Deluxe will use excess cash to cut debt under newly expanded revolver

By Devika Patel

Knoxville, Tenn., Jan. 24 – Deluxe Corp. plans to use any excess cash to repay debt under its revolving credit facility, which the company increased by $200 million to $1.15 billion on Tuesday.

“To the extent we generate excess cash, we plan to reduce the amount outstanding against our credit facility,” senior vice president and chief financial officer Keith A. Bush said Thursday on the company’s earnings conference call for the fourth quarter and year ended Dec. 31.

“We ended 2018 with $910 million drawn on our credit facility, and, on Jan. 22, we expanded that credit facility by $200 million.

“The proceeds are to be used for general corporate purposes, giving us more flexibility and financial capacity as we continue to execute our transformation.”

The debt under the credit facility is largely due to stock repurchases and a December acquisition.

“In December, we closed on the acquisition of My Corp., which helps new businesses with incorporation, compliance and other services,” Bush said.

“The acquisition was funded through a draw on our credit facility.”

Deluxe has a “strong” balance sheet, the company’s top executive said.

“The company has a strong balance sheet with low leverage,” president and chief executive officer Barry McCarthy said on the call.

“Our ability to generate consistent cash flow enables us to not only pay solid dividends but also invest in the business and repurchase stock.”

At the end of the fourth quarter, the company had $911.9 million of total debt outstanding, including the $910 million outstanding under the revolver.

Adjusted EBITDA for the fourth quarter of 2018 was $134.3 million, compared with $136.6 million for the same period a year ago.

Adjusted EBITDA for full year 2018 was $511.4 million, compared with $523.3 million for full year 2017.

Cash and cash equivalents were $59.7 million as of Dec. 31, compared with $59.2 million as of Dec. 31, 2017.

Deluxe provides checks and business services for small businesses and financial institutions and is based in Shoreview, Minn.

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