Good day, ladies and gentlemen. Welcome to the Quarter One 2015 Deluxe Corporation's Earnings Conference Call. My name is Kathy, and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question and answer session towards the end of this conference. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to, Mr. Ed Merritt, Treasurer and Vice President of Investor Relations. Please proceed, sir.

Thank you, Kathy, and welcome, everyone, to Deluxe Corporation's First Quarter 2015 Earnings Call. I am Ed Merritt, Deluxe's Treasurer and Vice President of Investor Relations. Joining me on today's call are Lee Schram, our Chief Executive Officer; and Terry Peterson, our Chief Financial Officer. At the conclusion of today's prepared remarks, Lee, Terry and I will take questions if there are any. I would like to remind you that comments made today regarding financial estimates, projections and management's intentions and expectations regarding the company's future performance are forward-looking in nature, 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 press release that we issued this morning, as well as the company's Form 10-K for the year ended December 31, 2013. The financial and statistical information that will be reviewed during this call is addressed in detail in today's press release, which is posted on our Investor Relations website at deluxe.com/investor. This information was also furnished to the SEC on the Form 8-K filed by the company this morning. Any references to non-GAAP financial measures are reconciled to the comparable GAAP financial measures in the press release. Now, I will turn the call over to Lee.

Thank you, Ed, and good morning, everyone. In spite of foreign exchange headwinds, a higher tax rate and a continued sluggish economy, Deluxe delivered a strong quarter to start the year. We reported revenue and adjusted earnings per share at the high-end of our outlook. Revenue grew almost 7% over the prior year quarter and over 1% organically, driven by Financial Services growth of almost 21% and small business services growth of 4%. Marketing Solutions and Other Services ' revenues grew more than 31% over the prior year and in low double digits organically and represented 28% of total first-quarter revenue. Adjusted diluted earnings per share grew more than 6% over the prior year and we generate strong operating cash flow of $78 million for the quarter. We redeemed all of our $200 million senior notes due 2019, on March 16, 2015. We were drawn $318 million in total on our credit facility and short-term bank loan at quarter end. As expected, we did not repurchase any common shares in the quarter. We continued our brand awareness campaign to help better position our products and services offerings and drive future revenue growth. We also advanced process improvements and basically delivered on our cost reduction expectations in the quarter. In a few minutes, I will discuss more details around our recent progress and next steps, but first Terry will cover our financial performance.

Thank you, Lee. Earlier today, we reported diluted earnings per share for the first quarter of $0.91, which included $0.12 per share for a contractual call premium and associated fees from this early senior notes retirement and $0.01 from restructuring charges. Excluding these costs, adjusted EPS of a $1.04 was at the upper end of our previous outlook and was 6.1% higher than the $0.98 reported in the first quarter of 2014. Revenue for the quarter came in at $434 million, growing 6.5% over last year. Small Business Services revenue of $277 million, grew 3.9% versus last year, despite a continuing sluggish economic environment and unfavorable foreign exchange rates, which negatively impacted revenue growth by 0.8 percentage points. We delivered growth in Marketing Solutions and Other Services, checks and in our online Safeguard distributor, major accounts and dealers' channels. Small Business Services revenue also benefited from price increases implemented early in the quarter. Financial Services revenue of $112 million grew 20.5% versus the first quarter of last year and would have grown about 2%, excluding the Wausau acquisition. Higher marketing and other services revenue driven by Wausau and Destination Rewards, price increases and revenue from Zions Bank more than offset the impact of lower check orders and the impact on pricing from a large customer contract renewals early in the second quarter of 2014. Direct Checks revenue of $45 million was down 6.0% on a year-over-year basis, but ended ahead of our expectations, driven by higher reorders that were not driven by marketing initiatives. From a product revenue perspective, checks were $224 million, representing 52% of total revenue. Business products were $90 million or 20% of total revenue and Marketing Solutions and Other Services were $120 million, which was 28% of total revenue. Gross margin for the quarter was 64.8%…

Thank you, Terry. I will continue my comments with an update on overall focus and then highlight progress in each of our three segments, including the perspective on what we hope to accomplish during the balance of 2015, as well as an update on our brand transformation. Our primary focus of 2015 continues to be profitable revenue growth and increasing the mix of Marketing Solutions and Other Services revenues towards our goal of 40% by 2018. Here we will focus on growing organically as well as continuing to assess potential small to medium size acquisitions that complement our large customer bases and add new technologies. We have strengthened our channels and small business to include financial institutions, online, retail, wholesale, distributors, dealers and major accounts. Deluxe is now more capable of helping small businesses pursue their passion as a trusted provider of a growing suite of products and services a small business needs to market and operate their business and helping financial institutions with customer acquisition, fraud, security, and risk management and commercial and treasury services offers. There is an update on our four subcategories framework for Marketing Solutions and Other Services. We ended the first quarter right in line with our expectations in revenue, with mix in the four subcategories basically in line with our expectations. First, small business marketing is expected to represent approximately 40% in 2015, with expected growth in the mid-20s this year. Key 2015 growth initiatives include scaling web-to-print by cross-selling to our customer base and continuing to add new customers through distributors, dealers and major accounts. In addition to the opportunity to penetrate web-to-print, we also see strong growth opportunities in retail packaging, promotional products and other marketing solutions. In the first quarter, we refreshed our web-to-print website and won several new major account…

[Operator Instructions] Please stand by for your first question, which comes from the line of Tim Klasell of Northland Securities.

Yes. Good morning and thank you for taking my question. The first question has to do with Wausau. Obviously that seems to be performing better than expected, but I was wondering we have some purchase accounting issue or revenue recognition treatments that we need to do. If we were to back that out, how that had performed during the quarter?

The $0.02 per share loss, Tim, would have been, then we would had a profit. It is the best way to think about it, but the purchase accounting impact did not create any variance. That was that delivery just as we had expected, so thereby we delivered on our expectations for the quarter.

Okay. Perfect. Thank you. That is very helpful. Then the next follow-on question, the currency impact, it is pretty much all Canadian dollar I am sure. How does that affect the cash flows?

At the bottom of the cash flow statement, you have seen impact of foreign exchange and I believe it was about $4 million of impact on cash, due to FX.

Okay. Great. Thank you very much and I will pass it on.

You are welcome, Tim.

Thank you. The next question comes from the line of Jamie Clement of Macquarie.

Good morning, gentlemen.

Hi, Jamie.

Terry, first question is you then Lee, I will ask you one if that is okay. Terry, I was trying to chop this stuff down, but if you could maybe just help me just make the math easier.

Yes.

Between currency, where you stand today in terms of your projection for 2015 as well as tax rate year-over-year, what is the aggregate delta on EPS from 2014 to 2015, if you could give me those two numbers if you have them.

The tax rate year-over-year on a full-year basis is $0.07 per share.

Okay. Currency, based on current assumptions?

Currency, today is at just a touch over $10 million in revenue and say roughly about $3 million of free cash profit.

On a full-year basis or quarter?

That is on a full-year based. All of those numbers I just gave you are for the full-year.

I thought $3 million, it sounded like that was for the quarter. No?

$3 million was closer to the revenue impact for the quarter.

Revenue impact? Okay got it. Okay. That is where I think I got a little bit confused. Fair enough.

Jamie, some of that tax rate increased in our initial outlook in the year. Some of that negative impact, about $4 million of revenue in our initial guidance at the beginning of year, but certainly as the quarter went on, it worsened and that has grown from $4 million to now we see $10 million based on March 31 rates.

Yes. That's what I want to clarify, because obviously your earnings guidance strengthened with the release this morning, yet some of that stuff actually appeared to be more negative, so I just wanted to get.

We are not adjusting our outlook for those headwinds.

Yes. Got you. You are baking in those headwinds that is what I am saying. Yes. I have got it.

Baking them in, those are our issue not yours.

Got it. Totally understood. Lee, switching to you if I may, so as you look at some of the strength in the sales channels that you alluded to in the prepared remarks, weather that would be Safeguard deal or online large account, from your perspective if we kind of get your thoughts, the underlying strength in those versus let's say some other channels, does that tell you anything about where you are doing a particularly good job and sort of the second question there is, does that tell you anything kind of about the broader small business economy that you are selling into?

The way we look at it, Jamie, we have been consistent, so we want to win all these channels. Our goal is to maximize cost to acquire and you know how to we find our customers through whatever channel they want to find us, so to speak - channels, so when you hear us talk about growth across those channels and most of those channels, I think we said today, we saw growth in the quarter. I think that is a good sign for us and I think it is a good sign for offers that we have reaching the market. One area I want to highlight again and I said in the prepared comments that we are seeing even stronger opportunity as the major accounts. We are starting to see larger customers who have, again, access to small businesses and gain access to small businesses, it is that one of the many model that we like where you can get a major account and they start having those relationships with those small business underneath there, we won several deals that we think are significant, especially in a Small Business marketing solutions area and we also think over time we can bring more services to. I would highlight that as something that we saw even surprise us in a good way and we want to make a number of major deals, which hopefully over some timing we can start releasing some names and I will give you a sense of the magnitude of what these could be for us over time.

Okay. Then last question if I could. VerifyValid, e-checks and the situation that you referenced in your prepared remarks, a non-Deluxe financial institution going, so I believe you said a payroll services company, can you give us some flavor about how exactly they are going to be going to market and what that kind of that arrangement is really kind of going to look like thematically?

Yes. It is interesting that non-Deluxe account, FI wants to go to their small business owners and they principally like to try to implement e-checks to do that and they just want to rollout it out as a new initiatives and something they think is a differentiator for them in the marketplace. The payment solutions company, what is exciting about these kind of opportunities is that think of it as solutions companies out there that historically issued paper checks to a consumer or through a flow of funds through something they are brokering a relationship with to the consumer. Again, what we are going to be doing is issuing e-checks on their behalf, so they will be issuing e-checks in effect, so we like these obviously when they are non-Deluxe FIs and there are areas that were not doing paper checks today. Jamie that is an exciting area for us, so those are exactly what they are going to be for.

Okay. Great. Thanks very much for your time.

You are welcome, Jamie.

Thank you. The next question comes from the line of Joan Tong of Sidoti.

Good morning. How you guys doing? I have a couple of question here. Hi. My question is related to Financial Services. If I hear that correctly, I believe, that you mentioned, if you exclude at a Wausau acquisition, you are talking about organic growth of 2%. The only good results like in light of the continued decline in Checks business, so I am just wondering what is driving the strength other than apparently the Destination Rewards to be really, really strong as you mentioned in your prepared remark. Any other areas that you can call out in terms of like seeing that organic growth of 2%?

Yes. You hit a lot of Joan, but we had a really strong quarter and Destination Rewards now, what we are going to call Deluxe Rewards going forward. We also did well in some of those other services, the targeting and campaign services. We had a strong quarter there as well, so filling that out really helped our performance with that the checks rate declined being about and units being about 6%.

Right. Do you expect that organic growth trend line would continue going forward?

Yes. One thing to think about on our $120 million on MOS revenue in the quarters, we have a couple of things that happened as the year unfolds. We have the deals that we won I mention major account wins today. I mentioned in both, the major accounts area within small business marketing and within web services winning two competitive deals, takeaway deals. Then we also have seasonality as you get into the some of our offers, as you get into the more of the holiday season part of the year, so because of that we expect those ramps to be bigger. We also expect these rollouts in several of the financial services along with Wausau getting stronger as the year progresses, with deals we won and now getting the rollout. Same thing with Deluxe Rewards as we go forward, same thing with some of the other FI deals in the targeting and campaign services area, so that is how to think about it is as we move through the year.

Okay. Great. Then I have a questions regarding web services. I think, Lee, you have mentioned that one of the strategies is going forward is to improve customers experience and you mentioned last quarter about like a single sign-on the platform consolidating e-mails, so [ph] or not and I think it is on a beta trial if I am correct. I am just wondering so far how is the feedback and when are you going to rollout or you have already I do not know in terms of the actual platform, the single sign-on to improve like you know customer experience going forward?

Right. Jo, we have had a very successful start. What we have done is, we taken all the beta users input at this point in time and we are making modifications this quarter to all the learnings that we have got. They love the experience, the simplicity of experience, the lack of complexity when they are looking at intuitiveness of the offer and the solution, so while you will see is us putting all those and in fact we are doing it right now, we are putting all those takeaways that we have learn from the beta in new tweaks and refinements to make the offer better and you will see us come out after this quarter with more of a full market launch. We are really excited about it right now.

Okay. That is great. Finally maybe just touch on e-checks a little bit. I am excited about the acquisition definitely and I am just wondering if you can talk about the economics, how is it compared to like a regular paper check, profitability-wise, pricing-wise. If you have any color to share or view, appreciate it?

Think of it as, we price the e-check about the price of a postage stamp, so our sales niche is along those lines and we really have been sticking to our guns on every deal, every consumer deal or every small business deal or every deal that we talk about some of these bank deals and this payment company deal are going to be along the same lines as well, so the economics on this are wonderful. One of the things that is really also compelling if we can get this thing to go and I want to just to remind everybody that this is going to take time to build this market out. We also are working with still many large financial institutions who are also very interested in this, but it will take some time but one of the great things about this is where we cannot tell today when a small business customer or consumer is getting to the last paper check in their book. We can tell when somebody issue those e-checks and what is great about that is, the ability then to seamlessly without marketing to go back to them or without following up to them to tap them on the shoulder and or electronically and say looks like anymore e-checks. That we think is going to be a compelling operating margin opportunity for this space as well.

Okay. That is great. Then really just finally, I think, Terry mentioned some pricing pressure on the Checks business within Financial Services, but would you characterize as a stepped up pricing pressure or it is pretty much the pricing is always kind of an issue and it is just a little bit more noticeable this quarter?

I do not think. I think, we are trying to make sure that our investors understand it is out there. I do not think it got any worse this quarter across all three of our segments [ph] sell, checks, but it is out there and it is just something that we are trying to be remindful to the investor about.

Okay. All right. Great. Thank you so much.

You are welcome.

Thank you. The next question comes from Josh Elving of Feltl.

Hey, good morning guys.

Hi, Josh.

Just had one quick question, a couple of mine have been answered. Perhaps I missed it, but I wanted to get a better sense. Obviously, there were some moving parts within Financial Services with regards to acquisitions realignment, some accounting issues or items. How do I think about that operating margin for that segment going forward? I know that there was a big decline year-over-year. Can you kind of give me some idea as to think about it for the rest of the year?

One of the things that we try to point out, because we were a little worried. We thought we are clearly with this when stepped on a last quarter book. I think, Terry did a nice job in his comments, Josh, is that the 18.6% margin we had also had the 5.3 point impact from Wausau, so think about it as almost 24 points. We think we performed quite well a little slightly down versus the prior year, but remember that we had to absorb the large contract of pricing decline that we had last year beginning in the April timeframe. The way to think about it going forward is that, if you think about Wausau being basically neutral for the year on $75 million of revenue that we told you, adjust your models for that and you should expect the business before that adjustment to be about in line with what we did last year, so yes it is going to bring it down in the near-term, but we like this and we think we will continue to get more effective at improving the profit on that Wausau business as we go forward and as we get some of the accounting treatment of things behind us.

Okay. That is helpful. That is my only question. Thank you.

You are welcome.

Thank you. We have time for one last question. It is follow-up questions from Jamie Clement.

Yes. Hey, gentlemen.

Yes. Hi, Jamie.

Hello. Hey, Lee, I was just curious, I am wondering whether of the last couple of years with somebody acquisitions that you have made and also the area of businesses, the areas of business where you are a little bit more evolved, is there perhaps a little bit more seasonality in favor of 4Q and away from 1Q than perhaps was the case with the [ph] last five years ago?

I do not know and I guess I have not thought about it in those terms. The biggest issue we always have in Q1 is for whatever reason our direct to consumer business is our strongest revenue quarter every year. I do not think it is materially different in Q2. Sometimes depending on when the Easter holiday falls, whether it is March or April, Jamie.

Right.

Move things around a little bit, but I cannot tell you there is something wildly different other than.

I will tell you what I was getting at. Some of the Small Business Marketing Services, you just you have more services your better at than you were four or five years ago. I am wondering if that late lends some seasonal strength for the fourth quarter around the holidays?

Fourth quarter for sure.

Yes. That is what I was saying. Like, I was saying in other words, is the fourth quarter stronger than it has been historically is what I was really meaning to say. Do you get my drift? In other words, as we model this out, we look at it, is the fourth quarter a lot stronger relative to the first than it maybe was five years ago?

Yes. I think the way we should think about is, go back and look at what we reported on MOS in each of the quarters last year. Again, I think was Joan's question I mentioned that we will keep ramping as the year runs onto that 520 to 535 ranges on revenue, so yes absolutely, Jamie.

Sorry. I did not ask you the original question appropriately, but yes that is what I was getting at.

Yes. We right with you on that.

Very good, thanks very much for your time.

You are welcome.

Okay. Let me just ramp up by, first of all thanking everyone for their participation and the questions today and I just got three summary comments there I want to make. First of all, we delivered a strong first quarter to start the year. Our Marketing Solutions and Other Services' revenue grew over 31%, and the mix improved towards our goal of 30% this year and 40% by 2018, and we also believe that we established the strong baseline first quarter that we believe propels us towards revenue growth again in 2015 for the year the sixth consecutive year. As we normally say, we are going to get back, roll up our sleeves, get back to work and we look forward to providing another positive progress report on our next call and I am going to turn it over to Ed for some more final housekeeping.

Thanks, Lee. Before we conclude the call today, I would just like to mention that Deluxe Management will be participating at a few upcoming events in the second quarter. We can hear more about the transformation. On May 6th, we will be in Chicago with our R. W. Baird Growth Stock Conference. On May 11th, we will be in New York at the Macquarie Business Services One-On-One Conference and on June 2nd, we will be in New York, Stephen's Annual Investor Conference. Thank you for joining us and that concludes the Deluxe First Quarter 2015 Earnings Call.