CNNE - Earnings call transcript Q1 2018

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Operator

Good morning, ladies and gentlemen and welcome to the Cannae Holdings First Quarter 2018 Earnings Conference Call.

During today’s presentation, all parties will be in a listen-only mode.

Following the presentation, the conference will be open for questions with instructions to be followed at that time.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Jamie Lillis, Investor Relations for Cannae Holdings. sir. go-ahead Please

Jamie Lillis

and in operator everyone. appreciate We Thank first good quarter participation our call. XXXX your you, morning earnings conference

today Brent President, Rick are Chief me Officer, Cox. Bickett, Financial Joining and Cannae’s

replay of Eastern PM May As a on reminder, this will through Time be XXXX. call XX, XX:XX available a

about Before facts you Statements expectations, number this of are our and would uncertainties. conference including that call strategies remind I future we statements a to may are involve historical not that statements begin, like or the intentions that contain forward-looking hopes, risks regarding statements. forward-looking

The are and factors based management’s We result based and whether undertake and filings results a statements any of management. are to: Because statements of new projected. yesterday financial risks risk with detailed expectations well not may and to but the sections statement Forward-looking forward-looking to forward-looking subject update statements, in and are not Cannae’s differ are statements which future on results on as by assumptions risks operating actual made those limited such of release available the no SEC. forward-looking other fact, as regarding as from uncertainties are information, and press other S-X dated future factors information, include, events or currently and as to our materially Form information obligation to otherwise. in beliefs, and the statements other

now me Let the to call turn over Brent.

Brent Bickett

and group and performance. a continued investments business sectors leader healthcare three meaningful long-term in and payroll our or to deliver pleased tech as System. sector TE the with we value and are Today, by strong comprised Thanks, attractive existing monetizing enabled which shareholders HCM market progress financial growth Ceridian has our are strive emerged pursuing their in platforms HCM our Ceridian Cannae start, we platform software for services Jamie. executing new restaurant To of an potential. we investments strategies with made our as our

several years, market to Given Ceridian’s position right and appropriate go and for company was time it public. the past in growth the

are of owns XXth that’s initial shares price of the Cannae share Ceridian As public $XX on $XX additional most purchased a share of of At market share. XXXX, aware, Exchange offering Cannae common Ceridian Ceridian CDAY. closing a Ceridian. $XXX billion. $XX.XX $X.X value X,XXX,XXX currently XX,XXX of concurrent on private per Cannae's New stock by CDAY's time common ownership stock at Ceridian trades IPO, May a the under April on common representing position at stock per of Cannae of XX,XXX,XXX you stock has Based placement price in per ticker of in of Stock stake XXXX. price Ceridian York of IPO where the the participated shares XX% in on symbol million shares price of an probably X, the a

to Restaurant Turning Group. our

Blue quarter, Newport ownership As XX, family legendary Ribbon's and intent XX% interest equity XX baking, own a baking. an interest while in would Holdings. in non-binding March we with entered XX% and reorganize of XXXX American our a proposed X% family and equity Cannae along approximate of interest dining Restaurants, legendary Newport with O'Charley's dining last into lead we Holdings with in letter discussed would The reorganization to respective on

restaurant ABRH them attributes. concepts market and similar our quarter in XXXX and of enable We have negotiation to two that investment proposed team on to in simplify which reorganization this the agreements. of definitive transaction the focus will -- will facing our second subject expect our management close their execution This attention largest

Blue entered into Ribbon's we Recall of Bank in this by with American million. that operations. opportunity order the was assigned facility whereby outstanding reorganization, O'Charley's assignment $XXX see for purchased to to As enable Cannae during significant and ABRH's Rick its Group improve balance first Cannae quarter will agreement discuss, credit to an

Turning to T-System.

addressable a flu division. produce software of addressable market This in total for showcased Moreover, We comprised growth benefited in estimated which overtime. are the for T-System quarter a strong belief T-System outpatient offering season documentation XXXX revenue the services pleased $X for their the market. tech-enabled the organic $X of billion high-volume first market with quarter attractive billion of organic division helped fragmented helped to to which we $X addressable relationships coding. company first growth roughly and clearly customer evaluate within is is broaden driven first have roughly well our continuing also and and by markets the opportunities XXXX, are XX% growth documentation which solutions medical add which company's results product that and excess and this the to customer the on positioned coating of results T-Systems the to of wins in by acquisition quarter new software deepen company's is healthcare support platform in is space, underscored the billion great

the to and to for the platform further results over Looking create company of companies to in and attractive our grow forward, to portfolio investment shareholders. we Rick now detail. will investments value I opportunities our more are call company review turn our seek continuing

Richard Cox

detail. revenue first HCM off, $XX.X XX.X% XX.X% or quarter was which revenue first first which Ceridian HCM in quarter first $XX.X generated cloud on over EBITDA of million platform XXXX. In a or $XXX.X first million first XXXX $XXX.X XXXX, XXnd increase in live $XXX.X quarter on $XX.X XXXX. May the will the Eastern the the now quarter at quarter XXXX. a XXXX more of of start revenue $XXX call cloud-based from solutions Time million of and delivered to XXXX. than in first HCM represents from conference the end and increase first customers Thanks results for quarter XX.X% the are X:XX increase of million of financial discuss quarter the their XXXX at both the includes total, first XX% LifeWorks of Ceridian of which together quarter first million to represents over host grew million adjusted Ceridian the million In an compared million $XX.X [indiscernible] of quarter To an in XXXX up to quarter XXXX. more the Brent.

aggregate then of $XXX.X from of our XXXX, Ribbon a of partially same was Inn conditions first impact an by in store which by first to restaurant of to weather sales the in by Turning are in EBITDA X.X% in first million improved by in first O'Charley's sales which representing quarter group, and margin declined XXXX. quarter the X% of performances $X.X which $XXX EBITDA American generated same X% X.X%. poor QX, offset quarter X.X% negative compares These first quarter resulting of EBITDA revenue of followed increased Blue the led that X.X% in by Baker’s Village margin Despite million increased quarter the and by delighted store on XX Square which $X.X up X.X%. by expanded in in the we EBITDA XXXX. were which million the million strong

of Village sales Index Meanwhile, O'Charley's results for outperformed of Box in the consolidating mid-scale index index efficiencies NPB store decline assets. the sales decline cash National managing Inn and same family store Black by Baker’s underperformed Black performance significant unnecessary outperformed store sales same and/or of chain see store related X.X%. cost X.X%. Square agreements, personnel renegotiating XX same of same the regional improvement free sales X.X% expenditures, eliminate while flow the Importantly, Box and room our and manufacturing optimizing We IT supply better costs, driving growth

in to the Turning two company T-System, to organizes segments. itself

first through work EV providing in is flow complete full revenue. operations staff and for a offers clinical its documentation of which software The this segment clinical solutions platform documentation drive their suite

over In customers. The T-sheet T-sheet standard evolved for addition, clinical segment their emergency documentation. to pattern documentation services is industry the and XXXX important

workflow productivity revenue The more as coding. customer segment over a T-Systems solution coding self-service cycle, revenue due Software, and sites a at solutions. which and compared cloud-based accuracy, to provides an optimize second helped full-serviced SaaS solution, well offerings for compliance outsourced These their solutions in-house reimbursement coding customers area improved XXX as than as outsourced XXX Coding

T-System million $XX.X was to of first million Cannae’s quarter the book quarter of book in and compared was first flat XXst, of billion XXXX. of value $XX.XX. EBITDA first value to The $X.X $XX XXXX, XX% share increase from $X.XX quarter remain our XXXX million XXXX. revenue March per

the million as of ended first down holding the XXst of we XXXX December assigning million reflects and of Additionally, purchase AVRH was the company $XXX.X $XXX.X credit largely which a cash facility. in and from quarter is XXXX

turn and for the Brent tech-enabled are to attractive we seek healthcare begin capital opportunities I out, back will reinvestment. question-and-answer now investment sector session. evaluate the we looking to to As our forward continuing opportunities operator the call in pointed services

Operator

you. Thank

begin now session. Thank Instructions]. question-and-answer the will We [Operator you.

Deleeuw today Jaffray. Piper with question comes line first Our from proceed of your with questions. Jason the Please

Jason Deleeuw

Thank morning. give for organic you. trying we just a growth XX%. get the much sense you organic revenue like Question Good growth rate of kind rate can for was. expect us I'm on sense flu T-System, of the to Any impact should T-System. revenue how that a sustainable

Brent Bickett

opportunities quarter, about normalize we we're that that on we'll more did be we try which revenue flu that have One but we're side, year. it organic did a figuring benefit that it, new throughout and heavy the prior than as And not out we're double move prior the it. but over certainly growth. And forward the in digit, we point Jason. [indiscernible] from also customers calculate And should coding well. the for it implementing fluctuations coding had we more too, digit the low to and year, documentation more as from double Yeah, benefitted but they was still that season will

Jason Deleeuw

think is terms that documentation growing, getting growth Helpful. there then are revenue existing clinical is what of them Is customers, just from in when new think the there to add revenue? clients. the is or about Thanks X,XXX clients. Are having you growing should There software. about we growth the the they we them and And revenue how for much from from plus that. of

Brent Bickett

of of T-Sheets T-Sheets there is a lot use using Rick, the I evolved XXX customers the I small who now customers. their The and are business, collectively think T-Sheets that's, and mean

Richard Cox

about we anticipate in I growth generally heading. X% that’s we're where year-over-year, documentation will rate business Yeah, mean the

Jason Deleeuw

I strategic is billing the think coding pursuing? then opportunity for to just you there Got Is business, that opportunities that And Could about side that? on there expand talk the that. you're it. the

Brent Bickett

what that is adjacent to doing, mean sales capability. same the We point I customer, need Yeah, just it's one the same very we're the person. it's

our just looked organic our up And yet capability billing entities have In while acquisition and pipeline well. one customers wait to in we're an to So, revenue on. offer opportunity. continue at, also have to we of sure bigger have to could executed our as pursue acquisition, building that we're not a ourselves the that too. XX we several we meantime, billing we it's it think from make But going not do XX coding we

So, of if additional of $X revenue to our million it million we're we to coding for $X be million margins. us. of attractive And doing could one think $X customers

we're looking then acquisitions down on the offshore our at own So, partner two working and going capability. developing paths our secondly with billing

Jason Deleeuw

one the last first that coming? there the is that is margin we going XX% good for or that’s then on expansion quarter, And a some seasonality in or of this should some that T-Systems use number margins forward kind Great.

Brent Bickett

to margin would of EBITDA what happened to primary the we The QX QX that in XXXX. we’re big there of out drivers about I where two increase look margin. difference, higher is that decrease compared a margin, had to in XX% quarter coming slightly So, first at

had to adjustment is one $XXX,XXX related we about ASC XXX first [indiscernible]. The to that

to for margin that lower of XXXX. as customers the doing related which driver the driver there specifically on [indiscernible] throughout cost bringing And new have about lower at is pertains XXXX. the the to of relates The the cycle onshore second processing margins significant coding to margin the in backend the

normalized getting that margin. to process XX% As an XX offshore or EBITDA a like margins those in more we back overseas to increase transition we’ll see

Operator

your question. line Our is the Please from with next [indiscernible]. of proceed question

Unidentified Analyst

Hi, a of couple had I questions.

Ceridian thinking there that asset tax the regarding now. price, distribution or update give to the that terms stop there your to shareholders in any have an monetization related existing and on implications we we’ll for can and that shareholders for Now this you of portfolio is further

Brent Bickett

viewing Brent, We is that. a XX% the we’re lock up. just it are own what road obviously to subject I’ll down so Sure. the month We be would fixed public, we took This monetization and it to eventually a or and we taxable Cannae the be There would plans distribute have this to but both the don’t any do it is to be to sell strategy not shareholder. stock. really take

that’s think their So, But would -- for doing and facing pleased receptivity quite is and we least for in IPO We and stock has implication want so it rate. at to XX% strong. was the tax and the are attractive obviously market be to market see we’re that will market say position ‘re Ceridian, company to sell path this that we so a very with where shareholders federal there that to the about cash, happy the the they goes. think be

no current have anything to assist we the to So, to growth plan. other continue plans company’s do than

Unidentified Analyst

way Is shares efficient Okay. And that is fairly in do clarity anything the to distribute that. think on preclude there more or way that? were I would tax distributing a then from efficient the tax Rene further know might in a we no to us just in the I a past, ownership mis-remembering able there taxation. be way,

Brent Bickett

be In XX Holdings, interest to basis us on to % our terms Cannae way of in there a distribute the no Ceridian for tax-free would shareholders.

Unidentified Analyst

Okay.

Brent Bickett

XX% Rene that’s over J. Alexander's owned of and what both and enable two to those We do spin-offs. us helped

Unidentified Analyst

with then investment on restaurant part couple businesses, been group Okay. was about have then can transaction you the go forward of thinking we a tried been the we of that ownership do things There public the another that when understand past. And us not of transaction a structure to have the basis different made as to completed with that the change company help investment. in public talked And offering.

how achieve thinking maybe changes. potentially help Can I we're or some around us processes to what the two made that the the two of over year next about goals understand you and try year there some monetization the are guess. next over and we've holding thought going or you So, or structure

Brent Bickett

the we terms do right. Okay. to that we together What Newport have and various two belong anticipated. that continues Wild for at And growth and it's to We've terms to attractive, profile a think it's the outperform the be now get longer monetization two the long leased and of along O'Charley's. XX competitors all as family significantly potential together than the with dining let then them we're dining casual and to as in very Card If We time to is monetized, concepts larger strategies. you're pursued it so a two taking its has that the trying have get would in its we businesses. can candidly back in operation we of of concepts

But focus be to for of I candidly just the revenue in candidate to You would it monetize two the able think to IPO to have we an we attractive company attractive it with this the going be just or think we do were to But us or individually. to is rather take concepts. objective right public reorganization mid-XXXs that X sell help try past. combined efforts if of us it our could than to concepts is time to it as on

Unidentified Analyst

willing achieve that? we margin talked quickly give or initiatives results trying so of EBITDA if to in benchmark achieve terms you've you any some can there. how improve Are to to we do about think And and

Richard Cox

weather we one in done this the from increment and aside at for Rick, well turned cost had issues That's in a out EBITDA with I'll pretty QX timer explain. really group where So, which But generally not speaking, restaurant X.X% to the of couple things QX. is that we're generally go QX. excited a to brag we obviously about about. happened were of terms something some We compared But other all, margin.

EBITDA XXXX in margin to impacted had that that of bad QX drivers it that we From above perspective, margins. X-X gross we're really weather. compared our Let's despite revenue QX put EBITDA an way

self-accruals The have is had first we some thing insurance that we to book.

insurance them that not approximately related health that anticipated. $X.X a of was million to One in were spike claims

So that's the first thing.

also had wage impacted minimum in an too. as increase margin the well We EBITDA which our

get chain on our currently. IT at infrastructure our price line our then supply going cost working out get play that and terms, our that, our personnel, efficiencies per and we're then in and through the to renegotiating it through And so then baking to Now looking adjusting looking we're money having we’re to we're said margins reduce at then when there through side, some figure [sell] unwanted of how can we the off going some and comes manufacturing to in restaurants cost reduce legendary and lastly our bank. to our

Unidentified Analyst

about are those capital bolt Okay, deployment on in the we XXX and to you talked looking or recent on going of are then that’s been kind give And helpful. investments for we past there made. opportunities an should type where updated platform opportunity investments Can still million transaction areas to focused areas platform on I had of has some T-System terms with the of be think update call. of commentary the we’ve make us we on in

Brent Bickett

bolt be those plus Yeah, to the that’s get could the continuing than a so acquisitions through platform as the that the we more then will evaluating we’re typically near-term discuss really But on [candling] and T-Systems. focus, work near-term for upon. still on reorganization tertiary focus other is build XXX range million the is T-Systems but company restaurants and restaurant, opportunities we to

Unidentified Analyst

And is the share at capital time, follow up is it what off it table then somewhat additional still is one management the on or repurchase in this mix? is question the

Richard Cox

would be, the Right off now, there in the be table. unless short-term a is it dislocation would

for to where discussed. have stock keep to relative opportunities to kind million feel what see we continue over the we But available that value we and of the XXX powder is, those is. want monitor it We just that in cash, fair we’ll

Operator

your John proceed of with line the with Stephens. Our next question Campbell comes question. from Please

Unidentified Analyst

for couple that’s questions to of a its calling have on Ceridian. actually just John. guys specific Jeff the Hey fundamentals I

in base. by or years, more customers additional do the continue driven increase X% into larger to past for nothing then the winning in expect you that up ARR grew And I sales of guess X% by expansion two So modules forward? moving customers

Brent Bickett

for On going May the mentioned Ceridian to defer to thanks Rick in there their if that the their question. disclosed than Ceridian as remarks call Ceridian his is we’re and that now the we questions information other XXnd gap is on to public and Jeff, because XXnd so conference okay. on on they’re a call opening have that’s going

Operator

Brian Please question you. Capital. Warner Thank of Performance with next The line the your is with [Operator Instructions]. from question. proceed

Brian Warner

sort Hi I you of touched you give mentioned terms maybe have the were amount Most of satisfactory more a answering sort sort recall just million little you contemplating $XXX the ago, for and $XXX up? can maybe question, stage, a acquisitions. questions. on of pipeline, have as been if you somewhat war talking or on guess you’re about of chest for cash acquisition that related of my million a beef candidates of only to And in bites terms wondering the plans maybe before and but the them roughly Cannae was constructing when months thanks of capital color the in $XXX nine I’m I or in $XXX of or T-Systems

Brent Bickett

So, opportunities yeah. grow that $XXX T-Systems can at the just what need area $XXX customer, we size billing opportunity. coding, zip than capability. of having it's the the one for relationship that that shorter the pursue a we can that to same where on it's We one But right, doing add customer. million again it very bring give question, the million for the same and the of the company capability we term quickly. think was is comments flexibility one feels customer, we're would right we're the more on our us And to it's to focused about natural the is about code answer feels then Bill's That more

And we We to then is also more, the so, capability market. candidates. But there can we've a organic that of bring looked pond our we're building own passed healthcare. several ability in two meantime, on very it's but at bring them up that several deep just in

most the we're the think of capability arguably to pursuing M&A going or episodic there. coding complementary And what attractive, side anesthesiology very other documentation or are because of side the on more we're customers an would down that you the to be on M&A whether looking but now coding further those as we're more the path at and sides a Now hospital On we're urgent on you you on obviously coding we're focused been of also our it's the kind ED well. to care get the really we other like do. areas dual then of at we business. But looking growth right niche it's get see opportunities areas oncology we or coding, get side, on potential it's would

Brian Warner

Got have it. And plans. then capital do you

right of You've comments falling contrast $XXX the maybe got guess million? that million about I some $XXX you're now about which to

Brent Bickett

Yeah.

we $XXX used million. So,

So, our the group. debt we of own restaurant

we so, us that would And to some period of over to expect back flip time.

to of So, partners we had a at once over don’t [why but be to is that be have the do for think $XXX back. other we going that then do] that the plans likely get that's cash that as Ceridian anything our I no would Newport it's we And level period with areas to But think period settles trapped company re-organizations But we the and we our to a dust that potential refinance there, appreciation get time. and of a to look over higher million great. mentioned there will again, up time. be terrific

and be team to shareholders the to happy their to to management continuing going we're company store try help success. with So, continuing

Operator

time, remarks. turn this Brent the floor closing back I will to for At Bickett you. Thank

Brent Bickett

And you time your speaking today. for quarter. look next we forward with Thank to you

Operator

conference. concludes This today's

for your you may time. You at participation. your lines this disconnect Thank

Cannae (CNNE) 10 May 182018 Q1 Earnings call transcript