.
Goodwill is tested for impairment on an annual basis as of July 31, or more frequently if events occur or circumstances change that would indicate a possible impairment. To analyze goodwill for impairment, we must assign our goodwill to individual reporting units.
We test goodwill for impairment annually as of July 31, or more frequently if events or changes in circumstances indicate a possible impairment. To assess goodwill for impairment, we assign it to individual reporting units.
When completing our annual goodwill impairment analysis, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
We periodically review our reporting units to ensure they continue to reflect the manner in which we operate our business. During our annual goodwill impairment analysis, we may first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
As 25 a result, 78% of our debt had a fixed interest rate of 7.0% as of December 31, 2023, which partially insulates us from future interest rate increases. We continue to monitor inflationary pressures on our labor, delivery and material costs. In response to the inflationary environment, we implemented targeted price increases in all of our segments.
As of December 31, 2024, 61% of our debt had a fixed interest rate of 8.1%, which partially insulates us from future interest rate increases. We also continually monitor the impact of inflationary pressures affecting our labor, delivery, and material costs.
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.
Furthermore, we have entered into contracts with third-party service providers, primarily for information technology services, including cloud computing and professional services. These agreements also cover outsourced services, data purchases, and payment acceptance services.
Adjusted EBITDA and adjusted EBITDA margin – We believe that adjusted EBITDA and adjusted EBITDA margin are useful in evaluating our operating performance, as they eliminate the effect of interest expense, income taxes, the accounting effects of capital investments (i.e., depreciation and amortization) and certain items, as presented below, that may vary for reasons unrelated to current period operating performance.
These measures eliminate the effect of interest expense, income taxes, the accounting effects of capital investments (i.e., depreciation and amortization), and certain other items that may vary for reasons unrelated to current period operating performance. Management uses these measures to assess the operating results and performance of the business, perform analytical comparisons, and identify strategies to improve 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.
By excluding the impact of non-cash items or items that we believe are not indicative of current period operating performance, adjusted diluted EPS offers a useful view of our underlying business performance.
Partially offsetting these decreases in total cost of revenue was inflationary pressures on hourly wages, materials and delivery, as well as the revenue growth from new business and favorable volumes, primarily data-driven marketing and merchant services.
These decreases in total cost of revenue were partially offset by the revenue growth in data-driven marketing, as well as inflationary pressures on hourly wages, materials, and delivery costs. As a result, total cost of revenue as a percentage of total revenue for 2024 was virtually flat as compared to 2023.
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.
Reconciliation of Non-GAAP Financial Measures Free cash flow – We define free cash flow as net cash provided by operating activities minus purchases of capital assets. We consider free cash flow to be an important indicator of cash available for servicing debt and for shareholders, after making necessary capital investments to maintain or expand our asset base.
If, after this qualitative assessment, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary.
If this qualitative assessment suggests it is not more likely than not that the fair value is less than the carrying amount, a quantitative impairment test is unnecessary. For the 2024 annual impairment analysis, we performed quantitative analyses for specific reporting units: Merchant Services, Treasury Management, and Business Essentials.
We review the accounting policies used in reporting our financial results on a regular basis. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities.
The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as the related disclosure of contingent assets and liabilities. These estimates are based on historical experience and various other factors and assumptions that we believe are reasonable under the circumstances.
Gain on Sale of Businesses and Long-Lived Assets (in thousands) 2023 2022 Change Gain on sale of businesses and long-lived assets $ 32,421 $ 19,331 $ 13,090 As discussed in Executive Overview , during 2023, we completed the sale of our North American web hosting and logo design businesses, recognized income from actions related to the decision to exit our payroll and human resources services business, and sold 2 facilities.
Gain on Sale of Businesses and Long-Lived Assets (in thousands) 2024 2023 Change Gain on sale of businesses and long-lived assets $ 31,207 $ 32,421 (3.7%) As discussed in the Executive Overview section, we substantially completed our exit from the U.S. and Canadian payroll and human resources services business during 2024.
For example, if our stock price were to further decline over a sustained period, if a further downturn in economic conditions were to negatively affect our actual and forecasted operating results, if we were to change our business strategies and/or the allocation of resources, if we were to lose significant customers, if competition were to materially increase, or if order volume declines for checks and business forms were to materially accelerate, these situations could indicate a decline in the fair value of one or more of our reporting units.
For instance, a sustained decline in our stock price, a downturn in economic conditions affecting our operating results, changes in business strategies or resource allocation, loss of significant customers, increased competition, or accelerated declines in order volume for checks and business forms could indicate a decline in the fair value of one or more reporting units, potentially necessitating additional impairment charges for goodwill or other assets.
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.
Restructuring and Integration Expense (in thousands) 2024 2023 Change Restructuring and integration expense $ 48,570 $ 78,245 (37.9%) We are actively pursuing several initiatives aimed at aligning our business with our growth strategy and enhancing operational efficiency. As we implement these initiatives, the amount of restructuring and integration expense is expected to fluctuate from period to period.
The increase in the effective income tax rate for 2023, as compared to 2022, was driven primarily by an increase of 7.8 points related to the repatriation of foreign earnings and the change in our foreign effective tax rate, as well as a 3.9 point increase driven by return-to-provision adjustments and a 3.5 point increase related to the tax impact of share-based compensation.
The effective income tax rate for 2024 decreased compared to 2023. This change was primarily due to lower tax rate impacts in 2024 from return to provision adjustments, share-based compensation, and the repatriation of foreign earnings.
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.
We also reduced net debt by $52 million from the previous year-end. Realignment – Effective January 1, 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 prior to January 1, 2024.
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.
This decline was primarily driven by the reduction in revenue and inflationary pressures on labor costs. These decreases were partially offset by the benefits realized from operational improvements across our lockbox sites. Adjusted EBITDA margin for 2023 decreased compared to 2022, as the investments in the business and increased labor costs exceeded the benefit from cost management actions.
A terminal value is then applied to the projected cash flow stream. Future estimated cash flows are discounted to their present value to calculate the estimated fair value. The discount rate used is the market-value-weighted average of our estimated cost of capital derived using both known and estimated customary market metrics.
We project revenue using historical trending and internal forecasting techniques, apply our fixed and variable cost experience rates to the projected revenue, and calculate future cash flows. A terminal value is then applied to the projected cash flow stream, and future estimated cash flows are discounted to their present value to determine the estimated fair value.
Total SG&A expense as a percentage of total revenue for 2023 decreased as compared to 2022, as the impact of price increases, our cost reduction actions and the decrease in acquisition amortization more than offset the impact of investments in the business.
These reductions were partially offset by a $6 million increase in bad debt expense, primarily within the Print segment. Total SG&A expense as a percentage of total revenue for 2024 decreased compared to 2023, as the combined effects of price increases and our cost management actions more than offset the increase in bad debt expense.
Adjusted EBITDA margin increased for 2023, as compared to 2022, as price increases, the benefit of cost reduction actions and our focus on products with better margins more than offset the impact of inflationary pressures. For 2024, we expect the adjusted EBITDA margin percentage to remain in the mid-teens.
Adjusted EBITDA margin for 2023 also increased compared to 2022, as the inflationary cost pressures were more than offset by the benefits of the pricing and cost management actions, along with our focus on higher-margin products. CASH FLOWS AND LIQUIDITY As of December 31, 2024, we held cash and cash equivalents of $34 million.
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.
Based on these assessments, we found no changes in events or circumstances that suggested it was more likely than not that the fair value of any reporting unit was less 37 than its carrying amount. As such, no goodwill impairment charges were recorded as a result of our 2024 annual impairment analysis.
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.
The benefits of our pricing and cost management actions and the lower restructuring and integration expense were offset by the inflationary impacts. Consolidated Selling, General & Administrative (SG&A) Expense (in thousands) 2024 2023 Change SG&A expense $ 909,168 $ 956,068 (4.9%) SG&A expense as a percentage of total revenue 42.8 % 43.6 % (0.8) pt.
In determining the estimated fair values of our reporting units, we are required to estimate a number of factors, including revenue growth rates, terminal growth rates, direct costs, the discount rate and the allocation of shared and corporate items.
The discount rate used is the market-value-weighted-average of our estimated cost of capital, derived using both known and estimated customary market metrics. To determine the estimated fair values of our reporting units, we estimate several factors, including projected revenue growth rates, EBITDA margins, terminal growth rates, discount rates, and the allocation of shared and corporate items.
When completing a quantitative analysis for all of our reporting units, the summation of our reporting units' fair values is compared to our consolidated fair value, as indicated by our market capitalization, to evaluate the reasonableness of our calculations.
When completing quantitative analyses for all of our reporting units, we compare the summation of our reporting units' fair values to our consolidated fair value, as indicated by our market capitalization, to ensure the reasonableness of our calculations. In 2023, we entered into agreements to transition our U.S. and Canadian payroll and human resources services customers to other service providers.
The following table should be read in conjunction with the consolidated statements of cash flows appearing in Part II, Item 8 of this report.
Additionally, we had restricted cash and restricted cash equivalents, which were included in settlement processing assets and other non-current assets on the consolidated balance sheet, totaling $275 million. The following table should be read in conjunction with the consolidated statements of cash flows located in Part II, Item 8 of this report.
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.
These amounts, which totaled $19 million as of December 31, 2024, are included in other non-current assets on the consolidated balance sheets and are amortized on the straight-line basis as SG&A expense. The straight-line amortization approximates the timing of the transfer of goods or services to the customer, generally over periods of two to five years.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs 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.
Biggest changeQuantitative 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 located in Part II, Item 8 of this report. 38 As of December 31, 2024, our total debt outstanding was as follows: (in thousands) Carrying amount (1) Fair value (2) Interest rate Senior secured term loan facility $ 495,150 $ 500,000 7.2 % Senior unsecured notes 469,446 456,570 8.0 % Senior secured notes 441,638 454,860 8.1 % Securitization obligations 78,917 78,917 6.2 % Amounts drawn on senior secured revolving credit facility 18,000 18,000 7.2 % Total debt $ 1,503,151 $ 1,508,347 7.7 % (1) The carrying amount has been reduced by unamortized discount and debt issuance costs of $19 million.
(2) For the amounts outstanding under our credit facility agreement, fair value approximates carrying value because the interest rate is variable and reflects current market rates. The fair value of the senior, unsecured notes is based on quoted prices in active markets for the identical liability when traded as an asset.
(2) For the amounts outstanding under our credit facility agreement, fair value approximates carrying value because the interest rate is variable and reflects current market rates. The fair value of the senior unsecured and senior secured notes is based on quoted prices in active markets for the identical liability when traded as an asset.
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%.
As of December 31, 2024, we also had $450 million of 8.125% senior secured notes and $475 million of 8.0% senior unsecured notes outstanding. When factoring in the related discount and debt issuance costs, the effective interest rate on these notes is 8.6% and 8.3%, respectively.
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.
Our investments in, and loans and advances to, foreign subsidiaries and branches, along with the operations of these entities, are denominated in foreign currencies, primarily Canadian dollars. The impact of exchange rate changes on our earnings and cash flows is expected to be minimal, given that our foreign operations constitute a relatively small portion of our overall business.
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.
Further details regarding the interest rate swaps can be found under the caption "Note 7: Derivative Financial Instruments" in the Notes to Consolidated Financial Statements located in Part II, Item 8 of this report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest rate risk – We are exposed to changes in interest rates primarily as a result of the borrowing activities used to support our capital structure, maintain liquidity and fund business operations and investments. We do not enter into financial instruments for speculative or trading purposes.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest rate risk – We are subject to fluctuations in interest rates primarily due to our borrowing activities, which are essential for maintaining our capital structure, ensuring liquidity, and funding our business operations and investments. We do not enter into financial instruments for speculative or trading purposes.
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, 2024, based on the amount of variable-rate debt outstanding, a one percentage point change in the weighted-average interest rate would result in a $6 million change in interest expense for 2025. Foreign currency exchange rate risk – We are subject to fluctuations in foreign currency exchange rates.
We have not entered into hedges against changes in foreign currency exchange rates. 39
At this time, we have not engaged in hedging activities to mitigate the risks associated with changes in foreign currency exchange rates. 39
(3) The interest rate presented for total debt includes the impact of the interest rate swaps discussed below. As part of our interest rate risk management strategy, we entered into interest rate swaps, which we designated as cash flow hedges, to mitigate variability in interest payments on a portion of our variable-rate debt.
As part of our strategy to manage interest rate exposure, we periodically enter into interest rate swaps to reduce the variability in interest payments on a portion of our variable-rate debt. In December 2024, coinciding with the refinancing of our debt, we terminated our outstanding interest rate swaps and incurred an immaterial loss.
The nature and amount of debt outstanding can be expected to vary as a result of future business requirements, market conditions and other factors.
The amount and nature of our outstanding debt is expected to change based on future business needs, market conditions, and other influencing factors. Interest on amounts outstanding under our credit agreement and accounts receivable financing arrangement is payable at variable rates, as specified in the credit agreements.
Removed
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.
Added
Our credit agreement matures on February 1, 2029, at which point any outstanding amounts under the revolving credit facility must be repaid. The term loan facility requires periodic principal payments through December 2028, with the remaining balance due on February 1, 2029.
Removed
Changes in the fair value of the interest rate swaps are recorded in accumulated other comprehensive loss on the consolidated balance sheets and are subsequently reclassified to interest expense as interest payments are made on the variable-rate debt.
Added
The senior unsecured notes are scheduled to mature in June 2029, while the senior secured notes will mature in September 2029. However, if any of the senior unsecured notes remain outstanding as of February 1, 2029, the senior secured notes will also mature on that date.
Removed
The term loan facility requires periodic principal payments through June 1, 2026, and the senior, unsecured notes mature in June 2029.
Removed
Information 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.

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