Company: DLX
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0000027996-25-000163
Chunk: 106

Company: DELUXE CORP
Filing Date: 2025-08-07
Form: 10-Q
Item: Item 2
Chunk 106
---
5, compared to 19.0% for the first half of 2024, despite the impact of business exits, which drove a 0.3 point year-over-year decrease. The increase in adjusted EBITDA margin was primarily driven by our pricing and cost management actions and the favorable impact of growth in the data-driven marketing business. These factors were partially offset by the impact of inflationary pressures. 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 $35 million to $101 million, reflecting several positive factors. Key contributors included the positive impacts of our pricing and cost management actions, a reduction in performance-based employee cash bonuses, and a reduction in restructuring and integration spend. Additionally, growth in data-driven marketing and positive working capital changes, particularly in prepaid expenses and other current assets, also contributed to the increase in net cash from operating activities. Also, interest payments decreased, as the timing of these payments changed in 2025 due to the refinancing of our debt in December 2024, which altered the schedule and structure of our financial obligations. These positive impacts were partially offset by softer demand for certain promotional products and the continuing secular declines within the Print segment, higher income tax payments related to the timing of federal tax payments, inflationary pressures on our cost structure, and the impact of business exits.

•Free cash flow – Increased by $35 million to $52 million, driven by the same factors impacting 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 comparable GAAP financial measure can be found in the Consolidated Results of Operations section.

Recent Market Conditions

We continually monitor the interest rate environment and its effect on our outstanding debt. As of June 30, 2025, 62% of our debt carried a weighted-average fixed interest rate of 8.1%, providing us with some protection against potential future interest rate increases.

In addition to interest rate considerations, we closely monitor the impact of inflation on our cost structure, including labor, delivery, and material costs. In response to inflationary pressures, we have implemented targeted price increases, particularly within our Print and Merchant Services segments. Additionally, ongoing global unrest and uncertainties related to trade policies, treaties, and tariffs could disrupt the global supply chain and lead to