Vericast Corp.

Overview Key strengths Key risks Strong market position for providing checks within the financial services ecosystem. Competitive pressures and secular volume declines in check printing. Deep, long-standing relationships with established financial institutions with multiyear contracts spanning three to seven years. Significant exposure to cyclical marketing and advertising budgets. Revenue concentration with established financial institutions. Vericast continues to face secular pressure from the steady decline in check usage, which poses risks to revenue EBITDA margin stability. In the U.S., check volumes have been decreasing 6%-7% annually over the past decade. Vericast?s own volumes have declined at a 5%-6% rate over the same period. To offset volume declines, Vericast periodically raises prices and adjusts package quantity sizes to mitigate industry usage declines.

...Vericast's margin stability has support from check price increases amid ongoing volume declines. Vericast continues to face secular pressure from the steady decline in check usage, which poses risks to revenue EBITDA margin stability. In the U.S., check volumes have been decreasing 6%-7% annually over the past decade. Vericast's own volumes have declined at a 5%-6% rate over the same period. To offset volume declines, Vericast periodically raises prices and adjusts package quantity sizes to mitigate industry usage declines. However, this strategy does carry a risk to margin if the company is unable to implement these actions in a timely manner....

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