Presentation Operator
Good day ladies and gentlemen and welcome to the fourth quarter 2008 Deluxe Corporation earnings conference call. My name Erica and I’ll be your coordinator for today. At this time all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions)
I would now like to turn the presentation over to your host for today Mr. Terry Peterson, Vice President of Investor Relations and Chief Accounting Officer; you may proceed sir.
Terry Peterson
Thank you, Erica. Welcome to Deluxe Corporation’s 2008 fourth quarter earnings call. I’m Terry Peterson, Deluxe’s Vice President of Investor Relations and Chief Accounting Officer. Joining me on the call today are Lee Schram, Deluxe’s Chief Executive Officer and Rick Greene, Deluxe’s Chief Financial Officer. Lee, Rick, and I will take questions from analysts after the prepared comments. At that time the operator will instruct you how to ask a question.
In accordance with Regulation FD, this call is open to all interested parties. A replay of the call will be available via telephone in Deluxe’s website. I will provide instructions for accessing the replay at the conclusion of our teleconference.
Before I begin, let me make this brief cautionary statement. Comments made today regarding financial estimates and projections and any other statements addressing management’s intentions and expectations regarding the company’s future performance are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.
As such, these comments are subject to risks and uncertainties which could cause actual results to differ materially from those projected. Additional information about various factors that could cause actual results to differ from those projected are contained in the news release that we issued this morning and on the company’s Form 10-K for the year ended December 31, 2007, as updated in the company’s Form 10-Q for the quarter ended September 30, 2008.
In addition, the financial and statistical information that will be reviewed during this call is addressed in greater detail in today’s press release which is posted in the Investor Relations section of our website, www.deluxe.com and was furnished to the SEC on the Form 8-K filed this morning.
In particular, any non-GAAP financial measures are reconciled to the comparable GAAP financial measures in the press release.
Now I’ll turn the call over to Lee Schram, Deluxe’s CEO.
Lee Schram
Thank you Terry and good morning everyone. Given the very difficult economic environment, clearly we had a challenging quarter, but given our strong spending controls, disciplined approach to deploying capital and focus on operating cash flows, we were able to meet our adjusted earnings per share outlook and significantly expand our cost reduction program.
In this tough economy, revenue was slightly more negatively impacted than anticipated in holiday cards and other discretionary products such of imaging, apparel, and retail packaging products. It was also impacted by lower check volumes mid-quarter from a couple of large financial institutions that were recently acquired. Even with these revenue shortfalls, we were able to control spending and fully offset the earnings per share impact of the revenue shortfall, excluding the impact of restructuring and impairment charges.
With the challenging economy and financial crisis, we continue to focus on basic blocking and tackling in our core check businesses by continuing to extent contracts and further stabilizing margins. We also had our best quarter ever on new non-check revenue.
In response to an even further weakening economy, we also challenged ourselves to more aggressively reduce cost and expenses and now have expanded our previous $250 million cost reduction initiative to $300 million. At the same time we continue to invest in our future, with progress in many revenue initiatives, including e-commerce where we continue to see growth in site visitors. We also saw growth in loyalty, retention, fraud and security and new business services including payroll services, logo design, web services and business networking.
We are prudently managing our company, closely monitoring the small business and financial institution markets, and focusing on strong free cash flow generation while offering a very attractive dividend as we continue to transform Deluxe and steadfastly execute on our turn-around plan. In a few minutes I will discuss more details around our recent progress and next steps, but first Rick will cover our financial performance.
Rick Greene
Thanks, Lee. Earlier today we reported diluted earnings per share for the fourth quarter of $0.55, which included a loss from discontinued operation of $0.05, following our decision to sell the non-strategic, low-margin, Russell and Miller retail packaging and signage business.
Excluding restructuring and impairment charges, we reported earnings per share from continuing operations of $0.68. As Lee indicated, revenue was below our outlook due to an even greater down turn in the economy than expected. However, we were able to fully offset the impact of lower revenue with spending controls and cost reductions, primarily in SG&A expense.
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