Company: DLX
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0000027996-25-000163
Chunk: 89

Company: DELUXE CORP
Filing Date: 2025-08-07
Form: 10-Q
Item: Item 8
Chunk 89
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 EPS in the second quarter of 2025 increased $0.02 per share 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 within the Print segment, inflationary pressures on our cost structure, and increased medical costs. 

For the first half of 2025, adjusted diluted EPS was unchanged as compared to the first half of 2024. The impact of business exits drove a $0.05 per share decrease year-over-year. Excluding this impact, adjusted diluted EPS would have shown an increase, driven by the same factors that impacted the second quarter year-over-year comparison. 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 

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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. It also provides insight into the cash flow available to fund various items such as dividends, mandatory and discretionary debt reduction, acquisitions or other strategic investments, and share repurchases.

Net cash provided by operating activities reconciles to free cash flow as follows:

 Six Months EndedJune 30,(in thousands)20252024Net cash provided by operating activities$101,374 $66,222 Purchases of capital assets(49,260)(48,626)Free cash flow$52,114 $17,596 

Net debt – Net debt is calculated by subtracting cash and cash equivalents from total debt. One limitation associated with using net debt is that by subtracting cash and cash equivalents, it may imply that management intends to use these funds to reduce outstanding debt. Additionally, net debt can suggest that our debt obligations are lower than what the most comparable GAAP measure indicates. Despite these limitations, management