Good day, ladies and gentlemen. Thank you for standing-by. And welcome to the Second Quarter 2018 Deluxe Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will be provided at that time [Operator Instructions]. And as a reminder, this conference call is being recorded for replay purposes. I’d now like to turn the conference over to Ed Merritt. Please go ahead.

Thank you, James. And welcome everyone to Deluxe Corporation’s second quarter 2018 earnings call. I’m Ed Merritt, Deluxe’s Treasurer and Vice President of Investor Relations. And joining me on today’s call is Lee Schram, our Chief Executive Officer; and Keith Bush, our Chief Financial Officer. At the end of today’s prepared remarks, Lee, Keith and I will take questions. 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 projections are contained in the press release that we issued this morning, as well as in the Company’s Form 10-K for the year ended December 31, 2017. Portions of the financial and statistical information that will be reviewed during this call are addressed in more detail in today’s press release, which is posted on our Investor Relations Web site 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 or as part of our presentation during this call. Now, I’ll turn the call over to Lee.

Thank you, Ed and good morning everyone. Deluxe delivered a solid second quarter. We reported revenue in the middle of our outlook range, and adjusted earnings per share well above the high end of our outlook. Overall, revenue grew about 1% from last year, driven by Small Business Services growth of about 5% with Financial Services down 6% and Direct Checks declining 10%. On an organic basis, revenue declined about 2% and was about in line with our expectations. Marketing solutions and other services revenues grew about 7% over the prior year, and represented nearly 41% of total second quarter revenue. Adjusted diluted earnings per share grew almost 9% from the prior year. We generated strong operating cash flow of $147 million in the first half of the year. And we were drawn $765 million on our credit facility at the end of the quarter. We repurchased $20 million in common shares in the quarter, bringing the year-to-date repurchase total to $40 million, $10 million more than the first half of 2017. We continued our brand awareness campaign to help better position our products and services offering and drive into revenue growth. We also advanced process improvements and delivered on our cost reduction commitment for the quarter. On June 4th, we completed the small tuck-in Web services hosting acquisition of ColoCrossing, adding more scale to our existing Web services business. In a few minutes, I will discuss more details around our recent progress and next steps. Before I turn the call over to Keith to cover our financial performance, here is an update on the CEO transition process. It is going well with strong interest in the position, we continue to expect that we will meet the target of finding a new CEO within six months more or less from our late April initial announcement. Now I’ll turn the call over to Keith.

Thanks, Lee. Revenue for the quarter came in at $488 million, growing 0.6% over last year. Organic revenue, which excludes acquisitions, FX, and other non-comparable items declined about 2% and was about in line with our expectations. Shifting to our segment, Small Business Services revenue of $318 million grew 4.9% and we delivered continued growth in marketing solutions another services. From a channel perspective, our online major accounts and dealer channels grew. Financial Services revenue of $139 million declined 5.7% on a reported basis and declined 3.3% organically compared to the second quarter of last year. The revenue decline in Financial Services was driven by the loss of Verizon and Deluxe Rewards and some lower check orders. Direct Checks revenue of $31 million was down 9.8% from last year, ending slightly better than our expectations. From a product and services revenue perspective, Check revenue was $203 million, representing 42% of total revenue. Marketing solutions and other services was $199 million or about 41% of total revenue. And forms and accessories were $86 million or over 17% of total revenue. Gross margin for the quarter was 61% of revenue and declined from 63% in 2017. The impact of higher delivery and material costs and acquisitions were only partially offset by the benefits of previous price increases and improvements in manufacturing productivity. SG&A expense was about flat to last year at $209.6 million and was well leveraged at 42.9% of revenue compared to 43% last year. Benefits from our continuing cost-reduction initiatives and gains associated with the sales of small business and customer lift were basically offset by increased benefits expense associated primarily with the timing of vacation and planned innovation investment spend. Excluding non-GAAP adjustments, which are outlined in our press release, adjusted operating margin for the quarter was 18.7%, down…

Thank you, Keith. I will continue my comments with a recap of the first half of the year and implications for the full year; provide a quick refresh of our three year strategic direction outlined on our last earnings call; and then highlight our progress in each of our segments; focusing on the three primary MOS key growth areas to provide a perspective on how we progressed in the second quarter and outline what we expect to accomplish during the balance of the year. So where we are at operationally and strategically at the half way point in the year and what are the implications for the full year? Our initial outlook for full year revenue at the high end of our range was $2.105 billion with adjusted EPS at $5.80. We have now reduced the high end $40 million to $2.065 billion. $21 million of this reduction represents the strategic Treasury Management acquisition, which we anticipate would close by now and we remain very excited about. There is about $5 million impact from negative FX rate movement and eCheck customer rollout delays. The most significant revenue reduction is $17 million in data driven marketing. For the year, at the high end of our outlook, we originally expected data driven marketing organic revenue to grow about 25%, roughly double the market rate of 13%. This assumption was supported by last year’s 28% organic revenue growth, as well as 26% compound annual growth rate from 2014 to 2017. Our organic outlook assume all existing data driven marketing businesses grew organically over those periods of time even when they were standalone companies. Unfortunately, we now only expect about market rate revenue growth organically to data driven marketing. Positively, small business marketing solutions and Web services are outperforming our original expectation. And our…

Thank you [Operator Instructions]. Our first question comes from Charlie Strauzer with CJS Securities. Your line is now open.

So let's just talk about, a little bit about the changes in the outlook now versus previous. I believe you gave us some very good detail there, specifically on the data driven marketing side some of the delays there that you're seeing. Are they more of a combination delays and pushback from customers or just customers changing their mind? And if you can give us a little bit more color as to what causes some of those delays?

So here's what's going on, Charlie. We are continuing to see new costumers and then we're seeing expansions with the customers that we have. Here's the fundamental issue. We're not seeing them -- when the new customers come on, we're not seeing the number of campaigns that they're driving, taking off and doing as many as we originally expected in projecting when we put the guidance together at the beginning of the year. That is really what's going on in the First Manhattan space. And by the way, we're continuing to grow on that part of the business, double digit growth rates, but we're not seeing the expansion -- new customers are coming as we highlighted. But when they're running campaigns, we expected them to get more campaigns and go faster than what we're seeing from now. In the data mix side, which is a much more as we’ve talked about focused and them in the mortgage and in the auto space, we're not seeing the leak or the jump that we expected in the mortgage area. So some of the large customers who continue to be our customers are simply not jumping up and spending as much to attract new mortgage customers as we expected. And remember we’ve talked about this. We've got interest rate and non-interest rate sensitive areas; interest rate sensitive more in the case of data mix; non-interest rate more in the case of First Manhattan. So the balancing is there. The challenge we have right now is we're seeing a little bit of a pullback in what we expected in the mortgage area. And then we're not seeing the rate of growth in the number of campaigns and the size of the campaigns. We look at this as a near term challenge. And because if we're getting the customers to buy and the campaigns are working, which they are, then we just got to stay at this and let the campaigns keep playing out. And then allow that growth rate in terms of number of campaigns and the size of the campaigns to play out as we move forward. So that is fundamentally what we're seeing right now.

And when you talk to these customers who are doing these campaigns, it all would be larger. I think can you give any specific reasons as to why they're keeping the range tight?

Each one of these scenarios, Charlie, is different. When you look at a large -- these are the top 200 financial institutions, many of the top 500. They may go and do a program and they run like crazy and then they'll right away do a lot more. They may pause and take their time as they're going through that. All I can tell you from really watching and understanding all of these customers is, they don't all just take off and you put a program together and they all scale and run them up at the same time. The good news again is we're seeing them buy into us. They're not moving to somebody else. They're not buying other campaigns, are just taking their time to ramp the size of the campaign, whether it’d be a business deposit program, whether it’d be a consumer deposit program, a consumer loan program, they're just taking more time to see the ramp than what we originally expected.

And then just looking at the guidance for Q3, perhaps if you can give us a little bit more color by segments, by each product line as to what we should expect in Q3 in terms of revenue and margin direction?

I don't have that and Keith doesn't have it in front of us. I think Keith did a really nice job explaining what’s going on in Q3. So if you think about the year and how the year is playing out for us. One of the things that’s happening is -- and you guys don’t like this, but it’s just the reality that we live in. The tax rate moves around quarterly based on discrete items. So we already told you that the second quarter, we just got better -- lower tax rate. And what Keith said, we’re going to have a higher tax rate in the third quarter. I’d love the tax rate to be 24.5% every quarter. It just doesn’t work that way. And the complications with what we’re all going through, I mean we all companies with what’s happening because of the jobs cut and tax rate change is that items float around within what we’re working and then the states come up with different things. And therefore, Charlie, the rates move around. And what’s happening is we did not project the second quarter to be as good as we ended up, and we do not project third quarter to be as the higher rate. And then the other issue that we have and again, you’re used to this, is we are self-insured on medical expenses and we are seeing lots of movement on medical. And the good news is, as we’ve seen in the first couple of quarters perform pretty well, we know that there are high cost claims that are out there. I can’t find out that for my employees and I don’t want to find out for my employees what’s going on. I do know they are out there. And therefore, we’re going to…

Thank you. Our next question comes from the line of Chris McGinnis with Sidoti & Company. Your line is now open.

Can you maybe just talk about the rebranding effort and how -- are you seeing any positive data points to help drive that? It seems like it may be helping a little bit with small business. Thanks.

Chris, e view this was a long journey, you just don’t flip a switch and change your brand, especially for small businesses who have always thought of the company more as a check company. But there is a lot of incredible reach and excitement that we see right now in the brand. The hard work that’s going on behind the scenes for us right now is to take all that content that we have, and the content is incredible. When you go out to smallbusinessrevolution.org and you see all the businesses and the towns that we’re makingover, we’re using that content now to drive online sales and transactions on the small business side. We're seeing early signs that this is working. We just need to let this continue to run its course and continue to see the explosion of this hopefully as we get started getting more on the second half of the year as we get into '19 as well. I pointed out that comment from Bizztor, because one of the exciting things for the people here that are working on this is that we're getting mentioned with the profits and shark tanks of the world. And come watch Deluxe and Small Business revolution and what we're doing. So this is something that we believe is helpful and will continue to be helpful as we get ourselves out there and keep trying to stretch and improve the brand.

And then if I missed this I apologize. Can you just maybe talk about where you’re at with the acquisition today and how much on the revenue side? And then how much you need to make up for the year and how many acquisitions do you actually still have to make and how comfortable do you feel around that strategy for the remainder of the year?

One of the things -- you could obviously tell is driving us nuts is we’ve been working on this Treasury Management deal for some time. And we had a lot of debate inside the company as to whether or not -- how much do we put in acquisitions and into our guidance. And we felt that this would get done quicker, and sometimes things just don’t. And this is a super business that we're going to acquire. We're really excited about. It's got great people. It's got great technologies. And right now, we're just going through the process now to get it knock down and done. And both sides are doing all the right things. It just we’ve got to get through some of the comments that Keith made about the ordinary close stuff and customer consensus, so on and so forth. So we need to get that one done. And then we got $21 million other than that and we are continuing to look in primarily in the data-driven marketing space, in the treasury management space and then in the web-services spaces to get something done. Something could be more than one thing within that $21 million, Chris. We got things in the pipeline. We're actively moving and working them. Again, it comes down to how fast can we get those things through the pipeline. And you know us, we're not going to go do something that doesn't make sense, both from a -- will it or help us organically grow in the long term, and will it be a smart deal, meaning we're not sitting on something that's dilutive for a long period of time. One of the things we didn’t say specifically but it's on the chart that we showed is the Treasury Management deal is neutral to -- it's not accretive or dilutive. So we're not buying that business and we don't expect that to be a hit to us as we go -- as we get this done in the balance of the year. So that's the way to think about and we're doing all of the continued things that we've always done, hustling along, looking at the areas that make sense, got things in the pipeline, they're all being worked, it’s just be a question of how quickly can we get things done at this point.

And then just one last question, just in relation to this, I'm not going to say slowdown in the data driven but just the changes you have seen. So does that make you think about the business -- investing in that business a little bit different or you need to just expand on that just -- and thinking about the acquisition side of the business…

I think the way we look at it is and what we’ve done is we’ve looked and said, are there things within there that are just too long term or more medium term focus and maybe pull little back there. But no, we are continuing to invest. And all we did was trim that a little bit, because we just looked at it and said, you know, given where we are, it's more also a distraction for the organization. If we want you to be focused on certain areas, especially the sales and the sales growth, we don't want to be distracting on some of the development things as much. So think of it is just a little bit of pullback, but we are continuing to innovate, want to innovate and believe in the space tremendously.

Thank you. And we have time for one more question from the line of Jamie Clement with Buckingham. Your line is now open.

Lee, big picture question for you and really it’s a follow up from some of your prepared remarks, early on in the presentation. As you think about the opportunity seems right for a push to maybe try to accelerate the top line more, and certainly you talked about the acquisition program. I couldn't tell if you were talking about the organic aspects of the business. Also, were you hinting that it might be the time to ratchet up development spending, hiring that kind of thing in which you already own as well because the time is right to look to accelerate?

We're doing both. So as I said in the prepared comments, Jamie, I’ll just give a little more color and clarity. So we believe that -- we're close, slightly down on organic, we're expecting now for the year and the pull back has simply been because of the data driven marketing pull back. But we expect to be able to get organic growth in 2019 and 2020. And it's in these areas that we focused on, the data driven marketing area, the treasury management area, and the web services area. And we also believe on the small business marketing solutions, which has been a nice organic play for us this year and will continue. And then yes, can we get more done in those first three areas that allow us to scale those for the long-term more quickly. And as we also said, there's a cost to doing that. And if we absorb them and if something bigger and you guys know the multiples that are in somebody’s businesses right now, we're not going to do something foolish but we do think the time is right to continue to really get at those and we're looking at those right now. Some of the deals have gotten played in the market, we looked at them. We just said those don't -- we don't think those are going to grow for us and we don't think those make good financial sense as well. We’re in a game. We're playing in the right places, including some of the areas that have some of the bigger deals are going down. And we're just trying to make sure that we're prudent as we as you would expect us to be as we look at opportunities.

Thank you. And that concludes our question-and-answer session. So I'd like to turn it back for closing remarks.

So I just want to thank everybody again for your participation, and thank the analysts for their questions today. And I got three things to summarize the quarter; so we delivered a solid second quarter; we have marketing solutions and other services revenues that grew about 7%; and we improved our mix to 41% of total company revenue in the quarter towards our goal of 44% this year and 60% towards 2020; and we have established a solid baseline first half to propel us to revenue growth again in 2018 for the ninth consecutive year. We're going to roll up our sleeves as we traditionally do. We’re going to get back to work. We look forward to providing positive progress report on our next call. And I am going to turn it over to Ed for some final housekeeping.

Thanks, Lee. Before we conclude today's call, I’d just like to mention that Deluxe management will be participating in the following conferences in the third quarter, where you can hear more about our transformation; on August 12th and 13th, we’ll be attending the KeyBanc Capital Markets 20th Annual Technology Leadership Forum in Vail, Colorado; and on September 13th, we’ll be at the C.L. King & Associates 16th Annual Best Ideas Conference in New York. Thank you for joining us. And that concludes the Deluxe second quarter 2018 earnings call.

Thank you. That concludes today's conference, ladies and gentlemen, you may now disconnect. Have a wonderful day.