Title

Presentation

Deluxe Corporation beats earnings expectations. Reported EPS is $0.75, expectations were $0.72.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Deluxe Quarterly Earnings Conference Call. All participants are currently in a listen-only mode. And today’s call is being recorded. At this time, I’d like to turn the conference over to your host, Vice President of Strategy and Investor Relations, Brian Anderson. Please go ahead.

Brian Anderson: Thank you, operator, and welcome to the Deluxe First Quarter 2025 Earnings Call. Joining me on today’s call are Barry McCarthy, our President and Chief Executive Officer; and Chip Zint, our Chief Financial Officer. At the end of today’s prepared remarks, we will take questions. Before we begin and as seen on the current slide, I’d like to remind everyone that comments made today regarding management’s intentions, projections, financial estimates and expectations about the company’s future strategy or performance are forward-looking in nature as defined in the Private Securities Litigation Reform Act of 1995. Additional information about factors that may cause actual results to differ from projections is set forth in the press release we furnished today in our Form 10-K for the year ended December 31, 2024, and in other company SEC filings.

On the call today, we will discuss non-GAAP financial measures, including comparable adjusted revenue, adjusted and comparable adjusted EBITDA and EBITDA margin, adjusted and comparable adjusted EPS and free cash flow. All comparable adjusted metrics reflect the removal of impacts from business exits. In our press release, today’s presentation and our filings with the SEC, you’ll find additional disclosures regarding the non-GAAP measures including reconciliation of these measures to the most comparable measures under U.S. GAAP. Within the materials, we are also providing reconciliations of GAAP EPS to adjusted EPS, which may assist with your modeling. And with that, I’ll turn it over to Barry.

Barry McCarthy: Thanks, Brian, and good evening, everyone. I’m pleased to report our solid start to 2025. In the first quarter, our results reflected organic growth across our key metrics, including revenue, adjusted EBITDA, EPS and margin. Our sustained expansion of earnings at a rate faster than revenue for the ninth consecutive quarter continues to demonstrate the operating leverage we have purposely built into the company via North Star. We also remain particularly pleased with our significant year-over-year expansion of operating cash flow. This strong performance drove continued reduction of our net debt levels consistent with our commitment to this important capital allocation priority. These results contributed to our recent S&P ratings upgrade and positive ratings outlook, demonstrating our strong progress on balance sheet optimization.

You will recall accelerating our free cash flow and profit growth are the key tenets of our North Star execution strategy against which we remain on track toward our 2026 program targets. Before reviewing our first quarter highlights in more detail, I’d like to comment on four key factors. First, these are times of extraordinary volatility and macroeconomic uncertainty. While change swirls around us, we are focused on controlling what we can control and executing strongly against our plan. Our first quarter results are a testament to our focus and execution discipline. We continue to monitor report some economic forecasters around consumer sentiment, discretionary spending and other indicators for potential impacts to our outlook. Second, tariffs.

As we mentioned on our last call, we do not expect to have material direct tariff exposure within our supply chain. We rely upon in-market sourcing and production for the significant majority of our revenue. We do have some exposure across smaller promotional product areas, including lower margin branded apparel and accessories. This represents a small percentage of company revenue, and we would intend to pass along applicable increased costs just as we always do. What we don’t know is how this could impact demand. Third, our business continues to benefit from our overall One Deluxe go-to-market approach and our growth during the first quarter included new customer wins across each of our reporting segments. And fourth, given this broader context, we are maintaining our overall guidance ranges for 2025 this evening.

Chip will provide more detail in a moment. Now on to some additional detail about our first quarter performance. For the quarter, total revenue was just over $536 million, up 1.4% on a comparable adjusted basis year-over-year, combined growth across our payments businesses and a continuing double-digit growth trajectory across the data segment more than offset expected low single-digit secular declines within print, consistent with our strategy. Total comparable adjusted EBITDA for the quarter finished at just over $100 million, increasing nearly 3.5% from 2024 and continuing to reflect robust operating leverage across our portfolio. Comparable adjusted EPS finished the quarter at $0.75, reflecting just over 4% expansion versus the prior year.

We remain pleased with these results helping to demonstrate our progress towards optimization of our SG&A expense base and expansion of earnings and cash flow, as outlined within our North Star execution plans. As I noted within my introductory comments, both revenue and our key earnings metrics grew organically aligned to our key strategic execution priorities across the enterprise. In addition, these results reflected our overall revenue mix shifting towards our payments and data offerings. When we shared the same data after the first quarter of last year, our revenue balance reflected roughly a 57:43 ratio of Print to Payments and Data segments. As you can see here, just one year later, the ratio is at 54:46, consistent with the progress we indicated at our December 2023 Investor Day.

Our Payments and Data segments expanded year-over-year by a blended rate just above 8.5%, led by another very strong growth quarter from the Data segment. Data segment revenue grew 29% versus the prior year and significant demand from financial institutions. The Data team added 17 new customer logos during the quarter, while also continuing to broaden its portfolio across high-value adjacent market verticals. Within our Payments segment, we benefited from new and expanded FI relationships during the quarter, a key component of our One Deluxe model across the Merchant segment and our broader business. As another example of our ability to win larger scale FI partnerships, we were pleased to announce our partnership with TowneBank, a premier financial institution dedicated to exceptional service and community banking.

Through this partnership, TowneBank members will gain access to Deluxe Merchant Services suite of solutions, helping to streamline operations and their payment experience for their customers. Within B2B, we began processing new remittance volumes for a top 10 bank in the U.S. and expect continued momentum as we grow market share across our lockbox footprint over the balance of the year. Finally, in our Print segment, we have continued to win new business and expand share across legacy check with small to midsize additions, helping to mitigate secular unit decline rates. This progress resulted in declines of under 2% for check revenue during the quarter, consistent with our ongoing strategy. Beyond our organic revenue results, we also continued to deliver robust year-to-year expansion of earnings metrics.

Growth of both comparable adjusted EBITDA and EPS once again outpaced our rate of revenue expansion, driving adjusted EBITDA margins of 18.7%. This reflected an expansion of 40 basis points on a comparable adjusted basis as our sustained operating leverage further demonstrates progress executing against our core North Star initiatives across the organization. During the first quarter, total SG&A spend improved by 3.8% or just under $9 million, illustrating our ongoing focus on driving efficiencies across the business. This execution also contributed to our improved cash flow results during the period, which Chip will detail a bit more during his comments. To summarize, our overall first quarter results speak to our ongoing execution focus, payments and data growth potential and North Star progress.

While we continue to monitor macro level market developments for nearer-term impacts, our first quarter progress continues to support our path toward our 2025 revenue and EBITDA goals. Our ability to attract top talent at all levels signals additional support for our company’s future in payments and data. Brian Mahony joined us in February as Merchant Services President after serving industry leader at Elavon as CFO, CRO and in various other roles. Beau Cummins until recently Vice Chair at Truist; and Mac Schuessler, CEO of Evertec were recently elected to the Deluxe Board of Directors. Angela Brown, recently the CEO of Moneris, joined our Board last fall. Each of these individuals bring a serious depth of knowledge and experience across the payment space and financial institutions.

Finally, before passing this to Chip, I want to acknowledge and thank all my fellow Deluxers, who continue to work diligently each and every day to deliver these results for our customers and investors. With that, I’ll turn it over to Chip.

Chip Zint: Thank you, Barry, and good evening, everyone. As Barry mentioned, we were pleased with our first quarter progress, particularly our better-than-anticipated cash flow generation and our continuing strong comparable adjusted EBITDA growth during the period. As a reminder, our 2025 comparable adjusted reporting and related commentary will continue to exclude impacts from conversions of our now fully exited payroll business over the course of the prior year. 2024 payroll results were reflected within exited businesses throughout the year, allowing for clean operating segment comparisons across the respective periods and should have a relatively immaterial impact on our enterprise level reporting comparisons. I’ll begin today with a bit of additional color around our consolidated highlights for the period before moving on to the segment results, our balance sheet and cash flow progress and our maintained guidance.

For the quarter, we reported total revenue of $536.5 million, increasing 0.3% against prior year reported results while growing 1.4% on a comparable adjusted basis. We reported GAAP net income of $14 million or $0.31 per share, improving from $11 million or $0.24 per share in the first quarter of 2024. This increase was driven by improved operating results, including lower restructuring and overall SG&A expenses, net of a prior year gain related to business exits during the period. Restructuring expense for the quarter totaled $8.4 million, down from $14.8 million in the prior year. While projects remain to be completed under North Star, the most material restructuring spending for the initiative has now been realized and should continue to decrease from this point forward on an LTM basis.

Adjusted EBITDA was $100.2 million, increasing 3.4% on a comparable adjusted basis versus the first quarter of last year. Adjusted EBITDA margins were 18.7%, improving 40 basis points on a comparable adjusted basis. North Star efficiencies accompanying our revenue growth helped offset medical benefit cost headwinds reflected in corporate operations. These are anticipated to be mostly non-recurring in nature and representative of higher cost claims that would be expected from time to time as a self-insurer. Absent these period specific pressures comparable adjusted EBITDA would have expanded even faster. Q1 adjusted diluted EPS came in at $0.75, improving from $0.72 on a comparable adjusted basis primarily driven by our improved operating income, as previously noted.

Now turning to our operating segment details, beginning with the Merchant Services business. The Merchant business grew first quarter revenue by 1.3% year-over-year to $97.8 million, aligned to the low single-digit growth expectation to start the year that we indicated within our guidance commentary on the last call. Segment adjusted EBITDA finished at $21.4 million, remaining flat versus the prior year, mainly driven by customary channel and vertical mix dynamics. Our merchant portfolio remains well positioned across a diversified set of customer categories and verticals. We continue to monitor macroeconomic trends more broadly as they may impact volumes across these areas going forward, as Barry referenced. Reflective of our results to date and some of the recent trends surrounding overall consumer sentiment, we now expect revenue growth for merchant to potentially remain closer to a lower single-digit full year trajectory relative to our prior mid-single-digit outlook.

We continue to anticipate a low 20% adjusted EBITDA margin profile consistent with our prior guidance. Turning to B2B payments. For the first quarter, B2B segment revenues finished at $70.2 million, increasing 1.2% versus 2024, consistent with our quarterly cadence expectations and growth guidance for the segment. Overall lockbox volumes benefited from the onboarding of incremental wins, as Barry mentioned during the quarter, helping to offset overall secular declining remittance volume trends across this space. B2B adjusted EBITDA dollars remained flat versus the prior year, finishing Q1 at $13.3 million, reflecting an 18.9% margin as we continue to navigate the transition of the business to a more recurring software set of offerings. Within our B2B outlook, we anticipate a flat to low single-digit revenue growth trajectory through the first half with sequential improvement during the final two quarters of the year.

This would equate to a full year growth expectation in the low to mid-single-digit range. Overall, EBITDA margins are expected to remain in the high teens to low 20% range over time. Moving on to Data Solutions. This segment continued its very strong year-over-year growth trajectory, extending from the fourth quarter results. Revenues finished at $77.2 million for the quarter, achieving overall growth of 29.3% versus Q1 of 2024 and posting record levels for the segment. As a reminder, the data business remains campaign-oriented. We continue to advocate averaging the three to four trailing quarters actual results for both revenue and EBITDA dollars as a good barometer for ongoing segment level financial performance over the balance of the year.

We remain encouraged by the continuing strong performance of the segments and presently expect potential high single-digit to low double-digit full year data revenue growth. This expected increase helps to mitigate some of the macro-related risks within our updated outlook across our payments businesses. Data’s adjusted EBITDA margins for the quarter improved 50 basis points to 25.5%, reflecting our robust Q1 campaign execution and overall strong revenues. Adjusted EBITDA for the quarter was $19.7 million, up 32.2% from the prior year period. We continue to have strong confidence in our long-term low to mid-20% adjusted EBITDA rate guidance for the segment. Turning now to our Print businesses. Print segment first quarter revenue finished at $291.3 million, declining 4% on a year-over-year basis, consistent with our expectations.

Legacy check revenues declined at 1.8%, while the balance of the segment declined by 7%, indicative of some ongoing demand softness experienced within shorter-cycle discretionary branded promo products. We did see promo decline rates moderate slightly versus the rate of decline seen in the fourth quarter due in part to timing of some deals being pulled in from the second quarter. The timing of these deals, along with Barry’s comments around both economic and tariff-related uncertainty drive our expectation for continued constrained demand across legacy promo products throughout the first half. As such, we anticipate a further accelerated rate of decline to impact the segment through the second quarter. Importantly, legacy check revenues are expected to continue the predictable and consistent lower single-digit decline rate.

Adjusted EBITDA margins for Print improved 120 basis points year-over-year to 31.2%. This result is reflective of both the overall revenue mix weighted towards check within the quarter and continuation of our operating expense discipline driving efficiency across our operations. Consistent with our long-term outlook for full year 2025, we continue to expect to see low to mid-single-digit revenue declines across the Print segment, with adjusted EBITDA margins remaining in the low 30s. Turning now to our balance sheet and cash flow. We ended the first quarter with a net debt level of $1.46 billion, down roughly $80 million from the $1.54 billion mark at the end of Q1 of the prior year, consistent with our ongoing commitment to debt reduction as a top capital allocation priority.

As Barry noted in his comments, the sustained progress towards reduced leverage along with our overall operating trajectory and lowering restructuring expenses contributed to our recent S&P ratings upgrade. This upgrade improved our rating by one level across each of our outstanding debt instruments, improving the Deluxe corporate family rating from B- to single B, while maintaining our overall positive rating outlook. We were pleased to see acknowledgment of this progress from the agency and look forward to continuing this positive trajectory. Our net debt-to-adjusted EBITDA ratio remained 3.6 times at the end of the first quarter. As mentioned on our last call, we anticipate sequential improvement over the balance of the year and expect to end 2025 at roughly 3.3 times leverage.

Our long-term strategic target remains three times leverage or better by the end of 2026. Free cash flow, defined as cash provided by operating activities, less capital expenditures, finished at $24.3 million for the quarter, improving by $18.1 million from the first quarter of 2024. This result was driven by continued strong operating results, reflective of improved restructuring spend, lower year-over-year cash incentive payments and continued strong working capital efficiency, net of increased year-over-year CapEx investment. This continuation of strong operating cash flow generation remains a focus area for 2025, consistent with our increased year-to-year guidance for free cash flow. We continue to be positioned well from both a liquidity and go-forward capital structure, maintaining $368 million of available revolver capacity as of quarter end with no near-term maturities.

We recent market volatility serves as further affirmation that we appropriately timed our refinancing late last year and took advantage of capital market conditions at an optimal time. Consistent with past quarters, our Board approved a regular quarterly dividend of $0.30 per share on all outstanding shares. The dividend will be payable on June 2, 2025, to all shareholders of record as of market closing on May 19, 2025. As Barry noted within his opening macro commentary, we are maintaining our full year guidance. We also acknowledge the overall increased levels of near-term uncertainty within the economic environment, presenting challenges towards providing precision around the outlook for the balance of the year. For the second quarter, we believe these factors and our expectation for increased legacy promo pressure will lead to a slightly negative year-to-year revenue result.

Despite this, we remain on track against our overall first half expectations. We remain very focused on the operating levers within our control, ensuring continued strong execution across our free cash flow, EBITDA and balance sheet optimization goals. With this as important context, we are maintaining our existing full year guidance ranges for 2025 and as included in this evening’s release and shown on the current slide. To summarize, we were pleased with the first quarter 2025 performance. Despite some visibility challenges across the extended macro horizon, we remain focused on executing against our broad North Star initiatives and continuing our longer-term organic revenue growth, EBITDA expansion and deleveraging trajectory. Operator, we are now ready to take questions.

Operator: Thank you. [Operator Instructions] And the first question will come from Kartik Mehta with Northcoast Research.

Kartik Mehta: Hey, good afternoon, gentlemen. Barry, I was hoping maybe get a little bit more detail on the Merchant business, just from a fundamental standpoint, what you’re seeing in the marketplace? And maybe what segments in the business are doing well and maybe what segments might be lagging a little bit because of where we are in the economy?

Barry McCarthy: First of all, glad to have you here, Kartik. What I would tell you about the Merchant business overall is that it continues to perform and deliver really through any market condition. It’s a business that we get paid anytime commerce happens. So if a consumer is buying goods or service at point of sale, we have the opportunity to earn a fee whenever they use a credit card, debit card or other payment type. And I don’t think we have any particularly new insight versus the other things that you’re seeing in the macroeconomic reporting, about what is happening with the consumers at retail. But what I can tell you is, that we have a nicely diversified portfolio across a number of categories that provide not only strong retention, but ongoing volume. As you know from previous conversations, we have particular strength in government, not-for-profit, auto repair and other market verticals, and we continue to see nice volume coming from each of them.

Kartik Mehta: Sorry, Barry, I was on mute, I apologize. Maybe just your perspective, now you have a new leader in the business. Obviously, your strategy might change a little bit. I’m wondering, Barry, if you can just talk a little bit about now that Brian is on board some of the areas you might focus on or maybe strategic changes you would – you’re planning on in the business?

Barry McCarthy: So first of all, we’re very pleased to have Brian on our team. He comes with 20 years of experience in the industry. And I think in the early days, Brian would tell you that he can clearly see that we have a strong business that delivers great cash flow can deliver growth and is delivering growth. But I think the opportunities for growth, I think, are really around delivering improving our partnership relationships, meaning that we are looking from our partners, which is why we are particularly pleased to have the announcement earlier this week about the relationship with TowneBank. It’s an example of building our partnerships and having distribution built in. On the TowneBank deal, in particular, we think it’s just a great – another great example of our ability to move up market.

where the business historically had been really more focused at the community or multi-branch banking. Clearly, with TowneBank and Fulton Bank a year ago, we’re moving up into the middle market where there’s much more volume. And this is another example of our ability to win in that space. And I would expect, and I think Brian expects to continue to make headway in the partner space, as well as working to expand the channels of distribution and the markets and the verticals where we compete.

Kartik Mehta: Thank you very much. I really appreciated.

Operator: And the next question will come from Charlie Strauzer with CJS Securities.

Charlie Strauzer: Hi, good evening. First of all, thank you for the additional color on Q2. Maybe if you could expand a little bit more on that just in terms of – from a segment basis, how we should think about modeling that, especially since you may see some decline year-over-year there?

Barry McCarthy: Yes. Good evening, Charlie. So first of all, I just want to acknowledge just what a solid start to the year Q1 represented. There were some puts and takes across the portfolio, but the net-net to us internally was a start ahead of plan. And so I mentioned a few dynamics that I think are clear to call out. So on the data side, absolutely fantastic quarter for them. It’s campaign-oriented. There can be shifts in and out. So obviously, we continue to guide to look at that rolling three- to four-quarter average to get to kind of the trends they’re at. We still see great momentum in that business. We don’t anticipate them continuing to grow at 29%. But obviously, across the full year, starting to signal improvements for them in the upper single digits, low double digits.

So we would expect them to continue to grow and advise you to look at that rolling three- to four-quarter level to get to the absolute dollars. The other comment I made was around Print specifically, and I don’t want that to be over below. We’re talking about a few million dollars worth of promo-related shifts that came into the quarter, nothing super material. But obviously, as a result of that and just the overall short-cycle demand trends we’ve seen in promo overall, the last few quarters, we would expect promo to be specifically where a little bit of the softness is in Print in Q2. Check continuing its lower single-digit decline. So it’s really that Print side where the rate of decline may be a little bit bigger in the second quarter.

And then both B2B and merchant, very aligned with what we said on the last call and what we just reiterated, just continuing that lower single-digit improvement trend that we expected. And all that together will lead to what we believe is an on-plan start to the year. And obviously, based off that, we feel good about the guidance we set at the start of the year.

Charlie Strauzer: Great. Thank you on that. And then, Barry, maybe just if you could talk a little bit about the success of data the last few quarters. What’s kind of the secret sauce that’s helping you guys win these campaigns. If you could expand on that a little bit, that would be great.

Barry McCarthy: Sure. So Charlie, I just remind you on the journey we’ve been on as a company. We combined multiple assets to build what is our current data business. And in that data business, we have built what we believe is one of the largest, if not the largest, consumer and small business database or a data lake that combines for data to be used for marketing purposes that contains data from over 100 different sources. So that scale of data allows us to predict much more effectively than others in the marketplace when a customer is likely to buy any given product or service. We put together that great database with very advanced AI tools that get smarter and better with every campaign to help customers better target consumers or small businesses for any product or service.

Because of the work we’ve done on the database, we’re able to shift very quickly now between different types of campaigns, different market verticals, different target markets because we have the tool set and the database now that is well architected to be able to move quickly. What we’ve seen most recently is great strength in our traditional FI channel with demand for a variety of different services, but particularly continuing demand around a look for low-cost deposits. But it’s not just from the FI channel. We’ve also continued to expand into new market verticals that are adjacent but anywhere where there is a product that a company is trying to find new customers for that is a high lifetime value meaning it may be expensive to market to that customer to find that customer but that customer has a very, very high lifetime value.

We have great success. And the team is quite remarkable and be able to go and do side-by-side test and control A/B testing to enable us to prove the quality of our modeling, the quality of the data, which then helps us win these campaigns that’s delivering these terrific results.

Charlie Strauzer: That’s very helpful. Thank you.

Operator: And the next question will come from Jonnathan Navarrete with TD Cowen.

Jonnathan Navarrete: Thank you. Hey guys.

Barry McCarthy: Hi, Jonnathan.

Jonnathan Navarrete: How would you assess the potential impact of recent commentary from the Trump administration regarding phasing out of physical checks by the end of September of this year. What’s your exposure to government here? And do you think it could start a chain reaction amongst your larger customers?

Barry McCarthy: So I really appreciate the question, Jonnathan. And I want to be really clear because I think this is important. The federal government is not our customer. We don’t sell them checks. We don’t process checks for them. We have no direct exposure from this announcement. That’s point one. Point number two, when you really dig into it, those payments that Doge [ph] was specifically addressing is somewhere around 1% of all the government transactions. So from a practical and direct impact little to no direct impact, I would say, no direct impact. To your second question, though, about any collateral impact I would tell you, I don’t anticipate that, and here’s why I don’t anticipate it. The significant majority of checks that remain today are checks that we need to travel or the payment needs to travel with remittance advice.

And it’s impossible for the biller and the recipient of the payer and the payee to settle if they can’t pass that information between them in a way that the money can not only transfer effectively, but they can be posted appropriately to the general ledger. The transactions that had moved electronically have moved a long time ago. We’re not talking about managing payments for P&G and Walmart paying for diapers between them. That’s not where checks are today. Checks are still about 40% of all B2B payments today, and those payments need to travel with remittance advice. So could there be some impact perhaps but there really are no viable substitutes, which we have said for a long time, no viable substitutes and those viable substitutes are not – we don’t see them on the horizon, and we don’t expect much impact, although we have certainly seen the headlines.

Jonnathan Navarrete: Got it. That’s super helpful. Thank you. And just my last one is on tariffs. Have you observed any size of spending pull forward in April following the announcement of the tariffs, particularly in consumer or in SMBs facing verticals?

Barry McCarthy: Yes. We mentioned we saw a very small amount of pull forward in promo, but I don’t believe that, that really was about consumer pull forward or stocking. Certainly, we just don’t have any evidence that within our business that there’s much stocking that’s happened. And if you just, Jonnathan, think about the nature of our business, we get paid when commerce happens, it will be pretty hard to stockpile electronic transactions. So the volume of our business, the volume of our revenue really is around transactions. And we just don’t we don’t think we’ve seen really any stocking. Although we see those same headlines too, we just don’t think that’s materially present here.

Jonnathan Navarrete: Okay. Thank you.

Operator: [Operator Instructions] We will now take a question from Marc Riddick with Sidoti.

Marc Riddick: Hi, good evening.

Barry McCarthy: Hey, Marc.

Marc Riddick: So I wanted to start with – thank you for sort of already touching on the announcement with the partnership with TowneBank [ph]. I was wondering if you could talk a little bit about some of the potential catalysts for driving additional partnerships that you’re anticipating in the near term? And maybe as an aside to that, do you anticipate any potential economic disruptions to perhaps create opportunities to accelerate that path?

Barry McCarthy: Sure. I appreciate the question. So there’s a couple of factors here that really play to our advantage to give us some really nice competitive advantage in the marketplace. First, the Deluxe brand the reach that our company has and the large number of financial institutions that already are doing business with us gives us a very, very large-scale opportunity to build new partnerships in the bank channel specifically. The two big deals that you’ve heard us talk about in the last year or so were Fulton Bank and TowneBank now, and both of them are regional banking companies, very successful in their markets. And Fulton had a very long relationship with Deluxe. Towne had a smaller relationship with Deluxe. But really, we were able to go in both circumstances and talk about the scale that our – so that’s number one.

We have relationships. And a great brand and a lot of trust in the marketplace. Second is we can go to these institutions and talk to them about how we can serve them and their clients better than some of the larger providers where we’re winning this business away from. So very specifically, our platform, and you heard us talk last time about how we continue to invest in our platform adding new features like the Deluxe Pay that we talked about last time that allows you to pay phone to phone, et cetera, as well as our Deluxe payment platform that enables us to expand more rapidly into multiple different omnichannel opportunities. Our product, our basic platform is very robust. It is more flexible than some of the others and that our customers can have – customers on our platform have a bigger impact on having a vote, if you will, or a say in our product road map to help them meet their needs.

But a huge differentiator is really this area of service. And so Marc, a lot of people will talk about their company being able to deliver quality service, but our company can actually prove it. There’s something called ACSI, which is more or less the equivalent of a J.D. Powers award for customer service. And we have been a top category winner for at least the last decade. And we’re the only company in the space that can – that has that legacy. So if you think about being a community bank or a regional bank, your point of differentiation against the giants that are competing with you in your home markets is that you have better service for your customer. Instead of working for what are banking with what might be perceived as a giant less personal bank, you choose the community bank or the regional bank because you are going to be known by your banker, you have more confidence about the quality of service.

And what we can deliver on the merchant side of the equation is truly improvable best-in-class service, which really helps us win business. So we have great brand and great relationships in the marketplace. We have an excellent product that is competitive where we compete, and we have this notion of a superior service. And that – those three factors really help us win business and we’re very confident we’ll win more business going forward. It’s not every day that we have a large win like this to describe. But in every period, we have wins across the financial institutions, and I think you should expect to hear more from us in the coming quarters.

Marc Riddick: So very encouraging. Thank you for the color there. And then just a quick follow-up. Congratulations on the ratings improvement and the debt reduction that you’ve been embarked on I think it was mentioned in the slides or prepared remarks or both free cash flow. And sort of can you talk a little bit about where we are with CapEx for this year, I think it’s $90 million to $100 million. Is there anything timing-wise or lumpy wise that we should be thinking about? Or sort of how that flows throughout the year? Thanks.

Chip Zint: First of all, Marc, thank you for the comments. We were extremely proud of the ratings upgrade. That’s something we’ve been working on for a while with that team staying close with them on our progress, telling them our story, our journey and, of course, building confidence to the trajectory we’re on. And again, thank you for acknowledging the strong free cash flow as well. As you know, removing – reducing restructuring spend, getting towards the end of the job on North Star are key elements to our execution plan in the year and why our guidance for free cash flow is so strong, sort of come out of the gate for the first quarter with such a really good post on the free cash flow side, just a great leading indicator to high expectations for what’s to come and continues that progress of that multiyear journey we’re on to improve free cash flow by that full run rate $100 million.

Specific to your question on CapEx, there’s really no special science inside of there. It’s never going to be perfectly linear. But we will just reiterate that we guided between $90 million and $100 million for the year. What you saw in the first quarter was aligned with our plan, and there’s nothing really to anticipate. It’s not going to be perfectly linear, but I wouldn’t expect it to be bouncing around any material amount across the quarter. So we remain very confident about how we’re managing our working capital, staying focused diligently on cash flow every single day. And obviously, I want to make sure it’s not lost as well. In the prepared remarks, I commented on the leverage trajectory we’re on for the year. We referred to it as a very linear path last call, but I’ve gone as far this time to tell you, I’m expecting it to be roughly 3.3x at the end of the year, which keeps us on a nice linear path all the way to get below 3x by the end of next year.

So pleased with that all around and looking forward to continuing that progress and potentially finding another upgrade down the road as we continue to execute.

Marc Riddick: Much appreciated. Thank you very much.

Operator: And that does conclude the question-and-answer session. I’ll now turn the conference back over to Brian Anderson.

Brian Anderson: Thanks, Justin. Before we conclude, I’d like to share that during the quarter, management will be participating at both the Needham Technology, Media and Consumer Conference on May 13 and the TD Cowen Technology, Media and Telecom Conference on May 29, both in New York as well as the Virtual Wolfe Research Small and Mid-Cap Conference on June 3. Thank you again for joining us today, and we look forward to speaking with you all again in August when we share our second quarter results.

Operator: Thank you. That does conclude today’s conference. We do thank you for your participation. Have an excellent day.