Q1 2024 Deluxe Corp Earnings Call

Participants

Brian Anderson; Vice President, Strategy and Investor Relations; Deluxe Corp

Barry McCarthy; Chairman of the Board; Deluxe Corp

William Zint; Chief Financial Officer, Senior Vice President; Deluxe Corp

Kartik Mehta; Analyst; Northcoast Research

Charles Strauzer; Analyst; CJS Securities

Marc Riddick; Analyst; SIDOTI & Company

Presentation

Brian Anderson

Before we begin, and as seen on the current slide, I'd like to remind everyone that comments made today regarding management's intentions, projections, financial estimates, and expectations of the company's future strategy or performance are forward-looking in nature as defined in the Private Securities Litigation Reform Act of 1995. Additional information about factors that may cause our actual results to differ from projections is set forth in the press release. We furnished this afternoon in our Form 10-K for the year ended December 31, 2023, and in other company SEC filings.
On the call today, we will discuss non-GAAP financial measures, including comparable adjusted revenue, adjusted and comparable adjusted EBITDA and EBITDA margin, adjusted and comparable adjusted EPS, and free cash flow. In our press release, today's presentation, and our filings with the SEC, you'll find additional disclosures regarding the non-GAAP measures, including reconciliation of these measures to the most comparable measures under US GAAP. Within the materials were also provided reconciliations of GAAP EPS to comparable adjusted EPS, which may assist with your modeling.
Finally, as an important additional note, this evening's presentation reflects results aligned to our updated segment reporting structure. As outlined in our filings concurrent with our December Investor Day presentation and today's 8-K filing, which provides unaudited recast business segment revenue and adjusted EBITDA information for both 2022 and 2023 including quarterly details for 2023.
Updated operating segment figures are reported excluding any results from exited businesses for the respective periods, which results from such activities reported separately within the filed materials and detailed further within our segment information and reconciliation of GAAP to non-GAAP measures and slide in the Appendix of today's presentation materials.
chip or add some detail regarding these updates during his comments this evening. And with that, I'll turn it over to Barry.

Barry McCarthy

Thanks, Brian, and good evening, everyone. Two things before I get started first, today, I will be discussing comparable adjusted results for the quarter, which we believe best reflect our ongoing business performance later chip will discuss our reported consolidated and comparable adjusted figures to give even more perspective.
Second, as Brian just mentioned, this is the first time we're reporting in our new segments. We'll also be happy to have follow-up conversations and answer questions that you may have on these updates.
We think this new segmentation provides better insight into the company and our future. Our strategy is clear investment relationships, trust and brand that built in our print business to grow the payments and data businesses. Very simply payments and data are our growth drivers and print is our cash generator, helping drive payments and data success. On this chart, you can see print was 57% of revenue with payments and data combined delivering 43% for the quarter with Q1, the combined payments and data revenue of $226 million, growing 8.1% with margins of 22%. This is an attractive portfolio of businesses that we think is often overlooked. Our new operating segments should help highlight these businesses. Over the longer term, we expect the combined payments and data businesses to reach revenue parity with print and expect to provide updates annually. Overall, I'm very pleased to report our strong start to 2024. In the first quarter, we delivered growth across every key metric revenue, adjusted EBITDA, EPS and margin. Our adjusted EBITDA expanded at a significantly faster rate than revenue, demonstrating the operating leverage we have now purposely built into the Company we are also particularly pleased with the significant year-over-year improvement in cash flow. As a result of the strong performance, we're raising our 2024 cash flow guidance and affirming our other full year operating metrics. You will recall accelerating cash flow and profit growth are the key tenets of our overall strategy and North Star program, both of which we outlined during our December Investor Day. We believe the Q1 performance demonstrates our progress. As a reminder, our North Star goal is to unlock 80 million of incremental comparable adjusted EBITDA at a 100 million of incremental free cash flow by 2026.
As of the end of Q1, we're making progress on all 12 Northstar work streams shown here initiatives comprising roughly two thirds of our targeted 130 million of overall EBITDA improvements are now moving to the execution stage. Recall that the 130 million is aligned to our net 80 million incremental earnings targets after factoring for expected secular declines through 2026 benefit realization will phase in during the remainder of this year and throughout 2025 we expect to see in-year benefits accelerate and remain well positioned to achieve our goals.
Now before reviewing our first quarter highlights, I'd like to provide a few comments on the macro economy and key business drivers.
First, as we discuss on each of these calls, the launch of actively monitors trends surrounding overall domestic consumer sentiment, including discretionary spending, we review economic information for many providers, including the Federal Reserve card associations and more looking at this information alongside our own available data. But it appears consumers still feel inflation pressure. Some of the unfavorable spending dynamics between less and more discretionary categories present a year ago appear to have stabilized a bit. You'll see this reflected in our Merchant Services performance.
Second, our business continues to benefit from our overall One Deluxe go-to-market approach as our growth during the first quarter included new customer wins across each of our reporting segments.
Third, Trust continues to be a key driver for the Company and as we have noted, is one of our core values. We were honored to be recognized for the third consecutive year as one of America's most trustworthy companies by Newsweek. This ongoing recognition is testament to the quality, both of our products and services and the commitment of all Deluxe are delivering every day for customers.
Now to provide some additional details about our first quarter performance for the quarter. Net of business exits revenue was 529 million, up 1.2% or just over $6 million year over year. Combined growth in our payments and data businesses more than offset the single digit secular declines in print consistent with our strategy. Importantly, the Company is now in its fourth consecutive year of delivering organic revenue growth, demonstrating that our shift towards payments and data company is working.
Total adjusted EBITDA dollars increased 7% from the first quarter of 2023 to 97 million, continuing to reflect robust operating leverage across our portfolio.
As noted in my opening comments, adjusted EBITDA margins finished the quarter at 18.3%, reflecting an expansion of a full 100 basis points versus the prior year. We remain particularly pleased with results helping to demonstrate our progress around continued optimization of our operating expense base and expansion of adjusted EBITDA levels outlined within our Northstar execution plans.
Moving on to some segment highlights, beginning with Merchant Services. For the quarter, merchant segment revenue grew 8.3%, while adjusted EBITDA dollars grew 16.3% and margins expanded 150 basis points from 2023.
On strong processing volumes, we're pleased with the strong performance of this business as we approach the third anniversary of the acquisition on June first, since the combination from revenue, profit, operating leverage and margin have all materially accelerated further demonstrating the power of our One Deluxe model. We will continue to leverage our strong bank partner relationships, increasing penetration with integrated software vendors or IOCs and direct selling resources Additionally, we continue to invest responsibly in our differentiated service capabilities, technology and feature enhancements.
Moving now to results within the B2B payments segments. While we saw year-over-year declines of 7.7% for B2B. The overall results were largely in line with our internal expectations for the first quarter. As we have shared on previous calls, we're transitioning to Software as a Service or SaaS model, reducing our dependency on onetime nonrecurring revenue like software licenses and check imaging devices. This move to SaaS will also reduce our dependence on core transaction processing revenue over time. This means we are deliberately reducing focus of selling onetime nonrecurring products as we anticipated and as indicated in our first quarter results, the short term impact has been less revenue, but improved margins during the first quarter. B to B margins expanded 120 basis points, resulting in modest EBITDA impacts despite the drop in revenue. Additionally, we remain encouraged by our growing pipeline, demonstrating strong demand for our newest products. While we shift our focus to SaaS, we will continue to focus on efficiencies across lockbox, leveraging recent site consolidations and other operating improvements. We have continued to win new deals in the lockbox business, helping to offset secular volume pressure and from the transition to SaaS products, we have several high-quality deals currently in the implementation phase and despite some customer delays, we expect these deals to go live later this year and been clear, we do expect to see revenue profit and margin growth simultaneously as the shift towards SaaS unfolds over the next several quarters, we also expect to announce a new leader for this segment in the coming weeks.
Moving now to data solutions, which delivered particularly strong first quarter results. The core data driven marketing or DDM. business had a solid quarter, driving segment revenue growth of 34.5% and adjusted EBITDA growth of 46% during the period. These results reflect continued strong demand for customer acquisition marketing activities across our expansive base of core FI partners. Additionally, data continues to broaden its portfolio of clients extending to other attractive bond financial service verticals, including telecom, utility and smart home technology providers.
As we've discussed previously, quarter to quarter lumpiness results from the campaign oriented nature of the DDS business with customers often shifting planned marketing expense between quarters. Accordingly, we would not expect the levels of growth important during the first quarter to recur over the balance of the year.
Shifting finally to our print segments, consistent with our expectations and prior guidance, the print business experienced a revenue decline of just over 3% to 303 million, while adjusted EBITDA margins held at 30%.
In line with our outlook and typical first quarter seasonality within the segment, legacy check revenues remained roughly flat during the quarter at just over GBP178 million. Revenue declines were consistent with our expectations for the first quarter, which typically lags sequentially from Q4 holiday related to seasonal strength. Overall, we continue to manage the print portfolio to maximize cash flow through operating efficiencies, pricing actions and responsible invest.
Summarize our overall first quarter results speak to our transformation and NorthStar progress. This ongoing performance improvement provides us with a great foundation to deliver our 2024 revenue growth and EBITDA expansion goals. While work remains our consistent and sustained pace of progress create even greater confidence in our bright future as a payments and data company.
Finally, before I pass over to Chip, I want to acknowledge and thank all fellow to Luxfer's who work hard every day to deliver these results for our customers and investors. With that, I'll turn it over to Chip.

William Zint

Thank you, Barry, and good evening, everyone. As Barry noted in his opening, we were very pleased with our first quarter progress, particularly our better than anticipated cash flow generation and our strong comparable adjusted EBITDA growth during the period.
As Brian pointed out upfront, our updated segment reporting reflects the removal of all business exit impacts to both ongoing and recasted historical operating segment financials. This will allow for a clean view of our segment performance over time, net of any impacts from divested lines of business. The combined impact of the business exits can be seen separately within the historical results and today's eight K filing as well as within the enterprise level. Non-gaap reconciliations found within the appendix of today's materials and in our past filings. Importantly, 2024 operating segment results will continue to be reported, excluding any impacts from residual payroll business results that may be realized as customer migrations take place over the course of the year. This is consistent with the conversion agreements we executed during the second half of 2023 as we made the decision to exit these businesses. As a result, our total Enterprise 2024 results will now incorporate a comparable adjusted revenue figure in addition to comparable adjusted EBITDA and EPS to remove any payroll business impacts incurred from both the current and prior year results.
Now with that out of the way, I'll begin today with a bit of additional color around our consolidated highlights for the period before moving on to the segment results. Our balance sheet and cash flow progress and updated 2024 guidance for the quarter. On a reported basis, we posted total revenue of 535 million, down 1.9%, driven by the impact of our prior-year exits, but increasing 1.2% year over year. On a comparable adjusted basis, we reported GAAP net income of 10.8 million or $0.24 per share for the period, improving from 2.8 million or $0.06 per share in the first quarter of 2023 This increase was driven by improved operating results, particularly lower SG&A expense as well as gains relating to the business exits during the period, comparable adjusted EBITDA was 96.9 million, up 6.3 million or 7% versus the first quarter of last year. Comparable adjusted EBITDA margins were 18.3%, improving 100 basis points versus the first quarter of 2023. Q1 comparable adjusted EPS came in at $0.72, improving from $0.69 in 2023, primarily driven by the improved operating income results previously noted.
Now turning to our operating segment details. Beginning with the merchant services business. The merchant business grew first quarter revenue by 8.3% year over year to 96.5 million, reflecting strong Q1 performance. As Barry noted, segment adjusted EBITDA finished at $21.4 million, improving $3 million or 16.3% versus the prior year with margins expanding 150 basis points to 22.2% of revenue, mainly resulting from the strong top line growth and our ongoing profit enhancement initiatives.
In addition to the highlights, Barry covered a merchant business also benefited from robust seasonal volumes within the government vertical during the quarter and remains well positioned to continue momentum towards our mid to high single digit revenue growth and low 20% adjusted EBITDA long-term outlook.
Turning to B2B payments. As a reminder, our B2B segment includes our treasury management offerings featuring both our three 60 software and lockbox remittance offerings on the AR side, in addition to our eCheck and DPXAP. disbursement Solutions results from RDC and other scanner hardware and our fraud and security suite of offerings are also included within this segment.
For the first quarter, B2B segment revenues finished at 69.4 million, down from $75.2 million during 2023, consistent with our expectation for Q1 performance, while overall remittance volumes remained fairly stable on a sequential basis during the quarter, the balance of the business was unable to fully offset some nonrecurring hardware sales from 2023 and other one-time items, resulting in an overall 7.7% decline year over year despite the revenue headwinds within the segment, adjusted EBITDA margins continue to improve, consistent with the focus on operational efficiencies, which we have alluded on. Our prior two quarterly earnings calls, margins improved by 120 basis points to 19.2% during the quarter, with adjusted EBITDA dollars declining 1.5% from 2023 to finish at 13.3 million. Despite the expected soft start to the year, we anticipate flat to low single digit full year revenue growth as we transition to recurring revenues As Barry discussed, overall EBITDA margins are expected to improve to the low to mid 20% range over time.
Moving on to data solutions, as segment rebounded very strongly on both a year-over-year and sequential basis, delivering strong results for the first quarter. Data revenues finished at $59.7 million for the quarter, reflecting a sequential increase of more than 15.5 million from its seasonally lowest fourth quarter, achieving overall growth of 34.5% versus Q1 of 2023. As we noted a quarter ago that data-driven marketing business saw several customers accelerate campaigns into the fourth quarter of 2022, pulling planned data spend from the prior year first quarter comparable results. As Barry referenced, the quarter-to-quarter volatility of campaign timing within this business can make sequential growth rates difficult to predict with great precision. We continue to suggest averaging the two to three most recent quarters. Actual results for both revenue and EBITDA dollars as a good barometer for ongoing segment level financial performance over the balance of the year. We remain very encouraged by the recent performance of this segment and believe our mid to high single digit longer-term growth guidance remains appropriate.
From a full year perspective, data's adjusted EBITDA margins for the quarter improved 200 basis points to 25%, again reflecting campaign timing impacts within the Q1 compare as referenced previously, adjusted EBITDA for the quarter was 14.9 million, up 46.1% from the prior year period. We continue to have strong confidence in the long-term low to mid 20% adjusted EBITDA rate guidance for this segment.
Turning now to our print businesses, print segment. First quarter revenue was $303.4 million, declining 3.4% on a year-over-year basis. This decline was in line with our secular unit decline expectations across this business for the legacy Promotional Solutions revenue driving nearly all the full segment decline as we continue to prioritize stronger margin, printed forms and other business essentials. Adjusted EBITDA margins declined 30 basis points year over year to 30%, continuing to reflect our operating expense discipline and efficiency across cost of goods sold inputs, in particular, consistent with our long-term outlook for the balance of 2024. We continue to expect to see low to mid single digit revenue declines across the print segment, with adjusted EBITDA margins remaining in the low 30s.
Turning now to our balance sheet and cash flow. We ended the first quarter with a net debt level of $1.54 billion, modestly up from our 2023 year-end level, while remaining materially lower than the 1.66 billion mark at the end of Q1 of the prior year.
Consistent with our ongoing commitment to debt reduction as a top capital allocation priority for the enterprise. Our net debt to adjusted EBITDA ratio was 3.7 times at the end of the quarter, also increasing minimally from the 3.6 times reported at year end. As we've noted, our long-term strategic target remains approximately three times leverage. The first quarter typically reflects our seasonally lowest cash flow result, which tends to drive slight increases to our reporting leverage ratio relative to the balance of the year. Free cash flow, defined as cash provided by operating activities, less capital expenditures finished at 6.2 million for the quarter, improving by 38 million from the negative results reported during the first quarter of 2023, driven by continued strong working capital efficiency, in addition to reduced year-over-year CapEx spend, lower cash incentive payments and improved operating results. This was a continuation of the stronger than anticipated operating cash flow results. We have reported since the second quarter of last year, noting that we guide into an expected negative first quarter free cash flow result on our prior earnings call. We continue to expect the first quarter to reflect our seasonally lowest cash flow result, inclusive of payments for annual license and maintenance expenditures, employee compensation payments and other items. As a result of this first quarter performance and our updated forecast, we are raising our full year free cash flow guidance range. As Barry alluded with in his opening remarks, we remain very pleased with our overall operating cash flow generation during recent quarters and our ability to continue our delevering path consistent with our clear capital allocation priorities as an additional note regarding our overall capital structure, I wanted to take a moment to provide a bit of additional color as to the status of our present debt maturities summarized on the current slide. As we announced during the first quarter in mid-March, we entered into accounts receivable securitization facility with a capacity of up to 80 million through the first quarter. We have drawn approximately 65 million on the facility directing these funds toward prepayments against the balance of our 2024 required quarterly term loan amortization. It's a our facility provides us two primary benefits relative to our prior capital structure. First, the 36 month agreement terminates in the first quarter of 2027. And as such, extra shift out as much as 80 million of maturities to the column labeled 2027 plus on the current slide. Secondly, the base rate plus 140 basis points of interest on the new facility provide rate advantage borrowing against the balance of our 2026 variable rate debt. As shown here, our current revolving credit and term loan facilities carry June of 2026 maturities, while our 8% bonds mature in 2029. We remain very comfortable with our present levels of available liquidity and look forward to providing additional updates on any capital structure developments going forward.
Before turning to guidance. Consistent with past quarters, our Board approved a regular quarterly dividend of $0.3 per share on all outstanding shares. The dividend will be payable on June third, 2024 to all shareholders of record as of market closing on May 20th, 2024.
I'm pleased to update our 2024 guidance. We are affirming our estimates for our December Investor Day and raising our free cash flow range this evening.
As Barry noted previously, we continue to make strong progress in line with our original expectations across all key Northstar initiatives forecasted realization of the implemented workstream impacts noted in various comments are fully reflected within our existing 2024 guidance ranges. Our updated guidance figures are as follows. Keeping in mind all figures are approximate and reflect the impact of business exits over the past 12 months revenue of 2.14 billion to $2.18 billion, reflecting flat to 2% comparable adjusted growth versus 2023 adjusted EBITDA of 400 to 420 million, reflecting between 2% and 7% comparable adjusted growth adjusted EPS of $3.10 to $3.40, reflecting 3% to 13%. Comparable adjusted growth and free cash flow of 80 to $100 million increased from our prior guidance range of 60 to $80 million.
Finally, in order to assist with your modeling, our guidance assumes the following interest expense of 120 to 125 million, an adjusted tax rate of 26%. Depreciation and amortization of 150 million, of which acquisition amortization is approximately $55 million an average outstanding share count of 44.5 million shares and capital expenditures of approximately $100 million. This guidance is subject to, among other things prevailing macro economic conditions, including interest rates, labor, supply issues, inflation, and the impact of other divestitures.
To summarize, we are very pleased with the first quarter 2024 performance and resulting increased cash flow forecast. We look forward to continuing the growth and operating leverage momentum throughout the balance of the year, while remaining focused on executing against our broad North Star initiatives and continuing organic revenue growth, EBITDA expansion and deleveraging journey.
Operator, we are now ready to take questions.

Question and Answer Session

Operator

(Operator Instructions) Kartik Mehta, Northcoast Research.

Kartik Mehta

Good evening period. On the merchant services side of the business, you saw pretty good growth. And I'm wondering as you look at your business and trying to compare with the industry or kind of the credit card association numbers out there, what type of growth would you anticipate relative to the growth that the associations would see?

Barry McCarthy

So Kartik, thanks for being here.
But I would tell you that we're pretty we're very pleased with the growth that we're seeing in our merchant business. As you know, with the business that we have, there is very focused in a good secular growth categories, and we think that we're actually outperforming the market in those categories. If you look at the card association numbers, they also include volume growth in very, very high growth categories that often also include higher risk. Our portfolio is a very clean, healthy portfolio that produces quality results over time, and we're very pleased by that performance. And you know, from when we acquired the business, it was a low to mid single digit grower and we've expanded that and we have a great guide for the year that we think really talks about it shows the power of bringing that business inside of Deluxe at our One Deluxe go-to-market model where we can bring more products and services to more customers and leverage the trust that customers have in us now expanded across a bigger portfolio of businesses took as you look at the drivers for free cash flow and the improvement that you have, but you're going to see in 2024 in the raised guidance.

Kartik Mehta

If you look at those factors, are there factors, other factors that you look at where you can see maybe an opportunity to improve and the free cash flow guidance be maybe on the higher end or improve even more?

William Zint

Yes. I appreciate the question. So I'll tell you the strong Q1 really. It was once again a narrative of really good working capital efficiency. You may recall in the fourth quarter, we surprise to the positive based on extremely strong working capital that left me hesitant to change my existing guidance range coming into the year. And once again, here in the first quarter, the team managed working capital very well. And we really pulled forward cash to deliver a solid number, nearly 40 million better than a year ago. Given it is working capital, I have to be mindful that some of it could be timing and a pull forward of future quarters. So my view is roughly half of that sticks for the year at this moment in time. And at this point, we need to continue to execute and see how the year goes on. And for sure, there's an opportunity to over improve with execution and other levers as the year goes on. But at this moment in time, I looked at that strong start as a good sign of what's to come. We raise the 20 million range for now and then we'll see how we execute as the year goes on.
The other point would be, you know, I do anticipate some of that cash flow that occurred in the first quarter being a slight pull forward from the second, I do expect the first half of the year to be significantly better than it was a year ago, but I'm not really sure exactly what it means from a Q2 number specifically compared to last year. But overall, really pleased with the performance and a great opportunity to raise the guidance here at the start of the year.

Kartik Mehta

And then just one last question. Javier, last quarter you were you gave a very good book. Could the overview of maybe how the quarters were going to play out from an EPS standpoint. I'm wondering if you could provide just maybe cadence or but your expectations as we go through the year.

William Zint

Yes. Maybe I'll start at the top. I know USDPS.? Let me just start at the top. I think the one thing. So first of all, really pleased with the data business and 35% growth rate that they post just incredible.
Obviously, we're not expecting that to continue here in the second quarter. In my prepared remarks, I specifically pointed you guys to look at the average of the previous two to three quarters, specifically three, in this case, because revenue was roughly 65 in the third quarter of last year, 45 in the fourth and then 60 here in the first. And so if you average that out, I think that's a good indicator for where data revenue will be in the second quarter.
Now data is lapping some tough comps, especially in the second and the third quarter. So if you think about the sequence of the top line, I think really getting data right is the key piece on the Board to land on the right revenue starting point, flowing that down through towards profitability?
I don't really think I have great guidance for you other than you know, we would expect that as the year goes on, the benefit from NorthStar, as Barry mentioned, should grow over time, at least until we get to the fourth quarter where we lap kind of the big in-year benefit from a year ago. So I would expect margins to and pretty solid over the next few quarters on growing overall dollars and it should flow to reasonable EPS numbers here in the next couple of quarters.

Kartik Mehta

Perfect. Thank you very much. Appreciate it.

Operator

[Jonathan Charbonneau, TD Cowen Inc.]

Hey, guys. Jonathan on for Lynch. Nice for helping the quarter. Financial will be cash flows while I know you have to share it, this is largely driven by our by working capital. Can you maybe walk us through the puts and takes that what items in working capital drove the positive free cash flow?

William Zint

Yes, sure, John. And it was mostly from an AR perspective. So very pleased with where our DSOs landed on the AR side. By my calculation, the DSO was at 28 days in the quarter was a substantial improvement from where it was a year ago and you got to keep in mind a year ago, we had just gone live on our ERP upgrade. So that did impact our overall AR balance a bit. And so definitely one of the reasons why KAR. could be so solid. But the 28 days DSO compares to 31 at the end of the year. So it does show regardless of the timing of the year over year perspective from ERP, we did make progress.
The other thing I'll just point you to is we continue to do well managing our inventory. And this is a journey we've been talking about probably since the second quarter of last year, but we've been steadily walking our inventory balances down as again, we go live on the ERP. It's been many, many years, but we're through the supply chain disruptions and some of the challenges that we faced back in the 2021 time frame. And so as you look at what we've done since about Q2 of last year to where we are now, inventory was a good driver of working capital improvement as well. So really at the highest level, you're going to see it in AR and inventory.

And when you get a chance to digest our Q later this week, and second one is on EBITDA. What levers do you guys have left available to improve EBITDA margins in 2024? And are there any segment that stands out with the most opportunity question, what levers do we have to improve EBITDA?

Barry McCarthy

Yes. And that's why I'm definitely it is largely driven by cost improvements. But just curious, Scott.
Yes. So if you think back to our Investor Day, it's the page I would think of as the page I said if there's one page I want you guys to remember from the days this one, I clearly remember to it, but I did a walk of kind of our starting point for the program of NorthStar to where we'd be at the very end of 2026. But if you think about narrowing that focus into just this year, it's really the same walk. So we started at three 91 as our comparable adjusted beginning balance for the year, of course, write off, we had to take off the secular declines, which, you know, I like big round numbers, let's call that 25. So really from that point to the mid the mid range of our guidance that the lever is going to be what we're achieving in North Star. And as a reminder, we've got all the work streams that go across or discipline, pricing actions, procurement savings, you name it. We've laid it all out on the slide deck. All of those levers are there. And so if you combine the cost levers we're doing as part of NorthStar, along with the revenue initiatives and just growth across the payments and data business, which, as a reminder, our scale businesses that as we grow the top line across the three B2B merchant emerging data should bring improved margins with it. And again, really as part of NorthStar going after the corporate cost center as well to trying to remove cost from the shared services. So I think the answer is it's all of the obvious levers you would expect. It's all the things we've gone through as part of the Northstar journey. And the simple walk is exactly like I laid out.

Got it. Thank you. And my last question is actually on North Star. So on can you just share a little bit of details of where we are today and how much was spent in North Star during the first quarter and.

William Zint

Yes, I think, yes, sure. So you'll see in our earnings release that we had roughly 15 million of restructuring costs in the first quarter. The majority of that was North Star, not perfect. There was still a million or 1 million or two non North Star related activities, but net-net it was mostly that. So you may recall we were at roughly $45 million through the program at the end of the year. So I call it right around 60 and NorthStar restructuring spend. At this point, you'll recall that the overall program has an estimated cost of somewhere between 115 and 135. So we sit here today at 60, and that leaves us 55 to 75 left to go.
We do expect a little could drift into the first half of next year, mostly Q1, but a little bit could drift in. So yes, everything's on track from a spend perspective, the other thing I signaled in Q1 is I know you guys will recall we spent $90 million in restructuring in 2023. We said it would come down in 2024, I provided a range of 60 to 80. I'm still in that range. And so kind of take everything I just said, sitting at 60 today through the first quarter 55 to 75 left to go the program with some of it shifting into next year and overall staying in that range.
But you can figure out kind of how to sequence the restructuring dollars, the rest of the year from Yes.

Operator

Charlie Strauzer, CJS Securities.

Charles Strauzer

Hi, good evening to make sure you hear me okay.

Barry McCarthy

Somebody externally.

Charles Strauzer

Great. Just when looking at the project North Star and you talked a lot about that today, one of the things that's always not kind of a hallmark of Deluxe has the ability to take cost out of the business over the years and yet the revenue side. So it's been more elusive or a more difficult one to capitalize on those opportunities. Where are you on the revenue front there? And can you maybe provide a little more color as to some of the opportunities that are in front of you on the revenue side?

Barry McCarthy

So Charlie, really appreciate the question. And I think it's one of the things that really is a hallmark of where Deluxe is today. So at the beginning of my prepared remarks, I talked about the progress we're making in our payments and data business, which is about 43% of the Company's revenue today and you saw in the first quarter on a combined basis, those businesses that portfolio of businesses grew over 8% with healthy margins at 22%. So we fundamentally think the Company is in a very different place today where we have 43% of the Company's revenue growing in the high single digit range with very attractive margins. And we're doing at the same time that we're controlling or limiting the downside exposure on the secular declining business like checks, where we're continuing to win market share, putting in operational improvements, et cetera, to produce and protect that cash flow.
So within the Company today is a very different company than the company of just a few years ago that was not growing organically and if you do see in the aggregate, we are now in the fourth consecutive year. And Charlie, just once again the fourth consecutive year of organic revenue growth. And while that number may be modest. It is proving that we can consistently grow the Company and we're doing that and the success of the payments and data businesses in aggregate, again, again, if you would like to ask a question, simply press star one on your telephone keypad.

Operator

(Operator Instructions) Marc Riddick, Sidoti.

Marc Riddick

Well, good evening, everyone or remark. So I was sort of curious if we could spend a little time on a couple of the other North Star threats that we haven't had a chance to touch on one of which is around real estate. And I was wondering if you could maybe give us an update there if there's are there anything that we should be thinking about on that front.

Barry McCarthy

And Mark, you may recall we have made a lot of progress on real estate, consolidating our operating footprint, especially around our print production, our lockbox operation, et cetera. And we continue to make more progress even in the first quarter, consolidating some of our office locations and the space we have in that and our footprint, I think you'll continue to see us to make incremental improvement there. And but over the last few years, we've already made a very significant step forward on consolidating our real estate footprint. And while there's a bit more to go and I feel like we have made us, we made significant progress there.

Marc Riddick

Great. And then I was wondering if you could also sort of I wanted to step back to one of the comments around UM with cash flow improvement year over year. And I think you brought up the commentary around the timing of the ERP system last year, if I remember correctly, and correct me if I'm wrong, so I'm not off the top my head. I'm trying to remember this was right. There was like a little bit of a blip when you guys went live that negative sort of maybe set you back a week or so or something like that so relatively speaking, there's sort of this. There's I guess you sort of up against it a little bit last year with that part of it. Was there a little bit of an impact there that you obviously weren't seeing this year?

William Zint

That was somewhat helpful, too. And yes, a little bit. I mean, if you think about our print businesses, they would have had a little bit of pressure in Q1 a year ago with not being able to get everything out the door with perfect timing and then made up for it in the second quarter and the blend of everything. When you think about secular unit decline going on, it's not a huge part of the print story. But if you look at in absolute terms, there was a bit of pressure we would have seen in the first quarter last year that gave us favorable in the second quarter. So as you look ahead to Q2, comps, there will be a little bit of pressure with brands, but we think it really doesn't change the narrative of what's going on there with the business, just continuing to execute in this low to mid single digit decline levels right direction.

Marc Riddick

And then finally for me, I was sort of curious as to maybe if you could give us a little bit of a of a of a pricing dynamic update of what you're seeing out there as far as are there any particular areas where, as you know, pricing pressures or any pushback has then been seen that that should be called out? Or or what are we seeing there as far as your expectations as to the pricing and the escalations there?

Barry McCarthy

So we continue to be successful at moving the price for our products up in the marketplace, really across the portfolio. And we think we're able to do that because of the quality of the product and the service that we provide. We have, of course, no customer wants to see a price increase. So I think that we've been very responsible and I think our customers would agree. We've been responsible in the way we have been advancing our prices in the marketplace and we have been able to make those price increases at sand and we continue to take price we had and we put some additional price changes increases in the first quarter. That will benefit later in the year because, as you know, some of the increases get announced, but it takes a bit of time for them to be implemented and actually hit the P&L. But we continue to take price across the portfolio and it does not appear to have a significant impact on volume.
Yes, Mark, I would just add that you may recall at Investor Day we talked about pricing as one of the North Star initiatives and how it wishes to advancing itself from inflationary input costs relative to output price and really moving to more of a analytical view of price stratification across the customer base or product base really moving the needle on how we do it.
And so that is part of the initiatives and is one of the drivers behind why we continue to do it and feel good about the responsible price we're taking.
I would say if you boil it all the way up and you got to remember you got parts of the business with some decline aspects of it as you kind of normalize at all. But at the highest level, I'd say our growth in the first quarter was probably right down the missing middle 50, 50 price volume, healthy mix of both.

Marc Riddick

Great. Well, certainly an encouraging start to the year. Thank you very much.

Operator

Yes, that concludes our Q&A session. I will now turn the conference back over to Brian Anderson for closing remarks.

Brian Anderson

And thank you, Mark. Before we conclude, I'd like to share that management will be participating in person at both the Needham Technology and Media and Consumer Conference on May 14th and 15th in the TD Cowen Technology Media and Telecom Conference on May 29 and 30, both in New York during the quarter. Thank you again for joining us today, and we look forward to speaking with you all again in August as we share our second quarter results.

Operator

Ladies and gentlemen, that concludes today's call. Thank you for all, James. You may now disconnect.