Deluxe saw a steady increase in business over the summer months, allowing it to report better-than-expected quarterly results, officials said.
The Shoreview-based company also made more progress in its transition from a check-manufacturing firm to a small-business services provider, said CEO Barry McCarthy.
"Deluxe delivered better than expected results for the third quarter while accelerating our historic transformation, despite COVID-19 challenges," McCarthy said in a news release.
Results for the quarter showed sequentially improving results over the second quarter in revenue, net income and adjusted EBITDA margins, the company said. It also exceed analysts' expectations on revenue and earnings.
For the quarter ended Sept. 30, Deluxe earned $29.4 million, or 70 cents per share, compared with a net loss of $318.5 million, or $7.49 per share, in the same quarter last year that included an asset impairment charge of $391 million. Adjusted EPS for the quarter was $1.47 per share, down 14% from $1.71 per share reported in the third quarter of 2019 and better than the $1.03 per share expectation from analysts.
Revenue for the quarter was $439.5 million, down 11% from the same quarter last year, as Deluxe continues to work through the coronavirus challenges to its business. Analysts had expected revenue of $417 million for the quarter.
Deluxe has been historically known as a printer of checks and other business forms, but its collection of small business, electronic payments and treasury management services account for a continually increasing percentage of its business.
The company's "One Deluxe" strategy was launched by McCarthy shortly after he was named CEO and is a strategic effort to have Deluxe salespeople cross-sell more of its related services rather than sell each solution separately.
"Everyone sells at Deluxe. Our 'One Deluxe' approach works, bringing the best of Deluxe to our customers to solve their problems," McCarthy told analysts on a Thursday afternoon earnings call. "Our sales-driven 'One Deluxe' approach and financial health helped us win two important new deals in-quarter, closing a total of six of our top 25 prospects year-to-date."
McCarthy's strategic transformation plans also include a review of Deluxe's real estate portfolio aimed at reducing operating expenses. Over the past 18 months, it has closed nearly 50 of 80 locations, included seven in the third quarter.
The company also announced during the quarter that it would move its headquarters from Shoreview to downtown Minneapolis in 2021 and that it is building a financial-technology center near Atlanta.
Developers have already purchased Deluxe's 40-acre campus in Shoreview and have plans to redevelop the site.
Next week, the company will launch the fifth season of its "Small Business Revolution" TV series that highlights small-town revivals that can be done through investments in its small businesses. The new season will focus on the Pennsylvania town of Fredonia and feature the raft of business services that Deluxe offers.
The series picks towns with troubled or changing economies and has small business consultants coach companies on how to change to attract new customers.
Deluxe generally brings in a rotating mix of consultants, many from Minnesota, to work with small-business owners and the series co-hosts Amanda Brinkman of Deluxe and home renovation expert Ty Pennington. For season 5, consultants include Arwyn Birch and Teresa Fox, co-owners of Minneapolis-based Glam Doll Donuts; JJ Haywood, CEO of Twin Cities-based Pizza Lucé; and Mike Luckraft, general manager of golf at Legends Golf Club in Prior Lake.
Deluxe reported its results after the market closed Thursday. Shares lost 5% of their value on Friday to close at $21.69. Year-to-date shares are off more than 50%.
Patrick Kennedy • 612-673-7926