Deluxe Corporation

05/07/2026 | Press release | Distributed by Public on 05/07/2026 08:15

Quarterly Report for Quarter Ending March 31, 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 includes a more detailed discussion of our revenue and expenses;
•Cash Flows and Liquidity and Capital Resources that discusses 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. In the first quarter of 2026, we continued to execute on our strategic priorities of accelerating profitable growth, enhancing operational efficiency, and disciplined capital allocation.
Accelerating profitable growth - In March 2026, we completed the divestiture of the Safeguard small business distributor channel within our Print segment, generating $22.8 million of net proceeds. The transaction reduced first quarter 2026 Print revenue by approximately $12.6 million and Print adjusted EBITDA by approximately $1.7 million, and enables greater focus on our core growth businesses and ongoing portfolio optimization. Collectively, our payments and data businesses delivered 12.5% year-over-year revenue growth and a 22.8% increase in adjusted EBITDA in the first quarter of 2026.
Enhancing operational efficiency - In the first quarter of 2026, we reduced selling, general and administrative (SG&A) expense by 7.1% year-over-year, reflecting the benefits of our ongoing and prior cost management efforts. Additionally, despite revenue pressures in the Print segment, operational improvements resulted in adjusted EBITDA margin improvement for this segment. These results contributed to year-over-year increases in net income, consolidated adjusted EBITDA, and consolidated adjusted EBITDA margin in the first quarter of 2026.
Disciplined capital allocation - We continued to apply our capital allocation framework, working to ensure investments are aligned with our growth objectives and deliver optimal returns. In the first quarter of 2026, net cash provided by operating activities increased by $2.4 million year-over-year, and we reduced total debt by $32.3 million compared to year-end 2025.
2026 Financial Results
Highlights of our financial results for the first quarter of 2026 compared to the first quarter of 2025 include:
•Consolidated revenue - Increased by $1.6 million to $538.1 million, driven by growth in all three of our payments and data businesses. This growth was partially offset by demand softness for promotional products and the ongoing secular decline in order volumes for checks, business forms, and various business accessories in our Print segment. In addition, our first quarter business exit resulted in a decrease in revenue of approximately $12.6 million.
•Net income - Increased by $21.8 million to $35.8 million, primarily reflecting the impact of our cost management and pricing initiatives, as well as lower restructuring and integration expense. Growth in our payments and data businesses further contributed to the improvement. Additionally, during the first quarter of 2026, we recognized a $5.1 million gain from the sale of the Safeguard small business distributor channel within the Print segment, and interest expense decreased $3.6 million year-over-year. These favorable factors were partially offset by the continuing demand softness and secular declines in the Print segment, as well as inflationary pressures impacting material and delivery costs.
•Adjusted EBITDA - Increased $17.7 million to $117.9 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 demand softness and the ongoing secular declines in the Print segment and inflationary cost pressures. In addition, our first quarter business exit resulted in a decrease in adjusted EBITDA of approximately $1.7 million.
Adjusted EBITDA margin increased to 21.9% for the first quarter of 2026, compared to 18.7% for the first quarter 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 $2.4 million to $52.7 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, and lower cash expenditures for restructuring and integration activities.
These benefits were partially offset by higher payouts for performance-based employee cash bonuses related to our 2025 performance, timing-related changes in accounts payable, demand softness and continuing secular declines in the Print segment, and inflationary cost pressures.
•Free cash flow - Increased by $3.0 million to $27.3 million, 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 March 31, 2026, 66% of our debt had a weighted-average fixed interest rate of 8.1%, which provides partial insulation from changes in market interest rates. This capital structure helps moderate our exposure to interest rate volatility in a higher-rate environment, although future changes in rates could still affect our borrowing costs due to our variable-rate debt.
Inflationary pressures have continued to affect the broader economy, particularly with respect to logistics, energy, and certain raw material costs. These pressures remain an important external factor influencing our cost structure, pricing dynamics, and customer demand. In response, we implemented targeted price adjustments, particularly within our Print and Merchant Services segments, to help offset increased costs while remaining mindful of customer price sensitivity. We continue to monitor inflation trends closely, including the potential for further cost volatility driven by supply chain disruptions, energy markets, and raw material price fluctuations.
Global economic conditions remain uncertain, reflecting ongoing geopolitical unrest and evolving trade policies, treaties, and tariffs. These developments have the potential to disrupt supply chains, increase operating costs, and affect the availability and timing of certain goods and services. In addition, heightened geopolitical tensions have increased cybersecurity and technology-related risks, reinforcing the importance of continued investments in information security, data protection, and technology resilience.
We also closely track 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 continued pressure on consumer confidence, which has contributed to softer demand trends, particularly within discretionary spending categories. Small business sentiment softened in early 2026 amid higher uncertainty and cost pressures, although underlying demand and employment indicators remained relatively stable. Persistent inflation concerns, uncertainty in the labor market outlook, and trade-related disruptions may continue to influence our customers' purchasing behavior. A sustained period of economic uncertainty or a broader slowdown in global economic activity could adversely affect our financial position, results of operations, and future growth prospects.
Liquidity
As of March 31, 2026, we held cash and cash equivalents of $27.2 million, along with an additional $380.9 million available for borrowing under our revolving credit facility. We anticipate that capital expenditures will be between $90.0 and $100.0 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 available credit, 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. 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 March 31, 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 March 31,
(in millions) 2026 2025 Change
Total revenue $ 538.1 $ 536.5 0.3%
Total revenue increased in the first quarter of 2026 compared to the first quarter of 2025, primarily driven by strong demand for our data-driven marketing services, which contributed a $20.5 million year-over-year increase. Revenue growth was also supported by strategic price increases implemented in response to inflation, particularly within our Print and Merchant Services segments, as well as growth in Merchant Services volume driven by favorable government channel activity and new customer implementations. These increases were partially offset by soft demand for promotional products and the continued secular decline in order volumes for checks, business forms, and various business accessories in our Print segment, as well as the impact of the first quarter business exit, which resulted in an approximate $12.6 million year-over-year reduction in 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 13: 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
March 31,
2026 2025
Merchant Services 19.5 % 18.2 %
B2B Payments 13.7 % 13.1 %
Data Solutions 18.1 % 14.4 %
Print 48.7 % 54.3 %
Total revenue 100.0 % 100.0 %
Cost of Revenue
Quarter Ended March 31,
(in millions) 2026 2025 Change
Total cost of revenue $ 258.7 $ 255.5 1.3%
Total cost of revenue as a percentage of total revenue
48.1 % 47.6 % 0.5 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 first quarter of 2026 compared to the first quarter of 2025, primarily due to the revenue growth in our data-driven marketing business and inflationary pressures on materials and delivery costs. These increases were partially offset by lower costs associated with the 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 reduced cost of revenue by approximately $6.0 million in the first quarter.
As a percentage of total revenue, total cost of revenue increased in the first quarter of 2026 compared to the first quarter of 2025. Inflationary pressures and a shift in revenue mix toward our lower-margin growth businesses contributed to margin pressure, partially offset by the benefits of cost management initiatives and pricing actions implemented to address inflation.
Selling, General and Administrative (SG&A) Expense
Quarter Ended March 31,
(in millions) 2026 2025 Change
SG&A expense $ 209.3 $ 225.2 (7.1%)
SG&A expense as a percentage of total revenue
38.9 % 42.0 % (3.1) pts.
SG&A expense decreased in the first quarter of 2026 compared to the first quarter of 2025, primarily as a result of our ongoing cost management initiatives, including actions such as workforce adjustments across multiple functions and the optimization of our marketing strategies. In addition, medical costs were lower and commission expense declined due to lower Print revenue volumes. The business exit during the quarter further reduced SG&A expense by approximately $5.9 million.
As a percentage of total revenue, SG&A expense decreased in the first quarter of 2026 compared to the first quarter of 2025, reflecting the impact of our cost management actions.
Restructuring and Integration Expense
Quarter Ended March 31,
(in millions) 2026 2025 Change
Restructuring and integration expense $ 3.4 $ 7.7 (55.8%)
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. 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 March 31,
(in millions) 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: Divestitures" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part 1, Item 1 of this report.
Interest Expense
Quarter Ended March 31,
(in millions) 2026 2025 Change
Interest expense $ 27.7 $ 31.3 (11.5%)
Weighted-average debt outstanding 1,441.6 1,553.6 (7.2%)
Weighted-average interest rate 7.2 % 7.6 % (0.4) pts.
Interest expense decreased in the first quarter of 2026 compared to the first quarter of 2025 due to a reduction in both average debt outstanding and the weighted-average interest rate. Our exposure to variable-rate debt remains a key consideration for future interest expense. Based on the amount of variable-rate debt outstanding as of March 31, 2026, a one percentage point change in the weighted-average interest rate would result in a $4.0 million impact on interest expense for the remainder of 2026.
Income Tax Provision
Quarter Ended March 31,
(in millions) 2026 2025 Change
Income tax provision $ 10.8 $ 5.3 103.8%
Effective income tax rate 23.2 % 27.5 % (4.3) pts.
The effective income tax rate decreased in the first quarter of 2026 compared to the first quarter of 2025. The 2026 rate benefited from a higher tax benefit related to employee share-based compensation and lower foreign income tax expense. These decreases in our effective income tax rate were partially offset by an increase in the deferred tax valuation allowance of $2.3 million related to a capital loss carryforward generated during the quarter that we do not expect to fully utilize, as well as the tax impact of non-deductible executive compensation expense and state income taxes. Further information regarding our income tax provision can be found under the caption "Note 9: 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 March 31,
(in millions, except per share amounts) 2026 2025 Change
Net income $ 35.8 $ 14.0 155.7%
Diluted EPS 0.77 0.31 148.4%
Adjusted diluted EPS 1.05 0.75 40.0%
Net income and diluted EPS increased in the first quarter of 2026 as compared to the first quarter of 2025, driven by the factors discussed above. Adjusted diluted EPS also increased year-over-year, primarily reflecting the benefits of our cost management and pricing initiatives, as well as growth in our payments and data businesses. These favorable impacts were partially offset by the soft demand for promotional products and the ongoing secular declines in the Print segment and inflationary cost pressures. In addition, the first quarter business exit reduced adjusted diluted EPS by $0.03 per share on a year-over-year basis. 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.
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:
Quarter Ended
March 31,
(in millions) 2026 2025
Net cash provided by operating activities $ 52.7 $ 50.3
Purchases of capital assets (25.4) (26.0)
Free cash flow $ 27.3 $ 24.3
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) March 31,
2026 		December 31,
2025
Total debt $ 1,397.1 $ 1,429.4
Cash and cash equivalents (27.2) (36.9)
Net debt $ 1,369.9 $ 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 taxes, depreciation and amortization, 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
March 31,
(in millions) 2026 2025
Net income $ 35.8 $ 14.0
Depreciation and amortization expense 36.7 35.3
Interest expense 27.7 31.3
Income tax provision 10.8 5.3
Share-based compensation expense 6.7 5.4
Restructuring and integration expense 3.7 8.4
Certain legal and environmental expense 1.6 0.5
Gain on sale of businesses and long-lived assets (5.1) -
Adjusted EBITDA $ 117.9 $ 100.2
Adjusted EBITDA as a percentage of total revenue (adjusted EBITDA margin) 21.9 % 18.7 %
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
March 31,
(in millions, except per share amounts) 2026 2025
Net income $ 35.8 $ 14.0
Acquisition amortization 10.7 11.8
Share-based compensation expense 6.7 5.4
Restructuring and integration expense 3.7 8.4
Certain legal and environmental expense 1.6 0.5
Gain on sale of businesses and long-lived assets (5.1) -
Adjustments, pretax 17.6 26.1
Income tax provision impact of pretax adjustments(1)
(4.7) (6.2)
Adjustments, net of tax 12.9 19.9
Adjusted income attributable to Deluxe available to common shareholders $ 48.7 $ 33.9
Weighted average shares and potential common shares outstanding 46.3 45.3
GAAP diluted EPS $ 0.77 $ 0.31
Adjustments, net of tax 0.28 0.44
Adjusted diluted EPS $ 1.05 $ 0.75
(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. We did not incur any additional restructuring and integration expense related to the North Star program in the first quarter of 2026. However, we continue to realize the benefits of actions taken under the program, which contributed to improved operating results during the first quarter of 2026.
Both adjusted EBITDA and adjusted EBITDA margin increased year-over-year during the first quarter of 2026. These improvements were supported by a 7.1% reduction in SG&A expense. Within our Print segment, adjusted EBITDA margin also improved as a result of our optimization actions, even as revenue pressures continue in the business. In addition, net cash provided by operating activities increased by $2.4 million year-over-year, and we reduced total debt by $32.3 million compared to the prior year-end. These results reflect the ongoing benefits of initiatives completed in prior periods, as well as incremental improvements from current-period actions.
The restructuring and integration expense recognized in the first quarter of 2026 relates to various employee reductions and other efficiency initiatives. The majority of the employee reductions included in our restructuring and integration accruals as of March 31, 2026, along with the related severance payments, are expected to be completed by the end of 2026. As a result of these employee reductions, we expect to realize annual cost savings in 2026 of approximately $2.0 million in cost of sales and $20.0 million in SG&A expense compared to our 2025 results of operations. These expected savings relate only to the employee reductions and do not reflect the total impact of all cost reduction initiatives. Actual results may be affected by factors such as inflationary cost pressures and continued investments in the business.
Further information regarding restructuring and integration expense can be found under the caption "Note 8: 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 13: 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 March 31,
(in millions) 2026 2025 Change
Total revenue $ 104.9 $ 97.8 7.3%
Adjusted EBITDA 26.8 21.4 25.2%
Adjusted EBITDA margin 25.5 % 21.9 % 3.6 pts.
Total revenue increased in the first quarter of 2026 compared to the first quarter of 2025, driven by a combination of factors, including higher transaction volumes from government clients, new banking customer implementations, and targeted pricing actions. These positive drivers were partially offset by ongoing economic uncertainty, which continued to exert pressure on consumer and business spending in certain customer channels.
Adjusted EBITDA and adjusted EBITDA margin also improved in the first quarter of 2026 compared to the first quarter of 2025, reflecting targeted price increases, cost management initiatives, including the year-end 2025 purchase of residual commission rights from an independent sales organization (ISO) partner, and contributions from new banking client implementations.
B2B Payments
Results for our B2B Payments segment were as follows:
Quarter Ended March 31,
(in millions) 2026 2025 Change
Total revenue $ 73.5 $ 70.2 4.7%
Adjusted EBITDA 17.2 13.3 29.3%
Adjusted EBITDA margin 23.4 % 18.9 % 4.5 pts.
Total revenue increased in the first quarter of 2026 compared to the first quarter of 2025, driven by the onboarding of new receivables processing clients, increased lockbox processing volume, and the implementation of modest price increases to counteract inflationary pressure. These impacts were partially offset by pressure on receivables processing volumes in certain customer relationships.
Adjusted EBITDA and adjusted EBITDA margin also increased in the first quarter of 2026 as compared to the first quarter of 2025, largely attributable to our pricing strategies and ongoing cost management actions, including operational efficiencies within our lockbox processing operations and marketing optimization strategies.
Data Solutions
Results for our Data Solutions segment were as follows:
Quarter Ended March 31,
(in millions) 2026 2025 Change
Total revenue $ 97.5 $ 77.2 26.3%
Adjusted EBITDA 22.8 19.7 15.7%
Adjusted EBITDA margin 23.4 % 25.5 % (2.1) pts.
Total revenue increased in the first quarter of 2026 compared to the first quarter of 2025, driven by a $20.5 million year-over-year increase in data-driven marketing revenue, reflecting strong demand for customer acquisition marketing activities, particularly from our financial institution partners.
Adjusted EBITDA also increased in the first quarter of 2026 compared to the first quarter of 2025, primarily driven by the higher data-driven marketing volume. Adjusted EBITDA margin decreased in the first quarter of 2026 compared to the first quarter of 2025, driven by an unfavorable mix of clients and campaign activity relative to the prior year, which impacted overall profitability.
Print
Results for our Print segment were as follows:
Quarter Ended March 31,
(in millions) 2026 2025 Change
Total revenue $ 262.2 $ 291.3 (10.0%)
Adjusted EBITDA 85.7 90.8 (5.6%)
Adjusted EBITDA margin 32.7 % 31.2 % 1.5 pts.
Total revenue decreased in the first quarter of 2026 compared to the first quarter of 2025, mainly due to soft demand for promotional products and the ongoing secular decline in order volumes for checks, business forms, and various business accessories. In addition, we completed the sale of the Safeguard small business distributor channel, which drove a decrease in revenue of approximately $12.6 million. These revenue declines were partially offset by our pricing strategies implemented to address inflationary pressures.
Adjusted EBITDA also decreased in the first quarter of 2026 compared to the first quarter of 2025, largely attributable to the lower revenue and inflationary pressures affecting material and delivery costs. In addition, the exit from the Safeguard small business distributor channel drove a decrease in adjusted EBITDA of approximately $1.7 million. We continued to execute cost management actions, including disciplined operating expense control and process efficiency improvements, which partially offset these impacts.
Adjusted EBITDA margin increased in the first quarter of 2026 compared to the first quarter of 2025, as pricing actions, cost management initiatives, and a shift in revenue mix toward higher-margin check products more than offset the effect of inflationary cost pressures.
CASH FLOWS AND LIQUIDITY
As of March 31, 2026, we held cash and cash equivalents of $27.2 million. Additionally, we had restricted cash and restricted cash equivalents, which were included in settlement processing assets and other non-current assets on the consolidated balance sheet, totaling $35.1 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.
Quarter Ended March 31,
(in millions) 2026 2025 Change
Net cash provided by operating activities $ 52.7 $ 50.3 $ 2.4
Net cash provided (used) by investing activities 11.1 (24.6) 35.7
Net cash used by financing activities (314.1) (268.6) (45.5)
Effect of exchange rate change on cash, cash equivalents, restricted cash, and restricted cash equivalents (0.4) 1.0 (1.4)
Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents $ (250.7) $ (241.9) $ (8.8)
Free cash flow(1)
$ 27.3 $ 24.3 $ 3.0
(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 $2.4 million in the first quarter of 2026 compared to the first quarter of 2025. The increase was primarily driven by the benefits of our cost management and pricing actions, a $14.3 million reduction in income tax payments due to the impact of federal tax law changes, and lower cash expenditures for restructuring and integration activities. These increases were partially offset by a $12.4 million increase in payouts for performance-based employee cash bonuses related to our 2025 performance, timing-related changes in accounts payable, continuing demand softness and secular declines in the Print segment, and inflationary cost pressures.
Included in net cash provided by operating activities were the following operating cash outflows:
Quarter Ended March 31,
(in millions) 2026 2025 Change
Performance-based employee cash bonuses(1)
$ 36.8 $ 24.4 $ 12.4
Interest payments 26.0 24.7 1.3
Prepaid product discount payments 8.1 8.5 (0.4)
Severance payments 2.5 1.8 0.7
Income tax (refunds) payments, net (2.0) 12.3 (14.3)
(1) Amounts reflect compensation based on total company and segment performance.
Net cash provided by investing activities for the first quarter of 2026 increased $35.7 million compared to the first quarter of 2025. The increase was driven by proceeds from the surrender of company-owned life insurance policies and proceeds from the sale of the Safeguard small business distributor channel within our Print segment.
Net cash used by financing activities for the first quarter of 2026 increased by $45.5 million compared to the first quarter of 2025, driven by higher net payments on debt and a holdback payment made in 2026 related to the 2025 acquisition of the CheckMatch electronic check conveyance service business. In addition, payments for payroll taxes on the vesting of employee share-based awards were higher in 2026 due to our higher stock price.
Significant investing and financing cash transactions for each period were as follows:
Quarter Ended March 31,
(in millions) 2026 2025 Change
Net change in settlement processing obligations $ (240.0) $ (237.0) $ (3.0)
Net change in debt (33.4) (11.6) (21.8)
Purchases of capital assets (25.4) (26.0) 0.6
Cash dividends paid to shareholders (15.3) (14.5) (0.8)
Holdback payments for acquired assets (12.9) (0.5) (12.4)
Employee taxes paid for shares withheld (12.4) (5.2) (7.2)
Proceeds from company-owned life insurance policies 25.2 - 25.2
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 11: Debt" and "Note 12: 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 new facility lease agreement that will commence on June 1, 2026. The lease has a term of 16 years and provides for gross rental payments beginning in 2027, totaling approximately $88.0 million over the lease term.
As of March 31, 2026, we held cash and cash equivalents of $27.2 million and had $380.9 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 the available credit, 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. 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 March 31, 2026, the principal amount of our debt obligations was $1.41 billion, compared to $1.44 billion as of December 31, 2025. Our capital structure for each period was as follows:
March 31, 2026 December 31, 2025
(in millions) Amount Weighted-
average interest rate 		Amount Weighted-
average interest rate 		Change
Fixed interest rate $ 925.0 8.1 % $ 925.0 8.1 % $ -
Floating interest rate 486.0 5.8 % 519.4 5.8 % (33.4)
Debt principal 1,411.0 7.3 % 1,444.4 7.3 % (33.4)
Shareholders' equity 696.8 680.7 16.1
Total capital $ 2,107.8 $ 2,125.1 $ (17.3)
Total commitments under our revolving credit facility were $400.0 million, with $380.9 million available for borrowing as of March 31, 2026. Detailed information regarding our outstanding debt, including our debt service obligations and debt covenants, can be found under the caption "Note 11: Debt" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.
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 March 31, 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 quarter of 2026, there were no modifications in the assessment or determination of these estimates.
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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