Cannae Holdings Earnings Call: Strategic Moves and Optimism

Cannae Holdings, Inc. ((CNNE)) has held its Q1 earnings call. Read on for the main highlights of the call.

Cannae Holdings, Inc. recently held its earnings call, which was marked by a positive sentiment. The company has made significant strides in strategic investments and partnerships, notably with the acquisition of Dun & Bradstreet and the expansion of its partnership with JANA Partners. Despite facing some challenges, particularly in the Restaurant Group, the overall outlook remains optimistic as Cannae continues to focus on enhancing shareholder value through strategic initiatives.

Dun & Bradstreet Acquisition

Cannae’s largest public investment, Dun & Bradstreet, is set to be acquired by Clearlake Capital for $4.1 billion. This transaction will result in Cannae receiving $632 million in proceeds. The company plans to allocate $460 million of these proceeds towards share repurchases, dividends, and debt repayment, reflecting a strategic move to enhance shareholder value.

Expansion of Partnership with JANA Partners

Cannae has strengthened its partnership with JANA Partners by acquiring an additional 30% stake for $67.5 million, bringing its total ownership to 50%. This expansion broadens the scope of their partnership, allowing Cannae to better allocate capital towards proprietary acquisitions and further solidify its investment strategy.

Progress in Black Knight Football Investments

The Black Knight Football club has made notable progress, raising $133 million in new capital. AFC Bournemouth has opened a new performance center and acquired Vitality Stadium, while FC Lorient has been promoted to Ligue 1. Additionally, Hibernian FC is currently in third place in the Scottish Premier League, showcasing the club’s growth and potential.

Financial Performance of Portfolio Companies

Dun & Bradstreet reported a revenue of $580 million with a 3.6% constant currency organic growth, while Alight reported $548 million in revenue, experiencing a 2% decrease but an increase in adjusted EBITDA. Both companies exceeded consensus estimates, highlighting their strong financial performance.

Decrease in Operating Revenue

Cannae’s first-quarter total operating revenue was $103 million, marking a 7% decrease from the previous year. This decline was primarily due to lower revenue from the Restaurant Group, indicating an area that requires strategic attention.

Challenges in Restaurant Group

The Restaurant Group, particularly the O’Charley’s brand, faced a decline, contributing to an overall drop in same-store sales. The group is undergoing significant changes, including SKU reductions and new management appointments, to address these operational challenges and improve performance.

Forward-Looking Guidance

During the earnings call, CEO Ryan Caswell provided forward-looking guidance, emphasizing the company’s strategic initiatives. The acquisition of Dun & Bradstreet is expected to yield $632 million, with $460 million allocated for share repurchases, dividends, and debt repayment. The expansion of the partnership with JANA Partners and progress in Black Knight Football investments were also highlighted as key strategic moves. Caswell reiterated the commitment to rebalancing the portfolio and returning capital to shareholders.

In summary, Cannae Holdings, Inc.’s earnings call reflected a positive sentiment, driven by strategic investments and partnerships. Despite challenges in the Restaurant Group, the company remains optimistic about its future, focusing on initiatives that enhance shareholder value. The acquisition of Dun & Bradstreet and the expansion with JANA Partners are pivotal moves that underscore Cannae’s commitment to growth and strategic rebalancing.