CNNE - Earnings call 3 2023 | Cannae Holdings, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Cannae Holdings Inc.

Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, and a replay is available through 11:59 p.m. Eastern Time on November 14, 2023.

With that, I would like to turn the call over to Jamie Lillis of Solebury Communications. ahead. go Please

Jamie Lillis

and afternoon. operator, you joining for Thank all this us you, of

On Chief our have Massey; we the today, call our Ryan and Officer. Cannae's Caswell; Executive Bryan Financial Coy, Chief President, Rick Officer,

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

of management's to are based management. materially differ as statements, statements update any based letter, made are are obligation future and our risks detailed the a Forward-looking projected. fact, released future assumptions those statements The operating from new statements by such of otherwise. our other information subject on on company actual to forward-looking include, or beliefs available and afternoon results and undertakes well to no as filings are and this SEC. which financial currently was may as other The whether expectations are events shareholder with and the results quarterly risks Because as statements in limited to, to uncertainties, information, and which factors result in forward-looking not but not

remarks Today's measures. financial will also include non-GAAP references to

that financial information GAAP our financial is the letter. Additional information information, non-GAAP reconciliation including in shareholder between provided

over the to call like CEO, now would I Cannae's Rick turn to Massey.

Richard Massey

joining Thanks, us our call. thanks, conference Jamie, on and everyone, third for quarter

X share about an is a an want we secondly, much some we cetera. our got President, do discussion me. cash Ryan the our parts, companies, shareholder portfolio which et dutifully essentially file our share Bryan both we which they're broken or position, month Cannae value that's here basis. file things, and down to hour -- per half of a -- Coy, basis. filed is of a investment you a -- I a so, Bryan, which mentioned, our remind Jamie per we then detailed ago, our on one We And more letter, basis that monthly net of hour ago CFO; on per on line As have with asset various filed that on Caswell,

-- you right? that's So if

Bryan Coy

Yes, yes.

Richard Massey

you So we I you can -- tell than call. on you'll this phone those more short -- get in recommend really those, check on I

best may out believe So a letter, ago. I'll our from be was -- our is brief capital. stock with -- authority as couple of We investment you still our replenished by precious that all since there We buyback our our Board is information that our is our shareholder stock public. noted weeks own have

so bought in X.X the that company have third out which we shares of over be turns to time. over XX quarter, We million authority. in And X-month back of million -- roughly shares well about the X% of period

back we with our and since we no operation. company discontinue to we on of the reason buybacks, billion. journey And have And almost bought -- about little X/X that $X.X started

see own there we your with liquidation don't better back that what hard buying out than stock. you -- on see based everything and hits our on value there, down said, turn I As essentially double to that's we a It's anything instantly.

margins providing X.X% I'll BPaaS The a revenue had companies that enterprise that's mention market. their really is really and of comprehensive XX% which Alight portfolio Alight. really, just well increasing couple light the a offering order, selling alphabetical growth, excited in to X sort growth quarter, good

they Alight cash those Their a blew grew they which spiked XXX to who cash news XX%, by flow For flow in cash And their nearly it like is my margin and encouraging good. flow. quarter. nerds opinion, multiple corresponding over cash promising EBITDA the was points flow out of they of was -- you really basis me on their are about of most and the that out

the finally centers automation mobile. of employees they're within the getting from of So the benefit movement to this doing they're that call embedded that's restructuring and

that -- that Stephane handling call more, mentioned -- in thousands on the yet I this more recall year's period. earnings flat. X enrollment has employees over the mobile during Q&A, past his uptake over Their center able he maybe and million of were they number hundreds number, and people precise don't the the mentioned enrollment period the is of calls year hundreds tripled to they're call to last

up right So the is plan. this

automation. other than of sold, the is the really is there for certain benefits fact is that stock way The You're that overhang. depressed, they've to when not starting firm And they've the crashed it The company's sold private humming. afterwards. reason stock see equity any a

excess know don't board. They're we off certainly volume anymore. ownership their But are. below are We don't report where They've some hoping that gone they there. the They we see XX%.

stock out hoping the maybe shortly. then and out we're that of be that's So moving they'll

quarter able revenue-wise, is XXXX. a to in margin bit. at and morning, that and discount a expanded another bit, they They're they're to little line -- grew are basis delever peers. with before they peer little woefully And the X.X% this about over XX% the a trading that's despite D&B multiples undervalued the And third on on math. revenues third a growing quarter did one -- of fact -- I FX their the

to help some think help. ought give them to a it be we will bit least we trying we're as At much So much will bit some to had come leverage. power. buyback that with leverage. And do to thinking businesses little have a Alight up little they delever -- -- about too those have strategies strategies thinking they about reduce that We too

Alight note just to Ceridian UBS handed apart both just as usual, and UBS and just that on So report, for $XX CS quarter. I just Ceridian. here. right at the an on up and UBS, Ceridian it just Alight, I I'll was price moved got target on knocked a picked This Kevin that -- price who Alight target was pick initiated covering $XX third

on So obviously pretty bullish those.

handful over Bryan talk to of it a about going to to turn I'm things.

Bryan Coy

I stock wanted to in asset with asset referred net there was put net We of just net monthly, which where billion, aggregate about discount was trading the at the $XX.XX. out a value XX% discount of an $XX.XX. to value. were to aggregate $X.X as our Mats $X.X against at our year value We Sure. a we're what demonstrate started time. And still briefly stock the billion at we our price asset today,

XX.XX per to value So [ Cana XX% discount. out that ] intrinsic comes shares or

while fair has month discount have buy to month, sold a the rather month Ceridian decrease that after of that been some notice our down continuing bit reflecting shares of shares. in dutifully we little value, another aggregate our we've steady off So XX%, XX% that a after remained of you'll

we resulting act, a those and time. And took that plans has investor Fair particular, that on challenges the the challenges. fair been their late I'll to Bradstreet, month, line. for major of and below on on Product Dunn for earnings all kind up sign XXXX. That lot opinion marks. acceptance tied engage questioned further further and rather Cannae's evaluation a than stock book slower fair and of of timings. price. prepare second market's discussed definitely they're couple a And taken QX, strip the briefly. well sight the all rates about one the anticipated, ease a lately, call SystemX, other of on as from large acceptance from stock mark we a we This in lot quarter every SystemX those late valued range our value from rollout factored also into hits We value And recorded talk well their site book are had processors. line operators valuation a rollout month, a third-party have and even was write-down of lines took a mark in as sight result, We've to the reflecting third-party as of at

fair about million and recorded we value accordingly, on $XX book value parts. of $XXX another some its by to And impairment the reduced million the a

fact own to been Validus discount holding the still XX% and and has a our steady continuing billion we're So at that stock. buy $X.X pretty

Ryan?

Richard Massey

Ryan? We're over to turn going it to

Ryan Caswell

Yes. Jim ticketing. increase and what We've quarter, make revenues to continued progress the Commercial over on which good of year-over-year, the touch quickly increase year-to-date. the hires football. shows just to XX% some increase Black have both Knight That's positive. hospitality, are I'll doing new up about been sponsorship,

of as some and refine some also kind kind our the players value of contract over invested time. value of We to players top of those the the keep as financial players well in

remainder. about contributed Lastly, raise Knight. We a had third bit Black I did in at of parties the we capital $XX million. little Can

a raised we the -- million about over was it in So little quarter. $XX

Richard Massey

over -- turn we'll we'll operator, that, it With questions. to

Operator

the first comes question And of Oppenheimer. from Zaffino Instructions] Ian [Operator

Ian Zaffino

back how So point just what's of it this here shares, of shares, I of of portfolio? down it back see kind is horizon? DMB, would big on you structure philosophy And the your the company. how Or sense wanted buying collects investments shareholders? kind given to to buying maybe Are just on we of in return to kind thoughts new going your maybe kind instead selling does everything just what at as far make ask of investments the as here

Richard Massey

generally. deal I'll see all. Okay. with Great questions can if those I

say I'll we today, -- not we are looking not it have said, investments. nor for shown actively haven't this, actively we're said interesting been if I As any looking, investments. We're not I

by those -- back with stupid what it us a publicly our there on shares not below the really never even are own for offsets telegraph our some provided legal probably say more giving ownership to cash -- limits going do catch would below basis The -- We do traded you amounts structure are path and far to to we're yes, to the as tax and within our well be that shares portfolio we make our are up. -- and companies buy within law. But us would so that And harvesting as basis that nice buybacks. there. we will

math detail should let But that. about So think much on I'll you don't I portfolio. in do more get go the our I

to buy number than a, that. capital our being a of the loss lose -- the very tax main and for we of it's couple As reason reasons certain forth, way; do we then and b a carryforwards collapsing of of the and availability if so structure to more back carrybacks. shares that the it that inefficient

have are about prior losses to thinking If for today so taxes we in and get a capital prior refund back are -- that periods. a carryforwards paid C-corp. to then And company, some going were control to And repack we be we period, bought we're this, a be back limited. and have reach a theoretically, availability we those we they're over of of available prior years. periods the the That to not X-year severely -- -- to

-- So of we distribution avoiding those tax losses assets. a to double important sort are of on

faster valuable So we're we preserve than and assets. can't tax going these a very lot go

except our So to over is time, buy volume limited. ability

snowballs as our accelerate Our to able daily increase back volume buybacks as this. to it's we more. and do can we'll be And continue sort buy of we

our I think XX% it's -- daily of volume. average our trading

XXX,XXX average is Our about trading shares-ish. daily volume

over and on we -- time, So plan it up. creeping

does of game. make few We've and that's So come be liquidate well, in the a us would it distribute if had we you make proceeds, -- -- any rig people to does don't something That's to quite you. why a thing taxable and sense? for and liquidate just taxable that the say, that

not on have So side. to we -- on at would least C-Corp gain the a the like corporate

makes hopefully, So sense. that

Ian Zaffino

far Yes. buybacks, cash how XX... more And as more and Charlie maybe even about for do even as raising think you then

Richard Massey

a bring We us bit. think about

the -- restaurant love it you be business, would Oppenheimer in for If to Ian.

consumer be get there's number that around, about restaurants get in to a We cash drinks sold going chain. a -- we mean not don't and on all in to sell are out leases. look small there if restaurants, okay, M&A But a We're to a cute to already you workout going of of I is in down generate lot move going XX fee So cash. and sort we're of of discretionary restaurant haven't our -- it. property general. O'Charley's to aren't if it, bunch of

a acquisitive got been we'd get don't the there buying if roll-up, you a they're bit There it, couple road. love have So doing know anymore. a very kind We've down just out it it's I of call few, to bid. not companies brands, actually entertained a of little

we a look, it's SystemX, spot. yes, -- market not but So cash in sell it. our tried there's in looking We're every to for just possible

Ian Zaffino

do think What Okay. I one Or do talking guess we eventually of you how EBITDA generate? We're about actually [indiscernible] just that restructuring. more. O'Charley. could kind Yes,

Bryan Coy

these think, gotten do million post flow. can year out Ian, mean $XX annualized it's you've I a cash $XX combined of million, all I after the group Bryan. restructuring, restaurant negative

Richard Massey

That includes XX?

Bryan Coy

including They've Yes, that in flow That's XX couple last group. most mean, a the them closed one-offs whole I includes stores negative almost cash year, of one. the they closed of XX. the and for XX. were

So performing they've real get done better. to out a lot are that of of into then stinkers. get rationalizing work that And the ones that the

Operator

The Markets. Lee RBC of Capital next question comes Kenneth from

Kenneth Lee

of book terms the impairment a share based level? below detail to Just based Could trading the simply get In you see SystemX. price value what in just certain wanted that on? terms further on for into what little What of that. just was was triggered a

Bryan Coy

equity will We It investment Bryan. losses each on market our it down was prolonged a we value had than this where market the quarter, lower their -- by a but actually put of amount usually Ken, was. recorded Sure. value in method our below our even losses. value book take the is

So bring to our them we they down our ones charge taking noncash market end aggregate we effectively. mark up the If to of impairment a below investments. period value all of an value our get time, extended public for of book

Richard Massey

that with Paysafe. did We

Bryan Coy

We past that in with did of the a Paysafe, couple well. Yes. times as

Kenneth Lee

Okay.

and about the across if you Okay. private the And of for third-party how valuations? Very you looks investments sideline portfolio, helpful private rest investment of of in as did you then the valuations, Got valuation look their as you. terms rest the and investment, the there. some think do the it

Bryan Coy

have everything think sitting don't in very cost the tell in I with, the of there not numbers anything that not we're are big, by parts, as Ken. comfortable you else there's I can The summer and is think range, value the We into only dozen and million. investments. of million we up like in smaller that talked $XX other or and just one so about $XX that's The about that made one. was half got a

that to going is be... definitely think So one I

Richard Massey

line. because for value it was liquidation of the better $XX is sort there see of X/X was in such investment. not don't for -- an last just that. doing a -- it there's that And CSI bought Expanding well, company all about growing X% top X.X We going stuff just fine. But It's lead a do, no paid We to exception year, or margins to ago. liquidity do in million a expect screaming X% that's purchase. out X event So that. you'd summer We're the on it years we to a the what deal

Kenneth Lee

Got follow-up. you. Very And just one helpful there. then

briefly more raise that I outlook I think there? BKFC is for where can the capital prepared you just Could $XX in and what talk the little remarks, about longer-term you there a for the raise capital a bit potential participated. was for mentioned million

Bryan Coy

Yes.

some There million $XX million capital. players acquire incremental $XX about BKFC, was were that raised as we as opportunities to opportunistic some So for about Cannae. of well some

who's a owns can other and institutional Ryan in an helpful -- they longer-term brought investor So Sports we sports be properties. teams And other Ventures, think as in brought we partner. we that

so this kind for I'd -- players we was some got we going as of of capital bit outside the forward. as it's a -- that additional want little we -- bit So that where we're weren't thought say well we business opportunistic a

Kenneth Lee

in again, more a for comes to up Remind the it And is around you. transfer follow you. from I could the I Got with, me when terms capital source that BKFC, funding wanted one. little details on born AFC of -- the that. bit budget, just Got just get the if of to

Bryan Coy

certain revenues players. basically instances, with try in to -- operating business. the capital of the may then a additional we incremental additional mix mix or put And funded and a of player of being it's fund in It's

So it's kind of a mix.

as internally going that I'll as think mix will sell what kind it capital. well it's business funded of I as it some forward, will -- to But the players. we we revenue of of be hope today, from all call start be holdco kind a

Operator

come Inc. next of Our Campbell will John question Instructions] from Stephens [Operator

John Campbell

of for and guys homework know you all like done can't you buybacks. can your and all exactly have thanks you It details definitely the Rick, the do. on sounds what

We'll for buybacks a major questions for leave more at be basically us. you no So continue just focus guys. it there to

I But on... probably think statement. it's fair a

Richard Massey

some are say just at volume to buy me going to permit our back. so, point, Let limits us

million, me some day, just XX would I'm sorry, So promises. little probably XXX,XXX shares XXX,XXX a to I'm rough trading high. say, do let which math, not and XXX making is buy a we were back roughly a days But -- a year, which be or if maximum,

down to to up. shares. million quarter those million XX mean, a continuing volume our maybe if down that XX gets going XX% back I keep buybacks, it, call and Let's you're you buy you levels

-- on to we're going earlier, you we're So this we going keep can faster? asked faster. Ian go path, go If

John Campbell

lot Right. mouth, commentary Board Investor like up that Day ago, your to season seems sense. guys the But you BKF And operational the revenues Ryan, buy the of curious are it It the have -- I sounds up far, the know of you mean at if Makes to you of are X right. last a you sure. put starting thus the like to overall to over guys year XX%. kind back guys it years from talked for in being benefits you just living I on place? at from improvements any looking I'm see fully

know guys So average revenue isolate key it's you of at? whatever look those guys? trending million are you match, are How from you kind metrics maybe the of for X if could what terms in I don't if , metrics sponsorships, attendance,

Ryan Caswell

Yes.

we've done side, So really the and -- business I side the well. think commercial the on

constrained of basically great stadium. But increasing Jim or what and there's there's sticking, talked X the we're I I'll hospitality, commercial. -- as things of think sponsorship have the I'd done a we've by kind we then broader job call overall say team a bit before, just about they're in and are

categories up on side. each up a probably north you -- so amount, XX%. And the of stadium those can't obviously And were of fixed good -- just in that's ticketing were and on

on as on generating just up as there. revenue we're combination that's similar price areas. of well around price XX% generating they're I model the the sponsorship, pushing national international both as price were at increases. and So close versus new of On within getting from that parts finding they're the guess to more stadium. non-revenue hospitality, That's well really to a increases out both how or would They've that's And the areas basically we're changed regional up sponsors. stadiums sponsors probably in existing a And going where signage converting amount. looking sponsors as and sponsors the

So the around of a good job all team really done has that.

So we're there. very happy

so look and -- we of feel performance part the business, we about good hope And suit. the we'll on-field follows that

John Campbell

the And there, on Okay. you're That's you're line XX% of tipping of then helpful. now. almost majority balancing, kind investment

an to continue over you of Moving that you'll have are alongside if have and the further assuming or forward, we pegged you a next -- capital inject but guys you'll position? that tended years, guys keep to if others, assuming raise cycle know out you you're I any don't from of couple are or that do kind minority it investment position looking kind of minority you'll time here

Richard Massey

into that more any sure No, -- X- horizon. capital. don't And we're we planning to the of hard X-year -- percentage as with retaining this sort and we're on not not need It's this coded. not not went investment be necessarily. And

we and it. improve get So it, had theory early would we in that sell our on it. we'd we're was run it it, it, we run we still would pretty But

Operator

Rick remarks. would to Massey conference over This concludes any I like turn back our the question-and-answer for closing to session.

Richard Massey

call. Thanks a our for joining lot

the set in Ryan, with of welcome the to all above a You're side me, call Bryan, subsequent days. up any

quite a always up, have few we a We always could lined take few calls but we can more.

to feel your interest reach us. in Cannae So out for free to Thanks Holdings.

Operator

now today's and you concluded. disconnect. now you may presentation, attending has conference The Thank for

Cannae (CNNE) 7 Nov 232023 Q3 Earnings call transcript