Company: DLX
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000027996-25-000051
Chunk: 34

Company: DELUXE CORP
Filing Date: 2025-02-21
Form: 10-K
Item: Item 1A
Chunk 34
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 level of indebtedness could have several negative impacts, including: reducing our ability to secure additional financing for working capital, capital expenditures, general corporate purposes, or other needs; limiting our flexibility to pursue acquisitions; increasing our cash requirements to cover interest payments; restricting our ability to plan for or respond to changes in our business and industry; and heightening our vulnerability to adverse shifts in general economic and industry conditions. Furthermore, our credit agreement includes a number of restrictive covenants that impose significant operating and financial restrictions. These covenants restrict our ability to engage in acts that may be in our long-term best interest, such as paying dividends or making other distributions, repurchasing or redeeming capital stock, making loans and investments, selling assets, entering into transactions with affiliates, altering the business we conduct, or incurring liens.

Our capacity to make principal and interest payments on our debt depends on our future performance, which is influenced by general economic conditions and various financial, business, and other factors affecting our consolidated operations, many of which are beyond our control.

If we are unable to generate sufficient cash flow from operations to service our debt and meet our other cash requirements, we may need to take several actions. These could include seeking additional financing in the debt or equity markets, refinancing or restructuring all or part of our debt, or reducing or delaying planned capital or operating expenditures. However, these measures may not be sufficient to enable us to service our debt and meet other cash requirements. Furthermore, such financing, refinancing, or asset sales may not be available at all or on terms that are economically favorable.

Our variable-rate indebtedness exposes us to interest rate risk, which can adversely impact our results of operations.

Borrowings under our credit facility, including our secured term loan facility, are subject to variable interest rates. As of December 31, 2024, $597 million of our outstanding debt was subject to variable interest rates. This exposure to variable rates means that any increase in interest rates would lead to higher interest expense. Consequently, this would negatively impact our earnings and reduce the cash flows available for essential activities such as working capital, capital expenditures, and other investments. Effective management of our interest rate exposure is crucial to maintaining our financial health and ensuring that we can continue to meet our operational and strategic objectives. This involves closely monitoring interest rate trends and considering various financial instruments or strategies to mitigate the impact of rising rates on our financial performance. Despite our best efforts, fluctuations in interest rates could still adversely affect our financial condition and results of operations