Earnings Labs

Deluxe Corporation (DLX)

Q2 2011 Earnings Call· Thu, Jul 28, 2011

$30.10

-0.10%

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Transcript

Operator

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2011 Deluxe Corp Earnings Conference Call. My name is (Keisha) and I’ll be your operator for today. At this time, all participants are in listen-only mode. We will conduct the question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like hand the conference over to Mr. Jeff Johnson, Treasurer and Vice President of Investor Relations. Please proceed. Jeff Johnson – Treasurer and Vice President-Investor Relations: Thank you, (Keisha). Welcome to Deluxe Corporation’s 2011 second quarter earnings call. I’m Jeff Johnson, Deluxe’s Vice President of Investor Relations and Treasurer. Joining me on the call today are Lee Schram, Deluxe’s Chief Executive Officer; and Terry Peterson, Deluxe’s Chief Financial Officer. Lee, Terry and I will take questions from analysts after the prepared comments. At that time, the operator will instruct you how to ask a question. In accordance with Regulation FD, this call is open to all interested parties, the replay of the call will be available via telephone and Deluxe's website. I will provide instructions for accessing the replay at the conclusion of our teleconference. Before I begin, let me make this brief cautionary statement. Comments made today regarding financial estimates and projections, and any other statements addressing management's intentions and expectations regarding the company's future performance are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. As such, these comments are subject to risks and uncertainties, which could cause actual results to differ materially from those projected. Additional information about various factors that could cause actual results to differ from those projected are contained in the news release that we issued this morning and in the company's Form 10-K for…

Operator

Operator

(Operator Instructions) Your first question comes from the line of Charlie Strauzer with CJS Securities. Please proceed. Charlie Strauzer – CJS Securities: Good morning.

Lee Schram

Analyst · CJS Securities

Hey Charlie.

Terry Peterson

Analyst · CJS Securities

Hi Charlie. Charlie Strauzer – CJS Securities: Hey first of all just wanted to touch based on PsPrint acquisition, it sounds like a very intriguing addition to the service offering and the question I have for you Lee is I know The Johnson Group was building out web-to-print capability and how is this different from what you were trying to do organically there?

Lee Schram

Analyst · CJS Securities

The way to think about whether Johnson Group really brought was more of a store front approach, but not as nearly Charlie as robust is what we then started adding on from The Johnson Group and as I’ve said in the past of what we actually picked up with the Custom Direct acquisition was some front-end and back-end web-to-print capability as well. So think of it as we now have the benefits that we got started with The Johnson Group, the benefits we’ve picked up from Custom Direct started organically creating more strong technology at the front-end organically and we’ve been talking about that and we now just – we started to look at this is a great space. Our customers are asking us more and more in this space to help them with marketing and promotional services. So, we said are there other opportunities out there and we were fortunate off to find a good match with PsPrint. And again what I’ve said earlier is what we are trying to do Charlie is early on get more focused on better demand creation there and tweak a little bit of what we are doing to bring the two – all the platforms together here both in the front end and back end. What I would call medium term, we are trying to really bring it all together in to a seamless flow and again we’ve spend – investment already at the front end and think of it as our small business cannot just get those services, but have other services that are capable to be played right off the PsPrint solution. So, we are actually just extremely excited about this because it not only brings pieces that we had before and the investments we’ve made in those at the forefront, but it gives us some immediate larger scale capability than we had and having met the team of players there and the people its just a great cultural fit for us as well. Charlie Strauzer – CJS Securities: And Lee can you talk a little bit about PsPrints’ kind of growth history, have they been seeing the same types of growth rates you have been experiencing in your services business deal?

Lee Schram

Analyst · CJS Securities

Yes that’s been growing and you got to remember Charlie that the print - the suffering that the print companies had when the recessionary period was going out, but outside of that, yes they’ve been growing and the thing that we like about them from a cultural fit as well as they – they want to make money at this and they are very strong operators and they are strong on the - not only on the top-line, but as you know us and that leadership we have here focused on the bottom-line and then cash flow as well. So year we’re very again very pleased and we’ve seen nice growth in what they have been doing. Charlie Strauzer – CJS Securities: Great. And then thanks for some of the color you gave on the small business side in terms of not seeing the proverbial green shoots there yet, but what are the kind of visibility can you see there when you are talking to some of the small business customers that are out there, are they getting at least a little bit more optimistic?

Lee Schram

Analyst · CJS Securities

I think it’s tough. I think when I listen in on calls and when I hear what’s going on with our customers either I meet them or I hear from our call center, I listen in on calls, I think what we like right now is the areas they are most struggling with is how do did they find business and how do they find customers and again that macro that kind of bridge that I walked through in the prepared comments on how we pieced all these acquisitions and organic investments and some of the partnership that we - investment that we have, I think are hitting the mark more and more and again in my comment are giving us more confidence that as the economy gets better that small business is going to need the lean on this kind of services that we have. So but I don’t want a make it sound like it’s is wonderful out there for small business right now is my - also send my prepared comments. It’s a tough world for them right now. I think what were we’re doing though is focused on that market area and that sales area with the services and the products that we have and I think it is resonating well for them right now and they’re getting value out of it.

Terry Peterson

Analyst · CJS Securities

(indiscernible) like the rest of the market, there is a lot of uncertainty out there that’s really causing them to hold back. So the healthcare is still uncertain to them, taxes and all those pieces just really create a lot of uncertainty for them, and they hold back and they are spending because of it. Charlie Strauzer – CJS Securities: Got it. And Terry just one quick question on the amortization from the contract roll out, are we going to see anymore of that in Q3 and Q4 like we did in the first couple of quarters?

Terry Peterson

Analyst · CJS Securities

That one is – Don is a swim through the middle part of last year, but let me remind you too what you’ll see next quarter is we have that large contract settlement that we called out of it of $0.31 of EPS, so that was all revenue and operating income. And that was split between the Small Business Services and the Financial Services segment. So next quarter we will have that compare in those two businesses to the OS, but we gave good visibility and clear number on that by segment last year. Charlie Strauzer – CJS Securities: Got it. Great thank you very much.

Operator

Operator

(Operator Instructions) And we have no further questions in queue at this time. I would now like to hand the conference back over to Mr. Lee Schram for any closing remarks. Lee Schram – Chief Executive Officer: Hi, just want to thank everybody again for joining. We have a summer – a softer summer participation list today here but we are going to get back to work and we look forward to providing a positive progress report on our next earnings call. Jeff Johnson – Treasurer and Vice President-Investor Relations: Thank you, Lee. This is reminder that a replay of this call will be available until August 11 by dialing 888-286-8010. When instructed provide the access code 53073331. The accompanying slides are archived in the news and Investor Relations section of Deluxe’s website at www.deluxe.com. Again thank you for joining us and have a good afternoon.

Operator

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect your lines. Good day.