Ladies and gentlemen, thank you for standing by, and welcome to the Deluxe Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode and today's call is being recorded. We will begin by opening remarks and introductions. At this time, I would like to turn the conference over to your host, Vice President of Investor Relations, Tom Marabito. Please go ahead.

Thank you, operator and welcome to the Deluxe fourth quarter and full year 2022 earnings call. Joining me on today's call is Barry McCarthy, our President and Chief Executive Officer; and Chip Zint, our Chief Financial Officer. At the end of today's prepared remarks, we will take questions. Before we begin and as seen on this slide, I'd like to remind everyone that comments made today regarding management's intentions, projections, financial estimates or expectations about the company's future strategy or performance are forward-looking in nature as defined in the Private Securities Litigation Reform Act of 1995. Additional information about factors that may cause our actual results to differ from projections is set forth in the press release we furnished today and our Form 10-K for the year ended December 31, 2021, and in other company SEC filings. On the call today, we will discuss non-GAAP financial measures, including comparable adjusted revenue, adjusted and comparable adjusted EBITDA, adjusted and comparable adjusted EBITDA margin, adjusted EPS and free cash flow. To streamline discussion of our ongoing business operations, today and going forward we will discuss both revenue and EBITDA on a comparable adjusted basis which will exclude the inconsistency caused by acquisitions or divestitures in the prior periods. For purposes of full year 2022 this will exclude the partial year impact of First American and impact of the divestitures done throughout the year. In our press release, our presentation, and our filings with the SEC, you will find additional disclosures regarding the non-GAAP measures, including reconciliations of these measures to the most comparable measures under U.S. GAAP. Also on the presentation we are providing additional reconciliations of GAAP EPS to adjusted EPS, which should help with your modeling. Now I'll turn it over to Barry.

Thanks, Tom and good morning, everyone. Deluxe delivered strong results for both the fourth quarter and full year 2022, further proving we have become a payments and data company. As I expect payments -- will become our largest segment by revenue during the first half of 2023. This will be a key milestone in the company's history. Before reviewing the results, let me take a moment to reflect on what was another strong year for Deluxe. Four key highlights from the year include; first, reporting our second consecutive year of sales driven revenue growth, an achievement not seen over a decade, showing the strength of our One Deluxe model. Second, the accelerating success of our payments and data business. In payments, First American continues to perform well in its second year as part of Deluxe and we're expanding blended margins across the segments. In the data business, we recorded record revenue. Third, strong performance in our print businesses Promo and Check. Promo strongly rebounded after the impacts of COVID and supply chain disruptions and Check has delivered its strongest top line performance in over 10 years. This performance shows the durability of demand for these solutions. Fourth, our ERP implementation went live with its last major release earlier this week. This key milestone marks the completion of our major corporate infrastructure modernization. We also just announced the exit of our North American web hosting business, which was a non-strategic business line allowing us to further focus on payments and data. Chip will provide more details on the transaction. We've also changed the name of our Cloud Solutions segment to Data Solutions to better reflect the more focused operations of that business. Let me also take a moment to thank my fellow Deluxers for another strong year, for their endless dedication…

Thank you, Barry and good morning, everyone. Before we review the results for the quarter, I'd like to elaborate on the pending sale of our North American web hosting business. Last year we sold our Australian web hosting operations and upon completion of the latest transaction we will have completely exited the hosting business. As a reminder, this business has historically been largely a white label service offered through telecom partners which did not allow for material cross selling opportunities and did not fit within our overall portfolio. This pending deal also includes our logo business. For the trailing 12 months these businesses generated approximately $66 million in revenue with adjusted EBITDA margins in the mid to high 30% range. The web hosting business was previously fully impaired due to its capital intensive nature and recurring revenue declines. This was further evidenced in the fourth quarter where revenue declined 8% year-over-year. 2023 revenue will be impacted by approximately $45 million and adjusted EBITDA and free cash flow each will be impacted by approximately $20 million. These impacts are included in our guidance, which I'll discuss in a moment and mostly affect our data segment with a very small impact to the promo segment. I know there have been many changes to the portfolio recently, but they reflect a methodical effort to simplify and focus the business. For more information about the business exits and impact to guidance, please refer to the reconciliations in our press release and presentation. Additional details of the transaction can also be found in our recently filed Form 8K with the SEC. Now let's go through the consolidated highlights for the quarter and year before moving on to the segments. For the fourth quarter, total comparable adjusted revenue improved 1.2% to $564 million. On a reported…

[Operator Instructions]. Your first question comes from the line of Lance Vitanza from Cowen. Your line is open.

Hi guys, thanks very much for taking the questions. A lot to unpack here. But let me start with the web hosting and logo divestiture. Did you call out the EBITDA margin on the asset sale?

We did. We said that it was mid to high 30s. And as you know, Lance that is a business that was a consumer of capital, and it was in decline. We also mentioned that in the fourth quarter revenue in that segment declined 8%.

So right. So $665 million of revenue and kind of like $25-ish million of EBITDA, something in that range, or in that general vicinity. And I guess -- and that was for the trailing 12 months. Where I'm going with this, Barry, is I'm thinking about your adjusted EBITDA guidance of $390 million to $405 million, which right on the face of it, it looks like it's down versus the $418 million that you printed this year or for 2022. But if we add the $25 million-ish, right, from the asset sales, then we're sort of -- we're getting to that slight EBITDA positive that you talked about in the 8-K filing, is that sort of the right way to think about it?

This is Chip. So as you have time to digest this, you'll see at the back of our earnings release and slides, we have provided some information that will reconcile that for you, especially on the guidance side. But your back-of-a-napkin math is roughly right around $25 million of EBITDA for a full year. We are, of course, modeling into our guidance only three quarters of impact, that's where we get the roughly $45 million revenue impact and approximately $20 million EBITDA impact that I just referred to on the call. But all of those things plus the impact of last year's exits rolling forward are reconciled in the back. And that's why we thought it was important to move just favorable adjusted dynamics so that it can be much more transparent on how the business is doing on an apples-to-apples basis.

Okay. Great. Maybe moving on to the Data segment that continues. You mentioned during the call, continued diversification into noninterest rate-sensitive verticals. And I'm wondering how much of the data segment, again, on a go-forward basis, how much of that Data segment currently is in noninterest rate-sensitive verticals?

Lance, I don't think we've ever provided sort of the sources of revenue at that level. But the reason that business continues to perform well in a period of rising interest rates, I think, is because those noninterest rate sectors or categories are experiencing really attractive growth rates that are more than offsetting things that were highly sensitive like mortgage. And if you look back in our history, you can see previous interest rate cycles like this, that business was pretty significantly impacted and we're actually showing growth. And so I think that gives you a good sort of direction that it's increasingly about noninterest rate-sensitive categories.

Is it possible to talk a little bit about which of those noninterest rate-sensitive verticals present the most obvious or most compelling opportunities for Deluxe? And are there any examples of recent wins to call out anything like along those lines?

Yes. So we have two parts to this. The business historically was focused on financial services industry. And within the financial services industry, dollars are being shifted in those financial services companies away from interest rate sensitive things like mortgages towards things like certificates of deposit, normal DDA accounts, high-reward credit cards, other solutions that the financial institutions is attacking to deliver their own growth. And we've shown an ability to move into those sectors away from the interest rate sensitive area. But beyond that, we've also moved into and are providing now campaign services to a very wide range of solutions. Everything from one of the largest online retailers to insurance companies and others that are interested in growing and finding new customers. And the focus on all of this really are businesses that have high lifetime value for a customer. And the reason the solution is valuable to them is that it's giving -- we are providing to that company a very, very high converting lead list so that company can invest materially in its marketing plans with the confidence that it will turn into new customers. And we're growing the business because we're just really, really good at it.

That's helpful, Barry. A quick question on the check side. Margin was a bit weaker than we had expected. How has the margin performance compared to your own expectations? And was there anything going on in there that drove -- in the quarter that drove margin performance one way or the other that's worth kind of calling out? And I apologize if I missed that during your prepared remarks.

It's Chip again. So you're right, the 42.5% for the quarter was a bit below our expectations. We mentioned kind of two factors. There were two out-of-cycle supplier price increases that we experienced both on the material side and logistics side. Logistics specifically was more of a seasonal-based surcharge that will correct itself now in the start of the year. But the out-of-cycle price increases obviously happened. They're out of cycle, which means as we set our final forecast for the year, we didn't see them yet. And so that was a bit of a surprise. But as I said, we'll be able to make those increases into this next price increase early in the year. And obviously, it's very great that the overall portfolio was able to offset that issue and deliver the results exactly where we thought they would be.

Thanks. Just last one for me, I promise. Just on the corporate expenses, they were up again about 5% year-over-year. Is that just sort of the inflationary environment or is there anything in particular going on there? And really more to the point, I guess, it looks like you're running close to 9% of revenues on that corporate line, and it might even be higher on a comparable adjusted revenue basis. But I'm just wondering if that's sort of the right -- is that the right percentage for a company this size or is there -- is it -- should we be thinking that maybe there is some improvement there to come or no, is this just kind of a good level that you guys are happy with, anything you could say there would be helpful? Thanks guys.

Sure. So turning to the quarter, I think you got to recall, we've mentioned a few times throughout the year that we restored our 401(k) match earlier this year, that's been weighing on the corporate segment. So when you really look at the growth year-over-year, mostly a function of that, there's puts and takes across the other areas, other increases related to inflation, offset by operational efficiencies. But net-net, the real driver year-over-year in the fourth quarter was that 401(k) match. As we look forward to 2023, you are right. I would tell you, as you're thinking about your guidance and your modeling, you have to roughly model somewhere around $200 million or roughly 9% of revenue to get to the ranges we provided. And let me just give you a little bit of context what's going on there. We continue to deal with inflation, it's a factor of the environment that we've got the investments and the technology we've mentioned a few times. We also have the function of the divestiture. And once we divest those assets, there will be some stranded costs that are corporate in nature that will come back to the corporate cost center. And so all those things equally look like we are kind of staying flat, which we know is not where we need to be. So I'll just reiterate that this remains a major focus area for us. Getting cost out of the corporate segment is one of the most strategic factors for us as we get into the year and look to over deliver our results and overdrive our internal plan. And so I would just advise you to kind of model it as this 9% roughly or $200 million for now. But know that’s major focus of ours. And we think we can make progress as the year goes on to try to bring this spend down.

Thanks guys, appreciate it. Congrats on the solid quarter.

Your next question comes from the line of Charlie Strauzer from CJS Securities. Your line is open.

Hi, good morning. I'd like to talk a little bit about the divestiture yesterday in the hosting business. And if you look at the sale earlier in the year of the Australian piece, it seems that the sale -- kind of the all-in sale price was below where this business was bought back in May of 2008. And seems the price tag is a little bit low, but wondering there what transpired in terms of what potential kind of shopping kind of a go shop, if you will, in that process?

So Charlie, you're right. The company acquired those assets before quite a while ago. But you'll recall that in 2019, we had fully impaired between 2019 and early 2020, we fully impaired the asset entirely because the market for that business had changed so materially. And as we look to the future, really recognize that those businesses, web hosting really weren't a fit and a match with becoming a payments and data company. And we went to market looking for suitable buyers, a very robust process, a very robust process. And we came out with what we think is a fair transaction. And it avoids for us the ongoing need to put significant capital into the business in a business with secular declines and a much better fit for the acquirer because they're in that, that's their core business. And they have leverage and scale from adding our portfolio to their business, something we just -- it was a profile and an opportunity we didn't have. And so we took the opportunity to divest that. We think it will be very focusing for the company. You heard us say that we're changing the name of this segment from cloud because it was a distributed set of assets. And now it's very, very focused on our data business, which is what we've been saying is the jewel in that business for some time. And we think that makes it much more clear, and we think it's a good outcome.

Got it. And then staying on the topic of divestitures, are you planning to potentially invest more businesses going forward here or are we kind of at the tail end of that process?

We will continue to look at the portfolio for pruning opportunities. But Charlie, if the question really is, are you going to look to us to lap off one of the four legs check, promo, data or payments, I think we're at the place where we feel confident that that's not on the horizon here.

Makes sense, thank you very much on that. And then looking at the guidance for the year, pretty wide range of outcomes there at the high end on revenue growth, given that we're going into potentially a recession here with inflation and higher interest rates kind of in the forecast, what gives you confidence there at the high end of that range and kind of what are some of the assumptions behind the guidance overall?

Yes, I appreciate the question, Charlie. It's Chip. I would just say, I think the high end of the range, what gives us confidence is just the execution and success we've seen over the last two years, the ability to cross-sell within the portfolio, the way we've invested in the products over the last few years to improve the functionality, the market attractiveness of it, to build a robust pipeline, and just continue the sales momentum. So if I think about from a revenue side, I mean, obviously we did our range responsibly for all the right reasons you mentioned, there still is uncertainty and you don't know what's going to happen. But we look at that top end and I think it's very achievable. As you flow it down, obviously, the ranges get a bit wider as you go down my list of things I guided because of the uncertainty and room for variance can get larger and larger. But we just feel good about where the company is positioned, the internal plan we've established, and just being able to execute on the momentum we've had the last two years from a top line perspective. And then when you get to the EBITDA, it just can't be said enough how much we're going to focus on cost out, cost efficiencies, operating leverage, the corporate cost center as I said, and just get very maniacally focused on our cost profile so that we can make sure we deliver that EBITDA result and start to grow EBITDA even more, and that will obviously help our deleveraging.

Got it. Great. Quick housekeeping on the Check side. Just in terms of volumes, how did the declines look there and then what should we think about in terms of volumes for the full year?

On checks. So I mean, checks did return to secular declines again in the quarter. So if you think about kind of volume-price dynamics, it's a little bit more difficult to describe here. Obviously, price continues to be a function of the revenue because we took pricing actions throughout the year that rolled forward. But after we lapped all the customer wins, we did return to kind of normal secular decline. So we still had volume increases despite that, but when you net it all out, net reduction in revenue, which is what we're anticipating will be the same for 2023. So we're forecasting mid-single-digit declines, but the ability to keep margins in that mid-40% range. If I take checks aside and look at the other three segments, we are continuing to see a nice blend of volume and price. It was actually nearly 50-50 once again for the quarter. So just excluding the secular decline aspect of the business, we are just continuing to see a really good healthy mix of volume and price and that gives us confidence going into 2023 as well.

Great, thank you very much on that. And then lastly, just can you repeat on the -- what you said about payments growth for the year and margin expectations there, I missed that?

Yes. So payments we see as a mid-single-digit grower for the full year. We do think it's going to be maybe a little bit lower in the first quarter, and then it will pick up some steam as it gets into Q2 and beyond, and that's a function mostly of just some year-over-year comps that we're coming up against. But we do believe it's going to be mid-single digit on the revenue side. On the adjusted EBITDA margin side, this is an area that this business is finally really starting to show the value of why we love it so much as it's starting to get operating leverage. So low to mid-20% margins, I think if you look at the trend of that business over the last few quarters, you're starting to see this operating leverage that we've been talking about. And so we're feeling pretty good about the ability to, of course, grow the mid-single digits and then also just get EBITDA expansion, which would be nice to help hit that overall EBITDA guidance and offset the declines in checks that we're planning.

Great, thank you very much. And then just lastly, what should we be thinking about assumption-wise for share-based comp for the year?

Share-based comp, give me just a second, I would say somewhere around $25 million would be what I would assume.

Got it, it is great. Thanks for taking my questions. Appreciate it.

Your next question comes from the line of Marc Riddick from Sidoti. Your line is open.

Hey, good morning everyone. So I was wondering if you could talk a little bit, and I appreciate all the details that you've already provided. I was wondering if you could talk a little bit about thoughts on potential headcount adjustments for the year. You've talked about trying to keep the costs under control, but I was sort of wondering about maybe where you might stand as far as adding headcount and sort of maybe talk a little bit about any investment initiatives for the year?

Sure. So on headcount, we are very disciplined about managing headcount, and we go through periods of pruning, including one earlier in January, but we are not a company that has historically just done across-the-board reductions. But we're very disciplined at managing particularly professional staff. So I think that the rest of the question really is how do we think about cost management for the rest of the year and going forward. And the thing I would really tell you is we really focused on getting revenue growing in the company, and we've now proven the company is capable of that. Some people didn't think we would actually deliver that, but we've now delivered it for two consecutive years. And the next big thing we do, in fact, is profitability and particularly the corporate cost center is a particular target. And we're going to be very disciplined and thoughtful just like we have on the portfolio and just like we have been on growing revenue and to attack that next to help us expand the profitability of the company from here.

Great. And then I was wondering if you could talk a little bit about it, and you touched on some of the customer behavior that you're seeing given the environment that we're functioning in here. So I wonder if you could talk a little bit about if there are any particular industry verticals or pockets that are a little stronger than others or is pretty much the behavior that you're seeing largely across the board with customer verticals?

Well, what I would tell you is, overall, we're seeing very durable demand across our entire portfolio of services. We are seeing some shift between verticals or between different periods, where volume is up or down modestly by sector or time period. But in aggregate, we continue to see strong and continuous demand for solutions. And that's -- you can see that in our performance from a revenue perspective.

Great. And then I guess the last thing I was sort of thinking about is, I wanted to sort of circle back on the commentary that you had on the divestiture and sort of the opportunity for future pruning. I was wondering if you could talk a little bit about maybe on a bigger picture, maybe what you're seeing with the opportunities of within the M&A pipeline, sort of thoughts on current valuation, and whether that's -- if you've seen any changes there, any greater willingness of folks to engage or if that's changed much over the last few months given the recessionary environment? Thank you.

The broader M&A market, I think, has been fairly frozen for some period of time. We're seeing maybe a little bit of a slight pat in that. And I think our perspective for our business is, we really like the core assets that we have in payments and data. And we feel like we've got plenty of runway there. And our first objective is of course, invest in the company for its success and continue to pay down debt. So are we going to be active in the M&A market to acquire assets, which is where I think you're going, the hurdle rate for that kind of a transaction would be really, really high right now with interest rates. And I think that we believe that valuations are still a little bit frothy. So you never say never, but we like the businesses we have, and we like our pathway to continue to pay down debt, and we see that sort of as the first and primary path.

Excellent, thank you very much.

Your next question comes from the line of Chuck Nabhan from Stephens. Your line is open.

Hi, this is Alex Newman on for Chuck here. Sorry if I missed the call, but did you give expectations for revenue growth for the data segment in 2023, given some of that pull forward of revenue from Q1? And then just some of the drivers behind that revenue growth for the year, that would be great?

Yes, Alex it's Chip. Yes, we did. So for the full year, we're expecting low single-digit revenue growth. And it's important to note that we refer to that as on a comparable adjusted basis because that one will obviously have the change in the divestiture occurring over time. So we'll continue to reconcile that and give you guys that. But for the full year, we see low single-digit growth. That's a bit slower than what we saw across the data segment this past year, but that's because this past year was such a large growth year. I mean that business grew north of 20%. It's obviously we just know that it's a high hurdle to clear. The first quarter specifically, we're expecting to be a little difficult just because of those handful of campaigns that shifted into the fourth quarter out in the first quarter at kind of depleted the pipeline just a bit. The team continues to work their pipeline list of deals, but we do know that the start of the year may be a little slower, but we don't see any reason that, that business can't grow low single digits for the full year.

Okay. And then just within the merchant services, could you speak to what you see in terms of what's on the ground from your SMBs and what volumes are looking like and just the overall health?

So I think in the merchant business overall, we continue to see robust volume and there's lots of media attention about and speculation what's happening in SMBs. But I think overall, we're seeing pretty solid volume there. And our fourth quarter delivered exactly what we expected it to do. I'm sure you've seen the commerce department numbers for December, but we didn't experience that. We delivered the quarter and the way we expect it to deliver it. So we feel like the variety of business we have there and the -- verticals where we compete, help balance each other out in good times and in tough times. We feel like that's a pretty solid business right now.

Alright, thank you.

Your next question comes from the line of David Silver from CL King. Your line is open.

Yes, hi, good morning. I think I have a first question would be on your free cash flow forecast and then I'd have a maybe a more strategic question about SaaS-generated revenue. Regarding your free cash flow, the $80 million to $100 million range you provided, I mean, I've noticed that, that's kind of in the range of the last two years. And I think the term is kind of maybe a flywheel, but is it the case that should operating results exceed your budget, you may increase your discretionary spending and kind of keep your free cash flow within that targeted range? Or alternatively, if results fall a little below target, would you cut back on investments, let's say, either capital spending or working capital, again, to kind of keep that free cash flow within a targeted range, I mean, how should we think about that free cash flow target in terms of flexibility there or how inviolate it might be? And then secondly, on your CAPEX spend, let's say, of $100 million. Can you remind me what the sustaining portion of that is versus what you would consider discretionary spend? Thank you.

David, it's Chip. So on your first question, so the guidance of $80 million to $100 million, keep in mind, we're kind of approximating that the divestiture is roughly a $20 million impact to that. So all things equal, that's a guidance range of more $100 million to $120 million based off apples-to-apples, which you'll see is getting us back to kind of our -- towards our historical range that we were two to three years ago despite all the increases and interest costs. So I think that's a good place to land. To hopefully answer your question though, when we set the investment target for the year, whether it's the $100 million CAPEX or anything we may do inside the P&L, we actually look to achieve those, if not underspend those. We don't look to throttle up discretionary investment just because the results are trending better. We view those as kind of starting points, and we're going to do our best to spend our money wisely, come in under and make sure we can over deliver the free cash flow the best way possible because there's many of other -- interest expense or taxes. We know we have to manage this. So I wouldn't be concerned that if operating results trend better that we're going to throttle up investment. That's not what we would do. And to answer your last part of the question, in the guide of $100 million, I would think of it as kind of roughly $40 million to $45 million of that is kind of the sustaining. We call it KBR, keep the business running side with the rest of it, the kind of 55 to 60 being growth related. So high level, 60-40 growth to maintenance capital. And as you know, we're doing the print on-demand upgrade in check. So that's something that we're halfway through. So over time, that work will go down. And we just continue to invest responsibly in our growth products with payments and data and to try to make the company more efficient.

Thank you very much for that. My next question is maybe a little more strategic or philosophical. But Barry, you've taken a number of steps over the last couple of years to transform your company into as you pointed out today, you're a payments and data company. But I'm just wondering, underneath that, there's different kinds of revenue generation. And I think in your slide deck, the emphasis on SaaS-driven revenues has been increasing pretty steadily over time. And I'm just wondering, beyond the headlines or the column headings of payments and data, whether underneath that, there's also targets or goals for SaaS-driven revenues, which I consider more stickier and more relationship-based versus maybe transactional sales of onetime sales of services to companies that might handle the service themselves. So what are your goals maybe for that maybe more differentiated SaaS-driven revenue where maybe there's a service, differentiated service component in there that could make for more durable revenue streams, stickier customers, and that kind of thing? Thank you.

So that is a really insightful question, and it goes right to the very core of our sort of corporate strategy, which is we are trying to build the payments and data businesses because by their nature, they are stickier businesses. So for example, in our receivables and payables business, customers choose and adopt one platform to run their -- and build their business upon and increasingly they're choosing our platform. So we have a number of banks that are reselling our receivables platform as a branded version of their bank. So you don't know that it's Deluxe providing the solution. You know that it's the bank providing a solution to their customer. That is extremely sticky because once the customer has a commercial bank relationship with the bank and they are using our platform to manage their receivables and payables, that customer doesn't attrite and that's driven by delivering a great experience and set of tools, a software-as-a-service type model where that customer is building their business on the platform. And that's obviously where we're making our investments as a company. We are going to launch later this year, improved tools for our receivables business that will give us really attractive, really easy-to-use tools for the customer. We've invested in our platform for our data business, which someone was asking earlier about how we're diversifying the business, it's because we've invested in our platform that's allowed us to grow that business into new business verticals. So we're not here to say that we're a Software-as-a-Service company. We're absolutely clear, though, that we are moving the company towards a much bigger percentage of revenue from recurring revenue where businesses are building their business on our platform. It's completely true in our receivables payables business. It's a foundation in our merchant services business, and that's the very foundation and core of what's happening in data. So it's absolutely where the company is going and going forward and we're making our investments for growth.

Yes, okay. No, thank you for all that color. I mean I've just noticed with a number of my companies, there is difficulty in procuring sufficient IT resources. And I thought the way you're already interacting with them, it would kind of be a natural opportunity for your company over time. Thank you for that. That’s all I had.

And we have a follow-up question from the line of Lance Vitanza from Cowen. Your line is open.

Hey, thanks guys. Just two quick follow-ups that I forgot about. The first is on the proceeds from the web hosting sale. I know that there's about $10 million or so in the 8-K that sort of deferred, I think, over a 6 to 12-month period from the time you close it. And I'm just wondering, are there -- is that like an earn out, are there any sort of performance-related contingencies there that we should be aware of? And then my second question is just with respect to the payments business. I'm wondering if you could kind of step back and walk me through the margin outlook in 2023 and I apologize, I think you mentioned that you had some opportunities there, but if you could recap that for me, that would be great? Thank you.

This is Chip, I'll take both of those. So, on the sale of the web hosting business. So we announced a base sales price of $42 million in our 8-K the other day. $32 million of that is kind of a payment to occur at time of closing with the other $10 million 180 days later and 360 days later, I believe, neither of those 10 million are contingency-based. There is up to another $10 million, which could take the total sale price up to a max of 52. Those are contingency base subject to performance obligations. And so look at the sale price as a range of 42 to 52. The 42, it will happen, and it has the second and third payment which is just a timing factor as the business transitions over. The question about payments, you're right, we did talk about that a bit. So, we are forecasting EBITDA margin rates in the low to mid-20s. But I think what I said is if you look at the last few quarters, you're starting to see that business realize operating leverage, margins are expanding. That's a function of the volume growth. We like that business because as volume grows, it can come at an incremental margin rate because of the way the platform business work. We were -- we've got operational efficiency in our treasury management business, specifically lockbox, that's improving profitability there. And then, of course, as we continue to take price to keep up with inflation, that's helping as well. So all things equal, this is a business that we believe will expand margins nicely in 2023.

Thank you so much.

And there are no further questions at this time. Mr. Tom Morabito, I turn the call back over to you for some closing remarks.

Thanks, Rob. Before we conclude, I'd like to mention that management will be participating in the Truist Securities Technology, Internet & Services Conference on March 7, 2023, and the Sidoti Virtual Small Cap Conference on March 22nd. Thank you again for joining us today, and we look forward to speaking with you in May as we share our first quarter 2023 results.

This concludes today's conference call. Thank you for your participation. You may now disconnect.