Deluxe Acquires First Manhattan Consulting Group, Provides Financial Outlook

SHOREVIEW, Minn. — January 6, 2017 — Deluxe Corporation announced today that it has acquired First Manhattan Consulting Group (FMCG Direct), a data driven, marketing services company. FMCG Direct, based in New York City, is an industry leader in marketing analytics and insights, providing clients with deep financial services expertise and proprietary research, along with marketing campaign design and execution.

Deluxe acquired privately-held FMCG Direct on December 30, 2016, for $200 million, subject to customary adjustments. FMCG Direct is expected to deliver 2017 revenue of approximately $80 to $85 million and to be slightly dilutive to 2017 EPS by approximately $0.05 per share for the full year. Historically, FMCG Direct’s business has been seasonal with higher revenue occurring later in the year as a result of financial institution marketing timing. Management expects FMCG Direct’s revenue to increase quarterly throughout 2017 and expects first quarter 2017 EPS dilution of approximately $0.07 per share. The acquisition was financed through the existing revolving credit facility and an expansion of the credit facility term loan which has been increased to $330 million.

The FMCG Direct suite of services will be included in the Deluxe Financial Services segment which includes check program management, marketing analytics for customer acquisition, customer loyalty programs, and treasury management services for financial institutions. Combining the strengths of Deluxe’s deep background in the financial services space with FMCG Direct’s data and analytics, this acquisition will give clients differentiated capabilities to profitably grow revenue, acquire new accounts and deepen customer relationships.

“FMCG Direct further enhances our data-driven marketing services portfolio, and creates a one-of-a-kind suite of capabilities for top tier financial institutions to acquire, cross-sell and retain consumer, small business and commercial relationships,” said Lee Schram, chief executive officer of Deluxe Corporation. “The solutions FMCG Direct brings to market are complementary to Deluxe, continuing to strengthen our value proposition and market position.”

Bob Tetenbaum, president and co-founder of FMCG Direct, also added, "Deluxe has a proven track record of exceptional results with expanding data and analytics capabilities. After surveying our common capabilities and approaches to adding value to clients, we found that FMCG Direct’s analytical approach to marketing services is the perfect fit to further enhance the Deluxe Marketing Services portfolio. We’re excited to become part of the Deluxe family.”

Founded in New York City, FMCG Direct is a provider of industry leading targeted marketing campaigns that leverage proprietary multi-sourced data sets and insights to generate a compelling business case and exceptional return on investment. The comprehensive and powerful FMCG Direct data-driven solution suite will be sold through the Deluxe Financial Services sales channel.

Deluxe also announced today that it is slightly revising its prior 2016 fourth quarter and full year outlook and announced a preliminary full year 2017 outlook including the expected results of FMCG Direct. The prior 2016 outlook assumed the FMCG Direct acquisition would close in late November 2016 and included approximately $6 million of associated revenue. The 2016 revenue outlook has been revised to exclude this revenue reflecting the December 30, 2016 acquisition close as well as additional revenue softness in the holiday card product category. For both the fourth quarter and full year of 2016 compared to the prior outlook, diluted EPS was reduced by $0.05 per share of transaction costs related primarily to the acquisition of FMCG Direct, $0.04 per share of additional restructuring costs related primarily to severance, and $0.04 per share of additional debt extinguishment costs from the redemption of the 2020 Senior Notes and the related settlement of interest rate swaps. Additional details regarding the 2017 outlook will be provided in the fourth quarter 2016 earnings release scheduled for January 26, 2017.

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Adjusted Diluted earnings per share (EPS) is a non-GAAP measure. A reconciliation of diluted EPS on a GAAP basis to non-GAAP adjusted diluted EPS is provided at the end of this press release.

Petsky Prunier Securities and Faegre Baker Daniels served as Deluxe’s financial and legal advisors while AGC Partners and Latham & Watkins served as FMCG Direct’s financial and legal advisors.

About Deluxe Corp.
Deluxe Corp. is a growth engine for small businesses and financial institutions. Nearly 4.5 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 5,100 financial institution customers, Deluxe offers industry-leading programs in checks, customer acquisition, fraud prevention and profitability. Deluxe is also a leading provider of checks and accessories sold directly to consumers.

About FMCG Direct
FMCG Direct, a data driven, omni-channel marketing services company based in New York City, is an industry leader in marketing analytics and insights, providing clients with deep financial services expertise and proprietary research, along with marketing campaign design and execution.

Source: Deluxe Corp.