With its check-printing business in decline, Deluxe Corp. has expanded its commercial capabilities by acquiring a midwestern printing company.
The Shoreview, Minn., company said Thursday that it had paid $16.5 million for the assets of the Johnson Group in Rockford, Ill., a printer that employs 130 people, and for its affiliated companies.
Deluxe also reported Thursday that its third-quarter net income fell 16% from a year earlier, to $31 million. Revenue declined 4%, to $398 million.
Earnings per share were 61 cents, at the high end of the range the company gave in mid-October, when it raised its guidance for the quarter because of cost-cutting efforts that were showing results sooner than forecast. Deluxe is the No. 1 check printer, but this component of its business has been in a long, slow decline as people write fewer checks.
Revenues of Deluxe’s small-business services unit, which accounts for nearly 60% of its top line, grew 3%, to $234 million, but revenue for its check-printing operations fell 12%, to $164 million.
Deluxe said that it does not expect the Johnson Group purchase to have a significant effect on earnings or operating cash flow in 2006. It should generate about $22 million of revenue this year, however. The printing company will continue operating under its own name.
Lee Schram, Deluxe’s chief executive officer, said in a press release that the Johnson Group “strategically fits our growth objectives to expand our capabilities and portfolio of products to our small-business and financial institution customers.”
In June 2004, Deluxe bought another commercial printing company, New England Business Service Inc. in Groton, Mass., for $643 million of cash and $166 million of assumed debt.
