Deluxe Corporation Provides Update on Acquisitions and Revenue and EPS Outlook for the Second Quarter and Full Year

Deluxe Corporation (NYSE:DLX) announced today that it has entered into a
definitive agreement to acquire the treasury management business which
was initially referenced by management during the first quarter earnings
call on April 26, 2018. Original expectations were that this transaction
would close in the second quarter and would deliver approximately $46
million of revenue for the full year. The Company does not expect there
to be any regulatory issues. The Company expects to receive regulatory
approval to complete the acquisition in the third quarter. With the
delayed completion date, management has revised revenue expectations for
this acquisition to provide full year revenue of approximately $36
million. The transaction is subject to customary closing conditions,
including applicable regulatory approval. Additional information on this
acquisition will be provided after closing.

Separately, Deluxe recently completed an acquisition in the web hosting
services space which is expected to deliver approximately $7 million of
revenue for the full year 2018 and was included in the previous revenue
outlook. Additional information on this acquisition will be provided on
the second quarter earnings call.

“We are excited with our progress on these acquisitions as they add
capabilities in both the treasury management and web services spaces and
they are completely aligned with our pivot for faster growth strategy,”
said Lee Schram, CEO of Deluxe Corporation. “We have adjusted our
revenue outlook in light of the delayed completion date, but remain
confident that we will complete the treasury management transaction.
Given these acquisitions, we continue to make tremendous progress
transforming Deluxe into a financial services and small business
services provider.”

As a result of the timing of the treasury management acquisition,
management is revising the revenue outlook downward for the second
quarter by $7 million and the full year by $10 million. Management now
expects total second quarter revenue to be in the range of $485 to $492
million from $492 to $499 million and full year revenue to be in the
range of $2.055 to $2.075 billion from $2.065 to $2.085 billion.
Management anticipates that the delay in closing the acquisition will
have no impact on full year earnings, but will affect the timing of
acquisition costs, moving approximately $0.03 per share out of the
second quarter and into the third quarter.

Diluted EPS – GAAP (1)

(1) Does not include costs related to CEO succession
process and related obligations

Acquisition Revenue

Management originally provided a new acquisition revenue target of
approximately $90 million for the full year 2018. Taking into
consideration the delay in the treasury management acquisition,
management has lowered the full year new acquisition revenue target to
approximately $80 million. This $80 million is comprised of $16 million
from the previously announced LogoMix acquisition, $36 million from the
pending treasury management acquisition and $7 million from the recently
completed web hosting acquisition. The remaining $21 million of targeted
new acquisition revenue will be discussed on the second quarter earnings
call in late July.

Diluted EPS Reconciliation

Management believes that adjusted diluted EPS provides useful additional
information for investors because it provides better comparability of
ongoing performance to prior periods given that it excludes the impact
of certain items (restructuring and integration, transaction costs,
asset impairment charges, losses on debt retirement and tax reform) that
impact the comparability of reported net income and which management
believes to be non-indicative of ongoing operations. It is reasonable to
expect that one or more of these excluded items will occur in future
periods, but the amounts recognized can vary significantly from period
to period and may not directly relate to the Company’s ongoing
operations. The presentation below is not intended as an alternative to
results reported in accordance with generally accepted accounting
principles (GAAP) in the United States of America. Instead, the Company
believes that this information is a useful financial measure to be
considered in addition to GAAP performance measures.

Reported EPS reconciles to adjusted EPS as follows:

Asset impairment charges

About DeluxeDeluxe Corp. is a growth engine for small
businesses and financial institutions. Nearly 4.4 million small business
customers access Deluxe’s wide range of products and services, including
customized checks and forms, as well as website development and hosting,
email marketing, social media, search engine optimization and logo
design. For our approximately 4,900 financial institution customers,
Deluxe offers industry-leading programs in checks, data driven
marketing, treasury management and digital engagement solutions. Deluxe
is also a leading provider of checks and accessories sold directly to
consumers. For more information, visit us at www.deluxe.com,
or www.twitter.com/deluxecorp.

Forward-Looking StatementsCertain statements contained in
this communication, including statements about the pending definitive
agreement in the treasury management space, the completed acquisition in
the web hosting space and the Company’s outlook, constitute
“forward-looking statements.”

Forward-looking statements can usually be identified by the use of words
such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,”
“evolve,” “expect,” “forecast,” “intend,” “looking ahead,” “may,”
“opinion,” “plan,” “possible,” “potential,” “project,” “should,” “will”
and other expressions which indicate future results, events or trends.
Such statements reflect management’s current expectations or beliefs and
are subject to risks and uncertainties that could cause actual results
or events to vary from stated expectations, which variations could be
material and adverse. Factors that could produce such a variation
include, but are not limited to, the following: the risk that
acquisitions will not be consummated within the expected time period or
at all; acquisitions may involve unexpected costs, liabilities or
delays; Deluxe may be unable to achieve expected synergies and operating
efficiencies from acquisitions within the expected time frames or at
all; the integration of the treasury management business into Deluxe’s
business may be unsuccessful, or more difficult, time consuming or
costly than expected; revenues following the acquisitions may be lower
than expected; operating costs, customer loss and business disruption
(including, without limitation, difficulties in maintaining
relationships with employees, customers, clients or suppliers) may be
greater than expected following acquisitions; uncertainties surrounding
acquisitions; the impact that a deterioration or prolonged softness in
the economy may have on demand for the Company’s products and services;
the inherent unreliability of earnings, revenue and cash flow
predictions due to numerous factors, many of which are beyond the
Company’s control; declining demand for the Company’s check and
check-related products and services due to increasing use of other
payment methods; intense competition in the check printing business;
continued consolidation of financial institutions and/or additional bank
failures, thereby reducing the number of potential customers and
referral sources and increasing downward pressure on the Company’s
revenue and gross profit; risks that the Small Business Services segment
strategies to increase its pace of new customer acquisition and average
annual sales to existing customers, while at the same time maintaining
its operating margins, are delayed or unsuccessful; risks that the
Company’s recent acquisitions do not produce the anticipated results or
revenue synergies; risks that the Company’s cost reduction initiatives
will be delayed or unsuccessful; performance shortfalls by one or more
of the Company’s major suppliers, licensors or service providers;
unanticipated delays, costs and expenses in the development and
marketing of products and services, including web services and financial
technology solutions; the failure of such products and services to
deliver the expected revenues and other financial targets; risks related
to security breaches, computer malware or other cyber-attacks; risks of
interruptions to our website operations or information technology
systems; risks of unfavorable outcomes and the costs to defend
litigation and other disputes; and the impact of governmental laws and

Our forward-looking statements speak only as of the time made, and we
assume no obligation to publicly update any such statements. Additional
information concerning these and other factors that could cause actual
results and events to differ materially from the Company’s current
expectations are contained in the Company’s Form 10-K for the year ended
December 31, 2017.

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