Deluxe Corp. Stock

Ladies and gentlemen, thank you for standing by, and welcome to the Deluxe Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's call is being recorded.

At this time, I would like to turn the conference over to your host, Vice President of Strategy and Investor Relations, Brian Anderson. Please go ahead.

Thank you, operator, and welcome to the Deluxe Second Quarter 2026 Earnings Call. Joining me on today's call are 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 the current slide, I'd like to remind everyone that comments made today regarding management's intentions, projections, financial estimates and 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 actual results to differ from projections is set forth in the press release we furnished today in our Form 10-K for the year ended December 31, 2025, 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 and EBITDA margin, adjusted and comparable adjusted EPS and free cash flow. In our press release, today's presentation and our filings with the SEC, you'll find additional disclosures regarding non-GAAP measures, including reconciliation of these measures to the most comparable measures under U.S. GAAP. Within the materials, we are also providing reconciliations of GAAP EPS to adjusted EPS, which may assist with your modeling.

As a reminder, all comparable adjusted metrics reflect the removal of impact from business exits, including prior year adjustments to reflect removal of the Safeguard business effective with the closing of that divestiture and as of March 1, 2026. Financial metrics discussed through the second quarter also exclude any historical financial results relating to the Solero acquisition, which closed on July 31, 2026, and for which additional pro forma reporting in line with SEC requirements will be provided over the balance of the post-closing 2026 periods.

And with that, I'll hand it over to Barry.

Thanks, Brian and good evening, everyone. I'm pleased to report our strong performance through midyear. Deluxe continues to deliver its financial goals while accelerating our strategic transformation into a payments and data company.

During the second quarter, we once again delivered comparable adjusted growth across all key metrics: revenue, adjusted EBITDA, adjusted EPS, and free cash flow. We were particularly pleased to see free cash flow increase 65% through Q2. We're now in our fourth consecutive year driving consistent operating leverage and growth across all core earnings metrics. This performance enabled further reduction of our preacquisition debt levels an improvement of our leverage ratio through the first half.

We delivered this strong financial performance while accelerating our revenue mix shift towards payments and data. You'll recall in Q1 of this year, we reached a key milestone with just over 50% of our revenue being generated from nonprint sources for the first time in our 111-year history. In the first half of the year, our payments and data businesses together grew 11% and represented 52% of revenue, marking an acceleration of our progress. The addition of Solero, a leading merchant services provider, which closed last week, decisively shifts our revenue mix even further more on Solero in a minute.

At our December 2023 Investor Day, we outlined our plan to execute this financial and strategic transformation over 3 years. We delivered while achieving important cash flow and balance sheet commitments early. We're a team that executes consistently, we say what we'll do and we do what we say.

Let me summarize the quarter and highlight our ongoing consistent execution. One, our second quarter comparable adjusted revenue grew just over 2.5% led by continuing revenue expansion across each of the payments and data segments. Two, comparable adjusted EBITDA grew at 2x the rate of revenue demonstrating the continuing operating leverage and cost efficiency focus embedded across our business model. This strong earnings growth also accompanied rate expansion as adjusted EBITDA margins reached nearly 22% for the quarter. Three, our free cash flow continued to expand, growing year-to-date by nearly 65% versus prior year. This strong cash generation enabled more than $75 million of net debt reduction from our year-end 2025 levels improving our pre-acquisition leverage ratio to 2.9x at the end of the second quarter. And four, our payments and data businesses together expanded revenue more than 9.5% in Q2. Together, these businesses accounted for 52% of total year-to-date revenue, continuing the expansion from less than 1/3 of overall revenues in 2021.

Now a few additional details from each BU. Our combined payments and data segments expanded year-to-date revenues by 11% through Q2, led by another standout growth quarter for the data segment. Data segment revenues expanded just over 21% versus the prior year second quarter. This performance continued to reflect strong campaign demand for data-driven marketing solutions that deliver measurable outcomes, particularly from financial institutions and adjacent market verticals. We've now grown data segment revenues by more than 15% for 7 consecutive quarters, demonstrating the strength of our AI-supported DDM model. This strong data performance has continued to support overall enterprise revenue growth even as we approach significantly stronger growth comps over the back half of this year.

During the second quarter, our payments businesses together saw continued revenue growth rates as well, in line with our overall guidance outlook across both the Merchant Services and the B2B payment segments. Within the Deluxe Merchant Services or DMS segment, our onboarding of new partner wins and overall resilient macro spending environment and stable volumes across our diversified verticals contributed to second quarter revenue growth of just over 6%.

Moving to the B2B business. We saw a sustaining top line growth across this segment as well with revenues expanding by 3.5% versus Q2 of 2025. B2B continued to drive strong margin improvement during the period, expanding adjusted EBITDA rate by more than 250 basis points versus the prior year quarter.

Finally, across print, we also saw continued comparable adjusted EBITDA margin expansion with year-over-year margins improving 110 basis points. Print's strong margin performance was helped by the combination of 3 factors: our exit from the declining and lower margin Safeguard distribution channels earlier this year, containing the legacy check revenue decline to less than 2% and our prioritization of overall stronger margin in-sourced printed offerings.

Now on to a bit more about Solero. We closed on the transaction last Friday. Solero is a highly attractive asset in the merchant payment space. They enjoy solid growth in margin rates, broad channel distribution and important technology, including a terrific partner portal, enabling customers to onboard and operate their portfolios more efficiently. Strategically, Solero complements our existing merchant services offering and extends and improves our market position.

There are a few key factors. First, Solero immediately enhances the scale of our combined merchant services offerings. Together, we'll now process over $70 billion in annual volume across more than 210,000 merchants. This acquisition moves Deluxe to a top 10 nonbank merchant acquirer based on Nielsen data. Second, our increased scale enables significant near-term cost synergy and revenue synergy over time, and we anticipate further improvement to our already robust sales capacity and pipeline as our complementary go-to-market resources are brought together. Third, together with Solero, we've become an even more attractive merchant services partner for prospects beyond our added scale.

This addition will complement Deluxe's core offerings and go-to-market assets, our trusted brand, award-winning customer service, an expansive reach across more than 4,000 bank partners and millions of SMB customers. Adding Solero's strong sales relationships, platform technology and streamlined onboarding capabilities will position the expanded Deluxe Merchant Services offering as an even more formidable competitor in the marketplace.

Finally, Solero has built a very strong and talented team. We're pleased now to welcome them to Deluxe. We look forward to sharing more details regarding the combination and our integration progress over coming quarters. As we noted within our recent press release, we're also planning to host a live Investor Day presentation in New York in December of this year, and we'll provide more details regarding that event over coming months.

Now I want to talk briefly about putting this all together to update our 2026 outlook. We are updating our overall guidance ranges to reflect the closing of the Solera transaction last week. Our updated ranges include both increased overall revenue and adjusted EBITDA ranges to include Solero over the balance of the year, complementing our strong year-to-date performance through the first half. Chip will share specifics in a moment.

Before concluding, I want to reinforce our strategic progress on our core priorities through the first half. As a reminder, our core business strategy is focused on 3 ongoing strategic planks. Number one, shifting revenue mix towards payments and data to accelerate profitable secular growth; two, driving operating efficiencies, margin expansion and overall operating leverage across the combined enterprise; and three, expanding adjusted EBITDA and free cash flow to improve the balance sheet and rapidly improve our net leverage ratio toward a long-term 3x or better target. We clearly delivered on all 3 strategic planks through the first half, remaining focused on driving execution across our existing businesses and now increased payment scale via the addition of Solero, which provides opportunities to directly accelerate our progress. We're pleased to have Solera join Deluxe and are confident in our bright and clear future as a payments and data company.

Before passing this to chip, I'd like to take a moment to acknowledge and thank all my fellow Deluxers for their dedication to our customers' success and our company's continuing transformation. With the majority of revenue now coming from our growing payments and data segments and the addition of Solero accelerating this mix towards 60% of total revenue later in 2027, my fellow Deluxers are on the cusp of achieving what few other 100-plus year companies had ever achieved, successfully transforming ourselves for the next generation. Thank you. Our best days are yet to come. With that, I'll turn it over to Chip.

Thank you, Barry, and good evening, everyone. As Barry mentioned, we were pleased with our second quarter progress particularly our strong year-to-date free cash flow expansion, continued year-over-year comparable adjusted revenue, EBITDA and EPS growth and margin expansion over the quarter and year-to-date periods. I'll begin, as always, by reviewing some of the consolidated highlights for the period before moving on to operating segment results, strong cash flows and other balance sheet and recent capital structure updates as well as our improved overall full year 2026 outlook, inclusive of forecasted Solero additions.

For the second quarter, we reported total revenue of $499.3 million, decreasing 4.2% against prior year reported results while growing 2.6% on a comparable adjusted basis. We reported GAAP net income of $19.2 million or $0.41 per share, down from $22.4 million or $0.50 per share in the second quarter of 2025. This reduction was driven by the inclusion of $5.6 million of onetime transaction-related expenses within second quarter operating results and a slightly higher tax provision, net of overall lower restructuring and SG&A expenses and lower interest expense during the period.

Adjusted EBITDA was $108.8 million, increasing 5.3% and on a comparable adjusted basis versus the second quarter of last year. Adjusted EBITDA margins were 21.8%, improving 60 basis points on a comparable adjusted basis. Q2 adjusted diluted EPS came in at $0.87, improving from $0.82 on a comparable adjusted basis, driven primarily by our improved adjusted operating results and lower year-over-year interest expense.

Turning now to our operating segment details, beginning with the Deluxe Merchant Services business. The merchant business grew second quarter revenue by 6.1% year-over-year to $107.6 million, continuing its mid-single-digit growth trajectory consistent with our full year guidance expectations for the stand-alone DMS segment. This growth rate reflected overall stable base processing volume levels as well as the onboarding of new business wins discussed during prior quarters, net of attrition, consistent with our forecasted expectations. Segment adjusted EBITDA finished at $25.1 million, expanding by 15.7%, driven by revenue growth and overall channel mix dynamics in addition to the impacts from the December 2025 purchase of residual commission rights from a large ISO partner.

Margins finished the quarter at 23.3% and expanding by 190 basis points versus prior year Q2 levels. On a year-to-date basis, merchant margins have expanded by 280 basis points, in line with our guidance for the full year margin growth. We continue to expect the base DMS business to achieve full year mid-single-digit revenue growth, consistent with our prior outlook, along with a mid-20% adjusted EBITDA margin profile. As the Solero business is integrated to the Merchant segment results for the post-closing periods, this will provide significant upside to the overall balance of the year merchant revenue outlook as well as anticipated improvement of margins for the segment. We will provide further detail along these lines as integration efforts move forward over coming months.

Turning to B2B payments. For the second quarter, B2B segment revenues finished at $73.5 million, increasing 3.5% versus Q2 of 2025. Our installed lockbox volumes remains in line with our expectation as newer digital treasury management offerings continue to build momentum. We remain pleased with this blended level of B2B revenue growth, continuing our improved trajectory extending from the positive fourth quarter 2025 exit rate. Adjusted EBITDA for B2B came in at $18.3 million, reflecting an overall 24.9% margin. This represented continued strong expansion of adjusted EBITDA and growing by 17.3% from the prior year results, with overall realized margin rate in line with the top end of our full year guidance expectation for the segment.

EBITDA growth for the period was driven by continued operating efficiencies realized across both our physical lockbox footprint and overall optimization of the expense structure across the B2B business model. Within our B2B segment outlook, we continue to anticipate a full year low single-digit revenue growth rate as the business lapped sequentially improving revenues, particularly across the prior year back half periods. Overall, EBITDA margins are expected to remain within our full year low to mid-20% range.

Moving on to Data Solutions. The segment continued to drive very robust incremental year-over-year revenue growth supporting ongoing strong customer marketing campaign demand levels. Revenues finished at $82.3 million, driving overall growth of 21.4% versus Q2 of 2025. Second quarter adjusted EBITDA finished at $18.1 million, with a margin rate finishing at 22% for the period, consistent with our longer-term low to mid-20s expectation for this segment. Recall that prior year margins included material nonrecurring vendor rebates.

Our full year 2026 guidance ranges continue to reflect expected high single-digit overall data segment revenue growth. This outlook continues to reflect moderation of recent quarter growth trends over the back half of the year as we lap increasingly more difficult prior year results for the data segment.

Turning finally to our print businesses. Print segment second quarter revenue finished at $235.9 million, a decline of 4.3% year-over-year on a comparable adjusted basis. Legacy Check revenues declined 1.7% and on a comparable adjusted basis, while the balance of the segment declined by 10.1% to drive the overall blended results. We continue to see blended comparable adjusted decline rates moderate due in part to the shifting of overall print revenues more towards legacy check, reflective of the divestiture of Safeguard related promo revenues in particular.

Overall adjusted EBITDA for Print finished the period at $86 million. The 1.4% rate of comparable adjusted EBITDA decline across Print continued to align favorably to the blended rate of revenue declines as margin rates expanded to the mid-30s during the quarter on the improving overall mix, including favorable margin rate impacts from the Safeguard divestiture earlier in the year. Consistent with our prior quarter outlook, we continue to expect to see low to mid-single-digit comparable adjusted revenue declines across the Print segment with full year adjusted EBITDA margins remaining in the low to mid-30s.

Moving now to our balance sheet and cash flow. We ended the June 30 period with a net debt level of $1.32 billion down $75.2 million from $1.39 billion at year-end 2025, consistent with our ongoing commitment to debt reduction as a top capital allocation priority, as Barry noted. Our Q2 net debt to adjusted EBITDA ratio prior to impacts related to the Solero acquisition reflected 2.9x at the end of the period, improving versus our 3.5x ratio a year ago.

Free cash flow, defined as cash provided by operating activities less capital expenditures, finished at $85.9 million for the year-to-date period. This was an improvement of $33.8 million from the results reported through the first half of 2025. This continuing expansion of cash flows was reflective of our improved year-to-date operating results including lower restructuring spend, SG&A expense and cash taxes, along with largely stable working capital efficiency and CapEx investment, net of increased year-over-year cash incentive payments over the year-to-date period. Continuation of our robust operating cash generation remains a top focus area as we reset our deleveraging expectations against the updated capital structure reflective of the closing of the Solero acquisition.

As we shared during the transaction announcement in June, we expect to return to 3x net leverage over a 2-year horizon. Concurrent with the transaction closing effective July 31, we also completed an amendment and extension of our now $1.2 billion credit facility, consisting of an $800 million term loan A and a $400 million revolving credit facility, extending these balances, respectively, to a 2031 maturity as noted in our filings of late last week.

In addition, we entered into $600 million worth of floating to fixed interest rate swaps, helping insulate the incremental variable rate debt from ongoing volatility in interest rates. As a result of these swaps, we estimate to have approximately 75% of the debt stack aligned to fixed rates of interest. This structure enables improved confidence to our planned cash flow generation and debt reduction trajectory. These updates to our long-term capital structure position us well from both the liquidity and go-forward balance sheet position and will allow us to further assess our existing 2029 bond maturities opportunistically as warranted over coming periods.

Consistent with past quarters, our Board approved a regular quarterly dividend of $0.30 per share on all outstanding shares. The dividend will be payable on September 1, 2026, to all shareholders of record as a market closing on August 18, 2026. As Barry noted in his opening comments, we are raising our expected full year revenue and adjusted EBITDA guidance outlook this evening to incorporate expected August to December 2026 results for the Solero acquisition. We are also affirming or narrowing our prior base business estimates to reflect our year-to-date first half results our updated outlook across the operating segments.

Our updated full year ranges are as follows: revenue of $2.095 billion to $2.12 billion, including flat to positive 1% comparable adjusted growth versus 2025 for baseline Deluxe. Adjusted EBITDA of $455 million to $475 million which reflects between 5% and 8% comparable adjusted growth, adjusted EPS of $3.60 to $4, reflecting between 7% and 19% comparable adjusted growth. and free cash flow of approximately $200 million, reflecting 14% growth versus our 2025 results.

To reiterate, the increased revenue and adjusted EBITDA ranges reflect our combined balance of year outlook, while adjusted EPS and cash flow estimates reflect both interest expense from the updated cap structure and other transaction-related expenses expected over the initial integration periods. As a reminder, we expect the acquisition to be accretive to adjust EPS over the first full year horizon.

Finally, to assist with your balance of your modeling, our guidance has been updated to assume the following: interest expense of approximately $130 million and adjusted tax rate of 25%; depreciation and amortization of approximately $155 million to $160 million of which acquisition amortization is approximately $55 million to $60 million, an average outstanding share count of approximately 46.5 million shares and capital expenditures of approximately $100 million to $110 million. This guidance remains subject to, among other things, prevailing macroeconomic conditions, including interest rates, labor supply issues, inflation and the impact of any incremental portfolio additions or exits.

To summarize, we remain very pleased with our Q2 and year-to-date momentum, particularly our demonstrated continuing operating leverage, strong ongoing free cash flow generation and comparable adjusted expansion of our core earnings metrics through the first half of 2026. As we now welcome Solero, this strong execution focus and our capital allocation discipline provide a solid foundation for further acceleration of our combined growth and enhanced scale across payments and data. This combination will unlock synergy opportunities to further extend our earnings expansion, cash flow generation and balance sheet improvement priorities in support of our long-term value-creation algorithm.

We are excited to bring these assets together and look forward to sharing more details regarding integration progress and the combined outlook on our outdating calls and planned Investor Day later this year. Operator, we are now ready to take questions.

[Operator Instructions] And we will go to our first question.

By the way, this is a Kartik Mehta about that North Coast Research. Gary, if you look at the merchant business, good to see a 6% growth in the quarter. As you integrate Solero within there, what do you think is the largest revenue synergy opportunity for you?

Well, first of all, Kartik, thanks for the question. We're really excited about Solero because it not only gives us cost synergies which we've talked about extensively when we announced the transaction. And also over time, is going to give us revenue synergies. So immediately, as we said in our prepared remarks, our scale of a business expands tremendously which think gives us opportunities to compete for business that we weren't otherwise able to compete for either Solero or Deluxe independently, helps us move up to consider -- be considered for larger partnerships as well as larger customers, given that we will have more scale. That's number one.

Number two, they have done -- the Solero team has done a particularly good job, we think, in the ISV space, which we'll be able to leverage across our business, which, together, we've got a great ISV business. But together, we think we can accelerate that business opportunity as well as in specific market verticals. So we think the combination of the increased scale, the technology, by the way, which I didn't mention, they have some really great technology that we're going to bring to bear which allows partners to board merchants more quickly, manage them more effectively as well as great pipeline and go-to-market synergies, we are very optimistic that over time, we will see some revenue synergies as well.

And then, Chip, just understanding the new guidance, just surprised a little bit that you didn't increase the adjusted EPS or free cash flow, especially with Solero, contributing 5 months. Maybe you can just talk about your thought process for the guidance.

Sure. Yes, I'm going to take that as an overall question about guidance in general. So just to reiterate what we did do. So on both revenue and adjusted EBITDA, we bolted on revenue for Solero for the 5-month stub period as well as narrowing our existing ranges for the baseline deluxe. When you think about EPS and free cash flow, the reason I left it alone is really some of the math of what we laid out for you. So if you think about the 5-month stub period of earnings that are coming into the guide, we're also adding in the incremental 5-month interest costs from the new refinanced debt, along with other moving pieces that kind of come to light during the integration.

So there's going to be some integration-related costs and want to act cash flows. There's going to be some moving pieces around taxes. So really, if you really step back and you see the math, you'll see that the incremental EBITDA net of taxes, adjusted for the interest cost I built it in there, it kind of becomes a wash, right? And so given the time left in the year, the transaction having just closed last week, we think it was prudent to leave a bit of a wider range now to give us room to land the transaction, get the integration underway and really start to see how things unfold. But to be clear, at the midpoint of our guidance for EPS, you're talking about growth in EPS of 13% which is more than double the rate of growth of EBITDA. And obviously, all of those are faster than revenue. And so I think we feel really good about the profile of business we're putting in the guide here, what it means for shareholders and the progress we've made.

So really think of it as confidence around the existing numbers we had, the ability to manage some moving pieces as the year unfolds as we start the integration, digest the interest costs, continue to digest uncertainty in the interest rate environment and just being able to be very prudent about how we set this initial guidance and then coming back later in the year and firming things up with a little bit of time. And just as a reminder -- and sorry, just as a reminder, Kartik, the Solero transaction will be accretive to EPS, the first full year following close. So think of that as kind of net neutral to this year, but accretive full year kind of post closing kind of going into next year?

Perfect. What I was just going to ask you, so thank you for clarifying it. Appreciate it.

Thank you. We will go to our next question.

It's Charles Strauzer. Just a couple of quick questions on -- first on Claro. And if you look at the integration plan, if you will, what are kind of the priorities there for the combined companies?

Appreciate the question, Charlie. What we really like about the Solero asset is we think that the integration is very straight ahead. It's -- we call it right down the middle of the fairway. One of the pieces of technology that comes with the transaction is actually going to help us with that integration, which is this partner platform will simply be adding the Deluxe services into that partner platform -- so the new boarding of merchants will go on to Deluxe. And over time, we have the opportunity in the background to port the other parts of the portfolio towards our existing platform.

So there's cost synergies on the absolute operating side of the equation, payment processing, et cetera, that's an opportunity. We also have opportunity and other cost side on fees and other things where we pay, and we have 2 companies paying for the same fee, we get that to 1. And of course, on the overall organization. We have the opportunity to streamline the organization by pushing them together.

I will tell you though, Charlie, we're going to be very, very practical and thoughtful about that integration on the people side. to make sure that we are putting the best talent in each of the chairs that we have across the organization. Because one of the prime assets that we got from this transaction was a very talented Solero team. We've got a very talented Deluxe team. We're going to put those together, and we expect that will help the company not just deliver cost synergies, but as I mentioned earlier, help accelerate on revenue synergies as well and make sure we put the right folks in the right spots and leverage the incredible talent pool we have between the 2 organizations.

Great. And looking at data, it continues to outperform kind of growth estimates despite kind. Can you talk a little bit more about what types of programs are having success there?

So I'll start, and then Chip can jump in and give you any more color commentary. So we continue to see really strong success from our existing customers expanding their relationships with us or shifting where they're spending their marketing dollars towards the solutions that we provide. And the reason for that, Charlie, is that they're measurable. The outcomes are measurable. So we can provide and the customer can understand if they put a dollar in what they're getting specifically in return for that marketing investment.

I think you know, Charlie, that we have built what we believe is the largest data lake of consumer and small business marketing data in the industry are among the largest for sure. And then we supplemented that with what we believe are best-in-class AI tools that gets smarter with every campaign we run on behalf of our customers. So not only do we have the most robust data set we get smarter with every campaign we run. And then just as a reminder, we think the largest bank that's doing this on their own is doing a couple of hundred campaigns a year.

On behalf of our customers, we're doing thousands of campaigns. So we've got better data. Our models get better over time because they have GenAI part of the modeling tool. So we end up with expanding our moat and that means that we get more business from our existing customers, while at the same time, expanding to new market verticals.

Yes. I just want to repeat something Barry said in the prepared remarks. Mean this business has grown more than 15% for 7 straight quarters. And so specifically, when you look ahead to what the Q3 comp is going to be this quarter and the Q4 comp next quarter, those are growth rates of 46% and 31%, respectively. So listen, we are not any less bullish on this business than we've ever been. It's just knowing the strategy of the business, how they're executing the strategy to expand into new verticals, get new logos and get greater share of wallet from existing customers. At some point, we have to be very prudent and assume that customers can't keep spending existing customers can't keep spending at the same rate that they have been. And we think these tough comps are just a part where we have to normalize a little bit. But we're no less bullish on this business than we've ever been.

It has grown at a CAGR faster than we ever anticipated at our Investor Day a few years ago. And this is definitely a business that we're very proud of, and we see a lot of great things ahead as it just continues to grow. -- but we just want to continue to caution that back half of the year because of what's ahead of us, but really proud of how that team is executing, and it's going to be a great full year for that team.

[Operator Instructions] And we will go to our next question.

So we've covered quite a bit already, but I wanted to talk a little bit about the margins that you saw across the segments and the multiple improvements in most of the segments. So I was sort of curious One of the things that sort of jumped out was the pickup on print. Maybe you could talk a little bit about how much of that was revenue mix shift and the divestiture and how we should think about I think you mentioned mid-30s or so, but it just seemed to be sort of a notable tick up there on the print side. So maybe you can talk a little bit about how much of that is sustainable for the remainder of the year and going forward. .

Sure, Marc. Let me just kind of get the overview, and then Chip can go as deep as you want. First of all, I think the most important thing to know is how well the business is performing overall. It is declining at a slower rate than we have anticipated in the past, and we've been able to expand the margins in that business because of the smart investments we've made in the operating platform there over time. You know that we invested to improve the product by having print on demand, which also lowers the operating cost and variabilizes it with volume. And we are getting rewarded for that today in our operation.

But the driver, and you were on the topic there, Marc, which is we announced last quarter a very strategic exit and divestiture of part of the promo business. which was the Safeguard channel of distribution. Basically, a group of resellers almost like -- not almost, they were independent sales groups. -- that sold our products. They were lower margin and they were declining revenue. So when we have less drag because that part of the business is smaller, and it's -- it improves both our top line performance and improves our margin opportunity. So not having that in our mix has significantly helped us expand margin, and we think that continues to benefit the portfolio over time.

So it's those 2 things. First of all, the check business is performing really well, and we were successful in divesting a piece of the promo business that was not strategic for us and not helpful on our margins.

Yes. And just to reiterate -- I'm sorry, Go ahead, Mr. No, you can fight back front. Yes. I was just going to reiterate, I mean, we've been very consistent in the stated strategy in this space for a while, right? We're going to continue to slow the melt of check, continue to maintain margins, make smart investments. Barry made all those points. I think it's very clear the progress we're making there. This is a trend in check that is not 1, 2, 3. This is multiple years' worth of progress that we're really laying out. But we've also been very clear that when it comes to the lower margin aspects, the promo and apparel side that's declining way outside our long-term guide and at low margins.

We weren't going to just go chase revenue for the sake of dollars. We weren't going to take bad deals we weren't going to take low margin. And so we've been very focused on the higher-margin in-source printed offerings and improving the margin profile. So I don't have the exact bps impact to the print-specific segment at my fingertips. But I can tell you roughly for the overall enterprise, getting out of the Safeguard business helped our mix by about 80 bps to rate for the full Deluxe Enterprise. And so that was a really meaningful move to get very focused along with the stated strategy, help inflect the mix towards the more higher-margin pieces. And obviously, we're really focused on finishing that transition and really setting up that business for smooth execution and just continuing to run the strategy the way we have been.

Excellent. That's very helpful. And then my other question is sort of kind of generic, I suppose, but as we approach through the year and your commentary about having the December investor event, I was sort of thinking back to the prior 1 is maybe you can just spend a little bit of time without scaling future thunder, but maybe you can spend a little bit of time as to maybe the thought process of having an event later in the year and sort of maybe sort of what maybe some of the big picture things that you see getting across for investors who either have been with you through the way or maybe new to the story there?

So I appreciate the question. And I think, first of all, we told investors we had a 3-year plan, and we have delivered on the expectations for that 3-year plan. And in our prepared comments, we noted that we delivered those early. So most of those things that we've promised to deliver through the 26th year, we've actually already delivered most of them already in the first quarter, even some last year. So it's important that we think that we share with investors the progress we've made against the goals we stated 3 years ago.

Second, it's important to reiterate our strategy because the strategy is unchanged with the Solero acquisition. And those 3 strategic planks again are shifting the revenue mix towards payments and data to accelerate our organic growth; second, driving operating leverage and efficiency across the enterprise and third, increasing adjusted EBITDA and cash flow so we can lower our overall debt and leverage ratio.

Those are unchanged, and we're going to want to affirm those for investors, talk about how we've made progress on all 3 of those so far and then talk about how we will continue to improve the company on those same strategy. And of course, we want to introduce and spend more time describing the Solero acquisition and how that is going to improve not only our merchant business, but the company's performance overall.

I think that's plenty to cover and it's an important time to update investors on the progress from 3 years ago, affirm our strategy and talk about the strategic value that's being created by Solero and give all of the investors that are following our story a thorough update about what the progress that we've made, which we're very proud of.

Thank you. And this concludes today's question-and-answer session. I would now like to turn the call back to Brian Anderson for closing remarks.

Thanks, Rachel. Before we conclude, I'd like to share that management will be participating at the North Coast Research Small Cap Conference on September 9 and at the Barrington Research Virtual Investment Conference on September 22 during the quarter. Thank you again for joining us today, and we look forward to speaking with you all again in late October as we share our third quarter results.

This does conclude today's call. Thank you for your participation. You may now disconnect.

Ladies and gentlemen, thank you for standing by, and welcome to today's Deluxe Corporation conference call. [Operator Instructions] Today's call is being recorded. At this time, I would like to turn the conference over to your host, Vice President of Strategy and Investor Relations, Brian Anderson. Please go ahead.

Thank you, operator, and welcome to the Deluxe acquisition overview call. Joining me on today's call are 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, I'd like to note that the press release and presentation materials relating to today's announcement are also available via the Deluxe Investor Relations website. I'll remind listeners that today's call will include forward-looking statements about management's expectations and estimates, including, but not limited to, key transaction rationale, expected financial benefits, combined metrics, future financial and operating objectives and expectations regarding estimated post-closing results. All such forward-looking statements remain subject to the risk factors set forth in the press release we furnished today, our Form 10-K for the year ended December 31, 2025, and our other company SEC filings, which include additional information about factors that may cause actual results to differ materially from any such forward-looking statements.

Forward-looking statements speak only as of today, and the company does not assume any obligation or intent to update them, except as required by law. On the call today, we will discuss non-GAAP financial measures, including adjusted EBITDA and EBITDA margin, adjusted EPS, net leverage and free cash flow. In our press release, today's presentation and our filings with the SEC, you will find additional disclosures regarding non-GAAP measures, including reconciliation of these measures to the most comparable measures under U.S. GAAP. These materials are further available via the company's IR website.

And with that, I'll hand it over to Barry.

Thanks, Brian, and thank you all for joining us today as we announce our entry into an agreement to acquire Celero Commerce. This is a highly compelling transaction that we believe accelerates Deluxe's ongoing strategic transformation. Celero is a financial technology company focused on optimized payment solutions for small to midsized businesses and strategic partners. Once completed, we expect this transaction to significantly enhance the scale, scope and capabilities of our Deluxe Merchant Services business. The Celero acquisition fully aligns with our existing strategy and is highly compelling.

As you can see here on Slide 3, here's why. First, with Celero, our business mix will shift further towards payments and data, accelerating our transformation. Second, the combination increases Merchant Services scale and scope. Third, we expect the deal to be accretive to adjusted EPS in the first full year following closing, while also improving our overall top line growth trajectory and adjusted EBITDA margin profile with further improvement opportunity from achievable cost synergies. Fourth, it requires no change to our responsible capital allocation priorities, and we expect to return to 3x leverage over a 2-year post-closing horizon. Fifth, no changes are needed to our dividend policy. And finally, Celero furthers the modernization of our core payments technology.

Before Chip discusses some additional financial details, let me reinforce that today's announcement is a clear progression, accelerating our transformation that has been underway for several years. Since our Investor Day in late 2023, we've communicated a clear strategy consisting of leveraging the brand, trust, relationships and cash flow generated by our legacy print business to build a leading digital payments and data company. Our priorities have remained consistent, shifting mix towards payments and data to reduce reliance on the mature print business, driving operating efficiency and capital allocation discipline. We've executed against our strategy by investing in payments and data growth, driving consistent operating leverage across the business, expanding our free cash flow and strengthening the balance sheet.

As you can see on the current slide, with Celero, our mix shifts decisively towards payments and data. As I've shared and as you can see here on Slide 5, over the last several years, Deluxe has fundamentally repositioned itself. We've simplified our portfolio, modernized core technology infrastructure, integrated the First American business, expanded our margins, more than doubled our free cash flow, built scalable technology platforms and shifted our mix towards payments and data growth markets, all while reducing our debt, positioning our balance sheet to enable an accretive addition such as Celero to our portfolio. We've delivered against both our Investor Day financial commitments and our mix shift goal ahead of schedule.

I'll let Chip now jump in and talk more about the financial aspects of the agreement.

Thanks, Barry, and good morning, everyone. As we shared in our release and as you can see here on Slide 6, Deluxe will acquire Celero for $625 million plus the payment of certain seller transaction-related expenses and other adjustments. The price represents approximately 7.4x Celero's trailing 12-month adjusted EBITDA, inclusive of both expected run rate cost synergies and impacts from an anticipated tax step-up asset. At closing, we will initially fund the transaction with $375 million of incremental term loan proceeds, along with available existing capacity within our revolving credit facility. We have identified initial cost synergies in excess of $15 million to be realized fully across a 24-month period following closing, along with additional revenue synergy upside not included in our base case.

Our combined net leverage is anticipated to be approximately 3.9x at close, including expected run rate cost synergies. As you have seen from us in the past, we will continue to prioritize debt repayment as a primary capital allocation priority. With a clear actionable path towards deleveraging, we expect to return to 3x within a 2-year horizon following closing. And as Barry noted, there are also no changes planned to our dividend policy. The transaction is expected to close in the third quarter of 2026, subject to regulatory approvals in the U.S. and other customary closing conditions.

Barry will now cover more details about the quality and strategic value of the Celero assets.

Thanks, Chip. By adding Celero, we unlock the ability to further accelerate our strategy. When we acquired First American in 2021, known now as Deluxe Merchant Services, we added capabilities to become a processor, owning and operating a platform that actually moves the money and settles between the parties in a transaction. While others must rent these core back-end processing services from a third party, we process by leveraging on our own captive platform. Celero will further extend these processing capabilities as additional volumes bolt into our existing merchant platform, delivering accretive synergies.

Further, combining Celero with Deluxe creates extended operating synergies in back-office and administration, technology, operations and customer support areas as well. Our combined sales capacity will expand our scope, enabling us to reach more customers and channels faster, creating growth opportunities in the future. Our demonstrated execution capabilities will help us deliver the identified synergies, driving value creation for shareholders. More simply stated, by adding Celero, we not only materially accelerate our mix shift towards payments and data, we leverage key strategic processing assets, enabling significant scale advantages.

Having actively scanned the M&A landscape through recent periods, we've considered many options. Ultimately, we view Celero as the right asset on the right terms and at the right time. We see 4 compelling strategic reasons the combination creates value and achieves more than what either company could achieve alone. Specifically, this combination is expected to: one, expand our scale across merchant services, driving additional operating leverage and margin accretion, including expected synergies; two, further accelerate our mix shift towards payments and data; three, enhance pipeline opportunities and penetration across attractive merchant verticals; and four, be accretive to adjusted EPS in the first full year post close, including expected synergy benefits while expanding both our revenue and adjusted EBITDA margin growth trajectories.

Celero also offers 4 key differentiators to further strengthen our market position. Specifically, the acquisition will bring, first, a balanced and diversified go-to-market approach, supporting over 60,000 merchants while leveraging strong channel partner relationships. Second, expanded presence across attractive industry verticals with compelling TAMs, robust customer retention rates and a diversified customer base limiting any concentration risk. Third, a proprietary fit-for-purpose partner platform, which we believe amplifies the integration process while improving onboarding, reporting and other operational functions for customers and partners. Fourth, solid financial performance, accompanying significant free cash flow potential and a proven track record of sustaining growth.

Here on Slide 9, you can see Celero is a strategically attractive business. During 2025, the business generated over $200 million of revenue, growing roughly 6% versus the prior year, delivered approximately 28% adjusted EBITDA margins and the business converts about 90% of adjusted EBITDA to unlevered free cash flow. Celero's distribution resources across financial institutions, ISVs, ISOs and direct sales channels extend across attractive verticals within payments and are each highly complementary to the Deluxe Merchant Services go-to-market model. Celero has also built strong partner momentum with an experienced sales team and demonstrated go-to-market expertise, adding approximately 60 new partners in 2025 from an active base of 375 partners.

Celero adds significant scale to our merchant platform. Upon closing, our combined merchant services offerings are expected to process just over $70 billion of annual gross transaction volume, making Deluxe a top 10 nonbank merchant acquirer in the United States based on Nilson. We expect that our expanded scale will also unify strong service models across the combined entities. Identified synergies will deliver margin improvement and unlock incremental capacity to invest in core product and technology solutions. As of the first quarter of this year, payments and data already comprised the majority of Deluxe enterprise revenue. We believe that our acquisition of Celero accelerates this transformation further.

As payments and data revenues continue to expand, our earning streams also become increasingly weighted towards attractive digital payments and data markets, further improving our profit balance with our highly profitable but mature print business. This evolution, which has been at the core of our strategic transformation, reduces the company's reliance on print and creates a markedly stronger portfolio and a more attractive long-term value creation opportunity. Our acquisition of Celero will further accelerate the next wave of key milestones toward revenue and profit mix aligned to payments and data offerings.

We also expect the Celero's offerings will become stronger when integrated as part of Deluxe, as you can see on the next slide. Deluxe's existing breadth will expand Celero's potential distribution reach through key partners, including financial institution and emerging ISV relationships as well as our national sales and service organizational footprint. Deluxe provides a scaled operating infrastructure and back-end processing ecosystem, furthering product investment capacity and simplifying integration capabilities for our customers. We also have significant integration experience and view this combination as attractive from a technology integration standpoint.

Addition of processing volumes onto our existing back-end infrastructure, gateways and platform underscores the value of the scale that we have built over the last few years. In turn, we expect our merchant services partners will plug into Celero onboarding and operational platform seamlessly for the benefit of customers. Shareholders will further benefit from expected realization of cost efficiencies, vendor and system consolidation plans and other identified synergies from the combination of 2 organizations. Together, we'll have greater scale, scope, broader distribution and expanded ongoing growth opportunities, more than either company could unlock independently. Chip, over to you.

Thank you, Barry. Pending closing of the transaction expected during the third quarter, we are maintaining prior guidance ranges for our base business for the full year 2026 period. But you can clearly see that we expect the combination with Celero will help improve our overall combined rate of revenue growth and further expand EBITDA margins.

This is in addition to the expectation for year 1 adjusted EPS accretion, inclusive of realized expense synergies. This acquisition furthers our growth potential even as we maintain our overall capital allocation discipline and framework, as you can see here on Slide 14. We have executed consistently over the last few years against these priorities. We remain focused on overall debt reduction, high-return investments and strong shareholder returns, including the returning of capital to shareholders directly via our dividend.

Similarly, as shown on Slide 15, our long-term value creation construct remains solidly intact. We anticipate that our combination with Celero will help accelerate the reaching of our long-term plan targets while maintaining the same strategic discipline and shareholder return focus. This transaction will improve both the size and quality of Deluxe by increasing our presence across growth markets and strengthening our long-term cash generation capabilities.

With that, I'll hand it back to Barry to wrap up and then open the call for Q&A.

Thanks, Chip. Let me close by summarizing the key takeaways about this very strategic acquisition. First, today's announcement is fully aligned with our strategy and is expected to further accelerate our mix shift towards payments and data. This combination is expected to drive incremental value through greater scale, scope, expanded distribution and broadened vertical and partner reach. We believe that this deal will unlock meaningful synergy opportunities while delivering attractive financial accretion. And finally, we'll accomplish all that while preserving our disciplined capital allocation framework, including a clear actionable path towards deleveraging.

We delivered on our 2023 Investor Day commitments, and we are confident we can execute the same playbook here. We believe this transaction will create a stronger Deluxe with greater access to attractive growth markets and more opportunities to drive long-term shareholder value. We're very pleased about today's announcement and look forward to discussing it with you all over the coming days and weeks.

With that, operator, we're now ready to take questions.

[Operator Instructions] And we'll now go to your first question. It will come from the line of Kartik Mehta with Northcoast Research.

Barry, I'm sure the Board and you and Chip thought a lot about how this acquisition would increase leverage, how it's going to increase potential revenue growth and obviously increase the data and merchant acquiring business. And I'm wondering, you take all that into consideration, and I believe you answered a lot of questions through the presentation in this call. But how maybe the Board and you and Chip thought through that this will increase leverage, especially when you've done such a good job of deleveraging and why now was the right time to kind of pull the trigger on this?

Sure. Let me start and then Chip can jump in, too. So first of all, Kartik, I think the most important factor here is that this acquisition accelerates our strategy to shift and become a -- have more of our revenue and profit coming from our payments and data businesses. That is a very clear strategy and the pathway we are on. And of course, we considered multiple alternatives, and at the end of the day, believe that this will accelerate and pull forward our transformation journey significantly in a very responsible way with a pathway, a very clear pathway to get us back to 3x levered in within 2 years of the closing of the transaction, while at the same time, delivering full year accretion in EPS, revenue growth, EBITDA growth, et cetera.

And so it became a pretty clear pathway to accelerate the opportunity of the transformation of the company. And yes, it increases our leverage ratio, but we've also proven very clearly our ability to be disciplined and execute. And as we showed with the program we announced at the December '23 Investor Day, having delivered those results, in many cases, a full year early. Chip, what do you want to build on that?

Yes, Kartik, I'd say, hopefully, it's clear from the comments we made how much we like this asset. And when you really sit down and you assess the opportunity to acquire Celero now and look at in the financial model where we would be over a 1-year horizon with solid cash flow generation still occurring, our ability to accelerate the transformation, as Barry talked about, continue the debt paydown journey, we really looked at it as a bit of timing, right? Where did we want to be a year from now?

And what would that look like if we stayed the course and delevered a bit more and then looked for an asset like Celero then versus what would it look like having Celero as an asset now and fast-forwarding a year from now and looking at the position of strength we'd be in. And so to Barry's point, we've talked long and hard about it. We like the profile of this business. We like the combined profile of the 2 businesses together, and we're very confident about the achievable synergies, the path to delever, and it gave us a lot of confidence behind this being the right asset for right now and the timing to accelerate the strategy.

That's helpful. Chip, as you look at the business, I think you said the business grew 6%. What do you think is the right revenue growth for this business that we should think about over the next couple of years?

Yes. I think we have to be cautious and stop about providing any specific guidance. But another thing we like about Celero specifically that again was hopefully clear is their size, right? They bring meaningful size and scale to the portfolio, having delivered north of $200 million of revenue last year. And if you look at what they grew last year, I think you'll see it fits nicely to how we describe our overall Merchant Services growth rate, a solid mid-single-digit grower or better. It aligns up well, and we would be optimistic that the combined assets together, now much larger, can continue to grow at those levels.

And let's make sure it's very clear what we said a few times on the previous comments that this model does not assume any upside from revenue synergies. And we would expect that there are opportunities to drive further acceleration in growth once that's combined. So I want to stop short of providing guidance, but hopefully, you can hear the optimism and the excitement in our voice that it's a scaled asset. It drives meaningful value to us, and we think it will grow nicely in line with our existing expectations for our merchant business.

[Operator Instructions] We will now move to your next question coming from the line of Charlie Strauzer with CJS Securities.

You talked in the kind of the headlines about bringing you to new attractive merchant processing verticals. What are some of those verticals? And what -- when you looked at this acquisition, was it something that you looked at with the verticals, let's say versus -- buying your way into those verticals versus organic, what was kind of the thought process there?

Sure. So let's take that in 2 parts. The first part is about the verticals. So the verticals where Celero already competes are very complementary to us. We both have financial institutions, ISVs, ISOs and direct sales organizations. They have done a particularly good job of penetrating the ISV space, and they have a good foothold in financial services. So together, we not only get more reach, we have deeper penetration in market verticals where there's significant growth opportunities that play to the strength of the Deluxe brand in particular.

I think the second part of your question is what about growing those businesses organically versus acquisition? And we saw this very clearly as an opportunity to immediately change the profile of our payments business and doing it responsibly. And rather than doing that over a number of year period of time, we're doing it quickly, and we will be able to return to 3x leverage within 2 years from the close which puts the company in a much stronger position than it would be if we just pursued an organic strategy alone over that same 2-year period of time. So it is a clear accelerant to the strategy gets the company to a place that is much stronger immediately and the balance sheet is back to our long-term goal of 3x or less within 2 years, and that is a much stronger outcome than simply relying on an organic outcome over that same 2-year period.

Got it. That makes sense. And you talked in the press release about enhanced go-to-market motion, sales motion, I guess, is what you talk about here. Just maybe a little more color on that as well.

Sure. So both Celero and Deluxe have strong sales organizations. Celero has built a really rich and deep pipeline of opportunities that we think will be able to help accelerate their close rate because the strength of our company, our brand, our reputation, the relationships we have in the marketplace. So while they're very successful on their own, we think we can help them accelerate close rate and their overall success given the position of strength we have in the marketplace.

The second thing I do want to highlight, Charlie, we talked about in the prepared remarks, is they've built a really strong, what we call a partner platform, that makes it -- that's a differentiator for customers, partners that are reselling the solution to their customers, whether that's an ISO, whether it's a financial institution, whether it's an ISV. And this partner platform makes it very, very easy for a new merchant to be boarded. So it is -- think about it as an online tool with a bunch of switches that are available, and you can simply choose what the terminal type the customer should have, what entitlements, meaning what payments they should process, et cetera, all from a single dashboard or a tool set.

And the reason that's important is we're just going to simply bolt in Deluxe payments, the Deluxe payment processing to that toolkit, which will be able to expand for the Deluxe merchants, but also at the same time, add Deluxe merchant processing for Celero merchants, which we think is a powerful combination. So we think we can accelerate their rate of close and their success with our brand reputation relationships, and we can use their technology to further accelerate onboarding, which is a great one-two punch.

Your next question will come from the line of Marc Riddick with Sidoti & Company.

So you provided a great amount of detail, which certainly appreciate and certainly appreciate how big a day this is for the company. I was wondering if you could talk a little bit, in your prepared remarks, you made a commentary around looking at various opportunities as you were going through this process. And I was wondering if you could talk a little bit about sort of how this actually came to -- the opportunity came to be and sort of how you were able to sort of consummate the activities because I kind of was curious as to -- it seems as though it's attractive, but I was sort of wondering sort of what were some of the drivers that were able to sort of get this across the finish line.

Sure. So in our prepared remarks, we really talked about the quality of this asset. And the quality of this asset just is that strong customer relationships, no revenue concentration, underlying core technology, history of continued and successive organic growth, incredible cash flow generation and flow-through and a quality management team that is well known and respected in the industry and critically important, they've built a culture there that is very consistent with the culture we have built at Deluxe that has helped deliver success for this company for over 100 years.

And those cultures are built on the notion of doing the right thing, ultra-high integrity, customer first, always delivering on promises and put all those things together, and it becomes very clear that not only is this a financially attractive asset with a great growth profile, but it's also consistent with our values and culture, which will very much drive the success of the combined enterprise. So the culture fits, the product fits, the financials fit, and it's a -- 1 plus 1 is much more than 2.

Okay. Great. And then maybe you could talk a little bit about -- in the prepared remarks and the presentation, there was certainly details as far as the success of the sales team and some of the new relationships that were added in 2025, I believe it was approximately 60 or so. Maybe you can sort of talk about how that -- do you see there sort of being an overlap or similarity as far as go-to-market strategies and sort of how you sort of see their sales team setup that they have versus what Deluxe currently has and sort of how that might mesh?

Sure. So Marc, the first thing I want to make sure that it came through in the remarks is that our business case is not predicated on big sales synergies. This is -- our base case is built on effective operating and efficiency of the combined asset. I think that's a very important point. So the opportunity to sell more is addition to our base case. But specifically on your point, I think how the sales teams will come together and complement each other is that we have some markets where we may very occasionally see each other in the marketplace. But largely, we have focused on different segments within the different market verticals where we both compete.

But we also -- so we will be able to combine those and have a bigger pipeline with a broader scope of the target market. Each of us were able to be successful. But putting these things together, we have broader reach and broader scope and deeper market vertical penetration and bigger pipelines as a result. And if we just are able to help them increase their rate of sale and their technology helps us increase our rate of sale, it's pretty clear that there can be some significant sales revenue growth synergies here as well, although that is not in the base case of the transaction.

And it appears there are no additional questions at this time. I'll turn it back to you for any closing remarks.

Yes. Thank you, everyone, for joining us today, and we look forward to further updates as we approach the expected third quarter closing of the transaction.

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

Ladies and gentlemen, thank you for standing by, and welcome to the Deluxe First Quarter 2026 Earnings Conference Call. [Operator Instructions] And today's call is being recorded.

At this time, I'd like to turn the conference over to your host, Vice President of Strategy and Investor Relations, Brian Anderson. Please go ahead.

Thank you, operator, and welcome to the Deluxe First Quarter 2026 Earnings Call. Joining me on today's call are 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 the current slide, I'd like to remind everyone that comments made today regarding management's intentions, projections, financial estimates and 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 actual results to differ from projections is set forth in the press release we furnished today in our Form 10-K for the year ended December 31, 2025, 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 and EBITDA margin, adjusted and comparable adjusted EPS and free cash flow. All comparable adjusted metrics reflect the removal of impacts from business exits, including prior year adjustments to reflect removal of the Safeguard business effective with the closing of that divestiture as of March 1, 2026. In our press release, today's presentation and our filings with the SEC, you will find additional disclosures regarding non-GAAP measures, including reconciliation of these measures to the most comparable measures under U.S. GAAP. Within the materials, we are also providing reconciliations of GAAP EPS to adjusted EPS, which may assist with your modeling.

And with that, I'll hand it over to Barry.

Thanks, Brian, and good morning, everyone. I'm pleased to report our strong start to 2026. We continued our positive momentum, particularly in driving sustainable growth in our payments and data businesses. During the first quarter, enterprise results once again reflected organic growth across all key metrics, including revenue, adjusted EBITDA, EPS and free cash flow. We're now in our fourth consecutive year, driving consistent growth across our core earnings metrics. We're also proud to report that we reached 2 significant strategic milestones during the quarter.

First, we achieved our long-term 3x leverage ratio target, three quarters earlier than promised at our December 2023 Investor Day. And second, combined, our payments and data businesses now account for more than 50% of total revenue, a major inflection point in our transformation into a payments and data company. Our Q1 results highlight our team's consistent, sustained execution ability, and signal clarity in the company's future as a payments and data company.

Financial highlights for the quarter included: revenue growth across combined Payments and Data segments of 12.5%, nearly 20% growth of comparable adjusted EBITDA versus the prior year as our margins expanded by more than 300 basis points. Over 45% expansion of our comparable adjusted EPS and continued double-digit growth in our free cash flow, enabling further optimization of our balance sheet. We remain well positioned to deliver solid full year performance given our strong start.

You'll recall earlier in the year, we announced the pending divestiture of Safeguard, a component of the print business. The divestiture closed on the 1st of March. As we mentioned, we would do post closing, we've updated our full year guidance ranges for the year to specifically reflect the divestiture of Safeguard.

Importantly, our free cash flow estimate remains unchanged, while the remainder of the guided metrics reflect the same, if not improved, comparable adjusted growth rates. Chip will share additional details on the divestiture and our updated guidance. As a reminder, our core business strategy is to leverage the brand, trust, relationships and cash flow generated by our legacy paper-based payments business, checks, to invest and grow into a digital payments and data company.

We're focused on 3 ongoing strategic planks: one, shifting revenue mix towards payments and data to deliver ongoing profitable organic growth; two, driving operating leverage and efficiency across the enterprise; and three, increasing adjusted EBITDA and cash flow to lower overall debt and improve our net leverage ratio. We continue to consistently deliver on all 3 priorities simultaneously. On our first priority, mix shift, during the first quarter, we reached an important milestone as combined Payments and Data segments became our largest set of businesses, surpassing the Print segment to reach 51% of total revenue. This marks the first time in the company's nearly 112-year history that the print businesses represented less than 50% of overall revenues.

As I noted in my opening comments, this improving mix was amplified by continued double-digit growth across combined Payments and Data segment revenues. This performance was led by strong top line growth in the Data Solutions and Merchant Services segments and ongoing improvement in B2B. This inflection of our revenue mix is also expected to continue over the balance of the year as quarterly print results will reflect the Safeguard divestiture. Beyond reaching this improved revenue mix, we also saw strong execution on our second strategic plank, delivering efficiencies to drive consistent operating leverage. We continue to reduce overall SG&A expenses, improved by just over 7% versus the prior year, including efficiencies across our corporate operations.

Overall revenue growth, alongside these continued cost improvements, drove our 13th consecutive quarter of year-over-year comparable adjusted EBITDA expansion. These efforts enabled us to deliver robust operating leverage across the business as our margins expanded and earnings growth outpaced the rate of revenue. Finally, we also achieved a very notable milestone on our third strategic focus area during the first quarter. We deployed our expanded earnings and cash flows to further reduce our overall debt level, reaching our 3x net leverage ratio goal in just over 2 years, ahead of the pace we signaled at our 2023 Investor Day.

As Chip will detail further during his comments, our 12% year-over-year growth of free cash flow enabled us to reach this important goal. Total debt was reduced by more than $30 million from year-end levels, giving us more flexibility to consider future growth investment opportunities. We are consistently executing on our capital allocation priorities with discipline, and we will maintain this discipline going forward.

Now on to business unit performance. As noted in my prior comments, Payments and Data segments expanded year-over-year by a blended 12.5% rate, led by another very strong growth quarter from the data segment.

Data segment revenue continued its robust year-over-year expansion trend, growing just over 26% on sustaining strong demand from financial institutions and emerging adjacent market client campaign activity. The data business continues to leverage what we believe is one of the largest super aggregated consumer and small business marketing data lakes in the industry. We overlay this data with evolving Gen AI-enabled tools to deliver campaigns targeted toward high lifetime value customers, driving outstanding ROI for our clients' marketing spend.

Moving now to our Payments segment. We saw mid-single-digit or greater revenue growth across both our Merchant Services and B2B Payments segments during the quarter as well.

Within merchants, continued wins across our pipeline, strong ongoing merchant retention and stable consumer spending trends across our diversified verticals contributed to revenue growth of just over 7% for the period. In addition to solid baseline merchant business trends, we also continue to add new business partnerships, which will contribute to our go-forward growth trajectory. For example, we were pleased to sign a new strategic merchant partnership with Washington Trust Bank, a full-service commercial bank with more than $10 billion in assets serving the Pacific Northwest.

The bank now offers the full suite of Deluxe merchant services to its clients. We also made important progress in Q1, growing our integrated software vendor or ISV relationships just as we forecasted on earlier calls. This segment of the payments market features both high growth and strong customer retention. Last week, we announced our new merchant partnership with a major ISV, MRI Software, a leading provider of real estate and rent payment solutions serving more than 45,000 clients. Partnering with an ISV of this scale is evidence that our internal investment in merchant technology and product enhancements is working and positioning us for further growth.

The MRI partnership also highlights the ongoing effectiveness of our One Deluxe cross-selling model. MRI was an existing B2B payments customer already utilizing our lockbox services.

Shifting to the B2B business. We saw growth sequentially improve across the segment as well, with revenues expanding by just under 5% versus Q1 of 2025. Our efficiency focus in B2B drove more than 400 basis points of margin improvement versus the prior year quarter. Finally, across print, we also saw continued comparable adjusted EBITDA margin expansion, with year-over-year margins improving 70 basis points from the prior year to finish the quarter at just under 33%. This strong margin trajectory remains consistent with our focus on operational efficiencies across our print manufacturing footprint as well as our continuing prioritization of stronger margin in-sourced offerings. To summarize, each of these highlights contributed to robust growth across our key financial metrics during the quarter, and set the stage for continued execution focus across the balance of the year.

During the quarter, number one, we continue to leverage growth of our free cash flow to pay down debt, reaching our long-term 3x net leverage target. Number two, we shifted revenue mix to our combined Payments and Data segment, which now represent a majority of total revenue; and number three, we expanded operating income, comparable adjusted EBITDA and EPS at rates above the growth of our revenues, driving margin expansion and strong operating leverage. These results speak to our sustained, disciplined execution and focus on our value creation algorithm introduced at our Investor Day in 2023.

Before transitioning to the chip, I'd like to take a moment to acknowledge a couple of recent developments across the Deluxe corporate governance structure as well. As we shared last month, Paul Garcia was elected as our new independent Board chair, succeeding Cheryl Mayberry McKissack, who announced her retirement earlier this year. Paul's deep payments operating experience as the former Chairman and CEO of Global Payments, along with his extensive Board service across a diversified set of industries, will continue to strengthen our position as a trusted payments and data company. Cheryl's leadership and contributions to the Board over her tenure, including the past 7 years as Chair, have been critical to our transformation into a payments and data company.

I'm grateful for her steady Board leadership both as Chair in times of extraordinary change and over her 25 years of Board service. Job well done. Finally, as always, I want to acknowledge and thank all my fellow Deluxers, have made this performance and remarkable transformation possible by delivering for our investors and customers each and every day. Thank you.

With that, I'll turn it over to you, Chip.

Thank you, Barry, and good morning, everyone. As Barry mentioned, we are very pleased with our first quarter results, particularly our continuing strong comparable adjusted EBITDA and EPS expansion, sustained growth of cash flow and the fact that we reached our 3x leverage ratio target during the period. As noted during the introductory comments, our 2026 comparable adjusted reporting and related commentary will move all prior year impacts from the sale of the Safeguard business to exited businesses effective with the March 1 closing. Like prior portfolio exits, this adjustment will allow for clean operating segment comparisons across the respective periods. I will detail our updated full year 2026 guidance, inclusive of these adjustments later during my comments.

Now I'll begin, as always, by reviewing some of the consolidated highlights for the quarter before moving on to operating segment results, our balance sheet and cash flow progress and updates to our full year outlook. For the quarter, we reported total revenue of $538.1 million, increasing 0.3% against prior year reported results, while growing 2.7% on a comparable adjusted basis.

We reported GAAP net income of $35.8 million or $0.77 per share, improving from $14 million or $0.31 per share in first quarter of 2025. This increase was driven by improved operating results, including lower restructuring and overall SG&A expense, lower interest expense and a gain from our business exit during the period, net of a slightly higher tax provision. Adjusted EBITDA was $117.9 million, increasing 19.7% on a comparable adjusted basis versus the first quarter of last year. Adjusted EBITDA margins were 21.9%, improving 310 basis points on a comparable adjusted basis. Q1 adjusted diluted EPS came in at $1.05, improving from $0.72 on a comparable adjusted basis, driven primarily by our improved operating income and lower year-over-year interest expense.

Turning now to our operating segment details, beginning with the Merchant Services business. The merchant business grew first quarter revenue by 7.3% year-over-year to $104.9 million, continuing the sequential growth improvement trend we saw in 2025. This growth rate reflected ongoing stable base processing volumes and aligned with our expectation for mid-single-digit full year revenue expansion. Segment adjusted EBITDA finished at $26.8 million, expanding by 25.2% on the improving revenue growth, channel mix and our year-end 2025 purchase of residual commission rights from a large ISO partner. Margins finished at 25.5%, expanding by 360 basis points versus prior year levels. You'll recall that last quarter, we indicated this residual buyout was expected to expand year-to-year merchant margins by between 200 and 300 basis points.

As Barry noted, the merchant portfolio remains well positioned across our multichannel direct and partner go-to-market approach. We continue to expect full year mid-single-digit revenue growth for merchant within our outlook with a mid-20% adjusted EBITDA margin profile. We also assume stable ongoing macroeconomic conditions and related discretionary consumer spending levels across our broader guidance ranges.

Turning to B2B payments. For the first quarter, B2B segment revenues finished at $73.5 million, increasing 4.7% versus Q1 of 2025 on largely stable lockbox volumes and continued migration of treasury management offerings to support increasingly digital payment flows.

We were pleased to see this level of overall revenue growth, continuing our momentum from the fourth quarter 2025 exit rate. Adjusted EBITDA for B2B came in at $17.2 million, reflecting an overall 23.4% margin. This represented a very strong 29.3% expansion of adjusted EBITDA from the prior year results with overall margin rate in line with our full year guidance expectations. EBITDA growth for the period was driven by continued realized operating efficiencies across our lockbox footprint, and ongoing migration of the B2B business model toward more recurring revenue offerings. Within our B2B outlook, we continue to anticipate low single-digit revenue growth for the full year as the business laps sequentially improving revenue across the prior year quarters. Overall EBITDA margins are expected to remain in the low to mid-20% range over the period.

Moving on to Data Solutions. This segment extended its very strong year-over-year growth trajectory from ongoing campaign demand. Revenues finished at $97.5 million, driving overall growth of 26.3% versus Q1 of 2025. First quarter adjusted EBITDA finished at $22.8 million, expanding by 15.7% year-over-year, while the margin rate finished at 23.4%, sequentially in line with the prior quarter rate, returning towards our signaled longer-term low to mid-20s expectation for the segment. Our full year 2026 guidance ranges continue to reflect mid- to high single-digit segment growth expectation for the full year.

Importantly, we continue to expect to see moderation of recent growth trends over the back half of the year as we lap prior year results and see some customer pull forward of marketing spend into earlier quarters.

Turning finally to our print businesses. Print segment first quarter revenue finished at $262.2 million, a decline of 5.9% year-over-year on a comparable adjusted basis, factoring for the impact of the March 1 Safeguard sale. Legacy Check revenues declined 4.4% on a comparable adjusted basis, while the balance of the segment declined by 8.4% to drive the overall blended result. We continue to see legacy promo comparable adjusted decline rates moderate slightly versus the rates of decline during 2025 due in part to the removal of Safeguard-related promo revenues effective on the 1st of March.

Overall, adjusted EBITDA for print finished the period at $85.7 million. The 3.8% rate of comparable adjusted EBITDA decline across print continue to align favorably to the low- to mid-single-digit blended rate of revenue decline, maintaining a stable margin rate in the low 30s. Comparable adjusted EBITDA margins for Print improved 70 basis points year-over-year to 32.7%. This result was reflective of continued operating expense discipline, driving efficiency across our print operations. Consistent with our prior quarter outlook and updated for the exit of the Safeguard business over the balance of 2026, we continue to expect to see low to mid-single-digit comparable adjusted revenue declines across the Print segment, with adjusted EBITDA margins remaining in the low to mid-30s.

Turning now to our balance sheet and cash flow. We ended the period with a net debt level of $1.37 billion down $22.6 million from $1.39 billion at the end of 2025, consistent with our ongoing commitment to debt reduction as a top capital allocation priority over the multiyear horizon, as Barry noted. Our net debt to adjusted EBITDA ratio reached 3x at the end of the period, improving versus our 3.6x ratio a year ago. We were particularly pleased to reach this milestone in the first half of the year, further demonstrating our commitment to the optimization of our balance sheet via disciplined execution and our focus aligned to our value-creation algorithm.

Our continuing expansion of cash generation and balance sheet improvement provides us more flexibility to operate the company and invest for continued growth, always within our disciplined approach to capital allocation, as Barry noted earlier. Free cash flow, defined as cash provided by operating activities less capital expenditures, finished at $27.3 million for the quarter, improving $3 million from the first quarter of 2025. This continuing expansion of cash flow was reflective of improved operating results, including lower year-to-year restructuring spend, cash taxes and overall SG&A expense, along with largely stable working capital efficiency and CapEx investment, net of increased year-over-year cash incentive payments during the Q1 period.

Continuation of our strong operating cash flow generation remains a top focus area for 2026 even as we have reached our 3x leverage target. This is consistent with our full year guidance for free cash flow expansion, which we have maintained as part of our guidance outlook, inclusive of the impact of the Safeguard divestiture. We continue to be positioned well from both a liquidity and go-forward balance sheet position. reflecting $381 million of available revolver capacity as of quarter end. All material debt maturities remain aligned with the 2029 horizon, following our late 2024 refinancing of the debt capital structure.

Consistent with past quarters, our Board approved a regular quarterly dividend of $0.30 per share on all outstanding shares. The dividend will be payable on June 2, 2026, to all shareholders of record as of market closing on May 19, 2026.

As Barry noted in his opening commentary, we are maintaining or improving the comparable adjusted growth trajectories expected across our full year guidance outlook this morning, while updating revenue, adjusted EBITDA and EPS figures to specifically reflect the anticipated impacts from the March 1 Safeguard divestiture. Our updated full year ranges are as follows: revenue of $1.985 billion to $2.05 billion, reflecting negative 1% to positive 2% comparable adjusted growth versus 2025, adjusted EBITDA of $430 million to $455 million, reflecting between 4% and 10% comparable adjusted growth, adjusted EPS of $3.60 to $4, reflecting between 9% to 21% comparable adjusted growth and unchanged free cash flow of approximately $200 million, reflecting 14% growth versus our 2025 results. To reiterate, each of these guidance ranges reflect an unchanged to improving rate of comparable adjusted growth versus the prior year.

They have simply been updated to reflect the anticipated impact of the divestiture closed during the first quarter. Finally, to assist with your modeling, our guidance assumes the following: interest expense of approximately $110 million; an adjusted tax rate of 26%; depreciation and amortization of approximately $135 million, of which acquisition amortization is approximately $40 million; an average outstanding share count of approximately 46.5 million shares; and capital expenditures between $90 million and $100 million.

This guidance remains subject to, among other things, prevailing macroeconomic conditions, including interest rates, labor supply issues, inflation and the impact of any additional portfolio additions or exits. To summarize, we had a strong start to the year with meaningful organic growth across our key metrics. Our updated guidance, reflecting the impact of the Safeguard divestiture shows our continued solid full year performance expectations with the expansion of key earnings and cash flow metrics. The value creation framework we introduced at our 2023 Investor Day laid out our core business strategy to leverage the brand, trust, relationships and cash flow generated by our legacy paper-based payments business to invest and grow into a digital payments and data company.

The strategy is simple and the progress is clear. Operator, we are now ready to take questions.

[Operator Instructions] And we'll go first to Kartik Mehta with Northcoast Research.

Barry, maybe just first, just a bigger picture question. Almost every company I cover, the question becomes AI and the impact of AI. And I'm wondering if you could talk about maybe how AI is impacting your businesses and your ability to serve your customers. Just your perspective on how that is trending?

Well, first of all, Kartik, I appreciate the question. And for our business, we see AI as a net positive. And because we look at AI as a set of tools that help us improve the operation of the company. So I'll give you a couple of examples. In our data business, we use Gen AI to improve the models that we use to create marketing campaigns for our customers. And through Gen AI, every one of those campaigns make the system and the model smarter. So we get smarter, faster. And just as a comparison, we believe the largest FI in the country that's running campaigns inside their organization are doing a couple of hundred campaigns a year.

On behalf of all of our clients, we are processing and running thousands of campaigns a year. So not only do we have more at-bats because we're using Gen AI, our tools and our models get smarter, faster, giving us a really nice moat around our data-driven marketing business. That's one place.

The second place, just really simple to understand is in our B2B business, where we're processing payments through lockbox. Customer mails in a payment, and we receive that payment on behalf of the biller. There are literally billions of those payments that we process annually.

And there are payments there that require manual intervention because there are fragments of what's required to post that information appropriately on the balance sheet of the biller. We are applying AI to radically reduce the amount of manual intervention. And I think we're about a 2/3 reduction in manual intervention by applying AI to our business. And you can see it flow right through our business. You can see our margins expanding in that business, and that's certainly not the only reason, but one of the reasons that we're applying technology to improve our business overall.

So we see AI as a great enabler for us, and we're applying it across our business to deliver performance improving results.

And just a follow-up, Chip. In changing the guidance, obviously, for the divestiture, you didn't change your free cash flow guidance. And I'm wondering if that's just the underlying strength of all the other businesses or the divestitures would just not generate that much free cash flow, and that was the reason.

Yes, I'd say it's a bit of a mixture of both. Obviously, we've been executing really well, Kartik, on our free cash flow conversion and expansion of those metrics over the last 2 or so years. And so if you think about coming into the year with a guidance range of approximately $200 million, the pure fact is that business was relatively lower margin. So once you adjust for taxes and other cash items, the adjustment was immaterial, and I felt confident in the progress of the business to hold the guidance range as is, which I think is a very strong signal to the execution and focus we've had in that space.

We'll go next to Charlie Strauzer with CJS.

So seeing good organic growth in various segments. What are the common themes that you're seeing from clients that are helping to propel those business lines?

In our payments and data business, Charlie, we think all 3 of those businesses are delivering a very quality value proposition for our customers. I talked for a minute -- just a minute ago about our data-driven marketing business, which is the fastest-growing business. And because of the quality of our tools, we deliver an outstanding marketing dollar ROI for our customers. When a customer invests using our tools, they get the best return that we're aware of all of their marketing options.

So we've seen that customers -- existing customers expand their spend with us, moving dollars from one marketing program to ours because of the effectiveness and the delivery of -- the quality of the delivery of a new customer. And that's why that business has been growing as well as it has. In the merchant business, you heard us talk about our success in attracting new customers. We had 2 significant wins that we talked about, one with Washington Bank and a second with MRI Software, and in both of those cases, we were able to go to those customers and show them the value that we can create for them, which was not really just about -- it was not about price, it was about the value that we can create, the right product, the right service level, the right set of tools, including APIs, and that's allowed us to win those businesses, and keep that business.

So we've got a good retention rate in our merchant business. We are winning new customers in our target market verticals and that allows us that business to grow. And we've told you for a bit of time that in the B2B business, we expect it to have some nice quality wins and improve our operating efficiency. And I just talked for a minute ago about our use of AI to help us there. And so that is helping us win customers and improve our operating efficiency. So each one of those businesses, we've just got a compelling value proposition for existing customers to stay with us and for new customers to join us. And you can see that combination reflected in our performance.

Looking at the promotional businesses that you have, are you seeing any disruption there from the global conflicts that are going on, kind of disrupting travel, things like that on that business?

Charlie, I don't know that we're really directly seeing impacts from all the global uncertainty today. Of course, we're aware of it. But specifically to your question on promo, the promo business in general continues to be a bit soft, like it has been for some period of time, just reflecting, we think, greater market trends. But we can't point that specifically to global impacts happening today.

We'll go next to Marc Riddick with Sidoti.

So I wanted to first congratulate you guys on reaching these goals. Certainly, you guys have been working on this for quite some time. And these are key milestone goals to reach, having remembered the Investor Day a few years back. And I wanted to maybe touch a little bit on some of the expense reductions that you've seen in SG&A as a percentage of revenue in the quarter was, I believe, below 40% of revenue. Maybe you could talk a little bit about some of those.

And maybe you've already kind of touched on this with the efficiency commentary, Barry, but maybe you could touch a little bit on some of those efforts and just sort of -- it certainly seems as though you're just getting more bang for your buck there.

Yes, I appreciate. Well, first of all, congratulations, comments, and I appreciate the question, Marc. Look, there's no real secret to what we've done here. We've been very clear over the horizon in the last years of the work we were doing specifically to SG&A. So over a period of time, we had to invest in restructuring-related spend to drive efficiency, optimize the spend base of the company and really pivot us forward, and you saw that through our multiyear North Star journey. And we said about this time a year ago that 2025 would be less about a year of cost out on the corporate operations and more about improvements in margin expansion in the segments, but we knew coming into 2026, that would be a year where the final efforts of North Star and all the work we did to drive efficiency would come through the P&L.

And so you're really seeing those 2 things come together in these results. So number one, we're out of the period of heavy restructuring spend. You've seen that spend come down pretty methodically over the last few years. And so we're really now out of those days and overall restructuring spend is fairly low. And in fact, it's mostly related to the Safeguard divestiture this quarter, the amounts we do have. And then second, the ongoing cumulative effect of those cost improvements we've done and the way the team has focused on driving efficiency and changing how work gets done, it's evident in the numbers. So you combine those 2 figures together, and that's what's driving this overall 7% plus reduction in SG&A in the period.

Great. And then shifting gears, I wanted to talk a little bit about maybe if you could talk if you're seeing any particular industry verticals that stood out either relative to your expectations or just generally, if there are any particular pockets, whether that's industry vertical or regional strength that you saw during the quarter that stand out?

Marc, one of the things that we particularly appreciate about our portfolio of businesses is that they are diversified across multiple market verticals. And so we can deliver this kind of performance really in most environments. So we continue to have great strength in the FI channel across multiple businesses. And you see us moving aggressively into ISV space, which we said we would do for a while within our merchant space. The data business continues to expand beyond FI to get new logos and new market verticals. And so we're pretty pleased that the business is performing well overall and that the market verticals where we compete seem to be very durable and sturdy, and that's helping deliver this consistent performance.

And we're very proud that it's our 13th consecutive quarter of profitable growth here. So we think that's a testament to the mix of our verticals, the mix of our business and honestly, the improving mix of our business, which we hit that significant milestone of our payments and data businesses becoming our largest businesses in this period, something we've been working towards for some time.

At this time, there are no further questions. I will now turn the call back to Brian for any additional or closing comments.

Thanks, Jennifer. Before we conclude, I'd like to share that management will be participating at the Needham Technology Media and Consumer Conference on May 13 and the Truist Securities Financial Services Conference on May 19, both in New York during the quarter. Thank you again for joining us today, and we look forward to speaking with you all again in late July as we share our second quarter results.

This does conclude today's conference. We thank you for your participation.

Thank you, operator, and welcome to the Deluxe Fourth Quarter and Full Year 2025 Earnings Call. Joining me on today's call are 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 the current slide, I'd like to remind everyone that comments made today regarding management's intentions, projections, financial estimates and 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 actual results to differ from projections is set forth in the press release we furnished today in our Form 10-K for the year ended December 31, 2024, and in other company SEC filings.

On the call today, we will discuss non-GAAP financial measures, including comparable adjusted revenue, adjusted comparable adjusted EBITDA and EBITDA margin, adjusted and comparable adjusted EPS and free cash flow. All comparable adjusted metrics reflect the removal of impacts from business exits. In our press release, today's presentation and our filings with the SEC, you'll find additional disclosures regarding the non-GAAP measures, including reconciliations of these measures to the most comparable measures under U.S. GAAP. Within the materials, we are also providing reconciliations of GAAP EPS to adjusted EPS, which may assist with your modeling.

And with that, I'll hand it over to Barry.

Thanks, Brian, and good evening, everyone. I'm pleased to share our strong fourth quarter and full year 2025 results. Across the past year, our team executed with discipline and each of our businesses performed well, driving robust growth of all profit metrics directly benefiting our balance sheet.

There are 5 key highlights for the year: number one, revenue and profit growth. Comparable adjusted EBITDA expanded more than 6% at the top of our value creation framework with organic revenue growing 1%. 2025 was the third consecutive year with EBITDA growing faster than revenue, demonstrating our ability to scale profits. Two, EPS and operating income comparable adjusted EPS grew 13% and operating income increased by 23%. Three, cash generation and balance sheet improvement. We generated $175 million of free cash flow, delivering our 2026 goal in 2025, a full year early. We reduced net debt by $76 million, lowering our year-end leverage ratio to 3.2x also ahead of schedule. And we've paid our regular dividend for more than 30 consecutive years. Four, strategic mix shift towards payments and data. Payments and data now account for 47% of revenue, up from 43% a year ago and around 30% in early 2021. The payments and data businesses combined grew 12% during Q4 and 10% for the full year. We expect to achieve our strategic goal of payments and data achieving revenue parity with the print businesses later this year, delivering on our promise of transforming Deluxe into a payments and data company. Five, exit rate provides optimism for 2026. Chip will introduce our guidance in a minute but we are pleased with our Q4 exit rates with all businesses performing well, giving us confidence in 2026.

You will recall, at our Investor Day in December 2023, we promised Deluxe would be a significantly improved business by 2026. We think our results clearly tell the story of our progress. Put simply, our team executed well in 2025. Chip will provide deeper details for both Q4 and full year financial performance in a minute. But before he does, and consistent with recent quarters, I'll discuss overall business performance in the context of our 3 ongoing strategic planks. One, shifting revenue mix towards payments and data to deliver ongoing profitable enterprise-level organic growth; two, driving operating leverage and efficiencies across the enterprise; and three, increasing EBITDA, EPS and free cash flow to both lower net debt and improve our leverage ratio. Starting with our first priority, shifting our revenue mix towards payments and data. We are executing well against our clear strategy to leverage our history as the leader in paper-based payments to build a leading position in the digital payments and data space, strategically redeploying the dependable cash flows, sterling reputation and strong customer relationships from the Print segment to build a leading payments and data company, and it's working.

As I noted, payments of data now accounts for 47% of total revenue, increased by nearly 400 basis points from 2024. We expect to achieve parity later this year, affirming our future as a payments and data company. The data segment in particular, continued its standout performance to finish 2025, expanding its revenue by just over 30% year-over-year. You'll recall, our data business helps our customers across market verticals, attract and deepen relationships with high lifetime value customers. We've built what we believe is one of the largest consumer and small business marketing data lakes in the industry. We pair this information with our large-scale gen AI-enabled data analytics tools to deliver outstanding ROI for our customers' marketing spend. The flexibility of our data lake, AI-enhanced intelligence and proprietary targeting tools allow us to quickly shift focus across a broad diversity of bank product offerings, while also extending our services to new logo wins across non-FI market verticals.

Beyond the continuing growth momentum in data, Deluxe Merchant Services, or DMS, also extended its revenue growth trend across all 4 quarters of 2025. DMS revenue growth versus prior year improved sequentially across each quarter of 2025 toward our mid-single-digit growth outlook. We also invested to expand our DMS technology platforms and the strong service model throughout the year. The business delivered growth in line with our expectations, even at some levels of macroeconomic and broader peer group volatility persisted. As one example of our ongoing investment in DMS, we recently announced the deepening of our collaboration with the Visa Direct network, via the introduction of the Deluxe Bass Funds solution. This integration, along with other areas of ongoing investments, demonstrate our commitment to innovation across our DMS offerings. We remain encouraged with our prospects spanning both our direct go-to-market channels and through key partnerships, including our robust network of FI partners, and embedded software integrations across market verticals. We are particularly optimistic about the many attractive opportunities in the ISV space, where we've made responsible investments in APIs and reporting tools and new features. We expect to share more news about some of these opportunities over the course of 2026. Our overall DMS sales pipeline remains strong as we enter the new year.

Moving now to the B2B payments segment. Revenue growth for B2B also accelerated as we finished 2025 as we had signaled during last quarter's call. We saw sequential revenue dollar improvement for this segment across each quarter of 2025, reaching a fourth quarter revenue peak of more than $76 million. This reflected a year-over-year growth rate of 4.5%, consistent with our prior cadence commentary for the segment. We are well positioned to sustain growth into 2026 and as we continue to invest in newer digital offerings, helping transition the B2B portfolio to a more recurring revenue model. Finally, the Print business. For the full year, the strong margin check portion of the business continued to perform well, aligned with our long-term expectations, with full year revenue declining just under 2%. We were encouraged to see some improvement in the rate of decline for shorter cycle legacy promo revenue during the fourth quarter period as well. As we've discussed throughout the year, we remain focused on optimizing the long-term margin profile across Print through prioritization of our core offerings and consciously foregoing opportunities with unattractive margins. This strategy is clearly reflected within the expanded Print EBITDA margin profile during 2025. To summarize this first strategic priority area, the 10% full year revenue growth rate from our combined payments and data businesses more than offset anticipated secular decline rates across the Print segment. This expansion drove total company organic revenue growth across both the fourth quarter and full year periods. The payments and data businesses are together on their way to account for more than 50% of company revenue in 2026, affirming our future as a payments and data company.

Moving to our second big strategic priority: driving efficiency across our business operations to improve margins and deliver predictable operating leverage. Operating cost discipline remained a core tenet of the company throughout the year, and our EBITDA margins expanded in each operating segment for both the fourth quarter and full year periods. We reduced overall SG&A expenses by roughly $40 million over the full year 2025 horizon. This reflected an improvement of more than 4% year-over-year. Our OpEx discipline contributed to robust 23% growth of full year operating income and supported the significant improvement of our balance sheet. Our year-over-year growth of adjusted EBITDA for the 12th consecutive quarter and margin expansion realized across all 4 segments simultaneously demonstrate the continuing strength of our operating model. Finally, moving to the third strategic priority area within our capital allocation model, increasing adjusted EBITDA and EPS, driving cash flows and lowering our net debt and leverage ratio. As I noted earlier, we finished the year driving more than 6% growth of adjusted EBITDA, reflecting the high end of our value creation algorithm target range. Our adjusted EPS expanded by nearly 13%, further reflecting our improved balance sheet and strengthening interest rate position as 2025 progressed.

We also drove improved conversion of profits into 2025 cash flows. This resulted in a year-end leverage ratio of 3.2x, ahead of our previously signaled timing as we continue to progress towards our longer-term leverage target of 3x or lower. We reduced our net debt by more than $76 million during the year demonstrating our commitment to continued balance sheet optimization. To summarize, our 2025 results demonstrate clear progress on all 3 concurrent strategic priorities. One, shifting the mix towards payments and data; two, driving operating efficiencies; and three, increasing cash flow generation, driving reduction of debt and improving our leverage ratio. Both our fourth quarter and full year results illustrate this progress achieved through disciplined capital allocation, strong execution across each operating unit and sustained focus around the pushing of our value creation algorithm forward. Revenue momentum and our sales pipelines remain robust across each operating segment, giving us confidence toward continued progress in 2026.

Before passing this to Chip to share additional details regarding our 2025 performance and solid 2026 outlook, I want to thank my fellow Deluxers for executing so well. I'm proud of their unwavering dedication to our customers and the communities that Deluxe has served for generations, especially as we celebrated the company's 110th anniversary. It is via these daily efforts that we set Deluxe on a promising path for the next generation as a trusted payments and data company.

Chip, now over to you.

Thank you, Barry, and good evening, everyone. As Barry noted in his opening, we were very pleased with our strong 2025 progress, including our better-than-anticipated free cash flow conversion and resulting delevering pace. Expansion of comparable adjusted EBITDA and EPS growth rates, lowered overall operating expense, and reduced restructuring-related spending during the year clearly highlight our progress. Our strong momentum toward key Investor Day outcomes is clearly embedded within our 2026 guidance ranges, which I'm pleased to be able to share this evening.

Our 2025 results also demonstrate continued improvement in the health of our balance sheet. We're pleased with our recently upgraded credit standing across key capital markets and our strengthened quality of earnings as we execute our clear strategy. I'll begin by reviewing some of the consolidated highlights for the year before moving on to operating segment results and our 2026 guidance ranges. For the full year, we posted total revenue of $2.133 billion, increasing 0.5% versus 2024 reported results, while expanding by 1.1% year-over-year on a comparable adjusted basis. We reported full year GAAP net income of $85.3 million or $1.87 per share for the year, improving from $52.9 million or $1.18 per share in 2024. This increase was driven by overall revenue growth, improved operating margins and lower restructuring spend during 2025. Full year comparable adjusted EBITDA was $431.5 million, improving $25 million or 6.2% from the prior year results. Adjusted EBITDA margins were 20.2%, expanding by 90 basis points from the 2024 levels. Full year comparable adjusted EPS came in at $3.67, improving 12.6% from $3.26 in 2024. This improvement was primarily driven by expanded operating profits, along with slightly lower interest expense.

Now turning to our operating segment details, beginning with Merchant Services. For the full year, Merchant segment revenue finished at $398.6 million, growing by 3.8% versus 2024 results. We were pleased with this full year growth trajectory, which expanded sequentially across each quarter, as Barry noted, to reach our mid-single-digit fourth quarter exit growth rate consistent with our longer-term outlook for this business. Segment adjusted EBITDA finished 2025 at $85.9 million, expanding by 9.4% on the improving revenue trajectory and operating cost efficiencies realized versus the prior year. Margins finished at 21.6%, expanding by 120 basis points versus full year 2024 levels. Merchant revenue for the fourth quarter finished at $101.5 million, reflected growth of 6.3% versus Q4 of 2024, inclusive of our sequentially improving growth trend across the quarters. Merchant fourth quarter adjusted EBITDA finished at $22.3 million or 22% of revenue, expanding by 80 basis points versus Q4 of 2024. Margin improvement was driven via the improved revenue growth rate, continuing cost discipline and overall channel mix dynamics across the quarter. Our guidance ranges for 2026 reflect the expectation for growth of merchant segment revenue in the mid-single-digit range with continued expansion of margin opportunities across the portfolio, as I'll discuss in greater detail in a bit. We remain confident in our ability to drive growth across Merchant based on our robust pipeline of new FI, ISV and ISO partners, either currently signed or in queue for 2026 as well as additional merchant adds across our direct go-to-market channels. We have also assumed fairly stable ongoing macroeconomic conditions and related discretionary consumer spending levels across our broader guidance ranges.

Shifting to results within B2B payments segment. B2B revenue finished the year at $290.5 million, reflecting growth of 0.9% versus the prior year. This overall growth rate aligned to our in-year expectations and reflected sequential improvement of B2B revenue dollars during each quarter of the year, driving an improved fourth quarter revenue exit trajectory. 2025 adjusted EBITDA for B2B came in at $64.4 million, reflecting an overall 22.2% margin. This represented a strong 12.8% expansion of adjusted EBITDA from the prior year results. EBITDA growth was driven via continued efficiencies, realized across our operational footprint and ongoing migration of the B2B business model toward expansion of our more recurring revenue offerings. This margin rate was aligned to our expectation, reflecting expansion from the high teens towards low to mid-20s profile, consistent with our Investor Day multiyear outlook for the segment. For the fourth quarter, B2B revenues were $76.3 million, expanding by 4.5% versus the prior year. Q4 adjusted EBITDA finished at $18.7 million, reflecting a strong 24.5% rate in line with the improving fourth quarter revenue growth trajectory for the segment. Adjusted EBITDA for the quarter improved by 29% versus the fourth quarter of 2024, on stable lockbox processing operations and improving segment revenue mix within the specific fourth quarter prior year comparison. Within our 2026 guidance ranges, we anticipate B2B revenues maintaining an overall low single-digit growth profile as the segment continues to transition toward increasingly digital solutions. Our outlook also includes the continued rollout of our DPN capabilities within B2B, supported by the small acquisition we executed during the third quarter. Our 2026 full year outlook for the segment continues to incorporate adjusted EBITDA margins in the low to mid-20s range, consistent with my prior comments and the rate reflected within our 2025 results.

Moving now to the strong 2025 growth results within the Data segment. Overall, as Barry noted, the data-driven marketing business saw standout growth across each quarter of the year as full year revenue finished at $307.3 million, reflecting 31.3% growth versus 2024. This trajectory continued to demonstrate our success partnering with an expanded customer base to deploy our increasingly compelling set of marketing capabilities as we discussed throughout the year. Day growth was also accompanied by strong margin expansion during 2025, and inclusive of certain volume-related vendor rebates executed as part of our broader North Star program, as we specifically discussed last quarter. Overall, data adjusted EBITDA finished at $86.4 million reflecting a 28.1% margin rate, expanding 42.8% versus the prior year result. Fourth quarter data revenue finished at $73 million reflecting the anticipated sequential step-down from Q3 on normal course seasonality trends within the segment. Despite this, year-over-year revenue growth remained very strong, expanding 30.6% from the prior year fourth quarter results on continuing robust campaign demand during the period. Q4 adjusted EBITDA finished at $17.3 million, expanding just over 40% year-over-year on the drivers noted within my full year commentary. The Q4 margin rate finished at 23.7%, returning toward our signaled longer-term low to mid-20s expectation range for the data segment. Our full year 2026 guidance ranges incorporate a sustaining mid- to high single-digit segment revenue growth rate going forward. We remain confident in the growth trajectory of our data offerings, even as we begin to lap the raised prior year comparable results seen across the 2025 periods. Our adjusted EBITDA guidance incorporates data margins sustaining in the low to mid-20s margin profile consistent with our prior quarter commentary and the outlook communicated within our multiyear Investor Day trajectory.

Shifting finally to our Print business. The segment finished 2025 with $1.14 billion in annual revenue, reflecting an overall decline of 5.7% versus prior year levels consistent with our overall low to mid-single-digit secular decline trajectory expectation. As Barry mentioned, legacy check continued to perform well and consistent with our forecast, with revenue declining by 1.8% versus 2024. Accompanying the check trajectory, printed forms and other business products declined at 6.5% year-over-year rate. On a combined basis, these 2 core areas blended to an overall 3% rate of year-over-year decline, in line with our longer-term trajectory expectation for the segment. Full year revenue trajectory across other promotional product solutions reflecting some demand headwinds we discussed over the prior 2 quarters declined 15.3% year-over-year, while remaining concentrated toward generally lower-margin noncore product offerings. Overall, adjusted EBITDA for Print finished the year at $366.9 million. The 2.6% rate of adjusted EBITDA declines seem within print aligned favorably to the blended rate of revenue decline for the more core print product focus areas. This drove an overall print margin rate of 32.3%, remaining consistent with our longer-term low 30s margin outlook for the segment. Despite some shorter cycle demand headwinds to the top line, we expanded the overall print margin rate by a full 100 basis points across the full year 2025 results. Fourth quarter print revenues were $284.5 million, declining 3.8% versus Q4 of 2024, as detailed further within the revenue breakdown by product category slide in our materials. On a blended basis, the trajectory across more core products reflected a 1.5% decline rate, while other promotional solutions rate improved sequentially but remained outsized to our longer-term revenue decline expectations. Q4 adjusted EBITDA for print remained strong, finished at $92.2 million. This reflected a 32.4% margin rate for the segment, expanding year-over-year by 50 basis points, while remaining consistent with our longer-term outlook rate expectations. Our overall 2026 guidance ranges continue to reflect our confidence towards a predictable year-over-year trend for secular declines across print, driving an overall revenue trajectory in the low to mid-single-digit decline range. We remain confident in our ability to sustain margin levels across print, continuing to target an overall margin rate in the blended low 30s range over the guidance horizon.

Turning now to our balance sheet and better-than-anticipated 2025 cash flow results. We ended the year with a net debt level of $1.39 billion, down $76.2 million from $1.47 billion last year, consistent with our ongoing commitment to debt reduction as a top capital allocation priority for the enterprise, as Barry highlighted. Our net debt to adjusted EBITDA ratio was 3.2x at the end of the year, improving further versus our 3.6x ratio a year ago. As we've noted, this is ahead of the pacing we previously signaled toward our longer-term strategic target of 3x or lower leverage. Free cash flow to fund as cash provided by operating activities less capital expenditures, was $175.3 million, up from $100 million in 2024, driven by lower in-year cash restructuring spend, improved year-over-year adjusted EBITDA results continuing core working capital efficiency and lower cash taxes. We remain particularly pleased with the accelerated achievement of our targeted free cash flow expansion and the ability to continue reducing our net debt consistent with our clear balance sheet optimization priorities. During the fourth quarter, we deployed $36 million of cash for investing activities relating to the purchase of residual commission rights or one of our largest ISO partners within the Merchant Services segment. This investment is not expected to materially impact segment revenues during 2026 as related volumes have consistently been processed via Deluxe Merchant Services. We would, however, expect the fold-in of ongoing residual commissions to improve segment margins by as much as 200 to 300 basis points. This impact magnets our margin guidance for the segment toward the upper end of our low to mid-20s rate outlook band.

Finally, supported by our strong cash flow and overall 2025 results, our overall balance sheet remains well positioned and reflects our ongoing strong liquidity. Over the course of the year, our improving capital structure drove 2 S&P upgrades the most recent and late in November, and Fitch also moved our outlook to a positive watch position. All our material debt maturities remain aligned to our 2029 capital structure following our late 2024 refinancing activity. Our flexibility toward potential future portfolio optimization or other opportunistic investments continues to improve as we approach our targeted longer-term balance sheet ratios. Before turning to the details of our 2026 outlook, consistent with the remaining plank of our capital allocation priorities, the Board approved a regular quarterly dividend of $0.30 per share on all outstanding shares. The dividend will be payable on February 23, 2026, to all shareholders of record as a market closing on February 9, 2026.

With that, I'm pleased to now share our overall guidance ranges for 2026. Our ranges for the full year are as follows: revenue of $2.11 billion to $1.175 billion, reflecting negative 1% to positive 2% comparable adjusted growth versus 2025. Adjusted EBITDA of $445 million to $470 million, reflecting between 3% and 9% comparable adjusted growth. Adjusted EPS of $3.90 to $4.30, reflecting between 6% to 17% comparable adjusted growth and free cash flow of approximately $200 million. reflecting 14% growth versus our 2025 results. And to recap my previous segment assumptions, we anticipate the Merchant segment to grow revenue in the mid-single-digit range year-over-year. B2B growth is expected to expand at low single-digit levels. Data will maintain strong mid- to high single-digit revenue growth rates as we lap increased baseline comparables across 2026 quarters, and Print will continue to reflect low to mid-single-digit secular decline rates. Margins for Merchant are expected to reach a mid-20s profile. While B2B will remain in the low to mid-20s, consistent with 2025, and as data also returns to our longer-term low to mid-20s profile expectation, and Print margins will remain roughly flat in the low 30s range. Lastly, we'd expect significant efficiencies across our corporate operations and spending, in line with our multiyear commitments and conclusion of North Star plan objectives.

Finally, to assist with your modeling, our guidance assumes the following: interest expense of approximately $110 million and adjusted tax rate of 26%; depreciation and amortization of approximately $135 million, of which acquisition amortization is approximately $45 million, an average outstanding share count of approximately 46.5 million shares and capital expenditures between $90 million and $100 million. This guidance remains subject to, among other things, prevailing macroeconomic conditions as noted previously, including interest rates, labor supply issues, inflation and the impact of divestitures. To summarize, our solid 2025 execution and strong momentum put us on a strong trajectory heading into 2026. Our guidance for the year shows the significant progress we have made toward our Investor Day commitment of just over 2 years ago. 2026 is a year where the results of our hard work, deliver major advances towards all 3 of our critical strategic priorities. Payments and data revenues are expected to reach parity with the legacy print side of the business, putting us on a more sustainable long-term growth trajectory. Our earnings expansion is expected to continue once again, outpacing revenue growth as we drive efficiencies and improvements to our cost structure. And our significant free cash flow generation will allow us to achieve our sub-3x leverage target in the first half of the year. Each of these expectations are consistent with our clear ongoing value creation formula and we remain confident in our overall progress against our focused capital allocation priorities.

Operator, we are now ready to take questions.

[Operator Instructions] We will take our first question from Kartik Mehta with Northcoast Research. I'm hearing silence. We will go on to our next question from Charlie Strauzer with CJS Securities.

This is Will for Charlie. You made a note about the use of AI-enabled -- you made a note about the use of AI-enabled tools supporting the data segment and developments and payments around embedded solutions such as Deluxe Fast Funds as the largest financial players increasingly discuss investment in Agent eCommerce and the impacts of AI across industries, how would you say Deluxe's positioned to respond to or to take advantage of some of these trends?

So Will, appreciate the question. I would tell you that we're very proud and believe that Deluxe is very well positioned. We are a company that actually has applied AI technology in multiple places across our business. We're not experimenting with it. We have gone live and it's delivering improved performance. So as I mentioned in my prepared remarks, it is a part of how we're winning with our data-driven marketing business. As I said in my remarks, we built what we believe is one of the largest consumer and small business data lakes, and we pair that with great talent, but also great tools that are Gen AI-based that gets smarter with every campaign that we run. And if you compare our results and our -- the number of ad bats we have, we do thousands of campaigns a year, and any individual might do -- a large bank might do hundreds. So not only do we have more at bats, but given the nature of Gen AI, we also have the opportunity for some exponential increase in our capabilities and success from a campaign performance perspective. And you can see that in our revenue performance. We grew 30% in the full year, and that is a direct result of having great tools, great technology, great customer support and being able to move quickly to help an institution solve its problems around growth, customer acquisition or however we can apply that data to help them be successful.

Very helpful. Just a follow-up, given the release of your updated outlook, how are you feeling about macroeconomic or other risks potentially impacting your growth segments in particular? And what factors could drive upside to the higher end of the outlook provided?

Sure. I'll start and give you some there, and then Chip can jump in too. But on previous calls during the whole last year, we've been talking a bit about macroeconomic uncertainty, but we'll tell you what we've seen in the sort of the back half of the year through Q4 and even into the start of this year. We're seeing what we would consider just more traditional patterns of consumer behavior. Now the shift to still happen between discretionary and less discretionary categories that we saw earlier in the year but that shift seems to have stabilized. And so we believe that, that gives us good confidence as we look forward to this new year. We're optimistic that the consumer is going to stay healthy and that, that will help not just our merchant business, but our businesses overall, that tend to track pretty darn well with the economy overall.

Yes. I think -- well said, Barry, I guess 2 points I'd make. First of all, we're just fundamentally in a different place coming out of 2025 and going into 2026 than we were a year ago. If you look at the execution and the performance across all 4 segments, just from a year ago. Everything is in a different place in terms of momentum and how we're performing. I think the other thing I'd call your attention to is just the data segment in particular. Obviously, that was a business that experienced extraordinary demand last year and obviously, at times, outperformed even our expectations. But what we know is we're going to face some monster comps in the back half of the year. And I'll just remind you, this is a campaign-oriented business. And because of that, the nature of it is, we have better visibility to the next 1 to 2 quarters than we necessarily do the third or fourth one out. So as we think about the momentum of the business, that puts us on a path to see some solid growth continue for data for the first half of the year, not as strong as what you just saw, but we would expect data to continue a nice double-digit growth rate in the first half of the year. And then obviously, once we come up against those comps in the second half, things will more normalize getting to that overall guidance range. So I think to overall answer, we can drift up throughout the year. It's going to be getting more visibility to the pipeline, continuing the momentum across all the segments and just continuing to execute the way we have over the last 4 straight quarters or so.

We will take our next question from Kartik Mehta with Northcoast Research.

Sorry about that. I was having phone issues. But Barry, you talked about the business exiting 2025, with some growth trajectory, which is great to see. As you look at 2026, kind of what's your primary objectives for the business, maybe your top 2 objectives you'd like to accomplish in 2026?

Sure. So let me just reiterate that we think there are 3 big strategic plans of what we're continuing to drive in this business. The first one is to shift the mix towards our payments and data business. You heard us say that we added 400 basis points of revenue to our mix there going from 43% to 47%. We think that we get to 2 parity as the year unfolds. And Kartik as following our story for a while, you know why that's so important because it puts a bigger percentage of our revenue every day on growth segments to make it easier to offset the secular declines on the print side of the business. And as we continue to grow the payments and data business, it gets easier and easier for us to accelerate our overall growth rate.

The second area is driving efficiency in everything we do coming out of the work we did on the North Star project that has now moved to business as usual. We have built a good amount of muscle in operating the business even more efficient than ever. And the third, of course, is to generate cash flow through EBITDA, et cetera, to lower our debt net debt and our leverage ratio. So those are the big 3 things that we're working on as a company. And each one of the businesses, their specific strategic things they're trying to achieve, everything from building the ISV channel strongly in the merchant business to accelerating the software side of the B2B business and working on the margin. And the data business, of course, continuing the phenomenal trajectory thereon. And in the print business is holding under those fantastic margins, renewing customers and continuing the healthy cash generation of that business. So all those things work together to deliver what we think is going to be a very -- another very nice year in 2026, consistent with our ability to execute that hopefully we highlighted in our prepared remarks.

And then as you look at the merchant business, I know one of the objectives was to grow the distribution. As you look at the pipeline, I know you talked a little bit about the ISV distribution system channel. And I'm wondering, as you look at the pipeline, what does the pipeline look like for 2026 in terms of adding additional distribution?

Sure. So Kartik, I think we talked on the last call about the fact that we have really been working on putting more muscle into our ISV distribution channel. We have a new-ish leader there now that is helping us build a very nice and robust pipeline. We've also paired that with responsible investments and improving our API suite working on reporting tools and other features and functionality, but we think will make our program even more appealing to ISVs, and I think you should expect to hear from us about -- more about the ISV channel and hopefully, knock on woods, some wins that we can share with you as the year unfolds. But we're very optimistic that we have the right service model as well as the right feature set and now with the right leadership driving distribution, we think we've got a real opportunity there.

[Operator Instructions] Next question comes from Marc Riddick with Sidoti.

So first of all, thanks for all the detail that's already been provided and certainly quite a bit has been accomplished. I was wondering if you could talk a little bit about maybe some of the opportunities that you see before you? And specifically, sort of thinking about some of the maybe build versus buy kind of decisions as far as investments. We had thematically was over the summer or last few years. Maybe you could talk a little bit about the capabilities that you're that you're looking to continue to enhance and possibly maybe your appetite for a build versus buy kind of decision around those lines?

Sure. Let me just start with the point that we believe we're very fiscally responsible and good stewards of shareholder capital. And as you've seen us continue to help this business perform paying down debt, improving our leverage ratio. We did make 2 small acquisitions, the one that you mentioned with the Check Match, which helps our B2B business and then bought the residuals from an ISO or an independent sales organization that was on the merchant business. Both of those we believe will deliver nicely for us that there are logical tuck-ins that will help deliver improved performance, particularly around profitability over time. We also have a pretty great track record, Marc, of being able to deliver capabilities ourselves to help the business grow. So for example, we were one of the first companies in the merchant processing space to get approval and certification from Apple for a program they called Tap on Glass that allows 2 different phones to pay each other. You just saw us announce an integration with Visa into our product, Deluxe Fast Pay. You've heard us talk about our investment in building the database and the AI tools that have led to and created the opportunity for this massive growth in our data-driven marketing business. And even in our check business, we've been very responsible at making responsible investments to secure the margin profile of our check business for the intermediate to long term. So when you think about these things all the time and finding a balance between building things ourselves, which hopefully has the highest rate of return for shareholders. But when we see opportunities like we saw with the 2 things that we've talked about, as long as they're responsible and they meet our high hurdles, we're going to move forward with those because they are accretive to the company and help us succeed.

Yes. And Marc, it's Chip. I'll just add a couple more comments. So first of all, you saw us guide $90 million to $100 million worth of CapEx spend. We've been spending at that level pretty consistently the last few years. And as Barry said, we feel like we're good stewards of shareholder capital. So think of that as the right balance of investments that the business needs to drive efficiencies, remain competitive and invest in new growth opportunities to attack the market and win obviously in the competition. So embedded in our guidance is an organic continued investment in the business. And the second point to Barry's comment we are continuing to stay very clear on our existing capital allocation priorities. So as we watch the generation of free cash flow and as that has been expanding and getting better and more improving north of 40% last year, in fact, we're able to look at that in the direct impact it has to our leverage ratio and the trajectory we're on, and we're able to balance various levers, which gives us a chance to be opportunistic as Barry said, again, if it's the right opportunity with the right returns. So I think the way he described our fiscal responsibility is exactly how I would think about it, and it's how we've said we would prioritize capital allocation from the get-go, be able to invest internally for organic ads while also continuing to delever, improve the balance sheet, which just gives us continued optionality as we go on. So I think all of those things are embedded in how you should think about how we think of this going forward.

Great. And then I guess maybe I want to sort of shift over to sort of the AI focus opportunities? And maybe is there sort of an area where you see greater client receptivity. And by that, I'm speaking of industry verticals or geography, if that's more appropriate. Are there any particular areas that are sort of leading as far as acting on those opportunities through Deluxe that you're seeing currently?

I appreciate the question. I really don't think about it as a geography or client type. I really think about how we are applying AI, which is to solve specific problems, and we've applied AI in virtually every part of our company's business in our B2B space. We're using it in our lockbox operation to improve matching rates very dramatically, taking out labor and cost for our customers. I've already talked about in our data business, how we're applying AI tools to get better outcomes and better ROI for our customers. And in our Merchant business, we are using it specifically to drive our self-service chatbot at a very, very human experience. We also use it in the B2B space for the similar chatbot even on our deluxe.com website. So we are applying AI technology to solve customer problems, and we've seen great receptivity and uptake on each one of those opportunities because they deliver and they fix a problem for a customer. It's not about technology for technology's sake. It's not about having a shiny new toy. It's actually about delivering value. And that's one of the things that this company does so well. is find opportunities to help a customer fix or solve a problem and then deliver for them. And AI is one more really big tool now in our toolkit and our toolbox helps solve those problems, and we're doing it across our full portfolio of products and solutions.

And at this time, we have no further questions. I will now turn the call back to Brian Anderson for additional and closing remarks.

Thanks Rachel. Before we conclude, I'd like to share that management will be attending the JPMorgan Global High Yield and Leverage Finance Conference March 2 to 4 in Miami and the Sidoti Small Cap Virtual Conference, March 19, during the quarter. Thank you again for joining us today, and we look forward to speaking with you all again in May as we share our first quarter 2026 results.

This does conclude today's call. Thank you for your participation. You may now disconnect.

Ladies and gentlemen, thank you for standing by, and welcome to the Deluxe Quarterly Earnings Conference Call. [Operator Instructions] Today's call is being recorded.

At this time, I would like to turn the conference over to your host, Vice President of Strategy and Investor Relations, Brian Anderson. Please go ahead.

Thank you, operator, and welcome to the Deluxe Third Quarter 2025 Earnings Call. Joining me on today's call are 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 the current slide, I'd like to remind everyone that comments made today regarding management's intentions, projections, financial estimates and 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 actual results to differ from projections is set forth in the press release we furnished today in our Form 10-K for the year ended December 31, 2024, 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 and EBITDA margin, adjusted and comparable adjusted EPS and free cash flow. All comparable adjusted metrics reflect the removal of impacts from business exits.

In our press release, today's 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. Within the materials, we are also providing reconciliations of GAAP EPS to adjusted EPS, which may assist with your modeling.

And with that, I'll hand it over to Barry.

Thanks, Brian, and good evening, everyone. I'm pleased to report our strong third quarter results. During the period, we drove organic growth across all key financial metrics, revenue, adjusted EBITDA, EPS, margin rate and year-to-date cash flows.

Adjusted EBITDA grew significantly faster than revenue with margins expanding across each operating segment, demonstrating our ability to deliver consistent operating leverage. This was our 11th consecutive quarter of year-over-year EBITDA expansion with profits growing faster than revenue.

Our strong expansion of earnings also drove robust cash flow results. Year-to-date operating cash flows have expanded by more than 25% versus the prior 9-month period. These profit and cash flow outcomes contributed to continued reduction of our overall debt, aligning to our clear capital allocation priorities.

As a result of the strong performance through 3 quarters, we reached our targeted year-end leverage ratio of 3.3x, a full quarter ahead of our previously indicated pacing. We were particularly pleased with this result as we continue to drive efficiencies on path to our 2026 year-end debt-to-EBITDA target ratio below 3x. Based on these results, we are raising our full year outlook range for adjusted EPS while affirming all other guidance metrics narrowing to the midpoint or better of the prior ranges. Chip will cover these updates in additional detail in a bit.

Our overall third quarter execution remained very strong, including the following enterprise-level financial highlights, 2.5% comparable adjusted revenue growth driven by a fourth consecutive quarter of double-digit year-over-year expansion for the Data segment. Nearly 14% growth of total comparable adjusted EBITDA reaching nearly $119 million for the period. Expansion of margin rates by more than 200 basis points, reaching 22% of revenue. Adjusted EPS growth of nearly 30% year-over-year to $1.09 per share. Continued reduction of our net debt lowered by more than $20 million during the quarter, contributing to our improved leverage ratio and year-to-date free cash flow expansion of just over 49%, growing by more than $31 million versus the prior period.

Each of these third quarter results aligned directly to our overall value creation algorithm, providing a strong momentum as we approach the end of the year and continue our progress toward 2026 financial targets.

Now I'll briefly review some financial and segment highlights for the period in the context of 3 ongoing strategic priorities. Number one, shifting our revenue mix towards payments and data to deliver profitable organic growth; two, driving operating efficiencies across the enterprise, and three, increasing EBITDA and cash flow to both lower net debt and improve our leverage ratio.

I'll discuss each of these 3 big strategic priorities in order, starting with our first priority, shifting our revenue mix towards payments and data. We're pleased with our progress here. Through the third quarter, blended payments and data segment revenue has grown nearly 9.5%. Combined, these segments are nearing revenue parity with our print businesses.

Through Q3, payments and data now account for 47% of total company revenue, up nearly 400 basis points versus previous year. We're delivering our strategy to transition the company towards payments and data growth while leveraging robust cash flows from the Print segment. Data was our standout performer again in Q3. Growing revenue by 46% year-over-year.

We remain very pleased with the continued strong FI demand for revenue-generating campaigns, expanding deposit gathering, lending and other product offerings supported by our proven end-to-end data solutions. Our growth over the past 4 quarters has been driven by both continuing strong FI demand and expansion of data offerings to other markets whose target customers have high lifetime value.

Beyond the good news in data, Merchant Services also continued its expansion as third quarter revenues expanded by around 5% versus the prior year period, improving sequentially as promised. We've reached our mid-single-digit expectations for the segment despite some persistent ongoing macroeconomic uncertainty. We continue to expand our merchant base, both through our direct-to-market channels as well as FI and embedded ISV partnerships.

Additionally, our One Deluxe model continues to help accelerate merchants. For example, we recently announced the expansion of our existing multidivisional relationship with Peoples Bank, a $9.5 billion Ohio-based FI to now include merchant services. This is another example of Deluxe Building trust by delivering in one area, giving us the opportunity to cross-sell offerings from multiple other divisions.

Moving to B2B payments. Third quarter revenues for the segment declined modestly as we had signaled during the last quarter's call. Importantly, we did continue to see both sequential revenue growth for B2B and year-to-year year-over-year expansion of EBITDA margins, which improved 260 basis points on evolving mix and operating efficiencies across the segment.

Further, we continue to expect a return to growth within B2B revenues as we exit 2025. Within print during the third quarter, the stronger margin check portion of the business continued to perform in line with our long-term expectations, with revenues declining around 2%. As we discussed last quarter, the lower-margin branded promo portion of the Print segment has remained the primary area where demand headwinds persist. As expected, top line pressure across the product group again resulted in fairly immaterial impacts to segment profits.

To summarize this first strategic priority, revenue growth from our combined payments and data businesses delivered overall third quarter growth, more than offsetting expected headwinds and anticipated secular declines, particularly in print. These results are consistent with our long-term strategy.

Now on to our second big strategic priority: driving efficiencies across the business to improve margins and sustain our operating leverage. Ongoing cost discipline across the enterprise contributed to our success expanding margins and improving overall operating leverage during the third quarter. We delivered lower overall corporate expense with spend improving by just over $2.5 million. Inclusive of these savings, the overall enterprise reduced SG&A expenses by more than $15 million. This reflected a reduction of roughly 7% year-over-year during the third quarter.

Overall, we were very pleased to deliver adjusted EBITDA margin expansion across all 4 operating segments simultaneously.

Now on to our third big strategic priority: increasing adjusted EBITDA and driving cash flows and lowering both our net debt and leverage ratio. As I noted earlier, we continued to convert our expanding earnings base into strong cash flow results and to reduce our debt levels through the third quarter. This resulted in realization of our targeted year-end leverage ratio of 3.3x 1 quarter ahead of our previously signaled expectations.

Our third quarter free cash flow of just under $44 million reflected a 37% cash to EBITDA conversion rate. This result demonstrated continued improvement aligned to our targeted long-term yield remaining above 30%.

To summarize, overall, we are making clear progress on all 3 big strategic priorities: one, shifting the mix towards payments and data; two, driving operating efficiencies; and three, increasing cash flow, reducing debt and lowering our leverage ratio.

As our overall third quarter and year-to-date results illustrate, we are achieving this progress through disciplined capital allocation and strong execution, pushing our value creation algorithm forward. Our pipeline remains strong across each operating segment, and we have positive momentum as we sprint towards the 2025 finish line and prepare to launch 2026.

Finally, before passing this to Chip, I want to, again, to take a moment to thank my fellow Deluxers. As we celebrate the company's 110th anniversary this year are strong, enduring culture and clear commitment to meeting and exceeding our customers' needs while driving value for shareholders, truly reflects the Deluxe difference.

With that, I'll turn it over to Chip.

Thank you, Barry, and good evening, everyone. As Barry noted in his opening, we were very pleased with our third quarter progress and particularly our better-than-anticipated delevering pace, continuing expansion of our comparable adjusted EBITDA and EPS growth rates accompanying our strong year-to-date free cash flow conversion highlight our progress through 3 quarters of the year.

Over recent quarters, we've shown continued improvement in the health of our core fundamentals and quality of earnings continues to improve as we execute our clear strategy. I'll begin this evening providing some additional detail around our consolidated highlights for the period before moving on to individual operating segment results our balance sheet and cash flow progress and updated full year 2025 guidance ranges.

For the third quarter, we reported total revenue of $540.2 million increasing 2.2% against prior year reported results while expanding 2.5% on a comparable adjusted basis. We reported GAAP net income of $33.7 million or $0.74 per share for the period, improving from $8.9 million or $0.20 per share in the third quarter of 2024. This increase was driven by improved operating results aligned with expansion of revenues during the quarter as well as lower overall SG&A and restructuring-related expenses versus the prior year period.

Comparable adjusted EBITDA was $118.9 million, up 13.8% versus the third quarter of 2024. Comparable adjusted EBITDA margins improved to 22% of revenue expanding by 220 basis points versus the prior year third quarter, as Barry referenced.

Q3 comparable adjusted diluted EPS of $1.09 expanded by 29.8% from $0.84 in 2024, driven by the operating income drivers previously noted, net of a slightly higher year-over-year share count.

Turning now to our operating segment results. beginning with the Merchant Services business. The Merchant segment grew revenues by 4.8% year-over-year, finishing the quarter at $98 million, while continuing a sequential quarterly acceleration trend from 2.9% second quarter growth. This result reflected largely stable core merchant processing volumes as well as channel partner additions and planned in year pricing actions. As is customary, these growth drivers netted against normal course merchant attrition activity and reflected macroeconomic conditions continuing to signal some ongoing uncertainty pressuring areas of discretionary spend.

Segment adjusted EBITDA finished at $20.4 million, improving $2.6 million or 14.6% versus the prior year, with margins expanding 180 basis points to 20.8% driven by both the improved sequential revenue growth and ongoing cost efficiencies. We continue to expect full year merchant segment revenue growth in the low single-digit range with fourth quarter revenues remaining strong as demonstrated over previous quarters. We also continue to anticipate a low 20% adjusted EBITDA margin profile. Both these expectations are consistent with our prior guidance commentary for the segment.

Moving to B2B payments. For the third quarter, B2B segment revenues finished at $73.1 million, sequentially improving from the prior quarter, but declining 2.7% versus the prior year result consistent with the quarterly cadence expectation within our prior quarter commentary. B2B adjusted EBITDA expanded during the quarter, finishing at $16.8 million, reflecting growth of 9.8% versus the prior year period. Third quarter adjusted EBITDA margins of 23% for the segment reflected a 260 basis points expansion versus 2024, as Barry noted.

The segment sustained its focus on driving efficiencies across lockbox operations while optimizing SG&A to align to the anticipated onboarding and implementation efforts for new B2B wins across the portfolio. We continue to expect low single-digit full year revenue growth for B2B, implying a return to an improved fourth quarter exit growth rate for the business as we enter 2026. Margins are expected to remain in the low to mid-20% range, consistent with overall year-to-date levels within the segment.

Moving on to Data Solutions. This segment extended its revenue growth trajectory during the third quarter as demand for core marketing campaign execution across key FI partners continue to accelerate. Q3 data segment revenues finished at $89.2 million, reflecting growth of 46% versus the third quarter of 2024. This growth reflected a fourth consecutive quarter of strong double-digit demand growth for core bank customer marketing campaigns.

Our FI clients have increasingly turned to our proven data-enabled audience development and targeted marketing capabilities to support revenue generation across their core lines of business.

Data adjusted EBITDA finished at $29.1 million, growing 66.3% versus the prior year while adjusted EBITDA margins expanded by 400 basis points to reach 32.6% for the quarter. These results were primarily reflective of the level of revenue expansion during the period.

The segment further benefited from operating expense efficiencies, inclusive of volume-related savings. Specifically, over the last 6 quarters as the data business has grown rapidly, we have realized volume-related vendor rebates, benefiting segment margins beyond our long-term expectation of the low 20% EBITDA margin range.

Looking ahead, with baseline volumes now set at these increased levels, we would no longer anticipate having this magnitude of rebates and anticipate overall segment EBITDA margins beginning to return to the previously signaled low 20s range beginning in the fourth quarter.

We also expect some typical fourth quarter revenue moderation as the holiday period is seasonally lower for marketing activity across segments served by our core data offerings. We will also begin to lap our more challenging prior year results.

Despite this forecasted moderation, we expect to see strong growth continue with fourth quarter revenues remaining above the long-term mid- to high single-digit growth expectations.

To summarize for the data segment, strong year-to-date growth for this segment leads to an expectation of a solid double-digit full year revenue growth of 2025 with EBITDA margins in the mid- to high 20% range.

Turning lastly to our Print lines of business. Print segment third quarter revenue was $279.9 million, reflecting an overall decline of 5.9% versus the prior year. Branded promotional products continue to see the primary revenue headwinds declining 14.7% year-over-year improved from last quarter while remaining concentrated towards lower-margin noncore product offerings.

As Barry noted, legacy check continued to perform well. consistent with our recent history, declining 2.1% for the period. Forms and other business products declined 7.8% during the quarter. On a combined basis, these 2 core areas blend to an overall 3.6% rate of year-over-year decline, consistent with our low to mid-single-digit history and long-term expectations for the segment.

The 4% rate of adjusted EBITDA decline seen within Print for the quarter aligns to the blended rate of decline for the more core print product focused areas. This result drove an overall print margin rate of 33.4%, remaining solidly in line with our longer-term low 30s target for the segment. Importantly, and despite shorter-cycle promo revenue challenges, we expanded margin rate by 60 basis points versus our prior year Q3 results.

These healthy ongoing margin results reflect the overall continued segment mix shift towards stronger margin offerings, the continued focus on driving operating expense discipline and cost efficiencies realized across our scaled print fulfillment operations.

Consistent with our strategy, we remain focused on core profit drivers for the Print segment leveraging in-house production of checks and printed forms and accessories. For the near term, we expect the noncore branded promo portion of print revenue to continue to decline faster than the higher-margin offerings within the segment limiting impact on overall print profitability.

On balance, we continue to anticipate revenue declines in the mid-single-digit range across the overall Print segment for the full year, with adjusted EBITDA margins remaining in the low 30s, consistent with our longer-term flat rate outlook.

Turning now to our third quarter balance sheet and cash flow progress. We finished Q3 with a net debt level of $1.42 billion, reflecting a reduction of just over $44.5 million versus our 2024 year-end level of $1.47 billion. As Barry referenced, this result reflected a sequential improvement of just over $20.5 million versus our second quarter ending debt balance consistent with our clear commitment to debt reduction as a top capital allocation priority. We were particularly pleased to finish the quarter with a net debt to adjusted EBITDA ratio of 3.3x and showing continued improvement of our leverage position from the 3.6x ratio reported at the end of 2024. Reaching our targeted 2025 year-end leverage ratio on an accelerated basis demonstrated our ongoing commitment to balance sheet improvement.

Additionally, this result will reduce our ongoing interest obligation as we now move to a lower interest tier for variable rate borrowings per our credit agreement terms. Our long-term strategic leverage target remains at 3x or better by the end of 2026.

Free cash flow, defined as cash provided by operating activities less capital expenditures, finished at $95.9 million for the year-to-date period. This reflected improvement of $31.6 million from the results reported through the first 3 quarters of the prior year and finished within roughly $4 million of our full year 2024 free cash flow result.

Our year-to-date improvement continued to be driven by strong operating results and core working capital efficiency, in addition to significantly lower restructuring spend versus the prior year period.

Finally, we remain well positioned from both a liquidity and go-forward capital structure perspective following our December 2024 refinancing. As of the end of the third quarter, we maintained over $390 million of available revolver capacity with all material debt maturities extended to the 2029 horizon.

Before turning to guidance, consistent with prior quarters, our Board approved a regular quarterly dividend of $0.30 per share on all outstanding shares. The dividend will be payable on December 1, 2025, to all shareholders of record as of market closing on November 17, 2025. As mentioned previously, our year-to-date execution and momentum provide confidence to raise our overall range of expectations for adjusted EPS.

Further, we are affirming our existing guidance for revenue, adjusted EBITDA and free cash flow, each within a narrow range at or above the midpoint of our prior outlook for the year.

With that context, our updated full year guidance figures are shown on the current slide, keeping in mind all figures are approximate. Revenue of $2.11 billion to $2.13 billion, which represents a range of flat to positive 1% comparable adjusted growth versus 2024. Adjusted EBITDA of $425 million to $435 million, reflecting between 5% and 7% comparable adjusted growth. Adjusted EPS of $3.45 and to $3.60, now a range of 6% to 10% comparable adjusted growth and free cash flow of $140 million to $150 million.

Finally, to further assist with your modeling, our guidance assumes the following: interest expense of approximately $123 million, an adjusted tax rate of 26% and depreciation and amortization of $133 million, of which acquisition amortization is approximately $45 million, an average outstanding share count of 45.5 million shares and capital expenditures between $90 million and $100 million. This guidance remains subject to, among other things, prevailing macroeconomic conditions as noted previously, including interest rates, labor supply issues, inflation and the impact of divestitures.

In summary, we remain pleased with our continued strong performance shown in the third quarter and year-to-date periods as the underlying core fundamentals of the business continue to improve. Revenue mix continues to rotate towards the growing payments and data segments. Adjusted EBITDA and EBITDA margins continue to expand. Free cash flow conversion continues to improve and the balance sheet is the healthiest it's been since 2021 as we achieve our anticipated year-end leverage ratio ahead of schedule.

All of this is a result of clear strategy and capital allocation priorities we have been executing against over recent years, and we look forward to continuing this momentum.

Operator, we are now ready to take questions.

[Operator Instructions] We will take our first question.

This is Kartik, Northcoast Research. Chip, I wanted to talk about free cash flow, impressive increase in guidance. And maybe you can talk through the drivers behind it and the sustainability of the free cash flow as we move into next year?

Yes, sure. Thank you, Kartik. Good to see you. I think you know, over the last few years, we've been really focused on improving the free cash flow, not only absolute dollar, but on a conversion rate. And as we've outlined over the last couple of quarters, the goal of adding $100 million of annual run rate free cash flow coming into 2026 was one of the core tenets of the North Star program.

And so we came into the year this year, and we laid it out for you exactly how we would get there, achieving the original guidance and ultimately raising it to where we did would be a function of improved profitability, having lower restructuring spend and continuing to execute strong working capital efficiency in terms of maintaining a solid DSO and a solid DPO. And so what you have seen throughout this year is us just execute on that strategy.

So as we sit here today, executing nearly in line with what we delivered for the full year a year ago, that obviously gives us confidence in narrowing our guidance range up to the upper end and obviously puts us on a good path to be able to deliver that full run rate, $100 million as we go into next year. So very pleased with the progress we've made improving the EBITDA and the underlying profitability of the business as well as pulling back on the restructuring spending, winding down that program and delivering that improved free cash flow conversion that we've been talking about.

Barry, on the merchanting side, you talked about Peoples Bank here in Ohio as a partner. And I'm wondering if you could talk about -- a little bit about the pipeline for your distribution partners, whether it be financial institutions, ISVs or any other channel you're kind of focused on right now?

Sure. So let me just talk a little bit more about the Peoples Bank win because I think it's really a good small view of how effective our One Deluxe go-to-market solution, our processes. So as we mentioned in -- or as I mentioned in my prepared comments, I talked about how we can convert success in one part of the company into success across many parts of the company by building trust and delivering what the customer needs.

And People's Bank is the latest example that we can talk about which has followed that exact playbook in that exact model where we start with one place, we expand to multiple others. And in this case, now it also includes the merchant business. and that we have a very strong, healthy pipeline of additional opportunities for us in financial institutions, but also in ISVs or integrated software vendors.

And we have recently hired a new sales leader in the ISV space that we think will also help us accelerate our efforts there. But I really think the main message here is the effectiveness of our One Deluxe model, where we can land and build a relationship with the customer, deliver on our promises and our commitments and then expand that relationship over time. and merchant is a clear beneficiary of that, which was central to our original hypothesis of moving into the merchant space.

And we will take our next question.

It's Charlie Strauzer at CJS. Just a couple of quick questions, another impressive quarter from [indiscernible] and hoping that you can expand a little bit further as to kind of what the key drivers were and how sustainable this kind of growth can be a number of quarters in a row now where data has had some really good strength there. Maybe a little bit more about that?

Sure, Charlie. You'll recall that we had made an investment in building our infrastructure so that we have what we believe is the largest data lake of consumer and small business data, we think, in the country.

And then, of course, we put our proprietary AI tools that sit on top of that data lake to help build high-converting lead lists helping those institutions or organizations identify a target and market to a customer that's likely to be interested in the offering of that organization.

In this particular moment in time, financial institutions are increasing their investment specifically around all of their core products, whether it is low-cost deposits, but it's also things like high reward credit cards, it's around lines and loans and many other bank products. and we can see some great uptake on that. And we think that is sustainable, Charlie, now and probably not at the rate we've been talking about it, and Chip did a good job, I think, of setting that expectation.

But we have a very unique offering here that we can show a specific return on a marketing expense that delivers a customer with measurable value to a financial institution. And that is a very compelling proposition for financial institutions.

But we're also expanding, as you know, Charlie, beyond financial institutions into other market verticals where there's high lifetime value for that customer, and it's worth a significant marketing investment to acquire that customer. and we continue to make inroads there. And we feel very good and bullish about this business over the intermediate long term as well as what's right in front of us in Q4.

Excellent. Yes, very impressive. And just a follow-up question on the Print segment. Margins were above where they've been in at least in recent memory. And what was [indiscernible] better margins? Or is it across the board? Maybe a little more color there, that would be great.

Charlie, we've been saying for a while, We have 3 core strategic initiatives for the company. We want to shift our mix towards payments and data. We want to drive efficiency across our portfolio we want to increase EBITDA free cash flow to lower debt and our leverage ratio.

In the case of the Print business, we had a great cash generator in the Check business. and that had a very solid and very predictable Q3. We continue to struggle a bit in the promo business with just headwinds in the industry, we've also just been very clear. We're going to focus on profitable volume. We're not going to play the game that others in the space are playing, which is taking product or making sales that have little or no margin.

And so we're walking away from deals that we just don't think we can make a decent profit on. And you can see that in the revenue part of that equation, but what you come down to what's really important here is that we're able to largely hold on to the EBITDA. And as you can see, we're expanding margin here as well. So we think it's just a matter of being really choiceful and really fully in alignment with our 3 big strategic initiatives around shifting mix to payments and data, driving efficiency, increasing EBITDA, free cash flow, lowering debt and the leverage ratio that we're being very choiceful and disciplined about the business we take and making sure we do have is operated with great efficiency.

Chip, do you want to build on that?

Yes. I think you said it well. But Charlie, if you think about the extra materials we've added the last few quarters, you can see while the promo side is still struggling and declining a bit higher than we would like, it has improved. But to Barry's point, the real story is how Check continues to deliver solid results, decline better than long-term expectations and how those 2 things together deliver a really solid mix story to the business. .

So I think Barry said it all right, when you put that all together and you add on top of it, the focus on efficiency that we've been delivering over the last 2 years as part of our efficiency improvement program. It's all leading to this solid sustainable low 30s margin rate that we've been talking about for print that you can see is really stabilizing. And so we're very proud of that result. We're very pleased with how that team is executing.

Great. One more in kind of a bigger picture thing as we approach year-end here. Any initial thoughts for next year?

That was a really good try, Charlie. We're -- we'll be back in the next call with good guidance for next year.

[Operator Instructions] And we will go to our next question.

It's Jonnathan from TD Cowen. Just one question for me. Now that you've reached your leverage target, and congrats on that. How are you balancing capital between the, say, debt reduction, potential buybacks, some M&A and maybe even some reinvestments in the growth segments like payments and data?

Yes. Well, first of all, thank you for acknowledging that progress, Jonnathan. I think you know we've been very committed to this goal of bringing the leverage ratio down and getting ultimately at or below 3x sometime next year. So obviously, the work is not done yet. Very pleased with the execution and progress that allowed us to reach our original target for year-end '25, a bit faster but nothing really changes.

Our capital allocation priorities remain. We're still focused on paying down that debt and bringing the leverage ratio down. We're still marching down the path towards that 3x or better by the end of next year. and we're going to continue to invest internally for high-return growth that helps Barry's #1 strategic priority, shifting the mix to payments and data.

And then obviously, we'll keep returning value to shareholders through the dividend. So very, very pleased with the progress, but don't expect anything to change. We're going to keep executing based off this updated guidance range we've provided. I would say we're now in a place to land year-end around 35% depending on the rounding, so continuing great progress, and we're continuing on that journey to get at or below 3x by the end of next year.

And we will take our next question.

It's Marc Riddick from Sidoti here. I was sort of -- you've sort of covered it quite a bit already. I wanted to sort of touch on how we should think about the how CapEx might flow out through -- we have for the year, is it reasonable to think that we might see similar levels next year? Or how should we think about the potential for whether it's technology-driven investments or the like, how that might play into CapEx next year, just generally not a specific guide on numbers, I suppose, but just sort of generally.

Yes. So again, to reiterate, we've been holding in this $90 million to $100 million guidance range for all of this year, and we're executing pretty well in that, stopping short of providing full guidance. But where we are is a very comfortable level for us.

Like I said, we continue to focus on good internal return projects that can allow us to drive that strategic initiative to shift the mix. And so we're obviously not going to starve the business, but we also feel good about the progress we've made. So as we get into next year, we'll go through our normal process of evaluating all the investment opportunities inside the business and stack rank them based off the best returns helping drive the long-term strategy. And I would expect CapEx will settle somewhere around where it is right now. But again, stopping short of guidance, we'll wait to see where the final demands of the business land and what are the best returns inside the 4 walls to deliver the best outcome for both investors and our customers.

Great. And then I guess -- and admittedly, this might be a bit of a squishy question, but are there any parts of the business where you would like to expand bandwidth as far as internal whether it's personnel or the like, are there any areas that you feel as though you might need to expand bandwidth in the near term to take advantage of opportunities?

So appreciate the question, Mark. We regularly look at our resource allocation or capital allocation and where we're spending for maximum return. We don't anticipate any need for a surge in any one of our businesses. We are investing appropriately, particularly in the payments and data, the growth businesses. for the future. I mentioned earlier, we're putting a bit more investment towards sales, particularly in the merchant business, but we like the mix of what we have today and how we're investing to grow and really like how it played out for us in Q3.

And at this time, we have no further questions. I would now like to turn the call back.

Thanks, Rachel. Before we conclude, I'd like to share that management will be participating at the Citizens Financial Services Conference in New York and the Stephens Annual Investment Conference in Nashville on November 18 and 19, respectively and at the Bank of America Leveraged Finance Conference on December 2 and 3 during the fourth quarter, for which additional information will be posted on the Investor Relations website.

Thank you again for joining us today, and we look forward to speaking with you all again in early February as we share our fourth quarter and full year 2025 results.

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