CNNE - Earnings call transcript Q3 2018

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Operator

Good morning, ladies and gentlemen, and welcome to the Cannae Holdings Third Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Jamie Lillis, Investor Relations for Cannae Holdings. Please go ahead, sir.

Jamie Lillis

Thank you, operator, and good morning, everyone. in Quarter participation Call. Earnings your appreciate our XXXX Third Conference We

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

through this a XXXX. XX, will As replay Eastern of a be on reminder, available XX:XX November p.m. Time call

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

commitment down the projected. equity statements as of risks no statements Dun information, from forward-looking acquisition made well limited regarding factors other with. to on including Forward-looking uncertainties, risks are to and as our consortium, into investment and to based to a other our in and/or management’s as of in release, which SEC results information, obligation are such our factors agreement any ability, & not forward-looking not entered Bradstreet, whether of sell and The Because materially there to the close the and filings beliefs new based Cannae’s sections we the Form available statements result together fact, released subject to forward-looking as connection with ability the to, include, definitive currently of fund actual financial may pursuant well S-X expectations and as morning, otherwise. with and results and in future differ other assumptions our We risk information this detailed on the press statement and or statements undertake but by statements, are operating as management. are to, which are events those future update

over turn now Bill. call me the to Let

Bill Foley

HCM the and software to Holdings, the approximately positioning position. creation Thank quarter Cannae’s you, of price, XX.X third Ceridian strong a we’ve progress largest management on sector, our investment, representing third ownership per shareholders of market for billion. which as our through XX% yesterday’s I’m growth a Cannae released of To has pleased payroll start, $X.XX value Cannae the human continued leader shares quarter. has deliver owns emerged in capital achieved with Currently $XX.XX that Ceridian closing stake in as Jamie. evidenced is and last common a by Based week. stock, their million results Ceridian value share, market

commitment. Bradstreet Partners, Capital entered our consortium an a investment made Turning H. and equity equity Thomas to Lee remaining in partnership the close $X.X Cannae approximately and regulatory the Dun company stockholders & billion a Cannae to significant on X, XXXX. in first note, million equity, are and August transaction of of and in in Bradstreet. agreement syndicating D&B during $XXX process the $X Dun & to definitive including consortium, we total approvals the the a The into of in with with valued the approximately expectation quarter Cannae billion. Of yesterday, co-investors acquisition commitment. acquire CC currently making with a approved progress obtaining investment committed have at the transaction an is XXXX,

million fee. equity expectation syndication our Cannae current $XXX that X% we a of syndicate will Our is million of will $XXX receive commitment, which

into XX% D&B, equity we representing result, an $XXX position. approximately million will a As invest equity of

will single equity be we will Cannae individual & Dun the largest – be individual Bradstreet, Importantly, single in largest investor post-closing. the

a on using of combination fund our cash undrawn and available equity investment borrowings hand of credit. to under lines expect We

ideal the across We to and D&B operating has company the and while industries an significant & partner for Cannae with productivity, like-minded company Looking in company well. model to forward, increase investment we business we investors success. the believe, that make continued is a grow runway for know considerable that insight-driven Bradstreet’s a improving inter-connectivity see Dun to experience. positioned This and

delivered on turn and call As shareholders. our be enhanced execute I’ll our D&B believe, strategy, we Brent. to the we will over the to value now will value of be

Brent Bickett

three the Bill. that which Currently, review is achieved performance the turn you, include over reviewed Bill in and businesses to and then our Ceridian I detail. being Restaurant their Rick to with Thank Cannae financial transaction. will made more progress Group comprised our the primary in of businesses, T-System. success remaining review Ceridian, we’ve call the closing D&B

Turning owner parent to in the Fidelity group, to American million that investors a the group. debt and restaurant the equity Ribbon Cannae held we have of In are entered connection pleased restaurant XX it Holdings with at Cannae Blue restructuring debt is Holdings. with Ribbons debt Fidelity our the a $XXX owned into a facilitation XXX% reorganization. debt Blue interest transferred of of New American entity other XX Holdings, restructuring Newport Newport the report plan, Cannae Holdings, fee and equity and as form converted Holdings, of for XX.X% by in Port of part of was in the interest remaining in XX.X% holdings subsequently million $XXX XX. The to Fidelity the paid direct equity additional plan

XX.X% Holdings. Cannae XX and through in the interest reorganization, ownership of Following Newport on Fidelity Holdings Fidelity a XX.X% both, owns direct and our Newport of now basis directly

facility be in expects will bank which credit a repay proceeds to mid-November, $XX XX used of the to debt Lastly, of million new XX. at Cannae’s close on remaining

performance. restaurant deliver financial in that pleased to materially XX, we continues able Fidelity improve and interest ownership our Newport both were and in group’s are increase Holdings importantly, the to profile industry-leading We which

make improvements to changes continue our structure from end, Barber’s to is optimization quarter we initiatives increase of traffic within same-store the through end XX, a Craig of which the restaurant’s order a Box, for customer improve basis productivity, underway leadership, but by to management in quarter, support group broad sector a Rick which quarter. to to organization designed delivered as closely To specific we will this implement in of Black ABRH’s the the and outperformed satisfaction, of functions ABRH’s While as work have that discuss we review note to seen our challenging, range sales remains XXX the fourth the concept. flow. cash third significant X.X% cost one the increase portfolio drive the and grow team strategic England to continue financial results, New and XX Index well is with the in restaurant Under reduce structure. for scale, expenses, points. benefit improve restaurant to see a opportunity in Casual the standout remains continued we highlight will Dining

of comprised segments. company’s The T-System. to Turning two

software which offers full platform, EV operations drive suite documentation clinical workflow clinical revenue. their solutions through of a that providing software completeness is segment, first, and The full their staff augmentation

and as divisions. initiated business, these there software the experience, of notable which outsourced solution join coding for efficiencies the XX segment, leadership Trizetto. and as segments, Bob full The having produce coming as sales outsourced believe, services Executive and second positions actionable August Bob coding. in leaders, on solutions expansion coding to designed company industry, technology-enabled provides market With Chief efficiencies spent well as we excited review a both each care as well Bob is self-service Officer service the for the coding in a is the year. health solution of Wilhelm Since a cloud-based improve their over of are software-as-a-service have room to brings recommendation Cerner operational initiatives has years onboard, including XX and and in strategic growth to comprehensive right this

to needed areas working T-System review actively to I’ll more financial cross-sell of Bob results improvement for portfolio enhance the and further while the strengths opportunities. team and acquisition Rick, capabilities the the of We and call to candidates are also now companies also potential in detail. turn T-Systems’ the with over the company, are creating to reviewing

Rick Cox

Thanks, which quarter from Brent. third Cloud To includes Ceridian, million third in of represents increase the X.X% generated $XXX.X solutions, off, revenue $XXX.X Bureau start a million, quarter XXXX. of both and which

are as adjusted $XXX quarter include year-ago as the million details found of to of third from DayForce which X,XXX In XX.X% In website. $XX.X third quarter. XX, customers quarter in results, increased October financial DayForce to the the X,XXX at of Investor Relations live quarter, $XXX More on million the on quarter. third quarter grew up the be XXXX can compared Ceridian’s Third now platform, release on revenues, XXXX. EBITDA Powerpay, their on cloud-based we’ll to million compared the and total, which XX.X% end both to year-ago a section

X.X%. XX NPD was loss more Box by result quarter mid-scale million brand, increase generated Village and in a were the continued was third Inn, restaurant This Of delivered of a EBITDA The underperformed same-store the XX.X% the regional by $X.X by XXXX, million family increase which Baking’s increase third the by XXXX. in of Box Turning ABRH which index quarter EBITDA highlight the revenue to of underperformed or the of decreased X%; $X.X which third than sales to O’Charley’s results $XXX American same-store of million as decline the X.X%, underperforming Village closure same-store offset quarter. above O’Charley’s, Inn This third Bakers X.X%, $X.X quarter million. of the declined index, in which and sales Black declined note, loss X.X%; Blue perform million largely Ribbon by restaurants, by Square than XX delivered of $X.X up of million revenues was quarter restaurant strong sales performance sales, the an third-party revenues decline same-store X.X%. $X having to of sales compares down Square, index, our growth X.X%. million, in $XXX.X Bakers group. of Black of declined Holdings total XX Legendary while well which the which XXXX. the sales $X.X of year-ago compared same-store of offset quarter to more million and outperformed national

free overhaul team discussed, designed – going Brent of initiatives, cash undergoing ABRH sales. its As to has same-store the profitability, strategic and an been improve ultimately, management flow at

to for total the third a XXXX, company $X year-ago ASC in as to representing EBITDA XXXX. For adjusted EBITDA to which as was period. million as quarter. XX.X%, quarter compared of million $XX.X XX.X%, decline third X.X% quarter T-System generated was year-ago the margins compared XXX, a million the quarter of million, compared the of $XX.X decline third of The $X.X revenue, in were

pre-ASC quarter T-System of growth XXX on of of quarter XX%, segment’s coding basis, third from a a recorded XXXX. the the revenue approximately growth revenue organic led XX% XXXX, by For third

begin to by the in ended third XX, We value $XX.XX interest million, quarter with reflects cash, per share $XXX company share was XXXX the creation which conclude, XXXX. we’ve results third pleased shareholders. the holding of closing in to we plus XXXX, or at incentive I’ll an $X.XX XX years and [Operator an $XX December progress cash and implementation XX, remaining As facility, will billion that to cash cash back loan secured and in segment. greater to our we which or our purchase we entered LTIP allows question-and-answer on first no company and million assignment our $XXX for quarter for successful initial book while of growth cash Jason Cannae of at the payment of revenue that XXXX, rate is common the down impact documentation to highlighted company $XXX session. of receipts, and has strong proceeds for was applicable sale produced and which September date. our To from credit stock, million. from Cannae’s proceed expect holding LIBOR T-Systems’ of At CDAY this margin. largely Cannae having to XXX approximately XXXX, the our call shares XX, recognition positioning ASC quarter, the question. triggered of of at with later and as portion the million the consumed April. your ABRH compared margin continued December cash Our is month, our are $XXX from received by as facility from the the Instructions] Ceridian last made turn The per of Subsequent million question the of receive now $XX.XX million Jaffray. $XX.X volatility in a the three comes matures billion to Please into as the value $X.XX Deleeuw, Piper up million quarter-end, Yesterday, with LifeWorks, operator million $X.X put facility at IPO the borrow

Jason Deleeuw

Yes, good my question. morning and thanks for taking

$XXX of million capital Just cash, And line go want like, then the It too. and of to sources Ceridian of there’s million there roughly Holdings. to receivable, the there’s margin there’s credit $XXX the – fund through for looked $XXX is the million with the facility about D&B. on a then,

to can can, are facility much guess, you of to the that credit? at thinking, the terms cash us be and of in how in understand kind like in extent down So drawing much needs line kept just of, the help you, How holdco? I you margin the

Brent Bickett

facility, This we margin the undrawn line do so The Sure, with have restaurant our get quarter, Good is and have Jason. described. Brent. the you – hand. loan sitting the ability cash fund today, credit FNF some from to as that more to you do group. million sources of $XXX We back expect I Yes, cash we on morning too. highlighted to the this

mentioned another be that will we’ll million get LifeWorks. from then, that And million. $X So another Rick $XX

in again, And early sometime looks so And it close this have transaction we funding. will January. like the do

between could likely and other there, now cash of then. So sources be

Jason Deleeuw

can at the about you that? much company just, But us just of, like, you us, level, help need help cash holding kind Yes. how think

Brent Bickett

$XX on the company. We’re probably planning having at million holding about

Jason Deleeuw

Thanks on million. for then, original $XXX $XXX that. $XXX range to the and of, of And capital it commitment kind end down of to, brought high the million the the the million syndication,

have on, just was of, more? there range do So syndication, could the not guess, there. why kind can we more. color get a I You any done

on, just syndication you effort? about how color So the if of, there’s kind looking any thought

Bill Foley

we that minority making Well, in in was with controlling that the with past. trying have the and the what were were well Jason, that two position, partnered know really in thinking – shareholder. we’re partnership and we’ve And we about are we although, we we really entities to a effect largest sure

We have is – actually oversubscribed. the transaction

commitment, of, go we’ll, the And opportunity total so choose and we to closing. have move and our the through kind process between to decision-making down now

And that’s a investor operations. in, to another they coming significant us going are investment that’s making with have well. We help as

upside this within analysis the significant, the We the is believe, want management through as with we’re particularly, going process. to to of still company, placing a we going we’re investment the So our significant make be be company. for that group D&B

another million, a So while did this sell additional talking whether be we we’re And down, it more or can investment might than that. we really wouldn’t amount, down to down $XX we significant But sell if about anything constantly should in million company. not. $XX sell but an make we we’re it, want or

Jason Deleeuw

Is thoughts, thinking a for about strategy mostly creation opportunity just It’s me. then good be that’s it – it Cool, do to on if Just, any of, synergy I and, here? early, and thoughts hear. any And synergies? is, cost to little very helpful. those Any see of, high-level the last revenue understand be but going might kind kind the on items. you one it D&B or the value side high-level

Rick Cox

feel We opportunities. revenue significant there’s

synergy. cost a is this So

We’re going to take out cost out this company. significant of

they’re company in However, marketing the which a has little presently manner bit And data products this that the their are really significant. antiquated. is

we is approach which single we’re to down. the products are is going top data us a It this with cross get encouraged there it. level few ensure at that on with some revenue significant sales what quality the sold to the but months by to take the going opportunities. the for can may effort top we maybe of company – revenue same we’re And of that months, a believe, we’re the took side, to bit Knight, driving So or the and very really do take a – execute has six by we longer the Black

Jason Deleeuw

Thank you.

Operator

with Company , Hinman DeForest next Our Please question proceed your question. Walthausen LLC. Instructions] [Operator &

DeForest Hinman

couple A of questions. miscellaneous

a we to that sale? more us make for structure operating that transact likely easier new to does business Blue look Or that it Ribbon, for and it that it to the look business does make American operate through With results? improve

Brent Bickett

entity. Brent, question. This We standout answer XX I’ll Sure. your – is a is

And the revenue to segment, so, of we it $XXX and does who to just the million sense just is under company business, we Barber, XX%, a as to you sellable number think, call, most firmer put we of of of over have. think that respect increase historical rate the Legendary $XX.X is to has strong the And initiatives in best in in Northeast. give and get to has, of, up back ownership the It level taken its of have profitability. other Craig to brands, asset which our around to it’s addition, competitiveness the a our historically CEO the With during We EBITDA reduce kind of we million. the important it. a of highlighted of mode restaurant on brands cost probably and footing, up is Baking,

So that once more the the available brands other we efforts, Craig’s obviously, leadership. under we become that way expect to in monetization will, those perform do they believe us, start

time taking more than what is it we So thought.

desire owned three on, bit it time. and a and than would for expected. It a taken We little T-System. focus have the of to longer Ceridian us But long our D&B, be it’s kind monetize of, big eventually

DeForest Hinman

Okay.

Just we could color transact brand a would it more one, businesses at if Is little likely to that bit once? if we would we – increasing it were those sell likelihood them? we separately, is all that it. that on the would transact Or get it

Brent Bickett

than be would groupings. separate. logical that It it not, And they’re more is likely

Inn and bakery then, then, And division and it’s And the dining have not Bakers restaurant, we are the joined in obviously, baking a the of concepts is, We baking XX. a family division. O’Charley’s two have Square, terms the Village at hip. – which

performance the there but it, the so we of said, be I So a you of the move had, the a it make management to of team monetize get we on sure are businesses know, separate. desire we value. underlying have as and and do number years, monetize, over as might to efforts past We’ve think would some to is can it and

DeForest Hinman

That’s And shifting Okay. to helpful. then T-Systems.

and We continue some help understand of those adjacencies deals look we need very understand helpful deals, be would understand. maybe to you help at where us and deal funnel, multiples, of us to any can things size valuation the add to

Brent Bickett

one Sure, I’ll as well. that tackle

a, team Wilhem run is of he business our that doing whole company, Bob lines came its to So a, both operational as deals well he pursue is to first August. an we’re new readiness, We the immediate you a Those make call. his waiting his as had Bob but transaction. are to in thing have the existing will, is in for assessment doing, readiness, to of if CEO, its seek the do operational deals and M&A pipeline adjacencies. And and

to again, new be Bob waiting that on to coding operational the executing cross-sell we capabilities we’re growth. to where our can and adjacency So that’s while an can make some make it’s revenue the organic meaningful on we’re absorb side, able looking and companies for sure will our cycle That’s seeing revenue organic side. still coding readiness But the we up particularly we we’re at growth coding think clients. in can coming building we provide have we management a immediate company, something that

the third-party execute just prior documentation side, distracting very foundational of are phase continue transactions range. actually being we due we our potential and is $XX make diligence company $XX an make On a our million we’re while footprint sure the integrate and buying kind in want because intent that entity, on careful core know of, under from doing we target. Size range to to our letter to experience but million, is to generally, of the business with sure we we’re right

to give we they they comfortable significant And more before the do more see doing rope want us the how the on You to a things. will we’d execute, not give transaction. to see do larger more be more on them would them doing the ones. capital would one first We

importantly are multiple would to of do as think that So we entities, these revenue to synergies next of, I the they, those kind to in cross-sell of, us you companies ranges, XXx, organic to, size multiple digits. but that are that the revenue into buy kind opportunity in kind cheap, kind terms particularly in maybe would X expect not of, see by revenue might recurring you cost so characterized know, deal, On well basis, high – down a but of are single pre-synergies category. more post-synergy

DeForest Hinman

announced. followed become was very little That a Okay. parallels lot Knight. a of through & as transaction had with I bit I to transaction it the that when saw was overview. with helpful background moved Black Dun and a LPS Bradstreet

You’ve as and kind things but into multiyear in I in Bradstreet that context thoughts the to Is or is that an to I Black a stuck analytics mind, to a only ask the my be revenue, well an then very of was something & some is have is high be make of public? does that structure would not that number setup part of not could a with which reason I it And multiyear that out the revenue model? encouraging contract with one that And at me contract deferred certainly pursued opportunity was of attractive short-term Knight. business the ongoing me of those level or that had you asked increase very credit there would echoed it had those back company some an need came which need and about think the talking if it because made contract customers. abnormal customers shift contracted seem all customers a the very for kind basis. need from high is It’s showing a business those on in a model that Dun of

Bill Foley

using the really revenue the is our a have make are products plan, to that Well same year-after-year. model D&B the is. recurring Knight part like Black D&B customers consistently And of

of also strategies that’s various one our to strategy is products. cross-sell and our So

portal. to a of strategy Our more toward move – maybe consumer is a

running, everything it. a right doing they’ve doing company how to really and and we that – So the be now. day have we interested homework intend lot to ideas, of doing we we background and work. understand on don’t We of But that the lot first ground a – they’re in. but that’s have hit own a And we of hit something done been intend have different you’ve the really close, and get we’re yet, there lot we’re in to

revenue kind revenue recurring We’re interested to, that model of, in converting model.

correct. So you’re

DeForest Hinman

very last ask I’m That’s And but it, it. can can Okay. helpful. I we answer question, the if know, don’t

side On controlling transaction would for reported we be you perspective. minority the be Dun Bradstreet – as this transaction, or mean, accounting the accounting be that we item? would mentioned would a but into a we a Cannae like be entity from investment GAAP a Does of would owner & consolidating those an line results that

Rick Cox

report would to be up similar an exactly with as way Ceridian. will the and the the our we report share equity it operations, today. below earnings our do to We investment line would we of Ceridian It picked

DeForest Hinman

then And once related quarterly the transactions, Okay. business closed? would basis, at of a financial thoughts on size on, disclosing any all some just we to the be given line items that

Brent Bickett

would a even historically than same so – with did of would owned a quarter piece, we their likely for overview give though performance not that Ceridian, We and the here. it’s more we we Brent. is quick minority we This do the of

Rick Cox

have what today. we press have in We’ll similar to disclosure Yes. in Ceridian releases our that

DeForest Hinman

you. Thank Okay.

Operator

question with next Please question. Velgot, CTFN. your comes Our Stephen from proceed

Stephen Velgot

wasn’t – sure. others Yes. Hello, may known My but to be question and I is this

If you’ve with the I And in said after is plan ever that. Ceridian? had your follow-up stake then longer-term what a just

Brent Bickett

Stephen. Sure,

pleased realize Ceridian they look chunks team some extremely we public, But past upside David performed be the investor continues that has logical of through will they’re we doing well there’s it we’re owning over with stock clamoring with are the there as it that journey where companies, and Ossip shares large peaked of has out making. ago, for and our months obviously, to we of well, think do took more experience mean his six company base. tremendous stock We our amongst and the moves the get are when perform leadership that as potential. I that to So, just

a continue But of of again, think the momentum, next the we, next would company we see very couple our for like probably a slowly it where mean, would be to to we ride over we lot you years. logical company years. and So going, – is wind the position. over attractive us us down be to I what of, of the want has couple think kind investment will we

Stephen Velgot

transaction. to that a I follow-up currently able you question, know repurchase not that the then the is close D&B you stock, And something D&B be transaction? by but will close concerning you’re just the think the that Okay. time of revisited

Brent Bickett

over might our Well, D&B transaction, what – would trading when it of at again, – I these that we’ll repurchases, would Ceridian discount hypothetically the goes D&B T-Systems largest to road. Cannae be source would that – see add-on see do think we’ll we’ll be but for the time, where that close have Over at obviously, liquidity have could then certainly deal, for mindset stage, of what close do it. that what is is do, period over of we and left the our always down close cash acquisitions over, that capital do we see what and used is at, some to that that be and and then share and type where be the we evaluate is time. But we we

Stephen Velgot

Okay. Thank you.

Operator

Ladies end back like call question-and-answer of now have Bickett Brent turn remarks. session. would the closing gentlemen, to we to the reached I And and the for

Brent Bickett

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

Operator

today’s concludes conference. This

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

Cannae (CNNE) 8 Nov 182018 Q3 Earnings call transcript