Company: DLX
Filing Date: 2025-05-02
Form Type: 10-Q
Source: 0000027996-25-000142
Chunk: 100

Company: DELUXE CORP
Filing Date: 2025-05-02
Form: 10-Q
Item: Item 2
Chunk 100
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 remainder of 2025.

Income Tax Provision

 Quarter Ended March 31,(in thousands)20252024ChangeIncome tax provision$5,221 $5,522 (5.5%)Effective income tax rate27.1 %33.8 %(6.7) pts.

The effective income tax rate for the first quarter of 2025 decreased compared to the first quarter of 2024. This reduction was primarily due to lower tax rate impacts in 2025 from our foreign operations, share-based compensation, and non-deductible executive compensation. These decreases in our effective income tax rate were partially offset by an increase in our effective state income tax rate.

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Net Income, Diluted EPS, and Adjusted Diluted EPS

 Quarter Ended March 31,(in thousands, except per share amounts)20252024ChangeNet  income$14,048 $10,830 29.7%Diluted EPS0.31 0.24 29.2%Adjusted diluted EPS0.75 0.76 (1.3%)

Net income and diluted EPS for the first quarter of 2025 increased compared to the first quarter of 2024, reflecting the changes noted above. Adjusted diluted EPS decreased $0.01 per share year-over-year, driven by the impact of business exits, which drove a $0.04 per share decrease. Excluding the impact of business exits, adjusted diluted EPS would have increased due to the benefits of our pricing and cost management actions, as well as growth in our data-driven marketing business. These positive impacts were partially offset by the secular declines in the Print segment and inflationary pressures on our cost structure. 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 measure is that not all of our free cash flow is available for discretionary spending. We may have mandatory debt payments and other cash requirements that must be deducted from our available cash. Despite this limitation, we believe that the measure of free cash flow offers an additional metric to consistently compare cash generated by operations.