Company: DLX
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0000027996-25-000189
Chunk: 119

Company: DELUXE CORP
Filing Date: 2025-11-06
Form: 10-Q
Item: Item 2
Chunk 119
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.3) pts.

In the third quarter and first nine months of 2025, our effective income tax rate decreased compared to the same periods in 2024. The 2025 rate benefited from lower tax impacts for our foreign operations, share-based compensation, and non-deductible compensation. These benefits were partially offset by an increase in our effective state income tax rate. Further information regarding our income tax provision can be found under the caption "Note 9: Income Tax Provision" 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 September 30,Nine Months Ended September 30,(in thousands, except per share amounts)20252024Change20252024ChangeNet  income$33,766 $8,969 276.5%$70,235 $40,296 74.3%Diluted EPS0.74 0.20 270.0%1.54 0.90 71.1%Adjusted diluted EPS1.09 0.84 29.8%2.71 2.46 10.2%

In the third quarter and first nine months of 2025, net income and diluted EPS increased compared to the same periods in 2024, reflecting the factors noted above. Adjusted diluted EPS in the third quarter and first nine months of 2025 increased year-over-year, primarily due to the benefits of our pricing and cost management actions, growth in our data-driven marketing business, and a reduction in bad debt expense. These positive impacts were partially offset by the soft demand for certain promotional products and the ongoing secular declines in the Print segment, inflationary pressures on our cost structure, and increased medical costs for the nine-month period. Additionally, for the first nine months of 2025, the impact of business exits drove a $0.04 per share decrease year-over-year.  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 consider free cash flow to be an important indicator of cash available for servicing debt and for shareholders, after making necessary capital investments to maintain or expand our asset base. One limitation of using the free cash flow