CNNE - Earnings call transcript Q3 2024

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Cannae Holdings Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, and a replay is available through 11:59 p.m. Eastern Time on November 26, 2024. With that, I would like to turn the call over to Jamie Lillis of Solebury Strategic Communications. Please go ahead.

Jamie Lillis

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

statements. I Caswell, we and Officer. On Q&A remind following begin, and today, conference Ryan that But like Cannae's of intentions, future this historical our listeners we Financial statements facts, contain the number call the about that or Statements the uncertainties. Cannae's involve Chief statements may have and President; call forward-looking that to hopes, our strategies including Bryan are regarding remarks a before would Coy, expectations, forward-looking risks are not

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

over our GAAP like letter. now including to information information, I Additional reconciliation in call non-GAAP turn to between a shareholder Ryan. the to financial information the is provided financial the would

Ryan Caswell

strategic asset designed year, everyone. close NAV On our value to share portfolio to Bill good increase and outlined first our Jamie, NAV. net discount afternoon, call price you, our of and or the this plan a Thank

including believe we items capital primarily NAV, progress levers, shareholders. relating to are and that on I all portfolio making our companies, private I main valuation X that will in to grow each. and few new performance improving returning a investments fronts, the and of has companies strategy Our will making highlight

quarter, results I more the discuss last detail. several did our As companies I of then in portfolio will of

We away company our into portfolio and our of to are from investments company private investments. public new working rebalance some

in category, market of part years industry. the the recognition the position stake categories within announced brand strategy, Company. fragmented this founded XXX and a one October, Watkins acquisition highest the and we has As food spices, in growth of of was strong a ago within and U.S. Watkins over extracts seasoning, the overall XX%

in the only about owner, excited own of deal of and the will XX% us of are the two one of existing company structure partnering approximately business. We owners the is the history with

distributions. the products, on be Additionally, cash an grow sectors. partnering focused through equity to for ancillary expand has believe we into believe will with family-owned we across company's distribution could and growth the profitability. all and KDSA, company business firm flow this Furthermore, and of founder-led future an We opportunity food beverage the dividends preferred in which other are and substantial accelerate a existing acquisitions, businesses investment retailers, provide Cannae will to and attractive and platform new

it for of Ceridian XX shares this business. service as an ago bureau-based known final was first the Dayforce quarter. part then large rebalancing, Cannae As Dayforce, This successful in we a in portfolio held incredibly our concludes investing investment years sold when from

Cannae and $X.X Comdata We success Dayforce, our the entire his companies distributions. shares value has million those now how conduct and want subsequently XXXX. improve we thank all to the shares are drive management I Black to of and XX Dave the our the and Since billion IPO-ed like the discussing improving applied Football. the M&A few in sold Oss years. business and a efficiencies we the that business. portfolio operations, management to spend sold across over it playbook minutes the of realizing of partnership remaining as and team XXXX Over and I in years, synergies company's from would Knight accretive time, to sale for relates

to continue and see these starting Black into believe capital building although And We out actions time impact still we we creation. the investment are of value Knight early in on invest to Football. cycle, the

in the last club. we highest of Bournemouth AFC the League point season, previously, discussed their XXX-year As Premier achieved history total

We previous investment with Tottenham to and our Dominic came in fruition calls million assets, create the to or players $XX player starting to sale believe of up on also XX capital that this Solanke million. valuable GBP noted was we to for

of want wish the second I largest for all and the the window. on success summer off, his in Dom's in him his transfer and as Cherry's to thank the he is Bournemouth the Dom career. achievements League history largest during transfer moves Premier continued First in

to our value Premier with or our Manchester matches. evidence in previous of team Knight continue success Black sale create from seventh history this, the Bournemouth their our across was on field. League a champion only time first should Man City, sits conjunction teams in that win points football, brands of valuable other best X the defeat recently for currently place XX our the have building XXth players, shareholders. Premier We first it and despite in and League, for but in are X City's activity importantly, More one The within which in global platform, the is we the Premier the and League actions clubs last believe beat

minutes our capital In shareholders significant strategic updates our continue $X.XX few we we to our companies. returned goal our with of on a will million per share, some execute of provides I now capital spend our returned return dividends. of quarter, to share $XXX the shareholders will the of consistent our we combination shareholders a third dividend to have which through share plan buybacks December, a on as and a Through increasing price. to portfolio we of have Lastly, this third pay capital year. quarterly

both third of quarter. currency EBITDA over the third the First, for X.X% year-end. free that that $XXX to XX.X% of was also prior third growth $XXX with X.Xx The and leverage adjusted evaluate advisers the Jabbour the EBITDA X.X% was down D&B. cash on million XX to D&B's to Adjusted points at The from growth quarter, the and Anthony to buyers. financial inquiries to quarter representing and basis the team over their work flow currency year's to improve. prior posted X.Xx, Net continued call also of year's conversion quarter third year-to-date. by company continues constant noted expects representing million, Board and growth maintained revenue X.X% organic strategic constant margin expanded be received

today D&B's potential comment further provide not will we strategic that, on alternatives. Beyond

XXXX. HCM in Alight. quarter increase segment it was its the also flow shareholders begin XXXX. would of $XXX has focus a of We with with CSI recurring on conversion and X.X% which of a In in share core core discussion cash the effective seat Solutions, acquirer. of $X.XX months now X.Xx, million and more to payroll business, XXXX, fiscal given year, business of expanded revenue adjusted and banking Professional My software from $X.X business. higher flow number acquisition The cash in Computer business the the million a XX% The has to Velocity Moving paydown third noted XX quarter, lower the River $XXX services July fiscal the given prospects sale continuing XXXX. generated conjunction of Adjusted was of paying above. on the and remaining down to is of customer leverage per believe Services, revenue, business Furthermore, posting from optimistic the X.X% After CSI well. a $XXX of and deals or Services million financial CSI better River new be an for million base, or continuing perform provider, million acquired XXXX, secured and its leverage operating that owners, public for origination will net Alight's quarterly the attractive which EBITDA. EBITDA has half Alight and Alight's company first margins, X quarterly in record CSI, been the announced dividend. sale also growth loan $XXX reflects record announced company now the about continues percentage will currently dividend. software more higher year, increased consumers closed This third billion Hawthorn deals. Outsourcing Hawthorn its was business already Adjusted was total a than the for XXXX. Alight prior EBITDA year

in participate a or work JANA Partners that where to an to situations either value unlock companies as with is Cannae public continue capital involving and can We undervalued specific catalyst catalyst solution. acquirer there on

are has also and extremely to since to JANA pleased we the seen underlying business optimistic concrete nothing performance investments. While strong partnership with report prospects. about our yet, its date

Lastly, time a Watkins financial profile and little structure. I'll deal on spend more

an XX revenue believe and the free approximately was invested the preferred of digits attractive was million on historical profile and net high including investment strong and that given to Cannae growth margin fully growth M&A and comparables flow convertible precedent last million in to with $XX a the the generated has a $XX deal XX% of margins growth company We financed months, given dividend. The debt. an million stake $XX During and also annual about public X% $XX as Watkins to acquired when acquire million the sales the cash basis, single with valuation of of compared our mid diluted EBITDA structured transactions. business cash flow.

we position. are over our new In now business we'll company. cash we NAV. to I'll optimistic that to provide to grow will Going Bryan for the continue believe and look holding portfolio forward, about this to on turn financial our investments call touch companies the will conclusion,

Bryan Coy

Change XXXX were in XXXX the results year, to period Ryan. quarter our comprising in $XXX million third line locations with compared quarter total 'XX. reduction the the store comparable reflect third Thanks, in prior revenues. $XXX is locations in Cannae's than the as primarily restaurant largely million fewer of revenues XX revenues

continue on improving on Our work a and O'Charley's focus including and locations. restaurant bundling guest growing value-oriented hard traffic reductions, brands at to price our particularly revenue,

weeks counts the of tough few guest are a industry perspective, from was offerings. starting through across quarter the targeted dining third quarter casual the the guest strategy count the While with to fourth of first see improve we

XXXX above contains intended of discussed having rent the increasing also of which expenses driven quarter be and year increased manager revenue first external in revenue into attributable points the percentage few activities. restaurant the team a And such due as that decrease from efficiencies restaurant other The XX% are XX% performance are XXXX and pricing when to cost other a can offset the half down count is quarter the fixed $XX measures the The million, certain the locations. and revenue, the cost we've was restaurant labor. also effect cost of support. items percentage believe The by million, to lower revenue third management fees. in We the year cost but our of as were restaurant interim and a margin operating place identified this offerings from components cost restaurant prior as quarter, lower strategies higher have current XXXX. was rationalization menu in Third supply quarter realized $XXX of put guest has of brand bundling chain, the traffic, the

fees and the team Group, the approximately the seeing members. that the growth to management While locations to agreement a Restaurant encouraged also year we're not XXXX as at related agreements to $X.X of dedication the included and what from schedule. lower third perspective were noncash from year's quarter, nearly result million quarter the $XX we in we third manager $XX are Separately, million the profitability charges where were we're wind-down million in the want of by in and a lease than And million external this finally, closed. prior amended $X be

Sightline were gains value compared in in year for impairments noncash were XXXX to year. million and noncash relating third payments. XXXX pickups while to prior Paysafe post-quarter One recognized gains the SystemX the Lastly, that we Dayforce wanted Cannae of quarter to prior Sightline. $XX flag recorded item losses to primarily losses The regard was $XXX the and fair net shares, of million with

liquidity cost banking base faces looking been situation embedded its has the rationalizing while challenging advancing and management their development for concurrently quarter employee capital, end. of product additional company and senior post a While

With $X.X per or $XX.XX shares. represents to to question-and-answer and and and note we securities discount Cannae's solid cash a I'll capacity FNF loan fourth liquidity million Cannae today's our our $X.X balance Cannae $XX has of a value $XX position following asset today, million wrote operator Football. back in our of reflected was the going As parts result, value billion closing in Sightline, holds regard means listed begin matures investments Cannae to call gross the Watkins With transaction and now At Cannae's aggregate sheet the loan forward. in the today, that Black sum published recorded its XX% corporate the That today $XX.XX to and $XXX off and value near billion. year. remaining in margin the quarter, value. margin table $XX of Knight this excess additional for remains in a turn of leverage, under book intrinsic net outstanding close the in on price fair our million the has that, of end with our is million session. next

Operator

The Instructions] Kenneth Lee from comes from first Capital Markets. [Operator RBC question

Kenneth Lee

sort capital investments in terms for first one or of just near-term detail acquisitions? us physical the as on the Just a bit investments such outlook BKFE. BKFE? more could or player in terms of you CapEx plant give any for of And What's little outlook additional perhaps

Ryan Caswell

thank for question. the you Ken,

So as transfer where we really I will player or occur. probably are mean, there sales -- know, of be -- kind you acquisition windows the

There one rest be budget that. window there know the occurs not second will year, concludes. time, at I what believe next ahead capital but year the looks of will January. we So required probably any We will the think like. the investment capital the in out will for the we some don't that figure of half be until But of transfer

finishing. we CapEx are In facility, business, is terms close The very which of to before. CapEx the Bournemouth discussed in we've at training and real the

through the February be that, close being in I that believe frame. first should open. I are quarter, We actually to very it's think, time and

And so that only CapEx. is really the

look at third-party but further finance look visibility either visibility much to a give may stadium further, and more that's balance we that or raise future, that you to out, as in plays on the sheet continue more will we but We have and on out. we'll how the that we is capital,

Kenneth Lee

private looks the And just And backdrop? color acceleration but nothing investments. a one are outlook for was see on there It in potential the terms in transactions, the JANA your What you there, to get of little potential partnership. want you just around like to do report more there? especially bit potential a given seeing macro pipeline current

Ryan Caswell

Yes. Thanks, Ken.

JANA where continue discussions to Once the we potential an partner can time out. around So have identify take constructive it play will opportunities to we with opportunity, very together. team we

parties, We through months, are very their we wouldn't both very for next some uncover So and of couple excited think Cannae that will I about in the capital, attractive there shareholders. expect anything. can But relationship. the optimistic us and situations them be expertise through our

Kenneth Lee

more could if in. you. one Got I squeeze And just

were capital to capital with could any kind the you there? of what sources consider raising private of as or partnership, that look? financing there if ever investments be Would new sources part relatedly, equity Just you kind of options

Ryan Caswell

Okay. Yes, problem. no

places private the out create think I into talked investments public obvious the of we our of for that look public through capital would most investments. transitioning securities new securities. sale are about We've those to

as financing. public debt capital new believe, would I We into form we to would any to at So to if from find. what looking were some current could initially looking offering, especially We we be prices, the that whatever for you of do that investments look #X. capital. investments other redeploy equity that's would option do potentially be our not referring be

Operator

Stephens. John from from Campbell The next question comes

John Campbell

Ryan, away to just on the from portfolio. focus going the shifting private strategic back

the made over steady urgency sense Obviously, guys the or You your D&B year I'm have last progress got development. there. probably so. of about curious you've

You're be that on seem got not mainly on fundamentals you've investments, comment you've I'm to on to footing. that. other public going got better ownership, the of thinking sizable where kind But

shining push the to any to strategic public compelled can't to I But do entities? at it the there. the but a point think recognize feel for be is what if you And does Alight, the just example sell? probably get have you of Alight value, markets of

Ryan Caswell

sale any the of that entity. Board a I those up Look, strategic to is think of of obviously

at So so to start the we about that selling I have is much the what liquidity is we attractive they're believe businesses. those that create of just positions But Cannae. terms terms and own, think get we like the near-term sales in believe in that but obviously opportunities we're it through going liquidity And public of teams certain things directed better that question we to how businesses, right? do we down the more of securities may full for that, company investment management or and Boards

John Campbell

year. get I enough. guess Fair card Christmas from a them you'll still Okay. this

On you momentum Knight the obviously, going. investment, the Black football guys have

I within think with probably But to is stock, at seem lot Bournemouth. small Bill think really getting any created. do value soon. going It's don't that's right to just look really too a clear doesn't to you've for the see that monetize Cannae It to credit you're I like anytime that now. whole

publicly these stock So have clubs a of couple I international stocks. you mean, know traded do

can if there's or stock So portion a to maybe a I'm market spin back a value value to and just Cannae. way create it out if explored get that of tracking tie a a so way, we public you've curious

Ryan Caswell

John. I think really idea, good it's a

our to all value We are, different or mean, get recognized think I to think I ways securities. for create we value about will

the for creating be, what you want a specific with a to we be And mark whether business the and to we find and to so ways for agree would I but for whatever be company tracking very to may or be, and the helpful we're trying stock. stock whether investment, it the through through stock, don't tracking Cannae's know there's value demonstrate find if that able but will that's third-party that's

John Campbell

last agreed circle that how you're to want And pool? then the commitment? of me. able And one you're back flow just feeling level into the that about versus cash on of I Yes, just the of actually how dipping the of then for capital kind sustainability much there. quarterly dividend, source free $X.XX to

Ryan Caswell

Yes.

we the do pool. capital are We it's So right now, sustainable. dipping believe into

interesting of the one talked also about of around things restaurant the around some think we're Watkins, I group. the stuff we've doing

flow some get businesses cash get are those dividend. the for fully holding And to is it We of that covers enough company Cannae. that goal to are producing starting of the the

And But so dipping progression. we're our not pool. that capital into a will that be

And so. again, dipping capital we're But so we'll months much XX the pool. less today, be X today, from into hopefully, months, dipping

Operator

The Zaffino from question from next Oppenheimer. comes Ian

Ian Zaffino

you to of If deals on wanted deal you're to of looking I ask and And portfolio kind When had place. are many kind looking this. be? thanks, your come kind right? sum wish, the Brian, deals the for you It's for I large think all you at of the updating of I how kind have? parts, you positions the the on they you're just to at? construction, or just you, market philosophy over look would size would going How what of

less And that You worth see I focus here. just than don't share. have are the things per $X

achieve far what can as are me so position kind of And et you understand of cetera? maybe positions, as trying size, number you help to

Ryan Caswell

portfolio. some know think outsized I our probably positions have in you that we there's do

going we investment the forward, million-plus those would are of of the, amount of call some size range. invested, those in I be it, would capital $XXX Some grown. of type think, have

that that point. stuff, I do good seems bit I of I like that did continue some pretty at a base in million look bigger we Watkins. have think believe think a -- historically. we'll the I think that we'll have the we don't a construction. how think you'll scale portfolio smaller to some than given be I deals the starting Like but is we invested larger today That capital in about $XX

Ian Zaffino

Okay.

XX what along something those said, define to positions, maybe XX, So I lines. guess you of kind

Ryan Caswell

just Yes, you it's that. $XXX. at kind think than yes, I probably less But did of

I $XXX $XXX type position. call it, think it's, to million million

securities on some the down that be of we will our obviously, I ability less And sell have that's that dependent think it to all that. than reinvest positions bigger So and of capital.

Ian Zaffino

And talk both side, soccer off the Okay. the get there? bigger I some can you guess, the teams' synergies between maybe performance, the some to you then improved about and also of I the mean you're of maybe talked there field. side, desire on seeing football about on

Ryan Caswell

company across side actually our to Under building the who's soccer people commercial synergies started create kind last specific we as We've and across really out and announced been so Ian. time business, at well now processes, side I'm commercial the sporting of call going Knight and what call, both him, lot on spending Thanks, processes the leveraging to Football. holding or Tim expertise Yes. Bezbatchenko, additional football to as the processes that Black recruiting hired President on a of of kind the the we've the on the We performance trying the practices business. side. we of are the hire are the and best the more

different area players And an a opportunity that we kind the on scratching system. teams We player purchase through probably just of most believe we that be important can of creating and this lot and with just that surface. of the prices point the biggest different the send is will so ideally acquisition think we're of

early out a I of lot trying we're think real we are of build to it a across trying the where becomes competitive different get such but time spending to, clubs. that So in we're this each advantage again, in to

Operator

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

Ryan Caswell

you, operator. Thank

quarter fourth hard today. to time you to earnings will with your value continue drive again again speaking to for forward for on shareholders you Thank We XXXX call. and our work our look

Operator

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

disconnect. You may now

Cannae (CNNE) 12 Nov 242024 Q3 Earnings call transcript