Good day, ladies and gentlemen, and welcome everyone to the Fourth Quarter 2018 Deluxe Corporation Earnings Conference Call. At this point, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference maybe recorded. I would now like to turn the conference over to our host for today, Ed Merritt, Treasurer and Vice President of Investor Relations. You may begin.

Thank you, Sonia and welcome everyone to Deluxe Corporation's fourth quarter 2018 earnings call. I'm Ed Merritt, Deluxe's Treasurer and Vice President of Investor Relations. Joining me on today's call is Barry McCarthy, our President and Chief Executive Officer; and Keith Bush, our Chief Financial Officer. At the end of today's prepared remarks, Barry, 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 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 with a 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 Barry

Thank you, Ed and good morning, everyone. It's a privilege to be with you today at my first earnings call as President and CEO of Deluxe. Before we get started, I'd like to thank Lee Schram for his support during this transition and acknowledge his many vital contributions over nearly 13 years here. Along with all of us, I wish him the very best in his retirement, he deserves it. I'm honored to join Deluxe at this exciting and important time as we accelerate the ongoing transformation from a check printer to a technology-enabled solutions provider and continue to create value for our shareholders. In a few minutes, I'll share some of my background why I chose to become a Deluxer and some initial observations from my first few weeks here. I'll also provide a general sense of where I'm headed and outline some of urgent priorities for the coming month. Before I get to that, let me provide some highlights from 2018. I'll have Keith go into more details shortly. I'm pleased to report that we've delivered another year of strong revenue growth. In fact, 2018 marked a record for full year revenue and we continue to grow adjusted earnings per share and operating cash flow. Total fourth quarter revenue grew 6% year-over-year driven by financial services which increased 15% and by small business services which increased 4%. These increases on the top line were partially offset by Direct Checks which declined 8% in the quarter and underperformance within our data-driven marketing solution. Had data-driven marketing solutions delivered as expected, 2008 would have been a banner year. I'll address the challenges and opportunities in data-driven marketing in more detail in a few minutes. Checks and forms continue to perform well and I think it's important to note that the fundamental health of the company is very strong. In the fourth quarter we ended with 45% of our business growing revenue at a double-digit rate. It's clear that our strategy to transform Deluxe from a check and forms printer to a technology-enabled solutions provider is delivering positive financial results. With that, let me turn the call to Keith for additional details on 2018.

Thanks, Barry. We delivered fourth quarter revenue of $525 million, which as Barry mentioned represents a 6% increase over last year. Organic revenue which excludes acquisitions, FX and other non-comparable items was about flat. To underscore Barry's earlier point about the company's fundamental health, had data-driven marketing grown as expected, the company would've grown organic revenue in the quarter. As Barry also noted, we established an all-time revenue record of $1.998 billion, this exceeds the previous high of $1.981 billion set back in 1996, and we grew total revenue for the ninth consecutive year. Marketing solutions and other services revenue grew about 11% over the prior year and represented over 42% of full year revenue. Shifting to our segments, small business services revenue was $334 million and grew 3.6% in total or about flat organically. Financial Services revenue was $160 million and grew 15% on a reported basis or over 1% organically compared to the fourth quarter of last year. Financial Services check units declined slightly less than expected in the quarter at about 5% and about 6.5% for the full year. Direct Checks revenue was $31 million declining 8.3% from last year but ending better than our expectations. As Barry mentioned, we're making good progress on our strategy and we're intently focused on accelerating this transformation and increasing value for our shareholders. Our Marketing solutions and other services or MOS are central to our transformation and continue to grow. MOS grew to $238 million or about 45% of total revenue for the quarter, representing a 20% increase over last year, and an increase of 6% organically. MOS represented 42% of total revenue for the year ending at $840 million, and increased about 11% year-over-year or nearly 2% organically. Specifically, we delivered the following annual revenue by MOS category; small…

Thank you, Keith. As I mentioned at the beginning of the call, I'm very optimistic about the compelling opportunities ahead for Deluxe. Although I've only been in the position for a few weeks, I've spent that time talking to customers, learning the business, listening to our leaders and meeting hundreds of our teammates at many of our sites, and I've looked at our acquisitions and current strategy. Overall, I believe the company is on a solid path, but I recognize we have a work to do to achieve our full potential. Importantly, I'm even more optimistic about our future now than I was when I joined Deluxe just a few weeks ago. Before I talk about our plans for the coming month, I want to share with you what I saw in Deluxe, why I joined, and how my background positions me well for leading the company into the future. I enthusiastically came to Deluxe because I believe the company is significantly under-appreciated. We have an impressive collection of assets. For example, our Small Business Services segment has a base of 4.8 million loyal clients and Financial Services adds another 4,600 financial institution partners. On customer counts alone, Deluxe compares favorably with top tier global technology companies with 45% of our business already growing double-digits. While our current PE multiple looks more like a traditional printer than a technology company, I believe that the consequence of the market's not yet recognizing our transformation is already underway. Completing the picture, the company has a strong balance sheet with low leverage. Our ability to generate consistent cash flow enables up to not only pay a solid dividend but also invest in the business and repurchase stock. Deluxe is uniquely positioned for growth and increased shareholder value and we're focused on doing so…

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

I just had a couple of quick questions for you all this morning. Just been -- you look at the initial guidance that you're giving out, I'd appreciate it's only a couple of weeks since you're in there. But if you look at the revenue assumptions this year, is that breaking in any organic growth into that assumption for the full year?

So what is in that forecast; I think most important thing which is a difference in our planning architecture is that we are -- we've taken two things specifically out going forward. So we are not assuming or planning any gains on sale, and we are not assuming any new acquisition; so we're trying to give you the most transparent view of the business as we can. I think if you're specifically asking about organic growth, I think we're forecasting very, very modest increase in organic growth but to that -- the numbers you've seen is what were our first-pass and how we're thinking about full year.

And then when we look at the Q1 guidance, and you talked about the EPS for Q1 versus the -- I'm sorry, to the full year guidance for EPS, you're talking about on the adjusted side, it said using a base of $5.69 for this past year, or is it more $5.44 we should be using against as that kind of base?

Yes, you're thinking about it right. The $5.69 is our reported basis and that did include $0.25 of being on sale benefit. So we have not included any gain on sale benefit in our 2019 guidance, so you would be working from that lower number.

So assuming some modest growth off the lower number is what you're trying to say?

Correct.

And then, just thinking broadly vary just a little bit more on terms of the strategy here; obviously data-driven marketing was a little bit disappointing this past year. Are the fixes that you think you can employ there to kind of get that turn back around again?

From what I know today it's a really nice business and an opportunity for us to continue to grow. We have some terrific assets and I know the teams have plans in place that we expect will help improve performance for the year. So it's an area over the coming weeks I intend to invest time, to work with those teams to accelerate our growth.

And our next question comes from Jamie Clement of Buckingham.

Barry, comments from you about improving sales force processes, becoming more customer-centric if you will across the organization, obviously if you look at your small business customers, radically, radically, radically different group of customers than your financial institution customers but are there any kind of common themes or big picture thoughts initially that you have here thematically across the two that we can kind of look forth in terms of progress going forward?

I'm here only a few weeks into this, I can only give you really…

Totally acknowledged, totally acknowledged.

I can give you my thoughts philosophically and what I'm thinking about. And as I look at our company, I really see a company of companies, we have many fantastic assets that we have not leveraged more holistically. So I stand by it, putting together an integrated catalog that we can present to customers, especially enterprise class customers including financial institutions. We have an opportunity to distribute and sell our existing book of business to our existing clients. I agree with you that the small business opportunity is different than enterprise or FI [ph] opportunity but believe that these are opportunity to present multiple solutions to our small business clients and that's one of the reasons we're pleased about MyCorporation acquisition because it puts us at the very beginning of a business formation and at that moment in time a business is not only needing to incorporate but they are going to need all of the many other services that we can provide. And we think we're really well positioned, especially for ecommerce, mobile commerce merchants going forward with our ability to host website, design website, do logo design, etcetera. And if we can present more solutions to a customer, in this case small businesses at the time of formation, we believe an opportunity in that scenario for cross-sell as well.

So just curious for your thoughts on the macro, it's one number but the small business sentiment data has deteriorated a little bit over the last couple of months, you got the small business administration shutdown with the government shutdown. Are you all seeing -- what are you involved, hearing or what are your feelings on the macro backdrop here over the last couple of months?

Jamie, I read all the same things that you read but let me tell you how I think about it relative to our business. And so we have a very sturdy business because the services that we provide to small businesses are really foundational to their ongoing operations. Even if there is a lobe [ph] on the small business environment, businesses generally don't turn off their website, they generally don't start trying to find new customers. And those are places that are sweet spots for us where we've got a nice footprint. So immediate term, we like our -- the durability of starting us off our solution and I think that gives us data protection regardless of what's happening in the macro environment.

Just on guidance and I think you all mentioned -- obviously, we'll wait for the next earnings release for more of a comprehensive 2019 guide. But I'm noticing your presentation, you're looking for an organic revenue decline of about 2% in the first quarter. Does data-driven marketing have to turnaround in 2019 for you all to transition from a minus 2% to positive as the year goes by or do you feel like there is enough juice in the other aspects of the business to turn positive?

I think it's just important that we do make acknowledge that data-driven marketing is in this wobble [ph] and we are giving it attention to move through. But when you're looking at the first quarter of 2019 it's also important to recognize that that quarter last year was a really strong quarter for treasury management and they wrapped up 2018 with an incredible year. So in the first quarter of 2019 we're rebuilding our pipeline and we're feeling the effect of that. But we most certainly need to be focused on the data-driven marketing tips [ph] as well to ramp up that growth.

Thank you. And we have time for one more question, and that will be coming from Chris McGinnis of Sidoti & Company.

So I guess just -- I know it's early, I know it's been stressed already on the call. But I guess when you look at the three lines of business in terms of SI and small business and direct checks, so anything that excites you more about one or other that you'd feel more confident in kind of helping drive that transformation; maybe we could just start there if you don't mind? Thanks.

Let me tell you what I think is sort of most exciting about our company and our prospects, and it really comes down to our incredible customer footprint. So with 4.8 million small businesses, 4,600 banks and financial institutions, we already have relationships with an enviable portfolio of businesses. And embedded in that we have many enterprise relationship so we think can be expanded beyond just traditional small business or financial institutions. So I start from a place that -- with strong relationship with customers that like us and customers that want us to succeed. We just need to find a way to take the product and service we already have and deliver it to them at an easier way to consume, and in a way that can extend the relationship we have. And I made the comments earlier that an early observation is that we really operate much like a company of companies and if we can become a more integrated enterprise and sell the entire suite of what we offer, we just have huge opportunity even within the footprint we've already got which can help us lead to organic growth which will also help our margins, and that we can do -- we can make the company stronger with the things we've already got. So I wouldn't highlight any one product over another because I think we have multiple place here. The biggest thing we got to do which is why it's the first initiative on our new day program as we've got to scale our sales and distribution capability to reach our customers better and more holistically.

And then just one last question; because you're buying through the quarter, should we get maybe end of year share account just for that purpose going forward? Thank you.

Yes, we're going to need to wait until the 10-K to provide that information.

Thank you very much. And good luck in Q1.

Thank you. And I would now like to turn the call back over to Barry McCarthy for any further remarks.

Well, thank you all for your participation and questions today. I'd like to give you a small summary. First, I plan to spend much of my time in the coming weeks on improving the effectiveness of the sales organization, driving the development and delivery of innovative new products and services, reviewing the structure of our organization and process which will reduce cost, and enhancing our culture so we can forge stronger partnerships with our clients to support their needs. And second, by our April earnings call I'll have an additional 90 days under my belt, I'd be in a better position to provide more detailed insights into our strategic direction and how I see our company transforming to achieve profitable organic revenue growth for the long-term. So now I'll turn the call back to Ed for some final comments.

Thanks, Barry. Before we conclude today's call, I'd like to remind you that Deluxe management will be participating at the following conferences in the first quarter. On March 11 and 12 we'll be in New York at the Susquehanna Tech Summit, and on March 19 and 20 we'll be in New York at the Telsey Advisory Group Investor Conference. Thanks for joining us, and that concludes the Deluxe fourth quarter 2018 earnings call.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program, and you may all disconnect. Everyone, have a great day.