Deluxe Corp. continues to see progress from its efforts to diversify and offset the continuing decline in paper checks, its core business.
The Shoreview-based company Thursday reported first-quarter sales and earnings that beat both its own and Wall Street's estimates. In a conference call, CEO Lee Schram said the results were "a home run ... despite a continued sluggish economic environment."
Earnings for the quarter ended March 31 totaled $44.1 million, or 88 cents a share on an adjusted basis, compared with $32.6 million, or 75 cents a share, last year. Analysts were expecting Deluxe to earn 79 cents a share while the top end of the company's forecast was 81 cents.
Deluxe has made several acquisitions in recent years to lessen its dependence on checks and turn itself into a products and services provider for financial institutions and small businesses. Checks still accounted for about 61 percent of revenue in 2011, down from about 64 percent in 2010.
The acquisitions have included companies that provide logo design, Web hosting and search engine marketing services for small companies. "We will continue to assess potential small- to medium-sized acquisitions," Schram said on the conference call.
John Kraft, an analyst at D.A. Davidson, said the only disappointment in the quarter was Deluxe's losing out on a bid to win a large contract from a customer that the company declined to identify. Other than that, the company "is truly firing on all cylinders," Kraft said in a research note.
In the first quarter, Deluxe's small-business segment posted a 15 percent revenue gain, contributing $230 million to total revenue of $378 million in the period. That compares with total revenue of $350 million a year ago. Analysts had estimated revenue of $361 million; the top end of the company's estimate was $366 million.
Deluxe boosted its earnings forecast for the year by 10 cents a share, to a range of $3.20 to $3.40. The stock closed at $24.01 a share, up almost 5 percent for the day.
