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00:03 Ladies and gentlemen, thank you for standing by and welcome to the Deluxe Fourth quarter and full-year 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. And today's call is being recorded. We will begin with opening remarks and introductions.

00:19 At this time, I’d like to turn the conference over to your host, Vice President of Investor Relations, Tom Morabito. Please go ahead..

00:30 Thank you, operator. And welcome to the Deluxe fourth quarter and full year 2021 earnings call. Joining me on today's call is Barry McCarthy, our President and Chief Executive Officer; and Scott Bomar, our Chief Financial Officer. At the end of today's prepared remarks, we will take questions.

00:47 Before we begin, and as seen on this slide, I'd like to remind everyone that comments made today regarding management's intentions, projections, financial estimates or expectations about the company's future strategy or performance are forward-looking in nature as defined in the Private Securities Litigation Reform Act of 1995.

01:07 These comments are subject to risks and uncertainties including without limitation risks related to COVID, the risk that the company's recent acquisition of First American Payment Systems or any other acquisitions does not produce anticipated results or synergies and the risk that any future acquisitions or divestitures will not be consummated.

Any of these risks and uncertainties could cause our actual results to differ materially from our projections. 01:34 Additional information about factors that may cause our actual results to differ from projections is contained in our Form 10-K for the year ended December 31, 2021 and in other company SEC filings.

On the call today, we will discuss non-GAAP financial measures including adjusted EBITDA and free cash flow. In our press release, our presentation and our filings with the SEC, you will find additional disclosures regarding the non-GAAP measures including reconciliations of these measures to the most comparable measures under US GAAP.

02:10 Now I'll turn it over to Barry..

02:13 Thanks, Tom. And good morning, everyone. Deluxe delivered strong and historic 2021 results. We report full year sales driven growth for the first time in nearly a decade, along with adjusted EBITDA margins of over 20%. We promised this outcome in 2020 and affirmed that again last February in our 2021 guidance.

02:39 Our fourth quarter was especially strong as we delivered sales driven growth in all four segment. In short, our transformation into a sales-driven trusted payments and business technology company is real and our One Deluxe sales model works.

02:58 During the quarter payments performance was driven by the positive results from First American and growth on our digital payments and receivables businesses. Importantly, for the first time in our 106 year history we expect payments the equal checks as our largest business by revenue as we exit 2022.

03:21 First American have 13% year-over-year revenue growth on the quarter, once again exceeding our expectations. First American is clearly benefiting from the Deluxe Halo, our strong reputation, solid balance sheet and deep customer relationships.

The Deluxe Halo is real and by plugging First American into our One Deluxe sales model we're accelerating their growth.

03:51 Cloud growth was driven by data driven marketing, promotional solutions benefited from the implementation of key wins from earlier in the year and checks performance was driven primarily by new competitive wins and business checks.

04:07 Before I go into the highlights for the quarter and year, I want to acknowledge my follow Deluxer's for their continued hard work and commitment to our customers in what was once again a challenging year due to COVID and more.

Our significant progress on our transformation would now be happening without their dedication and unwavering commitment. 04:33 Now to the consolidated highlights for the quarter. Revenue was $571 million, up 25.5% year-over-year. Not including the positive impact of First American, sales driven revenue was up 6.8%.

This was the second strongest quarterly performance since 2012. Adjusted EBITDA margin was 20.5%, which was in line with our expectations. 05:05 For full year 2021, revenue was $2 billion, up 12.9% year-over-year, not including the impact of First American, revenue was up 2%. Adjusted EBITDA margin was 20.2%, down slightly from last year's 20.4%.

In 2021 we also maintained our commitment to ongoing financial discipline and to maintaining a healthy balance sheet, which Scott will touch on in a moment. 05:37 Moving on to some segment revenue highlights. For the fourth quarter our payments segment grew 114% year-over-year, driven by the performance of First American.

Excluding First American, revenue increased more than 5% with growth in our other major businesses, particularly receivables, payroll and HR. Our payables as a service offering, which includes our Deluxe Payment Exchange and Medical Payment Exchange continue to experience strong growth.

06:10 Next, Cloud Solutions had another solid quarter, growing nearly 6% year-over-year. Importantly, excluding business exits in 2020, cloud growth would have been nearly 11% for the quarter. Cloud performance benefited from sales wins and positive impacts of a recovery --recovering economy and our data driven marketing business or DDM.

06:36 Now onto our Promotional Solutions segment. Promotional Solutions had a strong quarter, improving nearly 9% year-over-year, positively impacted by the PNC deal we announced earlier in 2021.

PNC is a great example of the One Deluxe strategy as we're now providing multiple products to the nation’s 8th largest bank after initially only providing bond. 07:03 Finally, our very profitable cash generating check business also had a strong quarter, growing just over 6% year-over-year, which is significantly better than long-term industry trends.

The performance was largely driven by new wins, solid growth from business checks and the successful on-boarding of new client. 07:26 Next, I'd like to take a moment to reflect on what was a momentous 2021 as we continue our transformation that began in late 2019. As I mentioned, our One Deluxe model works.

We reported full year sales driven growth for the first time in nearly 10 years. We're very proud of this achievement. This was my promise when I became CEO to grow our Deluxe portfolio of products and to sell more to both existing and new customers.

08:05 As further evidence of the success of One Deluxe, in 2021 we achieve the third consecutive year of record sales performance. In 2021, we sold four of the top 10 deals in the last 10 years.

Since beginning the One Deluxe approach late in 2019 we’ve closed 12 of the top 20 deals of the last 10 years and closed the single largest deal in the company's history. 08:34 Now, let me touch on some of the key wins during the quarter.

In payments, during the fourth quarter, we signed one of the largest health care payers in the United States to our Medical Payment Exchange Solution for MPX. This company is the fourth payer in 2021, we are committed to get payments through MPX and our solutions solve for their major strategic goal of moving to electronic payments.

MPX digitizes the disbursement of health payments, including explanation of benefits, saving time and expense for the customer. 09:12 Another key win was with Melio, a fast growing payments company with investments and partnerships with some of the major players in the tech world.

Melio focusing on giving small businesses a way to digitally manage their B2B payments and receivables that will be using the Deluxe Payment Exchange or DPX to send B2B checks digitally to participating lock boxes. 09:37 In our cloud business, a key win was the large real estate financing customer.

Here we were able to solidify its direct marketing business through an optimization approach designed to analyze recent data driven marketing campaign responses. Cloud also want to contract with Pentagon Federal Credit Union.

This exciting strategic partnership will help test and facilitate member retention strategies with the nation's third-largest credit union with $25 billion in assets and over 2.3 million members. 10:10 In our cheeks business, we recently announced two significant value creating developments.

First, we're installing new HP printers to augment our check and Promotional Solutions segments with a digital and print on demand technology. These new capabilities will help manage fixed costs, enable us to quickly build new products and implement new customer requirements faster, creating new revenue opportunities.

With this technology, we have already expanded premium check and overall print design options. 10:47 Second, this long-term investment has enabled us to win one of the largest non-bank distributors of personal checks, The Bradford Exchange.

The Bradford Exchange provides innovative high quality art in a variety of collectible and consumer products, including checks with millions of repeat customers. We won Bradford away from their long-term supplier, our chief check competitor. We are now well positioned to win even more.

11:19 Another significant highlight in 2021 and consistent with our strategy to make meaningful platform acquisitions, it is the largest acquisition in our history, First American. First American gave us an immediate leadership position and a strong secular growth markets, complementary to our existing businesses.

First American also brought us a platform on which we can further grow and gain scheme scale advantage. Driving future leverage and positioning us for revenue and profit growth going forward. 11:54 As I mentioned earlier, the Deluxe Halo is real.

Our strong trusted reputation, excellent balance sheet and deep customer relationships provide a strong foundation for which First American can grow. We simply plug First American into our One Deluxe model and it works. And it's working really well. First American was historically a low mid-single digit revenue growth business.

Just as a part of One Deluxe, First American has been growing double digits, which is better than our expectations. 12:31 Additionally, First American is already successful selling Deluxe products like HR payroll, payables, receivables and web-hosting into their base, magnifying our success.

As further evidence of the One Deluxe Halo and One Deluxe success, First American closed three times as many financial institutions in the back half of the year as they would normally. Cross selling to approximately 4,000 financial institutions, and 4 million small business customers is not limited just to First American.

We achieved significant telesales success with increases in average order value and items per order across the company in addition to the enterprise level wins, I mentioned earlier. 13:20 One Deluxe works and our transformation is real.

In summary, Deluxe delivered strong fourth quarter and full-year results, furthering our transformation into a payments company, just as we promised. To recap, during the year, we delivered the following.

First, we reported sales driven full year revenue growth for the first time in nearly a decade, more than replacing secular check declines with profitable new and sustainable revenue. 13:53 Second, we completed the largest acquisition in our history in the second quarter, First American, giving us a strong market position.

First American is performing well above the expectations, proving that One Deluxe model works and the Deluxe Halo is real. Third, all four segments demonstrated sales driven growth in the fourth quarter.

Fourth, we expect that as we exit 2022 payments will equal the check business in terms of revenue, a first in our long history and a critical milestone in our transformation. 14:30 And finally, even with COVID, inflationary supply chain and labor pressures we're driving transformation. We said what we would do, and we did what we said.

We're looking forward to continuing our revenue momentum into 2022 as we add new sell through partners and payments and cloud, continue to innovate and grow our pipeline and actively manage the portfolio. 14:58 Now I will turn it over to Scott, who will provide more details on our financial performance..

15:05 Thank you, Barry and good morning everyone. Let's go through the consolidated highlights for the quarter and year before moving on to the segments. For the fourth quarter, we posted total revenue of $570.6 million, up 25.5% year-over-year. Not including First American, revenue came in at $485.5 million, up 6.8% year-over-year.

We reported fourth quarter GAAP net income of $13.8 million or $0.32 per share in the quarter. Compared to the prior year fourth quarter, GAAP net income was impacted by $13.7 million in acquisition and amortization, as well as increased interest expense, both related to the First American acquisition.

15:51 We also incurred increased tax expense related to the repatriation of $85.3 million of cash from our Canadian operations. Adjusted EBITDA came in at $117.1 million, while adjusted EBITDA margin was 20.5%, 20.9% in last year's fourth quarter.

Fourth quarter adjusted EBITDA was impacted by planned technology investments and inflationary pressures, offset by pricing actions in operating leverage from strong revenue growth. 16:26 Fourth quarter adjusted EPS came it at about $1.26 down from $1.38 in last year's fourth quarter.

This included an $0.11 per share impact from the previously mentioned cash repatriation. For the full year we posted total revenue of $2.02 billion, up 12.9% year-over-year. Not including First American, revenue came in at $1.83 billion, up 2% year-over-year at the high end of our guided range.

16:59 We reported full year GAAP net income of $62.8 million or $1.45 per share for the year. On a GAAP basis, the First American acquisition was diluted due to $29.5 million in acquisition and amortization, as well as $18.9 million in transaction costs.

The incremental interest expense resulting from the acquisition was offset by the operations of First American. 17:26 Full-year adjusted EBITDA was $407.8 million and adjusted EBITDA margin was 20.2%, down slightly from last year's 20.4%, due primarily to business mix. Full year adjusted EPS came in at $4.88, down from $5.08 in 2020.

As mentioned in the quarterly results, EPS was impacted by incremental tax associated with the repatriation of cash from our Canadian operations, as well as the higher share count. First American was slightly accretive to full year adjusted EPS. 18:03 Now turning to our segment details.

Payments grew fourth quarter revenue of 114.5% year-over-year to $167.3 million, largely driven by the acquisition of First American and sales driven growth for standalone Deluxe. Excluding First American, payments revenue increased 5.4% year-over-year.

In addition to First American strong performance that Barry mentioned, we experienced growth in our core payments business.

Including First American, adjusted EBITDA increased 93.8% in the quarter and adjusted EBITDA margin was 20.6%, down 220 basis points due to inflationary pressure in our lockbox business, partially offset by price increases as well as increased investments in IT, sales and marketing.

18:55 First America was slightly accretive to payments adjusted EBITDA margin for the quarter. With the addition of First American, our payments segment has more than double in size. As Barry mentioned, this is an important milestone in our transformation to becoming a payments company.

Once again, we expect payments to equal checks is our largest business by revenue as we exit 2022. 19:17 For the year, payments grew 69.1% year-over-year to $510.4 million, driven by the acquisition of First American and sales driven growth for stand-alone Deluxe. Excluding First American, payments revenue increased 5.4% year-over-year.

For the year including First American, adjusted EBITDA increased 55.1% and adjusted EBITDA margin was 20.7%, down 190 basis points. Longer term, we expect the payment segment to deliver a high single-digit revenue growth rate and for 2022 we expect adjusted EBITDA margins to be in the low 20% range.

20:00 Cloud solutions had another solid quarter, segment revenue increased 5.6% year-over-year and to $62.5 million in the quarter. As Barry mentioned earlier, the businesses exited during 2020 are excluded, cloud grew 11% in the quarter.

Cloud's growth continues to be driven by our data driven marketing solutions, which is seeing a solid rebound with the recovering economy and increased marketing spend. We continue to add new DDM clients, which will benefit us going forward.

20:32 As we said in previous quarters, our strategy in our data business is to diversify beyond our core banking and mortgage verticals. We have mentioned pilot campaigns within these new markets and these initial opportunities have been successful.

These pilot has outperformed our customer's existing campaigns leading to new ongoing programs and use cases to approach other major players within these target markets. Our Q4 wins include new customers and programs and telco, and notably within one of the country's largest e-commerce markers.

21:04 In Q4, cloud adjusted EBITDA margin declined 300 basis points versus prior year to 24.4% due to product mix and investments to drive future growth in the business and the impact from business segments. For the year, cloud segment revenue increased 3.8% year-over-year to $262.3 million.

Once again, the business exited during 2020 are excluded, cloud grew 13% for the year. 21:33 For 2021 cloud adjusted EBITDA margin improved 240 basis points versus prior year to 26.8%. For 2022, we continue to expect to see mid-single digit revenue growth on a reported basis. We also expect our margins to remain healthy in the low to mid-20% range.

Promotional Solutions fourth quarter 2021 revenue was $156.7 million, up 8.8% year-over-year. Adjusted EBITDA margin for the fourth quarter was 18.3%, up 430 basis points due to sales driven operating leverage, merchandising optimization and seasonal factors. 22:14 For the year, Promotional Solutions revenue was $546.5 million, up 3.2% year-over-year.

Adjusted EBITDA margin for the year was 15.6%, up 300 basis points. We are anticipating 2022 top line growth in the low single digit range and slightly improved adjusted EBITDA margins due to value realization initiatives and merchandising optimization.

Checks fourth quarter revenue increased 6.2% from last year, to $184.1 million as new competitive wins, pricing actions and strength in our business checks outpaced anticipating secular declines in the business.

The significant win enabled by our investment in the HP digital assets has a modest impact in the fourth quarter revenue, but were partially offset expected secular declines in 2022. 23:09 I should also note that while we are very pleased with these results, we do not expect to see this level of outperformance in 2022.

Fourth quarter adjusted EBITDA dollars remained flat year-over-year and adjusted EBITDA margin levels were 45.2%, down 290 basis points.

This was largely driven by expenses related to the onboarding of new customers, inflation and planned investments, including our new print on demand technology from HP, which should help protect our margins moving forward. 23:41 Checks full year 2021 revenue was $703 million, flat with last year.

And adjusted EBITDA margin levels were 46.1%, down 230 basis points. Based on high renewal rates and new businesses won 2020 and 2021, we anticipate checks to decline in the low single digits for 2022, better than the anticipated industry secular declines. 24:08 Turning now to our balance sheet and cash flow.

We ended the year with a net debt of over $1.64 billion, up from $716.9 million last year due to the First American transaction. Importantly, in the fourth quarter we retired over $94 million of debt and nearly $153 million since the First American transaction, further demonstrating our financial discipline and commitment to delever.

24:35 Our net debt to adjusted EBITDA ratio was 4.0 times at the end of the year, down from 4.3 times in the third quarter. Our long-term strategic target remains approximately 3.0 times.

Free cash flow defined as cash provided by operating activities less capital expenditures was $33.5 million in the fourth quarter, up $2.7 million in the fourth quarter of 2020.

We do expect overall free cash flow to increase in 2022 as the investments in our major tech platform modernization will decrease meaningfully starting in the second half of the year.

25:14 For the year, free cash flow was $101.7 million, down from $155 million in 2020 due to planned IT investments, as well as transaction fees associated with the First American transaction. Our Board approved a regular quarterly dividend of $0.30 per share on all outstanding shares.

The dividend will be payable on March 7, 2022, to all shareholders of record on February 22, 2022. We did not repurchase common stock in the fourth quarter. As a reminder, our capital allocation priorities are to responsibly invest in growth, pay our dividend, reduce debt and return value to our shareholders.

We will evaluate future repurchases on an opportunistic basis, subject to the attainment of our deleveraging goals. 26:04 Turning now to guidance. Today, we are providing our expectations for 2020.

As a reminder, the guidance includes the partial prior year of First American, assumes a continued economic recovery that is subject to, among other things, the macroeconomic uncertainties associated with the COVID-19 pandemic, including the Omicron variant, as well as the anticipated continued supply chain constraints, labor supply issues and inflations.

26:30 We've added several more components to our guidance, which should help you with the modeling. For full year 2022, we are expecting the following, keeping in mind that all figures are approximate. Revenue growth of 8% to 10%, including a full year of First American. As a reminder, the transaction closed on June 1, 2021.

Adjusted EBITDA margin of approximately 20% for the full year, we expect 2022 to return to pre-COVID seasonal hires, the Q1 margin rate will be the lowest of the year with margins improving as the year progresses. Interest expense of $85 million and adjusted tax rate of 26%.

27:11 Depreciation and amortization of $180 million, approximately half of which is acquisition amortization. Average outstanding share count of 43.5 million shares and capital expenditures of $105 million. 27:30 To summarize, I'm very pleased with the fourth quarter and full-year 2021 results.

We are executing on our One Deluxe strategy, I believe the company is experiencing solid momentum that we expect to continue into 2022. 27:42 Operator, we are now ready to take questions..

27:46 Thank you. [Operator Instruction] Our first question is from Lance Vitanza with Cowen. Your line is open..

27:58 Hi guys, thanks for taking the questions and congratulations on an important year and great quarter. And if I can, I'd like to start maybe with just one big picture question. Barry, you've done a lot to really transform this business over the past couple of years.

My question is, where do you see the business going from here? Do you have Deluxe where you want it to be, or will there be more improvements? And I guess what I'm wondering is, will it -- are you now moving into a reap what you sow type of dynamic? Or do you have a lot more -- are there more transformational -- is there more transformational work that needs to be done in your opinion?.

28:42 Well, first of all, Lance, great to talk to you again. We're very proud of how the business performed through 2021 and I fundamentally agree with you that it was a very, very important year in our transformation.

You'll recall that we have invested over the last couple of years to improve our core operating system, our infrastructure and more, and we will be completing all of that work in the first half of this year. So that is already largely behind us, that will be really behind us as the middle of the year passes.

29:15 We very much like the position the company is in today, we have a payments business that at year-end will be the largest business in the company's portfolio. And that puts us in a strong position for secular growth going forward.

In the payments business, we have long-held the belief that it will continue to grow and deliver high single-digit growth for the long term with healthy margins, we really like that profile substantially.

We've made investments to ensure the success of our check business cash flow for the long term that you saw us make announcements in the very recent past. I mean, really like where we're positioned today. And we think we're in a great spot to build the company from here..

30:09 Our next question is from Charles Strauzer with CJS Securities. Your line is open..

30:15 Hi, good morning everybody. Can you talk a little bit more about your assumptions behind the organic growth for 2022 to for both the core and SaaS business? And maybe a little bit more granularity on the segments. And I think you gave some good detail there.

But maybe some more about the assumptions behind those numbers?.

30:36 Sure Charlie. So, this is Scott. Good morning. So revenue of 8% to 10%, obviously that includes a partial year for First American be including in the base for the first time. To break that apart, we would say on the legacy business that will be 0% to 2% growth, similar to what we had communicated for this year.

As we move into the back half of the year and as First American just becomes part of Deluxe, we'll begin to think about that as a portfolio and we will – we not need to segregate that independently. Within the segments, we've talked about each individual segment and what our long-term expectations are for the overall payments business.

We're thinking 2022 and beyond is being a long-term high single-digit grower with the inclusion of First American, cloud in the mid-single digits, promo in the low single digits and check, we talk about the secular declines in that industry and we continue to resume.

31:38 In 2022 we had an incredible Q4 in the check business where we actually grew revenue period over period. We don't – while we're thrilled with our performance, we don't expect that to continue next year, and we're going to look at 2022 to deliver low single-digit decline in checks..

31:58 Great, thank you. And then, you're looking at a little bit of growth, obviously, on the topline, but even though our margins are relatively flat with 2021. Can you talk more about kind of the factors impacting the margins and sort of the things you need to offset those? Thanks..

32:14 Sure. So, 20% EBITDA margin for 2022, consistent with what we would say this year and certainly there are some areas of pressure with inflation and supply chain dynamics that we're still working our way through.

But we do feel like we've got a good solid plan on how to deflect those pressures in the business and deliver EBITDA rate -- performance in line with what we saw this year. 32:39 The one nuance is that, we are expecting Q1 to be the lowest quarter of the year.

There's some seasonal patterns that have historically existed in the business that we expect to resume you didn't see those in 2021. This is some of the one-timers associated with COVID, but we do expect Q1 to be the lowest performer of the year, increasingly steadily throughout the year and deliver 20% overall across the case here..

33:06 Great. And then lastly, if you can extend little further on your thoughts for free cash flow. I know you said you're expecting it to grow in 2022, but maybe a little bit more granularity there. Thanks..

33:16 Certainly. So Barry talked a lot about the transformation that was initiated several years ago regarding the internal infrastructure of the organization, internally we call these initiatives six flag, there were six specific infrastructure components that were priced completely.

Five of those projects are now complete, the final -- final of those, which is also the biggest and most impactful is a replacement of the ERP system to integrate all these previously unintegrated businesses. That will conclude in the first half of 2022 and that has been a significant consumer of cash in the organization.

And so, with the completion of that activity there is a meaningful amount of incremental free cash flow as compared to 2021 that we'll expect to see next year..

34:04 Excellent. Thank you very much..

34:09 Our next question is from Lance Vitanza with Cowen. Your line is open..

34:14 Hey, guys. Thanks. I wanted to start on First American and the payments business actually. It sounds like it was a -- if I heard you right, it was accretive to EBITDA margin, slightly accretive to EBITDA margin in the quarter, good. The guidance, I think you said for 2022 is going to be for another year of low 20% EBITDA margin.

And so it just -- it seems like you're not really -- if I heard you right, it sounds like you're not really expecting to capture any operating leverage there.

And I'm just wondering if that's a temporary phenomenon, I know obviously we've got a lot of things going on in the world right now or should we be thinking that that's just the nature of the business and that sort of -- that margin profile should continue out for the next several years?.

35:02 So we -- you're correct in that, we have not modeled a significant amount of operating leverage in First American for 2022. There are a number of investments that need to be made in the business and we're excited about continuing to grow that and thrilled with the performance that that team has delivered over the course of 2021.

We do however expect it in the long term. even in the intermediate term, there should be operating leverage as we've talked a lot about the strategy of that acquisitions. First American has a scale of business with a solid platform upon which additional volumes should come through at higher floating rates.

So we do expect operating leverage in the future, but we need to make some investments that continue to grow the baseline business as we further integrate that wins with the balance of Deluxe..

35:50 So not to quibble with the semantics, but it sounds like the flat margin in ‘22 is really somewhat misleading, because there is things going on, puts and takes beneath the surface.

There is some higher flow through, but it's being offset by some temporary investments that you feel like you need to make? Is that a fair way to characterize it?.

36:09 I think that’s fair..

36:11 Okay. Cloud, it looks like the year-on-year growth, it looks like it decelerated. And I'm wondering if there was anything in particular happening there which is still is quite nice. But I also noticed that it was down quarter-on-quarter.

So I was hoping you could talk a little bit about the seasonality that you would typically expect to see in the business? Thanks..

36:32 There is seasonality in the business, but I think primarily the decelerating growth is a function of the comp year and the recovery from COVID that we saw in early part of the year and now we're starting to trend up against stronger comp quarters in the business.

And as we continue to articulate, we view this as a mid-single digit grower going forward as we convert it to our level in Q4. But this business is performing in line with our expectations. We're really happy with the traction we've made with the -- with new customers and the prospective opportunity to enter into new industry verticals.

So we are very happy with the performance we've seen there. 37:15 Now I think it is important to note that, the growth rate that you're seeing there, the mid-single digit growth rate is also impacted by the exits, so if you exclude the exit that would have been 11% growth in the quarter..

37:27 Right. Okay, great. And so, on the promo side, they did quite nicely, much better than we were expecting. And I'm wondering, actually if maybe the reverse is happening there, was there some reason that that was maybe an easier comp, maybe anything that got pushed out of 4Q ’20 or or was there anything pulled forward into 4Q ’21.

Clearly, I'm guessing we should be expecting 9% year-on-year growth going forward..

37:51 So we saw some strong growth in our business. Certainly, we do not expect that to continue at those levels going forward. We did see some improved performance in some sub-sections within promos, specifically promo and apparel, which is a business that was hit hard by COVID, but we saw some nice strength in that piece of the business in Q4.

Also part of that business is sort of a forms business that often tracks with checks and we see some -- saw some strong performance there as well. So, we still think the business is healthy, we are going to perform well in 2022. So we're modeling that out as more of a low single-digit grower next year..

38:32 Okay. And my last question, if I can squeeze one more in, is really on the balance sheet and you did a nice job there leverage net debt, those are a little bit lower than we had modeled. I'm a little frustrated that now apparently you don't feel is the time to be repurchasing the stock.

I mean, the stock is clearly not reflecting the value proposition here.

And it sounds like you pretty much made up your minds that until you get that leverage down to your target share repurchases are all but off the table, maybe I'm making it to -- maybe it's stronger than you guys are making it, but could you comment on that a little bit? Is there any chance that maybe the company does move in first half of this year and take advantage of the prices that we're seeing?.

39:20 This is something we review with our Board every single quarter, we're always evaluating our capital allocation priorities and I would never say never. But at the moment, we are steadfast in our commitment to delever according to the commitments we’ve made at the time of the First American acquisition.

But we did revisit that on a constant basis for evaluating our capital plans, we're evaluating our debt deleveraging plans, as well as our share buyback plans constantly, so never say never, but at the moment, we're focused on reducing our leverage..

39:58 Understood, thanks for the color, guys, I appreciate it..

40:03 Our next question is from Chris McGinnis with Sidoti & Co. Your line open..

40:07 Yeah. Good morning. Thanks for taking my questions and nice quarter. I guess if we could start just on with First American.

Can you just talk about the growth rate you're seeing there? And then, how long you can keep that growth rate going, now that it's under your command?.

40:25 Hey, Chris. Good to hear you. We are obviously very proud and pleased with First American performance. And like we said earlier, we think it's just really clear evidence that our One Deluxe sales model works and the Deluxe Halo is real.

We think that's going to be a great business over the long term, we don't know that that's going to stay at this elevated rate of growth indefinitely. I'll tell you, we feel very good now about what we said when we acquired the asset that we believe we could have it as a solid middle digit grower and perhaps more.

And we're seeing perhaps more right now in what we saw in the full year and in fourth quarter results. 41:15 And what I would just tell you is, we feel very confident, very confident that our original business case and plan is solid and it is going to pour..

41:25 Great, thanks for that Barry. And then I guess the second part of that around fast.

I know you mentioned this last quarter, Barry, is that you're getting inbound calls, is that customer outreach still continuing to happen, coming to you now that you have that asset in place?.

41:43 Absolutely.

I think, Chris, maybe the best way to think about sort of this notion of the Deluxe Halo and the strength of our relationship and the strength of the brand we have in the marketplace, particularly with financial institutions is that, we closed three times, three times the number of financial institutions in the back half than what would be a normal close rates for First American.

It is -- the best way I can explain to you that it's real and that the fact that the relationships we have can de leveraged for growth. It just gives – it’s clear, it's black and white. Three times the number of financial institutions fine with First American in the back half than they would in a typical back half.

I just -- I don't have a better way to dimensionalize except to tell you that, because that's -- I think it's really powerful and really clear..

42:38 No, I appreciate that. And I guess just thinking about that with the Bradford Exchange announcement earlier this week.

Can you just talk about, I guess, one, the opportunity there, just on the check side? And then also, is there room for that One Deluxe strategy to play out to include more products that Deluxe offers?.

43:00 We continue -- there is a bunch of questions there. So let me take 1 of the time. Let me talk about the Bradford, HP and what we're doing in our tech business. We have long said that we were going to focus on maintaining that profitability for our foreseeable future.

And by making investments on the digital technology like you saw us announce that HP helps us to do that. It greatly simplifies the production process, eliminates inventory in our warehouses and gives us many more products to sell. 43:35 Part of having more products to sell mean there are other customers that we can go sell to.

And Bradford Exchange is a great example. Bradford Exchange, there business is that. they put art work on a variety of different products to create a custom product for consumer.

And they have significant check business today that was being managed and delivered by our competitor and we won that away on a variety of points, especially the fact that we now have this capability and technology that allows us to have nearly infinite variety of designs.

And that's important, not only to Bradford Exchange, because that's a key differentiator for them in the market, but it already allow us to add additional chunk designs to our mix, which allows us to have new revenue sources.

44:28 And it does position us really well to go after different segment of the market that we have been able to go after in the past. So, we think there's opportunity for us to win additional business there and continue the ability for us to grow share of the market in checks.

44:44 So the second question really was around One Deluxe and the ability to cross sell beyond just the success we highlighted on First American.

But throughout this quarter and throughout the year we continue to improve our cross-sell rates in our telesales centers, as an example, our pipeline of products that we have in queue to be sold to our existing customers that continued to expand. And then, I think it was a third record -- consecutive year of record across our performance.

45:17 So we don't see any reason that that's going to slow down. The One Deluxe model that we started building clearly works. And it’s – it’s a machine that is working really well for us..

45:32 Great. And I appreciate that color, Barry. Just to move on to checks and the growth in the quarter.

And I understand the outlook for 2002, but can you just dive a little bit more into the growth in the quarter itself? Maybe how much is from existing and then from new client wins?.

45:51 Yeah. So, look, we still think about the industry and the base business is being in that mid-single digit secular declines. So you get a sense for how much of the volume that we deliver was based on new wins.

And so the team has just done a terrific job in winning a high -- very, very high percentage of renewals of our existing customers and then fairing quite well when new business is up for grabs. So the teams just continue to do a terrific job there. And so we don't have as many renewals coming up in the near term.

So we think we've got a pretty solid baseline of revenue trending into 2022. But again the team continue to take share and then do a good job at that business..

Thanks for that. Also on MPX, it sounds like it's starting to really gain some traction. You just talk about the opportunity that you see and maybe the revenue growth rate. I know it's still small, but it sounds like it's moving in a pretty positive direction..

46:54 So we're really proud of what's happening with MPX and BPX. And year-on-year that's growing in a 50 plus percent range. So very material revenue growth rate. And we think there is a ton of upside potential.

If you just look at it and you say, that if you convert small percentage of B2B checks, it's not -- it's incredibly – it’s right in front of us to go make that $100 million a year business and not tomorrow morning, but over a couple of year horizon. And at that growth rate we believe we can get there in few years.

47:36 And so it's a real business, it's a real market opportunity. And as we noted, we signed the fourth major payer in Q4, which is a big deal, because it hasn't gone live yet, but because that is find there will be revenue and profit that come to us beginning in ‘22 and then accelerating as we go forward..

48:09 And it appears we have no further questions at this time. I'll turn the call back to Mr. Morabito for any closing remarks..

48:17 Thanks, Chris. Before we conclude, I'd like to mention that management will be participating in Sidoti Spring Small-Cap Conference on March 23. Thank you again for joining us today. Please be healthy and safe and look forward to speaking with you in May as we share our first quarter 2022 results..

48:38 Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect..