Deluxe Corporation

11/05/2026 | Press release | Distributed by Public on 11/05/2026 09:55

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") provides a comprehensive overview of our financial condition, results of operations, and key factors affecting our performance. The following sections are included:
•Executive Overview that discusses what we do and our operating results at a high level;
•Consolidated Results of Operations, Restructuring and Integration Expense, and Segment Results that include a more detailed discussion of our revenue and expenses;
•Cash Flows and Liquidity and Capital Resources that discuss key aspects of our cash flows, financial commitments, capital structure, and financial position; and
•Critical Accounting Estimates that discusses the accounting policies and estimates that require management to make complex judgments and assumptions and their application can have a material impact on our financial condition and results of operations.
Forward-Looking Statements
This MD&A discussion contains forward-looking statements that involve risks and uncertainties. Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K") details known material risks and important information to consider when evaluating our forward-looking statements and is incorporated into this Item 2 of this report on Form 10-Q as if fully stated herein. The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information. Statements using terms such as "should result," "believe," "intend," "plan," "expect," "anticipate," "estimate," "project," "outlook," "forecast," and similar expressions are intended to indicate forward-looking statements under the Reform Act.
Use of Non-GAAP Financial Measures
This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). We also present certain non-GAAP financial measures, including free cash flow, net debt, adjusted diluted earnings per share (EPS), consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), and consolidated adjusted EBITDA margin. We believe that these non-GAAP financial measures, when reviewed alongside GAAP financial measures, can provide additional insight into our operating performance. Consequently, these measures are also used internally for management reporting. Our non-GAAP measures should not be considered substitutes for GAAP financial measures. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely solely on any single financial measure. Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and therefore, may not facilitate useful comparisons. Reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the Consolidated Results of Operations section.
EXECUTIVE OVERVIEW
We empower businesses to build stronger customer relationships through a broad range of trusted, technology-enabled solutions designed to facilitate payments, drive growth, and improve operational efficiency. Our comprehensive portfolio includes merchant services solutions, marketing and data analytics, treasury management solutions, and promotional products, as well as customized checks and business forms tailored to our clients' needs.
We serve a diverse customer base, including small and medium-sized businesses, financial institutions, and some of the world's leading consumer brands. In addition, we offer checks and related accessories directly to individual consumers. Our extensive reach, scale, and multi-channel distribution network enable us to deliver innovative solutions and reliable support, positioning us well as a valued partner to our customers.
Our Strategy
A comprehensive discussion of our strategy is provided in Part I, Item 1 of the 2025 Form 10-K. During the first nine months of 2026, we continued to execute on our strategic priorities of accelerating profitable growth, enhancing operational efficiency, and disciplined capital allocation.
Accelerating profitable growth - We continued to execute on our strategy of growing our payments and data businesses while optimizing our overall portfolio, delivering stronger revenue mix and profitability. In March 2026, we completed the divestiture of the Safeguard small business distributor channel within our Print segment, a strategic action enabling greater focus on our growth businesses and ongoing portfolio optimization objectives. The divestiture reduced Print segment revenue by approximately $79.3 million and Print adjusted EBITDA by approximately $7.8 million in the first nine months of 2026 compared to the first nine months of 2025.
On the growth side of our portfolio, our payments and data businesses demonstrated strong momentum, collectively delivering 14.6% year-over-year revenue growth and an 18.0% increase in adjusted EBITDA in the first nine months of 2026. Approximately $33.5 million of the revenue increase was driven by the acquisition of Celero Commerce ("Celero") on July 31, 2026. Celero is a financial technology company that provides payment solutions to small and mid-sized businesses through a diversified distribution network. Cash consideration paid for the acquisition was $625.0 million plus certain seller transaction expenses and other adjustments. Further information regarding the acquisition can be found under the caption "Note 6: Acquisitions and Divestitures" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report. The transaction was financed through our amended credit agreement, via a combination of additional term loan financing and revolving credit facility borrowings. Further information regarding the amended credit agreement can be found in the Capital Resources section.
Celero's platform complements our existing payments offerings and is expected to accelerate the modernization of our payments technology, expand our distribution capabilities, and strengthen our competitive position through increased scale and broader customer reach.
Enhancing operational efficiency - During the first nine months of 2026, we continued to focus on cost management and operational efficiency through workforce adjustments across multiple functions and optimization of our marketing strategies. We also continued to realize the benefits of prior-year initiatives, including operational efficiencies within our lockbox processing operations.
On a consolidated basis, net income decreased $2.2 million year-over-year in the first nine months of 2026, primarily reflecting costs associated with the Celero acquisition and continued secular declines in our Print segment. However, our cost management and operational efficiency initiatives, together with targeted pricing actions and growth in our payments and data
businesses, contributed to improvements in consolidated adjusted EBITDA and adjusted EBITDA margin compared to the first nine months of 2025.
Disciplined capital allocation - We continued to apply our capital allocation framework, focusing on investments that support our strategic growth objectives while maintaining financial flexibility. During the first nine months of 2026, net cash provided by operating activities increased by $47.4 million year-over-year, reflecting our continued focus on working capital management and operational improvements. While the Celero acquisition represents a significant investment in our growth strategy, we remain focused on reducing leverage over time. Our operating cash flow generation and available capacity under our credit arrangements position us well to service our obligations, reduce debt, and deliver long-term value to shareholders.
2026 Financial Results
Highlights of our financial results for the first nine months of 2026 compared to the first nine months of 2025 include:
•Consolidated revenue - Decreased by $6.8 million to $1,591.2 million, primarily driven by the first quarter business exit, which reduced revenue by approximately $79.3 million. Additionally, soft demand for promotional products and the ongoing secular decline in order volumes for checks, business forms, and various business accessories in our Print segment contributed to the decrease. These unfavorable drivers were partially offset by growth in all three of our payments and data businesses, including $33.5 million of revenue contributed by the Celero acquisition, which closed on July 31, 2026.
•Net income - Decreased by $2.2 million to $68.0 million, primarily reflecting transaction costs of $15.4 million associated with the Celero acquisition and $10.9 million of incremental amortization expense attributable to the acquired intangibles, as well as continued revenue pressures in the Print segment, and higher material and delivery costs due to inflation. These factors were partially offset by the benefits of our cost management and pricing initiatives and growth in our payments and data businesses.
•Adjusted EBITDA - Increased $28.3 million to $353.8 million, driven by the benefits of our cost management and pricing initiatives and growth in our payments and data businesses. These favorable impacts were partially offset by the continued revenue pressures in the Print segment and inflationary cost pressures. In addition, our first quarter business exit resulted in a decrease in adjusted EBITDA of approximately $7.8 million.
Adjusted EBITDA margin increased to 22.2% for the first nine months of 2026, compared to 20.4% for the first nine months of 2025. The margin improvement was primarily driven by our cost management and pricing initiatives, partially offset by inflationary pressures and the shift in mix toward our growth businesses. A reconciliation of net income to adjusted EBITDA can be found in the Consolidated Results of Operations section.
•Net cash provided by operating activities - Increased by $47.4 million to $215.9 million. The increase was primarily driven by the benefits of our cost management and pricing actions, lower income tax payments due to the impact of federal tax law changes enacted in July 2025, favorable changes in working capital, and growth in our payments and data businesses, including the Celero acquisition.
These benefits were partially offset by transaction costs associated with the Celero acquisition, higher performance-based employee bonuses related to our 2025 results, continued revenue pressures in the Print segment, inflationary cost pressures, and the impact of the Safeguard divestiture.
•Free cash flow - Increased by $39.0 million to $134.9 million, primarily reflecting the same factors that drove the increase in net cash provided by operating activities. We continue to reinvest the free cash flow generated by our Print business into our other businesses. Free cash flow is defined as net cash provided by operating activities less purchases of capital assets. A reconciliation of free cash flow to its most directly related GAAP financial measure can be found in the Consolidated Results of Operations section.
Recent Market Conditions
We continually monitor macroeconomic conditions and other external factors that may affect our business, including interest rates, inflation, small business sentiment, consumer spending trends, and global economic conditions. As of September 30, 2026, 75% of our debt had a weighted-average fixed interest rate of 7.3%, which provides partial insulation from changes in market interest rates. However, future changes in interest rates could continue to affect our borrowing costs on the variable-rate portion of our debt.
Macroeconomic conditions, including inflation, energy price volatility, and fluctuations in logistics and certain raw material costs, continue to influence our cost structure and customer demand. In response, we implemented targeted price adjustments, particularly within our Merchant Services and Print segments, to help offset increased costs while remaining mindful of customer
price sensitivity. We continue to monitor the potential for further cost volatility resulting from changes in energy markets, supply chain conditions, and raw material pricing.
Global economic conditions remain uncertain, reflecting ongoing geopolitical unrest and evolving trade policies, treaties, and tariffs. These developments may disrupt supply chains, increase operating costs, and affect the availability, timing, and pricing of certain goods and services.
We also closely monitor trends in small business sentiment and consumer discretionary spending, as these factors influence demand across our portfolio. Our analysis incorporates data from credit card networks, the Federal Reserve, leading economic forecasters, and our proprietary analytics. Recent economic indicators suggest that while consumer sentiment remains weak, consumer spending has remained relatively resilient, although consumers continue to demonstrate price sensitivity. Small business optimism has softened modestly, with recent indicators reflecting elevated uncertainty and more cautious expansion plans. Negative shifts in consumer and business spending patterns could influence transaction volumes in our Merchant Services segment and demand for certain discretionary products within our Print segment. A sustained period of economic uncertainty or a broader slowdown in economic activity could adversely affect our financial position, results of operations, and future growth prospects.
Liquidity
As of September 30, 2026, we held cash and cash equivalents of $74.9 million, along with an additional $189.8 million available for borrowing under our revolving credit facility. We anticipate that capital expenditures will be approximately $110.0 million for the full year, compared to $95.3 million in 2025, as we continue to build scale across our product categories and invest in innovation. Our capital allocation priorities remain focused on responsible growth investments, debt reduction, and returning capital to shareholders through dividends, which are subject to quarterly approval by our board of directors.
We believe that net cash generated by operations, together with our cash and cash equivalents on hand and borrowing availability, will be sufficient to meet our operational needs, contractual obligations, and debt service requirements over the next 12 months. This assessment takes into account our working capital position and anticipated cash flows, including those associated with the additional debt incurred in connection with the acquisition of Celero. We regularly monitor our liquidity position in light of potential risks, including market volatility, interest rate fluctuations, and macroeconomic uncertainty, and we are prepared to adjust our capital allocation strategy as needed. As of September 30, 2026, we were in compliance with our debt covenants. Additional information regarding our long-term capital requirements and debt maturities can be found in the Cash Flows and Liquidity and Capital Resources sections.
CONSOLIDATED RESULTS OF OPERATIONS
Revenue
Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2026 2025 Change 2026 2025 Change
Total revenue $ 553.9 $ 540.2 2.5% $ 1,591.2 $ 1,598.0 (0.4%)
Total revenue increased in the third quarter of 2026 compared to the third quarter of 2025, primarily driven by growth in our Merchant Services segment, including the impact of the Celero acquisition on July 31, 2026, which contributed revenue of $33.5 million. Strong demand for our data-driven marketing services also contributed to the increase, resulting in $13.9 million of additional revenue compared to the prior-year quarter. Revenue growth was further supported by strategic price increases implemented in response to inflationary pressures, particularly within our Merchant Services and Print segments.
These favorable factors were partially offset by the first quarter business exit discussed in the Executive Overview section, which reduced revenue by approximately $32.3 million. Soft demand for promotional products and the continued secular decline in order volumes for checks, business forms, and business accessories within our Print segment also negatively impacted revenue.
Total revenue decreased in the first nine months of 2026 compared to the first nine months of 2025, primarily due to the first quarter business exit discussed in the Executive Overview section, which reduced revenue by approximately $79.3 million. Soft demand for promotional products and the continued secular decline in order volumes for checks, business forms, and business accessories within our Print segment also contributed to the decrease.
These unfavorable factors were partially offset by strong demand for our data-driven marketing services, which contributed $49.0 million of additional revenue compared to the prior-year period. Revenue also benefited from growth in our Merchant Services segment, including $33.5 million of revenue from the Celero acquisition, as well as strategic price increases, particularly within our Merchant Services and Print segments. Growth in our B2B segment, driven by new lockbox and remittance processing clients and a software license agreement within our broader suite of treasury management offerings, also contributed to revenue.
We do not manage our business based on product versus service revenue. Instead, we analyze our revenue based on the product and service offerings shown under the caption "Note 14: Business Segment Information" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report. Our revenue mix by business segment was as follows:
Quarter Ended
September 30, 		Nine Months Ended
September 30,
2026 2025 2026 2025
Merchant Services 24.4 % 18.2 % 21.8 % 18.6 %
B2B Payments 13.9 % 13.5 % 14.1 % 13.4 %
Data Solutions 18.6 % 16.5 % 17.8 % 14.7 %
Print 43.1 % 51.8 % 46.3 % 53.3 %
Total revenue 100.0 % 100.0 % 100.0 % 100.0 %
Cost of Revenue
Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2026 2025 Change 2026 2025 Change
Total cost of revenue $ 266.3 $ 249.1 6.9% $ 764.6 $ 746.6 2.4%
Total cost of revenue as a percentage of total revenue
48.1 % 46.1 % 2.0 pts. 48.1 % 46.7 % 1.4 pts.
Cost of revenue primarily includes raw materials for product manufacturing, shipping and handling costs, third-party costs for outsourced products and services, payroll and related expenses, information technology costs, depreciation and amortization of production and digital assets, residuals paid to independent sales organizations (ISOs), and related overhead.
Total cost of revenue increased in the third quarter and first nine months of 2026 compared to the same periods in 2025. The increases were primarily driven by higher costs associated with growth in our payments and data businesses, including the impact of the Celero acquisition, lower vendor rebates in our data-driven marketing business compared to the prior year, and inflationary pressures on materials and delivery costs.
These increases were partially offset by lower costs associated with soft demand for promotional products and the continued secular declines in the Print segment, as well as the impact of our cost management initiatives. In addition, the first quarter business exit discussed in the Executive Overview section reduced cost of revenue by approximately $14.8 million in the third quarter of 2026 and $37.1 million in the first nine months of 2026.
As a percentage of total revenue, total cost of revenue increased in the third quarter and first nine months of 2026 compared to the same periods in 2025, driven by inflationary pressures and a shift in revenue mix toward our growth businesses. These increases were partially offset by the benefits of targeted pricing actions and cost management initiatives.
Selling, General and Administrative (SG&A) Expense
Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2026 2025 Change 2026 2025 Change
SG&A expense $ 226.2 $ 212.4 6.5% $ 637.8 $ 652.1 (2.2%)
SG&A expense as a percentage of total revenue
40.8 % 39.3 % 1.5 pts. 40.1 % 40.8 % (0.7) pts.
SG&A expense increased in the third quarter of 2026 compared to the third quarter of 2025, primarily driven by costs associated with the Celero acquisition, including transaction costs of $9.8 million, amortization expense of $10.9 million, and the ongoing operating expenses of the acquired business. Partially offsetting these increases was the first quarter business exit discussed in the Executive Overview section, which reduced SG&A expense by approximately $16.8 million in the third quarter of 2026. SG&A expense also benefited from our ongoing cost management initiatives, including workforce adjustments across multiple functions, and lower commission expense driven by lower Print revenue volumes.
As a percentage of total revenue, SG&A expense increased in the third quarter of 2026 compared to the third quarter of 2025, as the impact of transaction costs and amortization expense associated with the Celero acquisition more than offset our cost management actions and the impact of the first quarter business exit.
SG&A expense decreased in the first nine months of 2026 compared to the first nine months of 2025, primarily driven by the first quarter business exit discussed in the Executive Overview section, which reduced SG&A expense by approximately $39.7 million. SG&A expense also benefited from our ongoing cost management initiatives, including workforce adjustments across multiple functions and the optimization of our marketing strategies, as well as lower commission expense driven by lower Print revenue volumes. These decreases were partially offset by costs associated with the Celero acquisition, including transaction costs of $15.4 million, amortization expense of $10.9 million, and the ongoing operating expenses of the acquired business.
As a percentage of total revenue, SG&A expense decreased in the first nine months of 2026 compared to the first nine months of 2025, as our cost management actions and the impact of the first quarter business exit more than offset the impact of transaction costs and amortization expense associated with the Celero acquisition.
Restructuring and Integration Expense
Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2026 2025 Change 2026 2025 Change
Restructuring and integration expense $ 8.7 $ 2.9 200.0% $ 13.8 $ 14.6 (5.5%)
We are actively pursuing initiatives aimed at improving operating efficiency and supporting earnings and cash flow growth. As we implement these initiatives, the amount of restructuring and integration expense is expected to fluctuate from period to period.
Restructuring and integration expense increased in the third quarter of 2026 compared to the third quarter of 2025, primarily due to integration activities associated with the Celero acquisition. For the first nine months of 2026, restructuring and integration expense decreased compared to the first nine months of 2025, as lower costs from our ongoing restructuring initiatives more than offset integration costs related to the Celero acquisition.
Further information regarding these costs can be found in the Restructuring and Integration Expense section.
Gain on Sale of Businesses and Long-Lived Assets
Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2026 2025 Change 2026 2025 Change
Gain on sale of businesses and long-lived assets $ - $ - - $ 5.1 $ - -
In the first quarter of 2026, we recognized a gain on the sale of the Safeguard small business distributor channel within our Print segment. Further information can be found under the caption "Note 6: Acquisitions and Divestitures" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part 1, Item 1 of this report.
Interest Expense
Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2026 2025 Change 2026 2025 Change
Interest expense $ 35.0 $ 30.5 14.8% $ 90.6 $ 92.8 (2.4%)
Weighted-average debt outstanding 1,824.6 1,498.5 21.8% 1,562.4 1,525.8 2.4%
Weighted-average interest rate 7.0 % 7.6 % (0.6) pts. 7.1 % 7.6 % (0.5) pts.
Interest expense increased in the third quarter of 2026 compared to the third quarter of 2025, primarily due to higher average debt outstanding as a result of the financing of the Celero acquisition. This increase was partially offset by a lower weighted-average interest rate.
Interest expense decreased in the first nine months of 2026 compared to the first nine months of 2025, primarily due to a lower weighted-average interest rate. This decrease was partially offset by higher average debt outstanding as a result of the financing of the Celero acquisition.
As of September 30, 2026, $500.5 million of our debt was subject to variable rates, after giving effect to our interest rate swaps. Changes in market interest rates on this debt could affect our interest expense. Based on the amount of variable-rate debt outstanding as of September 30, 2026, a one percentage point change in the weighted-average interest rate would result in a $1.3 million impact on interest expense for the remainder of 2026.
Income Tax Provision
Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2026 2025 Change 2026 2025 Change
Income tax provision $ 6.7 $ 13.5 (50.4%) $ 28.4 $ 27.9 1.8%
Effective income tax rate 34.0 % 28.6 % 5.4 pts. 29.5 % 28.4 % 1.1 pts.
For the third quarter of 2026, our effective income tax rate increased compared to the third quarter of 2025, primarily due to higher non-deductible executive compensation expense. This increase was partially offset by a $1.4 million reduction in the valuation allowance associated with a deferred tax asset for a capital loss carryforward.
For the nine months ended September 30, 2026, our effective income tax rate increased compared to the same period in 2025. The increase was primarily due to higher non-deductible executive compensation expense, the tax impact of the surrender of company-owned life insurance (COLI) policies, a higher state income tax rate, and a $0.9 million increase in the valuation allowance related to a capital loss carryforward generated during the period that we do not expect to fully utilize. These unfavorable impacts were partially offset by a higher tax benefit related to employee share-based compensation. Further information regarding our income tax provision can be found under the caption "Note 10: Income Taxes" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.
Net Income, Diluted EPS, and Adjusted Diluted EPS
Quarter Ended September 30, Nine Months Ended September 30,
(in millions, except per share amounts) 2026 2025 Change 2026 2025 Change
Net income $ 13.0 $ 33.7 (61.4%) $ 68.0 $ 70.2 (3.1%)
Diluted EPS 0.28 0.74 (62.2%) 1.46 1.54 (5.2%)
Adjusted diluted EPS(1)
1.06 1.09 (2.8%) 2.99 2.71 10.3%
(1) A reconciliation of net income to adjusted net income, as used in the calculation of adjusted diluted EPS, can be found in the following section.
Net income and diluted EPS decreased in the third quarter of 2026 compared to the third quarter of 2025, driven by the factors discussed above. Adjusted diluted EPS also decreased year-over-year, primarily due to the ongoing secular declines and soft demand for promotional products in the Print segment, inflationary cost pressures, increased interest expense, and higher amortization expense driven by our technology investments. The first quarter business exit discussed in the Executive Overview section also reduced adjusted diluted EPS by $0.05 per share compared to the prior-year quarter. These unfavorable factors
were partially offset by the benefits of our pricing and cost management actions, as well as growth in our payments and data businesses, including the impact of the Celero acquisition.
Net income and diluted EPS decreased in the first nine months of 2026 as compared to the first nine months of 2025, driven by the factors discussed above, with diluted EPS also impacted by a higher weighted-average number of shares outstanding in 2026. Adjusted diluted EPS increased year-over-year, primarily reflecting the benefits of our pricing and cost management actions, as well as growth in our payments and data businesses, including the impact of the Celero acquisition, and lower interest expense. These favorable factors were partially offset by the ongoing secular declines and soft demand for promotional products in the Print segment, inflationary cost pressures, higher amortization expense driven by our technology investments, and the higher weighted-average number of shares outstanding in 2026. The first quarter business exit discussed in the Executive Overview section also reduced adjusted diluted EPS by $0.13 per share compared to the prior-year period.
Reconciliation of Non-GAAP Financial Measures
Free cash flow - We define free cash flow as net cash provided by operating activities minus purchases of capital assets. We believe free cash flow is useful to both management and investors, as it provides a consistent metric for comparing the cash-generating ability of our operations across periods. It also offers insight into the cash available to support dividends, debt reduction (both mandatory and discretionary), acquisitions, other strategic investments, and share repurchases. However, free cash flow has certain limitations. Not all free cash flow is available for discretionary spending, as we may have mandatory debt repayments and other contractual or regulatory cash requirements that must be satisfied. Despite this limitation, we believe free cash flow is a valuable supplemental measure for evaluating our financial flexibility and our ability to pursue growth opportunities and return capital to shareholders.
Net cash provided by operating activities reconciles to free cash flow as follows:
Nine Months Ended
September 30,
(in millions) 2026 2025
Net cash provided by operating activities $ 215.9 $ 168.5
Purchases of capital assets (81.0) (72.6)
Free cash flow $ 134.9 $ 95.9
Net debt - Net debt is calculated as total debt less cash and cash equivalents. We use net debt to evaluate our financial leverage and overall balance sheet strength. By considering the cash and cash equivalents available to offset outstanding debt, net debt provides a more comprehensive view of our debt burden than total debt alone. However, net debt has certain limitations. Subtracting cash and cash equivalents may imply that these funds are readily available and will be used to reduce debt, which may not reflect management's actual intentions or liquidity needs. Additionally, net debt may suggest that our debt obligations are lower than the most directly comparable GAAP measure.
Total debt reconciles to net debt as follows:
(in millions) September 30,
2026 		December 31,
2025
Total debt $ 2,004.1 $ 1,429.4
Cash and cash equivalents (74.9) (36.9)
Net debt $ 1,929.2 $ 1,392.5
Adjusted EBITDA and adjusted EBITDA margin - We believe that adjusted EBITDA and adjusted EBITDA margin are metrics that provide meaningful insight into our operating performance. These measures exclude the impact of interest expense, income tax expense, depreciation and amortization expense, and certain other items that may vary for reasons unrelated to current period operating performance. Management uses these measures to evaluate our results of operations, facilitate period-to-period and peer comparisons, and inform strategic decision-making aimed at enhancing performance. We believe that growth in adjusted EBITDA and adjusted EBITDA margin reflects improvement in our operating efficiency and may be indicative of increased enterprise value.
It is important to note that we do not consider adjusted EBITDA to be a measure of liquidity or cash flow. This metric does not reflect cash requirements for interest payments, income taxes, debt service, or capital expenditures.
Net income reconciles to adjusted EBITDA and adjusted EBITDA margin as follows:
Quarter Ended
September 30, 		Nine Months Ended
September 30,
(in millions) 2026 2025 2026 2025
Net income $ 13.0 $ 33.7 $ 68.0 $ 70.2
Net income attributable to non-controlling interest - - (0.1) (0.1)
Depreciation and amortization expense 45.4 32.3 118.3 101.0
Interest expense 35.0 30.5 90.6 92.8
Income tax provision 6.7 13.5 28.4 27.9
Acquisition transaction costs 9.8 - 15.4 -
Restructuring and integration expense 8.9 2.9 14.6 15.6
Share-based compensation expense 6.5 6.0 19.7 17.6
Certain legal, environmental, and other expense 1.8 - 4.0 0.5
Gain on sale of businesses and long-lived assets - - (5.1) -
Adjusted EBITDA $ 127.1 $ 118.9 $ 353.8 $ 325.5
Adjusted EBITDA as a percentage of total revenue (adjusted EBITDA margin) 22.9 % 22.0 % 22.2 % 20.4 %
Adjusted diluted EPS - We believe that adjusted diluted EPS is a valuable metric that provides insight into our operating performance. Adjusted diluted EPS is calculated by excluding the impact of certain non-cash items and other items that we believe are not indicative of core operating results for the current period. By removing these effects, adjusted diluted EPS offers a perspective on the underlying performance of our business and facilitates more consistent comparisons across reporting periods. Management uses adjusted diluted EPS as a key metric to evaluate our operating results, assess performance trends, and inform strategic decision-making. This measure assists both management and investors in analyzing current period results and in assessing potential future performance by focusing on earnings generated from ongoing operations.
It is important to note that while adjusted diluted EPS excludes certain items to enhance comparability, these items may recur in future periods and the amounts recognized may vary significantly.
Diluted EPS reconciles to adjusted diluted EPS as follows:
Quarter Ended
September 30, 		Nine Months Ended
September 30,
(in millions, except per share amounts) 2026 2025 2026 2025
Net income $ 13.0 $ 33.7 $ 68.0 $ 70.2
Net income attributable to non-controlling interest - - (0.1) (0.1)
Net income attributable to Deluxe 13.0 33.7 67.9 70.1
Acquisition amortization 20.4 10.6 41.2 33.8
Acquisition transaction costs 9.8 - 15.4 -
Restructuring and integration expense 8.9 2.9 14.6 15.6
Share-based compensation expense 6.5 6.0 19.7 17.6
Certain legal, environmental, and other expense 1.8 - 4.0 0.5
Gain on sale of businesses and long-lived assets - - (5.1) -
Adjustments, pretax 47.4 19.5 89.8 67.5
Income tax provision impact of pretax adjustments(1)
(11.0) (3.6) (19.2) (14.5)
Adjustments, net of tax 36.4 15.9 70.6 53.0
Adjusted net income attributable to Deluxe 49.4 49.6 138.5 123.1
Re-measurement of share-based awards classified as liabilities
- - - (0.1)
Adjusted income attributable to Deluxe available to common shareholders $ 49.4 $ 49.6 $ 138.5 $ 123.0
Weighted average shares and potential common shares outstanding 46.5 45.6 46.4 45.4
GAAP diluted EPS $ 0.28 $ 0.74 $ 1.46 $ 1.54
Adjustments, net of tax 0.78 0.35 1.53 1.17
Adjusted diluted EPS $ 1.06 $ 1.09 $ 2.99 $ 2.71
(1) The tax effect of the pretax adjustments reflects the tax treatment and applicable tax rates for each adjustment in the relevant tax jurisdictions. Generally, this resulting tax impact approximates the U.S. effective tax rate applied to each adjustment. However, for certain items, such as share-based compensation expense and gains on sales of businesses, the tax effect is determined by whether the amounts are deductible or taxable in the respective tax jurisdictions and the applicable effective tax rates in those jurisdictions.
RESTRUCTURING AND INTEGRATION EXPENSE
Restructuring and integration expense consists of costs incurred in connection with initiatives to improve operating efficiency and support earnings and cash flow growth. These costs primarily include consulting and project management services, internal labor, facility closure and consolidation costs, and employee severance across functional areas.
By the end of 2025, we had completed the material components of our North Star program, a comprehensive, multi-year initiative designed to enhance shareholder value by accelerating adjusted EBITDA growth, increasing cash flow, reducing debt, and improving our leverage ratio. Related restructuring and integration expense incurred during the first nine months of 2026 was not material. However, we continue to realize the benefits of actions taken under the program, which contributed to improved operating results in 2026.
During the first nine months of 2026, we continued to focus on cost management and operational efficiency through workforce adjustments across multiple functions and optimization of our marketing strategies. We also benefited from prior-year initiatives, including operational improvements within our lockbox processing operations.
On a consolidated basis, net income decreased $2.2 million year-over-year in the first nine months of 2026, primarily reflecting costs associated with the Celero acquisition and continued secular declines in our Print segment. However, our cost management and operational efficiency initiatives, together with targeted pricing actions and growth in our payments and data businesses, contributed to improvements in consolidated adjusted EBITDA and adjusted EBITDA margin compared to the first nine months of 2025. In addition, net cash provided by operating activities increased by $47.4 million in the first nine months of
2026 compared to the prior-year period, reflecting improved operating performance and favorable working capital changes, among other factors.
The restructuring and integration expense recognized in the first nine months of 2026 relates to various employee reductions, other efficiency initiatives, and integration activities related to the Celero acquisition. We do not expect the remaining expense associated with Celero integration activities to be material. The majority of the employee reductions included in our restructuring and integration accruals as of September 30, 2026, along with the related severance payments, are expected to be completed by early 2027.
Workforce reductions implemented in 2025 and 2026 are expected to generate cost savings of approximately $2.0 million in cost of revenue and $17.0 million in SG&A expense in 2026 compared to our 2025 results. These projected savings reflect only the impact of workforce reductions and do not represent the total benefits of our cost reduction initiatives. Actual savings may differ from these estimates due to factors such as inflationary pressures and continued strategic investments in the business.
Further information regarding restructuring and integration expense can be found under the caption "Note 9: Restructuring and Integration Expense" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.
SEGMENT RESULTS
We operate four reportable business segments: Merchant Services, B2B Payments, Data Solutions, and Print. Our segments are generally organized by product and service type and reflect the way we manage the business. The financial information presented below is consistent with that presented under the caption "Note 14: Business Segment Information" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part 1, Item 1 of this report, where information regarding revenue from our various product and service offerings can also be found.
Merchant Services
Results for our Merchant Services segment were as follows:
Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2026 2025 Change 2026 2025 Change
Total revenue $ 135.1 $ 98.0 37.9% $ 347.5 $ 297.2 16.9%
Adjusted EBITDA 32.1 20.4 57.4% 83.9 63.5 32.1%
Adjusted EBITDA margin 23.8 % 20.8 % 3.0 pts. 24.1 % 21.4 % 2.7 pts.
Total revenue increased in the third quarter and first nine months of 2026 compared to the same periods in 2025, driven by revenue from the Celero acquisition, new customer implementations, higher transaction volumes from existing partners across several channels, and targeted pricing actions. The Celero acquisition, which closed on July 31, 2026, contributed $33.5 million of revenue in both periods. These increases were partially offset by pressure on consumer and business spending in certain customer channels.
Adjusted EBITDA and adjusted EBITDA margin also improved in the third quarter and first nine months of 2026 compared to the same periods in 2025, reflecting contributions from the Celero acquisition and new customer implementations, targeted pricing actions, and cost management initiatives. These initiatives included the purchase of residual commission rights from an ISO partner in late 2025, which reduced ongoing commission expense.
B2B Payments
Results for our B2B Payments segment were as follows:
Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2026 2025 Change 2026 2025 Change
Total revenue $ 77.3 $ 73.1 5.7% $ 224.4 $ 214.2 4.8%
Adjusted EBITDA 22.5 16.8 33.9% 58.0 45.8 26.6%
Adjusted EBITDA margin 29.1 % 23.0 % 6.1 pts. 25.8 % 21.4 % 4.4 pts.
Total revenue increased in the third quarter of 2026 compared to the third quarter of 2025, driven by revenue from a software license agreement within our broader suite of treasury management offerings, higher remittance processing volumes, and targeted price increases to mitigate the impact of inflation. These increases were partially offset by pressure on remittance processing volumes in certain customer relationships.
Total revenue increased in the first nine months of 2026 compared to the first nine months of 2025, driven by the onboarding of new lockbox and remittance processing clients, higher remittance processing volumes, revenue from a software license agreement, and targeted price increases to mitigate the impact of inflation. These increases were partially offset by pressure on remittance processing volumes in certain customer relationships.
Adjusted EBITDA and adjusted EBITDA margin also increased in the third quarter and first nine months of 2026 compared to the same periods in 2025, driven by targeted pricing actions and ongoing cost management initiatives, including operational efficiencies within our lockbox processing operations and more efficient marketing spending. New client implementations and revenue from a software license agreement also contributed to the improvements.
Data Solutions
Results for our Data Solutions segment were as follows:
Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2026 2025 Change 2026 2025 Change
Total revenue $ 102.9 $ 89.2 15.4% $ 282.6 $ 234.3 20.6%
Adjusted EBITDA 27.6 29.1 (5.2%) 68.6 69.1 (0.7%)
Adjusted EBITDA margin 26.8 % 32.6 % (5.8) pts. 24.3 % 29.5 % (5.2) pts.
Total revenue increased in the third quarter and first nine months of 2026 compared to the same periods in 2025, driven by increases in data-driven marketing revenue of $13.9 million in the third quarter and $49.0 million in the first nine months of the year, reflecting strong demand for customer acquisition marketing activities, particularly from our financial institution partners.
Adjusted EBITDA decreased in the third quarter and first nine months of 2026 compared to the same periods in 2025, primarily driven by higher vendor rebates in the prior-year periods, partially offset by increased data-driven marketing volume.
Adjusted EBITDA margin also decreased in both periods compared to the prior year, reflecting the impact of higher vendor rebates in the prior-year periods and changes in the mix of marketing campaigns.
Print
Results for our Print segment were as follows:
Quarter Ended September 30, Nine Months Ended September 30,
(in millions) 2026 2025 Change 2026 2025 Change
Total revenue $ 238.6 $ 279.9 (14.8%) $ 736.7 $ 852.3 (13.6%)
Adjusted EBITDA 84.3 93.5 (9.8%) 256.0 274.7 (6.8%)
Adjusted EBITDA margin 35.3 % 33.4 % 1.9 pts. 34.7 % 32.2 % 2.5 pts.
Total revenue decreased in the third quarter and first nine months of 2026 compared to the same periods in 2025, primarily driven by weaker demand for promotional products and the ongoing secular decline in order volumes for checks, business forms, and various business accessories. In addition, the sale of the Safeguard small business distributor channel in the first quarter of 2026 reduced revenue by approximately $32.3 million in the third quarter and $79.3 million in the first nine months of 2026. These declines were partially offset by pricing actions implemented to address inflationary pressures.
Adjusted EBITDA also decreased in the third quarter and first nine months of 2026 compared to the same periods in 2025, primarily driven by lower revenue and inflationary pressures on materials and delivery costs. The sale of the Safeguard small business distributor channel reduced adjusted EBITDA by approximately $2.9 million in the third quarter and $7.8 million in the first nine months of 2026. These impacts were partially offset by ongoing cost management initiatives, including disciplined operating expense control and process efficiency improvements.
Adjusted EBITDA margin increased year-over-year in both periods, as pricing actions, cost management initiatives, and a shift in revenue mix toward higher-margin check products more than offset inflationary cost pressures.
CASH FLOWS AND LIQUIDITY
As of September 30, 2026, we held cash and cash equivalents of $74.9 million. Additionally, we had restricted cash and restricted cash equivalents, which were included in settlement processing assets and other non-current assets in the consolidated balance sheet, totaling $19.3 million. The following table should be read in conjunction with the consolidated statements of cash flows located in Part I, Item 1 of this report.
Nine Months Ended September 30,
(in millions) 2026 2025 Change
Net cash provided by operating activities $ 215.9 $ 168.5 $ 47.4
Net cash used in investing activities (675.8) (76.0) (599.8)
Net cash provided by (used in) financing activities 242.3 (339.3) 581.6
Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents (1.2) 1.2 (2.4)
Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents $ (218.8) $ (245.6) $ 26.8
Free cash flow(1)
$ 134.9 $ 95.9 $ 39.0
(1) See Reconciliation of Non-GAAP Financial Measures within the Consolidated Results of Operations section, which defines and illustrates how we calculate free cash flow.
Net cash provided by operating activities increased by $47.4 million in the first nine months of 2026 compared to the first nine months of 2025. The increase was primarily driven by the benefits of our cost management and pricing actions, a $27.9 million reduction in income tax payments due to the impact of federal tax law changes enacted in July 2025, favorable changes in working capital, and growth in our payments and data businesses. These benefits were partially offset by transaction costs associated with the Celero acquisition, a $12.4 million increase in performance-based employee bonuses related to our 2025 results, continued revenue pressures in the Print segment, inflationary cost pressures, and the impact of the Safeguard divestiture.
Included in net cash provided by operating activities were the following operating cash outflows:
Nine Months Ended September 30,
(in millions) 2026 2025 Change
Interest payments $ 85.8 $ 83.6 $ 2.2
Performance-based employee cash bonuses(1)
36.8 24.4 12.4
Prepaid product discount payments 20.4 22.9 (2.5)
Severance payments 4.6 7.5 (2.9)
Income tax payments, net of refunds 2.7 30.6 (27.9)
(1) Amounts reflect compensation based on total company and segment performance.
Net cash used in investing activities for the first nine months of 2026 increased by $599.8 million compared to the first nine months of 2025. This change was primarily driven by cash paid to acquire Celero and higher capital expenditures in 2026, partially offset by proceeds from the surrender of COLI policies and the sale of the Safeguard small business distributor channel within our Print segment in the first quarter of 2026.
Net cash provided by financing activities for the first nine months of 2026 increased by $581.6 million compared to the first nine months of 2025, primarily reflecting additional borrowings under our amended credit agreement to fund the Celero acquisition. This increase was partially offset by changes in settlement processing obligations, a holdback payment in 2026 related to the prior-year acquisition of the CheckMatch electronic check conveyance service business, and payments for debt issuance costs associated with the new financing. In addition, payroll tax payments related to the vesting of employee share-based awards increased due to our higher stock price.
Significant investing and financing cash transactions for each period were as follows:
Nine Months Ended September 30,
(in millions) 2026 2025 Change
Payments for acquisitions, net of cash, cash equivalents, restricted cash, and restricted cash equivalents acquired $ (642.9) $ (12.1) $ (630.8)
Net change in settlement processing obligations (256.9) (236.0) (20.9)
Purchases of capital assets (81.0) (72.6) (8.4)
Cash dividends paid to shareholders (43.0) (41.6) (1.4)
Holdback payments for acquired assets (13.0) (0.6) (12.4)
Employee taxes paid for shares withheld (12.8) (5.6) (7.2)
Payments for debt issuance costs (12.6) - (12.6)
Net change in debt 581.1 (56.1) 637.2
Proceeds from company-owned life insurance policies 34.0 3.0 31.0
Proceeds from sale of businesses and long-lived assets 10.8 2.0 8.8
When assessing our liquidity and capital resource requirements, we consider a range of factors, including scheduled debt service, lease obligations, other contractual commitments, and contingent liabilities. Detailed information regarding the maturities of our long-term debt and our contingent liabilities can be found under the captions "Note 12: Debt" and "Note 13: Other Commitments and Contingencies," both of which appear in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report. Information regarding our lease obligations can be found under the caption "Note 13: Leases" in the Notes to Consolidated Financial Statements appearing in the 2025 Form 10-K, and information regarding our contractual obligations can be found in the MD&A section of the 2025 Form 10-K, under the section entitled Cash Flows and Liquidity.
In April 2026, we entered into a 16-year facility lease, classified as a finance lease, which commenced in June 2026. The aggregate undiscounted lease payments total $88.3 million over the lease term, including $22.5 million due through 2031, with the remainder due thereafter.
As of September 30, 2026, we held cash and cash equivalents of $74.9 million and had $189.8 million of available borrowing capacity under our revolving credit facility. We believe that net cash generated by operations, together with our cash and cash equivalents on hand and available capacity under our revolving credit facility, will be sufficient to meet our operational needs, contractual obligations, and debt service requirements over the next 12 months. This assessment takes into account our working capital position and anticipated cash flows, including those associated with the additional debt incurred in connection with the acquisition of Celero. We regularly monitor our liquidity position in light of potential risks, including market volatility, interest rate fluctuations, and macroeconomic uncertainty, and we are prepared to adjust our capital allocation strategy as needed.
CAPITAL RESOURCES
As of September 30, 2026, the principal amount of our debt obligations was $2.03 billion, compared to $1.44 billion as of December 31, 2025. Our capital structure for each period was as follows:
September 30, 2026 December 31, 2025
(in millions) Amount Weighted-
average interest rate 		Amount Weighted-
average interest rate 		Change
Fixed interest rate $ 1,525.0 7.3 % $ 925.0 8.1 % $ 600.0
Floating interest rate 500.5 5.8 % 519.4 5.8 % (18.9)
Debt principal 2,025.5 6.9 % 1,444.4 7.3 % 581.1
Shareholders' equity 717.8 680.7 37.1
Total capital $ 2,743.3 $ 2,125.1 $ 618.2
As of September 30, 2026, total commitments under our revolving credit facility were $400.0 million, with $189.8 million available for borrowing. Detailed information regarding our outstanding debt, including our debt service obligations and debt covenants, can be found under the caption "Note 12: Debt" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.
In connection with the acquisition of Celero on July 31, 2026, as discussed in the Executive Overview section, we amended our credit agreement, which consists of an $800.0 million senior secured term loan facility and a $400.0 million senior secured revolving credit facility. We utilized the additional capacity under the term loan facility, as well as a draw on the revolving credit facility, to fund the acquisition and related fees and expenses. The amended credit agreement extends the maturities of both the term loan and revolving credit facilities to July 2031. The term loan facility is structured to be repaid in equal quarterly installments of $15.0 million from December 31, 2026 through September 30, 2030 and $20.0 million from December 31, 2030 through June 30, 2031, with the remaining balance due on July 31, 2031.
On July 31, 2026, we entered into amortizing interest rate swap agreements to mitigate variability in interest payments on a portion of our variable-rate debt. The interest rate swaps, which mature in July 2030, effectively convert $600.0 million of variable-rate debt to fixed-rate debt. The weighted-average fixed rate under the swaps was 4.13% as of September 30, 2026.
While the Celero acquisition increases our debt and leverage levels in the near term, we believe anticipated cash flows from operations, together with available capacity under our credit arrangements, will be sufficient to support our ongoing operations and service our debt obligations. We will continue to evaluate opportunities to optimize our capital structure.
In October 2018, our board of directors authorized the repurchase of up to $500.0 million of our common stock. This authorization does not have an expiration date. We have not repurchased any shares under this authorization since the first quarter of 2020. As of September 30, 2026, $287.5 million remained available for repurchase. Information regarding changes in shareholders' equity can be found in the consolidated statements of shareholders' equity located in Part I, Item 1 of this report.
CRITICAL ACCOUNTING ESTIMATES
A description of our critical accounting estimates was provided in the MD&A section of the 2025 Form 10-K. During the first nine months of 2026, there were no modifications in the assessment or determination of these estimates. Information regarding the annual goodwill impairment assessment completed during the third quarter of 2026 can be found under the caption "Note 8: Fair Value Measurements" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part 1, Item 1 of this report.
Business combinations - We account for business combinations using the acquisition method of accounting, which requires us to estimate the fair values of assets acquired and liabilities assumed as of the acquisition date. These estimates involve significant judgment, particularly in valuing acquired intangible assets. The valuation of intangible assets generally involves assumptions regarding forecasted revenue, customer attrition, EBITDA margins, discount rates, and other factors. These assumptions are based on management's expectations of future operating performance and market conditions and are inherently uncertain. Changes in key assumptions could materially affect the estimated fair values of acquired intangible assets and the amount of goodwill recognized. The fair values assigned to acquired intangible assets, along with their estimated useful lives and amortization methods, determine the amount and timing of future amortization expense. In addition, if actual operating results fall below expectations, the resulting decline in the estimated fair value of the business could increase the risk of future goodwill impairment charges. In connection with our acquisition of Celero on July 31, 2026, we applied these valuation techniques to determine the preliminary fair values of assets acquired and liabilities assumed, as discussed under the caption "Note 6: Acquisitions and Divestitures" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.
New accounting pronouncements - Information regarding accounting pronouncements not yet adopted can be found under the caption "Note 2: New Accounting Pronouncements" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.
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