CNNE - Earnings call transcript Q1 2020

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Operator

Good morning, ladies and gentlemen, and welcome to the Cannae Holdings First Quarter 2020 Earnings Conference Call. [Operator Instructions] 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. We appreciate your participation in our first quarter 2020 earnings conference call.

Cannae's Chief Foley; Financial are Rick Executive today and Massey; Officer, me Chairman, Chief Bill Officer, Joining Rick Cox.

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

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

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

non-GAAP our accordance useful the in not performance. with in isolation reconciliation we call, most can should today's substitute as in for GAAP in our will discuss can to non-GAAP these evaluating A measure during GAAP. or be results be comparable we presentation Additionally, additional considered found of which of measures, earnings. The US measures be information this prepared a believe

the turn me Let call over Bill. to now

William Foley

of you, COVID-XX, Today, world, all significant of midst country has a Jamie. all which know, us. battle as against our in you are impacted the and Thank of

all across of and of customers employees is our the and our priority, course, portfolio health first safety companies. Our

ensure working minimize new are while management of maintaining our we effectively to that businesses. we daily as adapt operations this teams to disruption, our seamless with We order in environment the

have philosophy. having course share environments, investment sheet with the the career, my seen importance This my which a the and of management challenging importantly, take of advantage includes dislocations. helped strong balance have During teams, essential weather shape fortress-like trade of my and of property outstanding intellectual secrets, to storm and businesses most market I fair

Cannae's strategy remains unchanged.

companies, our opportunities. investments, new We investment continue of investments portfolio monetize to our make future nurture prospect for and

during Cannae to of investments to the expanded And Our the capital market has when pipeline dislocation. has begins potential ample optimistic be stabilize. economy

Bradstreet, significant Dun & or we operations period progress in time. improving a D&B, have made short At our of

announced, from savings XXXX. particularly the XXXX, of the making, the million million. of in ever pandemic, customers efficiencies reflected to the in more million months over first and than in out of team year-end be of management government. are company demand data reliant a is D&B's as the United year-over-year analytics the evident adjusted result is $XXX experiencing COVID-XX revenue decision strategic and States growth quarter for position D&B's on note, currently schedule, have Of taken goal of achieving ahead As by strength annualized cost of that $XXX the completed previously expense the an of its course identified D&B's several competitive additional $XX will X%

quarter. D&B of XX% adjusted the first and $XXX EBITDA the basis prior XX.X% points adjusted million of margin expansion quarter growth year-over-year to over delivered to Additionally, team EBITDA XXX

recorded proceeds of million, by rebalanced its Cannae X.X a at and of $XXX.X resulted $XXX.X selling price gain Ceridian million quarter, shares share. we a portfolio This of the gross of per During $XX.XX in approximately million.

owns XX, Cannae approximately Ceridian billion. stock $X.X shares April of worth XX.X million of XXXX, As

challenges. an for previously distributed life our on $XXX and and a million in the marketed retirement we XX% large developed, the significant approximate a US and record closed pre-retirees I and we poses AmeriLife, insurance, organization that planning in have as annuities market insurance companies AmeriLife solutions to to track has And have markets independent for We commitment invest very years. strong XX commented, marketing position health Turning of dislocations. during environment current is nearly acquiring company. announced key to understand

network, We robust. and have a remains strong our pipeline

are optimistic deliver arise, continuing our long-term potential deploy we As positioned capital, very grow to shareholders. We Cannae. value to to deals to our further well remain

With financial call turn review to over Cox the I'll our Rick to that, results.

Richard Cox

undrawn facility to Bill. million company execute cash On giving future credit had million, Cannae $XXX holding Thanks March approximately investments. XX, $XXX.X on million of and $XXX capacity in Cannae an of

facility to an initial public D&B, offering. point B and Turning basis reduction with realized its the interest to repriced further point loan get reduction term $X.XX a XX a upon XXX the in ability billion basis we rate successfully

costs loan Excluding term the the the rate million annually cost interest of save of the lower transaction, B. $XX maturity D&B in the will through approximately interest

During method at $XXX.X the first for final investment longer balance purposes, balance a million. reflecting million, Cannae and gain market for now as the changed recognizes holds quarter, accounting Ceridian sheet no control a was Cannae of value The its $XXX.X fair position.

currency million, Dayforce revenues was and up basis. XX.X% XX.X% up $XXX.X on year-over-year constant up a

up currency up up Adjusted XX.X% on of $XX.X and revenue, million, basis. revenues XX.X% Excluding million float Dayforce a constant XX.X% year-over-year. were year-over-year $XXX.X EBITDA

float up EBITDA adjusted year-over-year. XX.X% Excluding revenue,

or team January XX total timetable of operations which Village for American Inn, this Restaurants. up Holdings, more revenue, financing. of process. voluntarily a constant revenue quarter Cannae an basis. management Ribbon of Square to its XXXX O'Charley's, was XX.X% of float currency this the restructuring for the Bakers affect to was involve order XXXX, or flexibility the or with the in providing million $XXX.X not provided a part filing business million debtor-in-possession and Baking, for as of operations, includes on does XX, Blue XX accelerate petition Ceridian $XX in But XX.X% Chapter first increase on Legendary Excluding filed the

in restaurant loss the the the of of compared adjusted quarter. was the consolidated million $XXX.X in compared to year XXXX The $X.X total quarter $X.X gain to in XXXX million of of group million ago quarter of total The XXXX. quarter $XXX.X a first of group first generated a first EBITDA million revenue restaurant for

decline in store EBITDA mandate in quarter one, primarily revenue the closures XX While margins. impacted the dining closures to the to significantly is room of due due COVID-XX

of is to not $X.X portfolio but challenging quarter, shareholders. to $XX.XX as was opportunistically positioned December continue only at Cannae billion book our maximizing was per share portfolio across purchased brands. growth we or challenging the $X.X to During value Cannae's per on while XXX,XXX price an times average compared shares or environment, built Amongst XX, value On $XX.XX XXXX, our the share investment, March billion XXXX. withstand XX, progress delivered opportunities, Cannae of ultimately and to monetize to delivering future our for prudently sustained well of $XX.XX.

to our the question-and-answer session. our turn back operator now call to begin I'll

Operator

question comes John [Operator Stephens. Please first go Our Instructions] from with ahead. Campbell

John Campbell

I on D&B. want to check

I check with the like me. You they're guys some fire the are doing COVID. work doing the a got sounds of going That pretty amid fantastic wanted irons in job government sounds some work. It of things some to to of they on there. getting interesting

line? enough to what they're if to talk top maybe doing on impactful could the you move that's and the needle If there,

William Foley

and provide revenue also began the into D&B US has data the of in I'd Security it's specific US quite of and terms selected were started bit analytics COVID rather to Committee after providing -- Office Homeland the of government. revenues of information of it's to by been FEMA get and And really Virus the a and And the happening encouraging not -- data selected analytics or and March In the that the those government, numbers, to appearing very President. XX. and the that involved began we but Department by

next So, were revenues those couple we revenue any the But growth face D&B on balance over not impactful they of may quarters. help in should diminution quarter. that first the

remember, The of And publicly in closure second a number call stated that growth in to D&B will time. due Tucson, revenue terms a as revenue one Arizona that of to just is that in was the center be at times, year of last third quarter thing basically challenged the eliminated and we've

So, third end it by it's still gone away. -- -- existed -- we're last the has it the to it be but going quarter, of year, but

comping of growth second we're come it back. will difficult the to In that that over in sustain make revenue it should particular So, quarter, piece quarter. third

have of the summary on more our and revenue. kind revenue D&B we'll just it how to clarity say call of significant government that's the to more have about We'll end the And conference with regard situation. is. So second -- at quarter

John Campbell

helpful. That's Okay.

the restaurant how maybe also talk then, how the some that On through these actions some about can I within given days, this restaurants, or walk of debt you to is doing if and is of guys steps much it challenging in the the check, the restructuring process? And can you're wanted you world of nonrecourse?

William Foley

there the any isn't in Well, debt the debt, terms really on restaurant of company.

-- there's operating have Square. Baker we the recourse the that leases restaurants leases, and are is only Inn those and the entity of to case particular Village So, in

leases holding company. So, there's the expenses on recourse to back no or other up

Village and XX% we those closed. the sell brands reopening restaurants, be proceeding, able the expense, terms Bakers and sure also Inn then of anticipating closed the ever we'd on And and at Square And those the So, is demographic the with are the to just Unfortunately, can COVID-XX, that Legendary a Bakers Village Chapter occupancy. the sell lease basically, restaurants funding satisfy Square, is XX restaurants all not with Inn just But Baking. and filed we're in cost a older. XX recover. problem sell Chapter few restaurants now

of time. So, at entire we're process business just in the that this exiting

positive, about Southeastern-based in unfortunate in other Nashville, restaurants of chains It's March up headquartered then and was of collapsed to about were restaurant until was it's revenue XX. everything the O'Charley's obviously really is and those chains, both primarily comping XX And restaurants, closed. significantly XXX all the up, a is do with starting and because well, Northeast improved chain. growth EBITDA The course,

XX locations. various now we're with going the restaurant process So, through of evaluating O'Charley's and right

just restaurants. reopen The Southeast assuming a when XXX% the back occupancy. it's is coming may of to XX% XX Northeast. And in restaurants XX those reopening those bit up trail some may start we'll And virus the get time the never doesn't the at because back. in to O'Charley's reengage, we and occupancy

no debtor risk there's of were have don't chain. for balance upon any. -- no We just current obligations. in companies debt terms XX, -- just there -- ones in of filed in restaurant there's outstanding but -- isn't we the the based don't restaurant So Especially Chapter to whole the or that debt the

So, is that of rambled kind I bit, helpful? a but

John Campbell

operating answer. great company a main Nonrecourse back to was helpful. is No, leases holding and debt. the that's very My on concern the

from want more to hop one and all will airtime me, So, don't I I queue. take here. the the in

to lot a with. have guys you obviously, powder, dry play in million $XXX the On

thoughts if want updated Bill, you Just talk how And multiples much you're about could out and changed kind pandemic? maybe then, of versus to or get M&A. on kind that's amid there, the seeing pricing buybacks of

William Foley

Yeah.

you're got So, that really it and working is the the when on. I'll or the companies. familiar process in say to and with have we're now three cratering, give And that a example the Black market in high-XXs situations couple $XX. we're you more two we'll Knight. of Knight regard to Knight weeks with about $XX mid-XXs. down is now, an was in to back And or into Black Black They're started really good

have were its lot really and is got and back example. to that know of And a companies revenue started hit it's They we're that today, involved with And around think then tracking that recurring and of we I was coming down high and $XX. back. $XX. mid-XXs, the Ceridian another the about we're now So,

its interested come of high, it's from its up of that but were characteristic in in, some that from in in their off But the on going been companies have down that those put public multiples potentially is it's businesses. most we're low. sort that monetization hold, certainly that and interested of ones slightly. pretty we're some So, That the are need there's have companies

we're all on are those time. those our screens, at the and So looking

companies really have streams impacted. revenue are are are suddenly, are And their public and then that over-levered. And the opportunities over-levered that other but been

it's So And significant believe additional in definition summer on companies various we're that's we third-party more weeks that on. interesting different when are we or think looking we more we're we're terms have little through going having in kind raise companies to we're very about a And the of to software, and already have really an some looking it's businesses things different a have what and primarily to you And kind opportunities. that three working at. about in. those there'll fall of say in vehicles of capital opportunity in at two be that the and analytics, we the processing, same of data

John Campbell

you. great. helpful. Okay, That's in queue, jump back going Thank the to guys. I'm

Operator

Fargo. Our next come Eller ahead. from David will Please question with Wells go

David Eller

afternoon, Dun & taking I'm questions. for good you if your Bradstreet margin Thank just you Hey, at talk about could the guys. wondering EBITDA entity.

quarter, it was So, last it looks like XX.X%.

quarter than I would and than have larger it as XXX quite some maybe provide have basis margin XX.X%. business, QX QX or been? This off revenue seems has Can like sequential they drop know, color margins points lowest dropped been, wasn't QX better as Maybe should maybe you that expected. have it I there? the good were could but been over to a quarter for historically,

William Foley

quarter from the D&B. most first is quarter. No. We on track. quarter for you're right the up We're the points think basis difficult correct, year-ago And XXX we're about

off contract which all signings come done previous are quarter the be of quarter fourth trying it's -- by the You that to year-end. in fourth

there's so, we you'll back working we its quarter. lag as through the And that think balance of way the forward -- year-over-year. EBITDA go of But working the see year. a improved bit margin then again in a right And We little track. start first on up we're

concerned So, there's about. to be really nothing

David Eller

the Okay. ever. in as be that you I've Great. your And Dun QX call than revenue But of Is and Or & commentary then credit about the product necessary seeing updates. on all center? should side? pretty need are trade was to what then, headwinds talked you that Bradstreet utilization for credit kind you risk strong customers related more assumed that having credit the trade real-time mentioned QX. maybe you in thought challenging

William Foley

Yes.

principle in the So really, is scenario. the center culprit this call

in areas as of dried information impacted, hotels you that, consumer that particularly going we so area, and the And the to However, businesses, course, back did hospitality amount can imagine, of up. fair restaurants. are completely a

offsets and So, the has -- that of that sort government business really we've to managed attain drop.

in but terms not The impacted business. get to But businesses still get significant, are it's an back and some that banks, course, So, demand need consumer-oriented of very to revenue we we to -- the need of for impact that still robust it's terms they've this our had in our these institutions. are virus, by picture financial products. of of really -- America

that business kind But analytics. we back in and really can of is to consumer-oriented we'll see just fast So, how get data work. the government offsetting largely diminution

David Eller

like And And & then, do the you the about how overall end liquidity covenants quarter? and feel at Dun Bradstreet? what at was of liquidity

William Foley

the in have capital don't I number. have have entire I me. for in don't Yes. about structure X.X is basically, place -- our of exact years. another front that we But

and going obviously May. in liquidity have that to of really hoped been course, SEC had of do, preferred that of and the opens. We've we subordinated the to month IPO submitted don't we execute response. S-X, any round waiting So, What on has market their the debt, problems. we're deferred. our an and Well, IPO for was piece take And comments just see XX.X% out a we when in X.X% second good call were case, the back And the debt. the to our of we'll

So, we're to drop numbers. first in going our quarter

And so, S-X an can executed have against. be we'll that

the lot a good up of we've I and It's offering. feel robust various not update perfect. demand we think early to public about analysts. to S-X all August it's our timing the XX, the it. until was of just then done have we'll again. terms in And calls way in But is about very of all There the work and

great we're go quarter quarter first until have of public we -- So, the year, or constraints. It doesn't in the capital next no if don't shape. fourth we

David Eller

from share side maybe question. But costs it's in you Okay. to other the virus. I And somewhat kind got defensive or the leaning last very just a Many how them are through that a maintain side of in, you number that then, then you last the to get trying you plans of related been see take strategic cover we companies the overall, liquidity, cutting of to guess companies bolstering making. other But throughout have more few virus standpoint? this order to a on current commentary assuming of virus. posture, were advising

of to are So kind in operate this how you advising them environment?

William Foley

Yes.

our operations ongoing. So, the in done and in we has the product it's but plans. found company development, about is, of have all of another we're sales What that we've way we structure, maintaining uncovered, $XX not business executing million against the But terms run and -- been change we're synergies.

real believe it to stopped an a make we haven't just we analytics -- Bradstreet data And to think we not & a have but at that opportunity continue Dun company, We all. company.

on, -- we're you very plus working X and sell sell plus for and what X that's And analytics data X X data with analytics you data because hard for plus X.

And So, change. come future. the growth where big in to that's going our it's a revenue is

so, XX stages this been, the business transformation. we months just And of company. what, in XX, since only It's the we're early acquired

David Eller

for taking you questions. Thank all my

Operator

next John ahead. go Please Our from will Campbell come Stephens. with question

John Campbell

last And Hey, does you at just that taxes? here. I basically payments the closing, PTIP I the the that. you guys. shot that sheet. the Two day run for account payments of haven't a maybe the LTIP is last value help the the guess, also in price that the day and Does of quarter reflect closing can or that the and or the fair with -- -- balance ones of math I quick Ceridian? If market -- on guys. for changed know Ceridian

Richard Cox

LTIP consider and into John, That's the taxes. would of at end share the consideration price Yes. also and taking quarter, the

John Campbell

Bill, going be And when ice? to the on back the for Knights Okay. me. then are one last

William Foley

is such The on and focused this Cup awarding Boy, year. good so the it's commissioner a team, Stanley have disappointing. very we

by to I training back it's will facilities move there's to finishing back in But will in July -- -- seeing so, with believe whether shape maybe players by round. an period And finished very opening season or expanded that I'm going about on be And playoff that then, be July partially It's we'll the too and but X.X shouldn't finished in playoff from be we X, because playoffs Then, way you're playoffs and be advantage the get then I'm unfortunately. feel our other weeks. we their confident we'll groups get bad unclear confident to scenario, a base without three-week the or to very fan small into season lot well, in to whether two fans, just our practice in I of ready. ice a teams. either like going have real round the a a say in start weeks, about compared or start

John Campbell

Any sense of this be normalcy great would at stage.

guys. hope I plays that taking Thanks time, So, the for out.

William Foley

sports air. get Just the back some on

John Campbell

Exactly.

Operator

This I'd back Foley concludes like our Bill question-and-answer over to for the conference any to session. turn remarks. closing

William Foley

results. conclude, pleased To you. first we are with quarter Thank very our

pipeline today investments your while thanks for today. expand portfolio time Please of also Importantly, that at will economy challenging has nurture deliver work healthy, well as of and many vetting attractive to growth present to long-term that portfolio our team. shareholders. and in value stay Cannae we the for dislocations are will our weathered our the our companies, and and we safe capitalized team and to opportunities environments, our we see the deep management optimistic continue We remain potential

Operator

Thank for is attending presentation. you now The concluded. today's conference

may now disconnect. You

Cannae (CNNE) 10 May 202020 Q1 Earnings call transcript