DELUXE CORP

Previous wording

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") includes the following sections:

Current wording

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") provides a comprehensive overview of our financial condition, results of operations, and key factors affecting our performance. The following sections are included:

Previous wording

•Consolidated Results of Operations, Restructuring and Integration Expense, and Segment Results that includes a more detailed discussion of our revenue and expenses;

Current wording

•Consolidated Results of Operations; Restructuringand Integration Expense; and Segment Results that includes a more detailed discussion of our revenue and expenses;

Previous wording

•Critical Accounting Estimates that discusses the estimates that involve a significant level of judgment and uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.

Current wording

•Critical Accounting Estimates that discusses the accounting policies and estimates that require management to make complex judgments and assumptions and their application can have a material impact on our financial condition and results of operations.

Previous wording

Please be aware that this MD&A discussion contains forward-looking statements that involve risks and uncertainties. Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K") details known material risks and important information to consider when evaluating our forward-looking statements and is incorporated into this Item 2 of this report on Form 10-Q as if fully stated herein. The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information. When we use terms such as “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” “outlook,” "forecast," or similar expressions in this Quarterly Report on Form 10-Q, in future filings with the Securities and Exchange Commission, in our press releases, investor presentations, and in oral statements made by our representatives, these indicate forward-looking statements within the meaning of the Reform Act.

Current wording

This MD&A discussion contains forward-looking statements that involve risks and uncertainties. Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K") details known material risks and important information to consider when evaluating our forward-looking statements and is incorporated into this Item 2 of this report on Form 10-Q as if fully stated herein. The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information. Statements using terms such as “should result,” “believe,” “intend,” “plan,” “expect,” “anticipate,” “estimate,” “project,” “outlook,” “forecast,” and similar expressions are intended to indicate forward-looking statements under the Reform Act.

Previous wording

This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). Additionally, we discuss non-GAAP financial measures such as free cash flow, net debt, adjusted diluted earnings per share (EPS), consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and consolidated adjusted EBITDA margin. We believe that these non-GAAP financial measures, when reviewed alongside GAAP financial measures, can provide valuable insight for investors analyzing our current period operating performance and assessing our future operating performance. Consequently, our internal management reporting also includes these financial measures, which should be considered in addition to, and not as superior to or as a substitute for, GAAP financial measures. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely solely on any single financial measure. Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and therefore, may not facilitate useful comparisons. The reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the Consolidated Results of Operations section.

Current wording

This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). We also present certain non-GAAP financial measures, including free cash flow, net debt, adjusted diluted earnings per share (EPS), consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and consolidated adjusted EBITDA margin. We believe that these non-GAAP financial measures, when reviewed alongside GAAP financial measures, can provide additional insight into our operating performance. Consequently, these measures are also used internally for management reporting. Our non-GAAP measures should not be considered substitutes for GAAP financial measures. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely solely on any single financial measure. Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and therefore, may not facilitate useful comparisons. Reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the Consolidated Results of Operations section.

Previous wording

Highlights of our financial results for the first nine months of 2025 compared to the first nine months of 2024 include:

Current wording

Highlights of our financial results for the first quarter of 2026 compared to the first quarter of 2025 include:

Previous wording

Adjusted EBITDA margin increased to 20.4% for the first nine months of 2025, compared to 19.3% for the first nine months of 2024, including the impact of business exits, which drove a 0.2 point year-over-year decline. The increase in adjusted EBITDA margin was primarily driven by our pricing and cost management actions, partially offset by the impact of inflationary pressures. A reconciliation of net income to adjusted EBITDA can be found in the Consolidated Results of Operations section.

Current wording

Adjusted EBITDA margin increased to 21.9% for the first quarter of 2026, compared to 18.7% for the first quarter of 2025. The margin improvement was primarily driven by our cost management and pricing initiatives, partially offset by inflationary pressures and the shift in mix toward our growth businesses. A reconciliation of net income to adjusted EBITDA can be found in the Consolidated Results of Operations section.

Previous wording

•Free cash flow– Increased by $32 million to $96 million, driven by the same factors impacting net cash provided by operating activities. We continue to reinvest the free cash flow generated by our Print business into our other businesses. Free cash flow is defined as net cash provided by operating activities less purchases of capital assets.

Current wording

•Free cash flow– Increased by $3.0 million to $27.3 million, reflecting the same factors that drove the increase in net cash provided by operating activities. We continue to reinvest the free cash flow generated by our Print business into our other businesses. Free cash flow is defined as net cash provided by operating activities less purchases of capital assets. A reconciliation of free cash flow to its most directly related GAAP financial measure can be found in the Consolidated Results of Operations section.

Previous wording

As of September 30, 2025, we held cash and cash equivalents of $26 million, along with an additional $393 million available for borrowing under our revolving credit facility. We anticipate that capital expenditures will be between $90 and $100 million for the full year, compared to $94 million in 2024, as we continue to build scale across our product categories and invest in innovation. Our capital allocation priorities remain focused on responsible growth investments, debt reduction, and returning capital to shareholders through dividends. We expect to maintain our regular quarterly dividend payments. However, dividends are subject to approval by our board of directors each quarter and, therefore, may change.

Current wording

As of March 31, 2026, we held cash and cash equivalents of $27.2 million, along with an additional $380.9 million available for borrowing under our revolving credit facility. We anticipate that capital expenditures will be between $90.0 and $100.0 million for the full year, compared to $95.3 million in 2025, as we continue to build scale across our product categories and invest in innovation. Our capital allocation priorities remain focused on responsible growth investments, debt reduction, and returning capital to shareholders through dividends, which are subject to quarterly approval by our board of directors.

Previous wording

We believe that net cash generated by operations, combined with cash and cash equivalents on hand and the availability under our credit facility, will be sufficient to support our operations over the next 12 months. This includes meeting our contractual obligations, debt service requirements, and addressing our long-term capital needs. Information regarding our longer term capital requirements can be found in the Cash Flows and Liquidityand Capital Resources sections. As of September 30, 2025, we were in compliance with our debt covenants.

Current wording

We believe that net cash generated by operations, together with our cash and cash equivalents on hand and available credit, will be sufficient to meet our operational needs, contractual obligations, and debt service requirements over the next 12 months. This assessment takes into account our working capital position and anticipated cash flows. We regularly monitor our liquidity position in light of potential risks, including market volatility, interest rate fluctuations, and macroeconomic uncertainty, and we are prepared to adjust our capital allocation strategy as needed. As of March 31, 2026, we were in compliance with our debt covenants. Additional information regarding our long-term capital requirements and debt maturities can be found in the Cash Flows and Liquidity and Capital Resources sections.

Previous wording

In the third quarter of 2025, total revenue increased compared to the third quarter of 2024, driven by strong demand for our data-driven marketing services, especially among financial institutions, which contributed a $28 million increase in revenue. Additionally, strategic price increases implemented in response to inflation, particularly within our Print and Merchant Services segments, also supported revenue growth. These positive impacts were partially offset by weaker demand for some of our promotional products and the ongoing secular decline in order volumes for checks, business forms, and various business accessories. The impact of business exits resulted in a $1 million year-over-year reduction in revenue for the third quarter.

Current wording

Total revenue increased in the first quarter of 2026 compared to the first quarter of 2025, primarily driven by strong demand for our data-driven marketing services, which contributed a $20.5 million year-over-year increase. Revenue growth was also supported by strategic price increases implemented in response to inflation, particularly within our Print and Merchant Services segments, as well as growth in Merchant Services volume driven by favorable government channel activity and new customer implementations. These increases were partially offset by soft demand for promotional products and the continued secular decline in order volumes for checks, business forms, and various business accessories in our Print segment, as well as the impact of the first quarter business exit, which resulted in an approximate $12.6 million year-over-year reduction in revenue.

Previous wording

Cost of revenue primarily consists of raw materials for product manufacturing, shipping and handling costs, third-party costs for outsourced products and services, payroll and related expenses, information technology costs, depreciation and amortization of assets used in production and in support of digital service offerings, residuals paid to independent sales organizations (ISOs), and related overhead.

Current wording

Cost of revenue primarily includes raw materials for product manufacturing, shipping and handling costs, third-party costs for outsourced products and services, payroll and related expenses, information technology costs, depreciation and amortization of production and digital assets, residuals paid to independent sales organizations (ISOs), and related overhead.

Previous wording

In the third quarter of 2025, total cost of revenue increased compared to the third quarter of 2024, and for first nine months of the year, total cost of revenue was virtually flat compared to the prior year. The same factors impacted the results for each period. Costs increased as a result of the revenue growth in data-driven marketing, as well as inflationary pressures affecting materials and delivery costs. These increases in total cost of revenue were offset by the soft demand for certain promotional products and the ongoing secular decline in checks, business forms, and various business accessories in our Print segment. Additionally, our cost management initiatives contributed to lower cost of revenue, including volume-based rebates in our Data Solutions segment. The impact of business exits reduced costs by approximately $2 million in the third quarter and $10 million in the first nine months of the year, including the impact of accelerated amortization expense in 2024.

Current wording

Total cost of revenue increased in the first quarter of 2026 compared to the first quarter of 2025, primarily due to the revenue growth in our data-driven marketing business and inflationary pressures on materials and delivery costs. These increases were partially offset by lower costs associated with the soft demand for promotional products and the continued secular declines in the Print segment, as well as the impact of our cost management initiatives. In addition, the first quarter business exit reduced cost of revenue by approximately $6.0 million in the first quarter.

Previous wording

We are actively pursuing initiatives aimed at aligning our business with our growth strategy and enhancing operational efficiency. As we implement these initiatives, the amount of restructuring and integration expense is expected to fluctuate from period to period. Further information regarding these costs can be found in the Restructuring and Integration Expense section.

Current wording

We are actively pursuing initiatives aimed at improving operating efficiency and supporting earnings and cash flow growth. As we implement these initiatives, the amount of restructuring and integration expense is expected to fluctuate from period to period. Further information regarding these costs can be found in the Restructuring and Integration Expense section.

Previous wording

In 2024, the income recognized was primarily associated with our strategic exit from the payroll and human resources services business, a process that we substantially completed during 2024. Further information can be found under the caption "Note 6: Acquisition and Divestitures" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part 1, Item 1 of this report.

Current wording

In the first quarter of 2026, we recognized a gain on the sale of the Safeguard small business distributor channel within our Print segment. Further information can be found under the caption "Note 6: Divestitures" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part 1, Item 1 of this report.

Previous wording

In the third quarter and first nine months of 2025, interest expense increased compared to the same periods in 2024. This increase was primarily due to the impact of higher interest rates, which outweighed the benefit of a reduction in our average debt outstanding. Based on the amount of variable-rate debt outstanding as of September 30, 2025, a one percentage point change in the weighted-average interest rate would result in a $1 million impact on interest expense for the fourth quarter of 2025.

Current wording

Interest expense decreased in the first quarter of 2026 compared to the first quarter of 2025 due to a reduction in both average debt outstanding and the weighted-average interest rate. Our exposure to variable-rate debt remains a key consideration for future interest expense. Based on the amount of variable-rate debt outstanding as of March 31, 2026, a one percentage point change in the weighted-average interest rate would result in a $4.0 million impact on interest expense for the remainder of 2026.

Previous wording

In the third quarter and first nine months of 2025, our effective income tax rate decreased compared to the same periods in 2024. The 2025 rate benefited from lower tax impacts for our foreign operations, share-based compensation, and non-deductible compensation. These benefits were partially offset by an increase in our effective state income tax rate. Further information regarding our income tax provision can be found under the caption "Note 9: Income Tax Provision" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.

Current wording

The effective income tax rate decreased in the first quarter of 2026 compared to the first quarter of 2025. The 2026 rate benefited from a higher tax benefit related to employee share-based compensation and lower foreign income tax expense. These decreases in our effective income tax rate were partially offset by an increase in the deferred tax valuation allowance of $2.3 million related to a capital loss carryforward generated during the quarter that we do not expect to fully utilize, as well as the tax impact of non-deductible executive compensation expense and state income taxes. Further information regarding our income tax provision can be found under the caption "Note 9: Income Taxes" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.

Previous wording

In the third quarter and first nine months of 2025, net income and diluted EPS increased compared to the same periods in 2024, reflecting the factors noted above. Adjusted diluted EPS in the third quarter and first nine months of 2025 increased year-over-year, primarily due to the benefits of our pricing and cost management actions, growth in our data-driven marketing business, and a reduction in bad debt expense. These positive impacts were partially offset by the soft demand for certain promotional products and the ongoing secular declines in the Print segment, inflationary pressures on our cost structure, and increased medical costs for the nine-month period. Additionally, for the first nine months of 2025, the impact of business exits drove a $0.04 per share decrease year-over-year. A reconciliation of net income to adjusted net income, as used in the calculation of adjusted diluted EPS, can be found in the following section.

Current wording

Net income and diluted EPS increased in the first quarter of 2026 as compared to the first quarter of 2025, driven by the factors discussed above. Adjusted diluted EPS also increased year-over-year, primarily reflecting the benefits of our cost management and pricing initiatives, as well as growth in our payments and data businesses. These favorable impacts were partially offset by the soft demand for promotional products and the ongoing secular declines in the Print segment and inflationary cost pressures. In addition, the first quarter business exit reduced adjusted diluted EPS by $0.03 per share on a year-over-year basis. A reconciliation of net income to adjusted net income, as used in the calculation of adjusted diluted EPS, can be found in the following section.

Previous wording

Free cash flow – We define free cash flow as net cash provided by operating activities minus purchases of capital assets. We consider free cash flow to be an important indicator of cash available for servicing debt and for shareholders, after making necessary capital investments to maintain or expand our asset base. One limitation of using the free cash flow measure is that not all of our free cash flow is available for discretionary spending. We may have mandatory debt payments and other cash requirements that must be deducted from our available cash. Despite this limitation, we believe that the measure of free cash flow offers an additional metric to consistently compare cash generated by operations. It also provides insight into the cash flow available to fund various items such as dividends, mandatory and discretionary debt reduction, acquisitions or other strategic investments, and share repurchases.

Current wording

Free cash flow – We define free cash flow as net cash provided by operating activities minus purchases of capital assets. We believe free cash flow is useful to both management and investors, as it provides a consistent metric for comparing the cash-generating ability of our operations across periods. It also offers insight into the cash available to support dividends, debt reduction (both mandatory and discretionary), acquisitions, other strategic investments, and share repurchases. However, free cash flow has certain limitations. Not all free cash flow is available for discretionary spending, as we may have mandatory debt repayments and other contractual or regulatory cash requirements that must be satisfied. Despite this limitation, we believe free cash flow is a valuable supplemental measure for evaluating our financial flexibility and our ability to pursue growth opportunities and return capital to shareholders.

Previous wording

Net debt – Net debt is calculated by subtracting cash and cash equivalents from total debt. One limitation associated with using net debt is that by subtracting cash and cash equivalents, it may imply that management intends to use these funds to reduce outstanding debt. Additionally, net debt can suggest that our debt obligations are lower than what the most comparable GAAP measure indicates. Despite these limitations, management believes that net debt is a valuable metric for assessing our financial leverage and overall balance sheet health. It provides a measure of our debt burden by considering the funds available to offset our debt obligations.

Current wording

Net debt – Net debt is calculated as total debt less cash and cash equivalents. We use net debt to evaluate our financial leverage and overall balance sheet strength. By considering the cash and cash equivalents available to offset outstanding debt, net debt provides a more comprehensive view of our debt burden than total debt alone. However, net debt has certain limitations. Subtracting cash and cash equivalents may imply that these funds are readily available and will be used to reduce debt, which may not reflect management’s actual intentions or liquidity needs. Additionally, net debt may suggest that our debt obligations are lower than the most directly comparable GAAP measure.

Previous wording

Adjusted EBITDA and adjusted EBITDA margin– We believe that adjusted EBITDA and adjusted EBITDA margin are useful metrics for evaluating our operating performance. These measures eliminate the effect of interest expense, income taxes, the accounting effects of capital investments (i.e., depreciation and amortization), and certain other items that may vary for reasons unrelated to current period operating performance. Management uses these measures to assess the operating results and performance of the business, perform analytical comparisons, and identify strategies to improve performance. Additionally, we believe that an increasing adjusted EBITDA and adjusted EBITDA margin indicate an increase in the company's value. It is important to note that we do not consider adjusted EBITDA to be a measure of cash flow, as it does not account for certain cash requirements such as interest, income taxes, debt service payments, or capital investments.

Current wording

It is important to note that we do not consider adjusted EBITDA to be a measure of liquidity or cash flow. This metric does not reflect cash requirements for interest payments, income taxes, debt service, or capital expenditures.

Previous wording

(1) The tax effect of the pretax adjustments takes into account the tax treatment and related tax rate(s) applicable to each adjustment in the relevant tax jurisdiction(s). Generally, this results in a tax impact that approximates the U.S. effective tax rate for each adjustment. However, the tax impact of certain adjustments, such as share-based compensation expense and gains on sales of businesses, depends on whether the amounts are deductible in the respective tax jurisdictions and the applicable effective tax rate(s) in those jurisdictions.

Current wording

(1) The tax effect of the pretax adjustments reflects the tax treatment and applicable tax rates for each adjustment in the relevant tax jurisdictions. Generally, this resulting tax impact approximates the U.S. effective tax rate applied to each adjustment. However, for certain items, such as share-based compensation expense and gains on sales of businesses, the tax effect is determined by whether the amounts are deductible or taxable in the respective tax jurisdictions and the applicable effective tax rates in those jurisdictions.

Previous wording

Restructuring and integration expense consists of costs related to initiatives aimed at driving earnings and cash flow growth, including costs related to the consolidation and migration of certain applications and processes. These costs consist primarily of consulting, project management services, internal labor, and other items such as facility closure and consolidation costs. Additionally, we have recorded employee severance costs across functional areas.

Current wording

Restructuring and integration expense consists of costs incurred in connection with initiatives to improve operating efficiency and support earnings and cash flow growth. These costs primarily include consulting and project management services, internal labor, facility closure and consolidation costs, and employee severance across functional areas.

Previous wording

The majority of the employee reductions included in our restructuring and integration accruals as of September 30, 2025, along with the related severance payments, are expected to be completed by mid-2026. As a result of these employee reductions, we expect to realize annual cost savings of approximately $6 million in cost of sales and $14 million in SG&A expense in 2025, in comparison to our 2024 results of operations. Note that these savings do not reflect all of our cost saving actions and they may be offset by increased labor and other costs, including inflationary impacts and investments in the business.

Current wording

The restructuring and integration expense recognized in the first quarter of 2026 relates to various employee reductions and other efficiency initiatives. The majority of the employee reductions included in our restructuring and integration accruals as of March 31, 2026, along with the related severance payments, are expected to be completed by the end of 2026. As a result of these employee reductions, we expect to realize annual cost savings in 2026 of approximately $2.0 million in cost of sales and $20.0 million in SG&A expense compared to our 2025 results of operations. These expected savings relate only to the employee reductions and do not reflect the total impact of all cost reduction initiatives. Actual results may be affected by factors such as inflationary cost pressures and continued investments in the business.

Previous wording

We are currently pursuing initiatives designed to support our growth strategy and to increase our efficiency, including several initiatives that we collectively refer to as our North Star program. The goal of this program is to enhance shareholder value by (1) accelerating our adjusted EBITDA growth, (2) increasing cash flow, (3) reducing debt, and (4) improving our leverage ratio. North Star is a comprehensive, multi-year plan that balances cost reduction and growth opportunities. On the cost reduction front, we concentrated on optimizing our organizational framework and enhancing our infrastructure and operational processes. The major components of our organizational restructuring have been completed, involving the integration of comparable roles, flattening management layers, and broadening supervisory responsibilities. We are also leveraging technology and automated processes to digitize and improve the efficiency of our operations. Additionally, we are expanding our operational capacity by centralizing back-office activities and utilizing talent from the global workforce. On the revenue growth front, our priorities include developing an integrated software channel in Merchant Services, expanding our Data Solutions business to cater to more industry verticals, and enhancing our marketing and sales capabilities. The positive impact of the North Star initiatives is evident in our results of operations. For example, SG&A expense decreased 6.3% for the first nine months of 2025 compared to the first nine months of 2024, and free cash flow increased $32 million for the same period. Also, within our Print segment, our continued focus on driving efficiencies contributed to an improvement in adjusted EBITDA margin for both the third quarter and first nine months of 2025 as compared the same periods in 2024, despite the revenue pressures facing this business. Further information regarding restructuring and integration expense can be found under the caption "Note 8: Restructuring and Integration Expense" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.

Current wording

Further information regarding restructuring and integration expense can be found under the caption "Note 8: Restructuring and Integration Expense" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.

Previous wording

Total revenue for the third quarter and first nine months of 2025 decreased compared to the same periods in 2024, driven by pressure on lockbox and receivables processing volumes, as well as lower software license revenue. These impacts were partially offset by the onboarding of new clients and a modest price increase to counteract inflation.

Current wording

Total revenue increased in the first quarter of 2026 compared to the first quarter of 2025, driven by the onboarding of new receivables processing clients, increased lockbox processing volume, and the implementation of modest price increases to counteract inflationary pressure. These impacts were partially offset by pressure on receivables processing volumes in certain customer relationships.

Previous wording

Adjusted EBITDA and adjusted EBITDA margin for the third quarter and first nine months of 2025 increased compared to the same periods in 2024, reflecting our pricing actions and ongoing cost management efforts, including efficiencies across our lockbox processing operations.

Current wording

Adjusted EBITDA and adjusted EBITDA margin also increased in the first quarter of 2026 as compared to the first quarter of 2025, largely attributable to our pricing strategies and ongoing cost management actions, including operational efficiencies within our lockbox processing operations and marketing optimization strategies.

Previous wording

Total revenue for the third quarter and first nine months of 2025 increased compared to the same periods in 2024, driven by strong demand for customer acquisition marketing activities, particularly from our financial institution partners. Additionally, we added new clients in various other verticals, contributing to the revenue growth. It is important to note that the timing of campaigns within this business can lead to quarter-to-quarter volatility, making specific quarterly growth rates more challenging to predict.

Current wording

Total revenue increased in the first quarter of 2026 compared to the first quarter of 2025, driven by a $20.5 million year-over-year increase in data-driven marketing revenue, reflecting strong demand for customer acquisition marketing activities, particularly from our financial institution partners.

Previous wording

As of September 30, 2025, we held cash and cash equivalents of $26 million. Additionally, we had restricted cash and restricted cash equivalents, which were included in settlement processing assets and other non-current assets on the consolidated balance sheet, totaling $38 million. The following table should be read in conjunction with the consolidated statements of cash flows located in Part I, Item 1 of this report.

Current wording

As of March 31, 2026, we held cash and cash equivalents of $27.2 million. Additionally, we had restricted cash and restricted cash equivalents, which were included in settlement processing assets and other non-current assets on the consolidated balance sheet, totaling $35.1 million. The following table should be read in conjunction with the consolidated statements of cash flows located in Part I, Item 1 of this report.

Previous wording

When evaluating our cash needs, we must consider our debt service requirements, lease obligations, other contractual commitments, and contingent liabilities. Detailed Information regarding the maturities of our long-term debt and our contingent liabilities can be found under the captions “Note 11: Debt” and "Note 12: Other Commitments and Contingencies," both of which appear in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report. Information regarding our lease obligations can be found under the caption "Note 14: Leases" in the Notes to Consolidated Financial Statements appearing in the 2024 Form 10-K, and information regarding our contractual obligations can be found in the MD&A section of the 2024 Form 10-K, under the section entitled Cash Flows and Liquidity. In the first quarter of 2025, we amended and extended an agreement for information technology services. This modification increased our contractual commitments by approximately $25 million, with the majority of the payments scheduled to be made during the years ending December 31, 2028 and 2029.

Current wording

When assessing our liquidity and capital resource requirements, we consider a range of factors, including scheduled debt service, lease obligations, other contractual commitments, and contingent liabilities. Detailed Information regarding the maturities of our long-term debt and our contingent liabilities can be found under the captions “Note 11: Debt” and "Note 12: Other Commitments and Contingencies," both of which appear in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report. Information regarding our lease obligations can be found under the caption "Note 13: Leases" in the Notes to Consolidated Financial Statements appearing in the 2025 Form 10-K, and information regarding our contractual obligations can be found in the MD&A section of the 2025 Form 10-K, under the section entitled Cash Flows and Liquidity. In April 2026, we entered into a new facility lease agreement that will commence on June 1, 2026. The lease has a term of 16 years and provides for gross rental payments beginning in 2027, totaling approximately $88.0 million over the lease term.

Previous wording

As of September 30, 2025, we held cash and cash equivalents of $26 million, with an additional $393 million available for borrowing under our revolving credit facility. We believe that net cash generated from our operations, combined with cash and cash equivalents on hand and the availability under our credit facility, will be sufficient to support our operations over the next 12 months. This includes meeting our contractual obligations, debt service requirements, and addressing our long-term capital needs. We expect to maintain our regular quarterly dividend payments. However, dividends are subject to approval by our board of directors each quarter and, therefore, may change.

Current wording

As of March 31, 2026, we held cash and cash equivalents of $27.2 million and had $380.9 million of available borrowing capacity under our revolving credit facility. We believe that net cash generated by operations, together with our cash and cash equivalents on hand and the available credit, will be sufficient to meet our operational needs, contractual obligations, and debt service requirements over the next 12 months. This assessment takes into account our working capital position and anticipated cash flows. We regularly monitor our liquidity position in light of potential risks, including market volatility, interest rate fluctuations, and macroeconomic uncertainty, and we are prepared to adjust our capital allocation strategy as needed.

Previous wording

As of September 30, 2025, the principal amount of our debt obligations was $1.47 billion, compared to $1.52 billion as of December 31, 2024. Our capital structure for each period was as follows:

Current wording

As of March 31, 2026, the principal amount of our debt obligations was $1.41 billion, compared to $1.44 billion as of December 31, 2025. Our capital structure for each period was as follows:

Previous wording

As of September 30, 2025, total commitments under our revolving credit facility were $400 million, with $393 million available for borrowing. Detailed information regarding our outstanding debt, including our debt service obligations and debt covenants, can be found under the caption “Note 11: Debt” in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.

Current wording

Total commitments under our revolving credit facility were $400.0 million, with $380.9 million available for borrowing as of March 31, 2026. Detailed information regarding our outstanding debt, including our debt service obligations and debt covenants, can be found under the caption “Note 11: Debt” in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.

Previous wording

In October 2018, our board of directors authorized the repurchase of up to $500 million of our common stock. This authorization does not have an expiration date. We have not repurchased any shares under this authorization since the first quarter of 2020. As of September 30, 2025, $287 million remained available for repurchase. Information regarding changes in shareholders' equity can be found in the consolidated statements of shareholders' equity located in Part I, Item 1 of this report.

Current wording

In October 2018, our board of directors authorized the repurchase of up to $500.0 million of our common stock. This authorization does not have an expiration date. We have not repurchased any shares under this authorization since the first quarter of 2020. As of March 31, 2026, $287.5 million remained available for repurchase. Information regarding changes in shareholders' equity can be found in the consolidated statements of shareholders' equity located in Part I, Item 1 of this report.

Previous wording

A description of our critical accounting estimates was provided in the MD&A section of the 2024 Form 10-K. During the first nine months of 2025, there were no modifications in the assessment or determination of these estimates. Information regarding the goodwill impairment analyses completed during the third quarter of 2025 can be found under the caption "Note 8: Fair Value Measurements" in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.

Current wording

A description of our critical accounting estimates was provided in the MD&A section of the 2025 Form 10-K. During the first quarter of 2026, there were no modifications in the assessment or determination of these estimates.

Previous wording

New accounting pronouncements – Information regarding new accounting pronouncements not yet adopted can be found under the caption “Note 2: New Accounting Pronouncements” in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.

Current wording

New accounting pronouncements – Information regarding accounting pronouncements not yet adopted can be found under the caption “Note 2: New Accounting Pronouncements” in the Condensed Notes to Unaudited Consolidated Financial Statements located in Part I, Item 1 of this report.