Despite a drop in third-quarter revenue, from $362.7 million a year ago to $332.3 million during third-quarter 2009, Deluxe Corp’s net income rose from $13.8 million to $28.6 million. The quarter ended Sept. 30.
A small part of the income increase was due to the checks-and-forms company tightening up on the cost of goods sold. This fell from 37.9% in third-quarter 2008 to 36.6% for the quarter just ended. But the quarter a year ago featured two charges – restructuring costs of $9 million and asset impairment charges of $9.7 million – which fell to just under $2 million in restructuring expenses for the quarter just ended.
The restructuring costs from a year ago included $17.9 million for employee severance, as well as the closing of three manufacturing facilities and one customer call center.
The company’s revenue was also boosted by acquisitions. In July 2009 it purchased Web listing and Internet services provider Abacus America Inc. from Aplus Holdings Inc. for $27.6 million in cash. It also bought MerchEngines.com, a search engine marketing firm, for $3.2 million.
But the bulk of its business is its checks and forms operations, and in that there is a disturbing trend or two. The company racked up 14.7 million orders during the most recent quarter, down from 15.9 million. And the average order revenue fell as well, from $22.82 per order to $22.62.
Deluxe Corp. attributed this falloff to “the continued decline in check and form usage, and turmoil in the financial services industry, including a higher number of bank failures.
That said, the lack of restructuring charges boosted the operating margins of Deluxe’s three business segments. Its small business services unit generated revenue of $198.9 million down from $212.9 million. But its operating income rose from $10.8million or 5.1%, to $23.3 million, or 12%.
The financial services unit saw its revenue fall from $103.8 million to $98.9 million, but its operating income jumped from $7.1 million or 6.9%, to $18.5 million, or 18.7%. And Deluxe’s direct checks operations saw its revenue decline from $46 million to $39.5 million, while its operation income, at $12.8 million, was just under the $12.9 million realized a year ago.
