LAS VEGAS–(BUSINESS WIRE)–Cannae Holdings, Inc. (NYSE:CNNE) (“Cannae” or the “Company”) today
reported operating results for the three-month period ended March 31,
2019.
Highlights
-
On February 8, the Company announced the completion of the previously
announced acquisition of Dun & Bradstreet (“DNB”). The Company
invested approximately $500 million in equity into DNB representing an
approximate 24% equity position. Cannae funded its equity investment
with cash on hand and $250 million in borrowings under its credit
facilities -
DNB management has made substantial progress on its $200 million cost
reduction plan target by having taken action on approximately $93
million of annualized cost savings as of March 31, 2019 -
DNB restructured its go-to-market sales strategy in the first quarter
of 2019, which is expected to improve productivity and deliver
accelerated revenue growth in upcoming quarters -
Total book value of portfolio company investments was $1.154 billion,
or $15.99 per share, as of March 31, 2019 compared to total book value
of $1.125 billion, or $15.58 per share, at December 31, 2018
Ceridian
-
Dayforce revenue increased 27.6% to $132.8 million from $104.1 million
in the first quarter of 2018 -
Cloud revenue, which includes both Dayforce and Powerpay, increased
21.8% to $154.6 million from $126.9 million in the first quarter of
2018 -
Total revenue, which includes revenue from both Ceridian’s Cloud and
Bureau solutions, increased 7.9% to $203.7 million from $188.8 million
in the first quarter of 2018 -
Excluding the effect of foreign currency fluctuations, Dayforce
revenue increased 28.6% year-over-year, Cloud revenue increased 23.7%
year-over-year, and total revenue increased 9.5% year-over-year -
Operating profit was $27.4 million compared to $28.0 million in the
first quarter of 2018. Pretax income from continuing operations
increased 111.3% from $8.0 million in the year ago quarter to $16.9
million -
Adjusted EBITDA increased 7.1% to $49.8 million from $46.5 million in
the first quarter of 2018. Adjusted EBITDA margin was 24.4% compared
to 24.6%, in the first quarter of 2018 -
3,851 Dayforce customers were live on the platform at the end of the
first quarter of 2019, up from 3,154 at the end of the first quarter
of 2018
Restaurant Group
-
$257.8 million in total revenue and a pretax loss of $8.1 million for
the first quarter, versus $273.8 million in total revenue and a pretax
loss of $9.3 million in the first quarter of 2018 -
EBITDA of $2.6 million and EBITDA margin of 1.0% for the first
quarter, versus EBITDA of $5.1 million and EBITDA margin of 1.9% in
the first quarter of 2018 -
Same store sales decreased 2.8% in the first quarter, as Ninety Nine
same stores sales increased by 0.5%, O’Charley’s declined by 3.7%,
Village Inn declined by 4.9% and Bakers Square declined by 5.7%
T-System
-
On a GAAP basis, T-System generated $12.2 million in total revenue and
a pretax loss of $4.9 million for the first quarter, versus $15.4
million in total revenue and a pretax loss of $0.8 million in the
first quarter of 2018 -
EBITDA of $0.0 million and an EBITDA margin of 0.0% for the first
quarter, versus EBITDA of $2.8 million and an EBITDA margin of 18.2%
for the first quarter of 2018
“With the completion of the Dun & Bradstreet acquisition, we continue to
make significant headway positioning the Company to deliver meaningful
value for our shareholders,” commented Chairman William P. Foley, II.
“Through the first quarter, the DNB management team has quickly
implemented a wide range of cost reduction initiatives designed to
reduce labor inefficiencies within the organization as well as high cost
professional fees and other non-personnel related spending. This has
resulted in $93 million of annualized expense saves through the first
quarter and we remain firmly on track to deliver the $200 million of
targeted cost savings that we outlined at the time of the acquisition.
We have also restructured DNB’s go-to-market sales strategy and are
optimistic that we can drive improved sales efficiency and growth over
the upcoming quarters.”
Mr. Foley continued, “During the first quarter, Ceridian continued to
generate strong revenue growth from its Cloud services business,
highlighted by 27.6% growth in Ceridian’s Dayforce business. Cannae
currently owns 32.7 million shares in Ceridian representing a 23.3%
ownership stake, now worth $1.63 billion based upon Ceridian’s closing
price of $49.83 on May 8, 2019.
Turning to our restaurant group, while the casual dining sector remains
challenging, the ABRH management team is making meaningful progress
reducing expenses as they focus on improving the group’s profitability
and cash flow. Initiatives include reducing labor costs, rationalizing
underperforming stores, identifying brands where a move to a franchise
model makes economic sense and improving the customer experience to
stabilize same store sales. As the group’s margins and cash flow improve
through the year, we will be in a position to evaluate various
monetization opportunities designed to create value for our
shareholders.”
Mr. Foley concluded, “The T-System team has made progress re-aligning
the business and has begun to execute on initiatives designed to improve
sales efficiencies in both the coding and documentation business and to
add executive talent across the company. In addition to the structural
improvements to the business, we are working with Bob Wilhelm and his
team to start executing on potential acquisition candidates to enhance
T-System’s product breadth and accelerate growth.”
Conference Call
As previously
announced, Cannae will host a conference call on May 9, 2019, to discuss
its first quarter 2019 results at 11:00 a.m. (Eastern Time). The
conference call can be accessed by dialing 1-877-407-0789 (domestic) or
1-201-689-8562 (international) and asking for the Cannae Holdings First
Quarter 2019 Earnings Call. A telephonic replay will be available
approximately three hours after the call and can be accessed by dialing
1-844-512-2921, or for international callers 1-412-317-6671 and
providing the access code 13689395. The telephonic replay will be
available until 11:59 pm (Eastern Time) on May 16, 2019.
Interested investors and other parties may also listen to a simultaneous
webcast of the conference call by logging onto the investor relations
section of the Company’s website at http://investor.cannaeholdings.com/.
The online replay will remain available for a limited time beginning
immediately following the call.
About Cannae Holdings, Inc.
Cannae
holds majority and minority equity investment stakes in a number of
entities, including Ceridian HCM Holding Inc., The Dun & Bradstreet
Corporation, American Blue Ribbon Holdings, LLC, 99 Restaurants
Holdings, LLC and T-System Holding LLC. More information about Cannae
can be found at www.cannaeholdings.com.
Use of Non-GAAP Financial Information
Generally
Accepted Accounting Principles (GAAP) is the term used to refer to the
standard framework of guidelines for financial accounting. GAAP includes
the standards, conventions, and rules accountants follow in recording
and summarizing transactions and in the preparation of financial
statements. In addition to reporting financial results in accordance
with GAAP, the Company has provided non-GAAP financial measures, which
it believes are useful to help investors better understand its financial
performance, competitive position and prospects for the future. These
non-GAAP measures include earnings before interest, taxes and
depreciation and amortization (EBITDA), and earnings before interest,
taxes and depreciation and amortization as a percent of revenue (EBITDA
margin).
Ceridian’s adjusted EBITDA is defined as net income or loss before
interest, taxes, depreciation, and amortization, as adjusted to exclude
net income or loss from discontinued operations, sponsor management
fees, non-cash charges for asset impairments, gains or losses on assets
and liabilities held in a foreign currency other than the functional
currency of a company subsidiary, non-cash share-based compensation
expense, severance charges, restructuring consulting fees, and IPO
transaction costs. Adjusted EBITDA margin is determined by calculating
the percentage Adjusted EBITDA is of Total Revenue.
Any non-GAAP measures should be considered in context with the GAAP
financial presentation and should not be considered in isolation or as a
substitute for GAAP net earnings. Further, Cannae’s non-GAAP measures
may be calculated differently from similarly titled measures of other
companies. Reconciliations of these non-GAAP measures to related GAAP
measures are provided below.
Ceridian Adjusted EBITDA Reconciliation
| Three Months Ended March 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| *As Adjusted | |||||||||||
| (Dollar in millions) | |||||||||||
| Operating profit | $ | 27.4 | $ | 28.0 | |||||||
| Depreciation and amortization | 14.4 | 13.9 | |||||||||
| Other (income) expense, net | (1.6 | ) | 2.2 | ||||||||
| EBITDA from continuing operations | 40.2 | 44.1 | |||||||||
| Sponsorship management fees | — | 0.5 | |||||||||
| Intercompany foreign exchange loss (gain) | 0.3 | (2.8 | ) | ||||||||
| Share-based compensation | 6.0 | 2.7 | |||||||||
| Severance charges | 2.1 | 1.9 | |||||||||
| Restructuring consulting fees | 1.2 | 0.1 | |||||||||
| Adjusted EBITDA | $ | 49.8 | $ | 46.5 | |||||||
*Prior period information has been adjusted to reflect the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” and
ASU No. 2017-07, “Compensation—Retirement Benefits,” which was adopted
on January 1, 2019.
Cannae accounts for its investment in Ceridian using the equity method
of accounting; therefore, its results do not consolidate into the
Company’s. As prescribed by relevant accounting standards, the Company
recognizes its proportionate share of Ceridian’s net earnings or loss in
earnings from equity investees in the tables that follow. See the
Company’s Annual Report on Form 10-K for further information on the
Company’s accounting for its investment in Ceridian.
Forward-Looking Statements and Risk Factors
This
press release contains forward-looking statements that involve a number
of risks and uncertainties. Statements that are not historical facts,
including statements regarding our expectations, hopes, intentions or
strategies regarding the future are forward-looking statements.
Forward-looking statements are based on management’s beliefs, as well as
assumptions made by, and information currently available to, management.
Because such statements are based on expectations as to future financial
and operating results and are not statements of fact, actual results may
differ materially from those projected. We undertake no obligation to
update any forward-looking statements, whether as a result of new
information, future events or otherwise. The risks and uncertainties
which forward-looking statements are subject to include, but are not
limited to: changes in general economic, business and political
conditions, including changes in the financial markets; our potential
inability to find suitable acquisition candidates, acquisitions in lines
of business that will not necessarily be limited to our traditional
areas of focus, or difficulties in integrating acquisitions; significant
competition that our operating subsidiaries face; compliance with
extensive government regulation of our operating subsidiaries; risks
associated with our split-off from Fidelity National Financial, Inc.,
including limitations on our strategic and operating flexibility related
to the tax-free nature of the split-off and the Investment Company Act
of 1940.
This press release should be read in conjunction with the risks detailed
in the “Statement Regarding Forward-Looking Information,” “Risk Factors”
and other sections of the Company’s Form 10-Q,10-K and other filings
with the Securities and Exchange Commission.
| CANNAE HOLDINGS, INC. | |||||||||||||||||||||
| FIRST QUARTER SEGMENT INFORMATION | |||||||||||||||||||||
|
(In millions) |
|||||||||||||||||||||
|
(Unaudited) |
|||||||||||||||||||||
| Consolidated |
Restaurant |
T-System |
Corporate |
||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||
| March 31, 2019 | |||||||||||||||||||||
| Restaurant revenue | $ | 257.8 | $ | 257.8 | $ | — | $ | — | |||||||||||||
| Other operating revenue | 16.7 | — | 12.2 | 4.5 | |||||||||||||||||
| Total operating revenue | 274.5 | 257.8 | 12.2 | 4.5 | |||||||||||||||||
| Cost of restaurant revenue | 227.0 | 227.0 | — | — | |||||||||||||||||
| Personnel costs | 24.4 | 12.8 | 8.3 | 3.3 | |||||||||||||||||
| Depreciation and amortization | 13.9 | 9.7 | 3.5 | 0.7 | |||||||||||||||||
| Other operating expenses | 23.8 | 16.1 | 3.9 | 3.8 | |||||||||||||||||
| Total operating expenses | 289.1 | 265.6 | 15.7 | 7.8 | |||||||||||||||||
| Operating loss | $ | (14.6 | ) | $ | (7.8 | ) | $ | (3.5 | ) | $ | (3.3 | ) | |||||||||
| Interest and investment income | $ | 11.0 | $ | — | $ | — | $ | 11.0 | |||||||||||||
| Interest expense | (3.7 | ) | (1.0 | ) | (1.4 | ) | (1.3 | ) | |||||||||||||
| Realized gains and losses | 1.6 | 0.7 | — | 0.9 | |||||||||||||||||
| Total other income (expense) | 8.9 | (0.3 | ) | (1.4 | ) | 10.6 | |||||||||||||||
| (Loss) earnings before tax | $ | (5.7 | ) | $ | (8.1 | ) | $ | (4.9 | ) | $ | 7.3 | ||||||||||
| Income tax benefit | $ | (4.8 | ) | $ | (0.1 | ) | $ | (1.2 | ) | $ | (3.5 | ) | |||||||||
| Earnings from equity investees | 2.9 | — | — | 2.9 | |||||||||||||||||
| Non-controlling interests | (3.1 | ) | (2.9 | ) | (0.3 | ) | 0.1 | ||||||||||||||
| Net earnings (loss) attributable to Cannae common shareholders | $ | 5.1 | $ | (5.1 | ) | $ | (3.4 | ) | $ | 13.6 | |||||||||||
| EPS attributable to Cannae common shareholders – basic | $ | 0.07 | |||||||||||||||||||
| EPS attributable to Cannae common shareholders – diluted | $ | 0.07 | |||||||||||||||||||
| Cannae weighted average shares – basic | 71.6 | ||||||||||||||||||||
| Cannae weighted average shares – diluted | 71.8 | ||||||||||||||||||||
| (Loss) earnings before tax | $ | (5.7 | ) | $ | (8.1 | ) | $ | (4.9 | ) | $ | 7.3 | ||||||||||
| Interest expense | $ | (3.7 | ) | $ | (1.0 | ) | $ | (1.4 | ) | $ | (1.3 | ) | |||||||||
| Depreciation and amortization | 13.9 | 9.7 | 3.5 | 0.7 | |||||||||||||||||
| EBITDA | $ | 11.9 | $ | 2.6 | $ | — | $ | 9.3 | |||||||||||||
| EBITDA margin | 4.3 | % | 1.0 | % | — | % | 206.7 | % | |||||||||||||
| CANNAE HOLDINGS, INC. | |||||||||||||||||||||
| FIRST QUARTER SEGMENT INFORMATION | |||||||||||||||||||||
|
(In millions) |
|||||||||||||||||||||
|
(Unaudited) |
|||||||||||||||||||||
| Consolidated |
Restaurant |
T-System |
Corporate |
||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||
| March 31, 2018 | |||||||||||||||||||||
| Restaurant revenue | $ | 273.8 | $ | 273.8 | $ | — | $ | — | |||||||||||||
| Other operating revenue | 18.6 | — | 15.4 | 3.2 | |||||||||||||||||
| Total operating revenue | 292.4 | 273.8 | 15.4 | 3.2 | |||||||||||||||||
| Cost of restaurant revenue | 240.8 | 240.8 | — | — | |||||||||||||||||
| Personnel costs | 24.1 | 12.0 | 8.9 | 3.2 | |||||||||||||||||
| Depreciation and amortization | 14.3 | 10.7 | 3.6 | — | |||||||||||||||||
| Other operating expenses | 21.2 | 15.9 | 3.7 | 1.6 | |||||||||||||||||
| Total operating expenses | 300.4 | 279.4 | 16.2 | 4.8 | |||||||||||||||||
| Operating loss | $ | (8.0 | ) | $ | (5.6 | ) | $ | (0.8 | ) | $ | (1.6 | ) | |||||||||
| Interest and investment income | $ | 1.3 | $ | — | $ | — | $ | 1.3 | |||||||||||||
| Interest (expense) income | (3.0 | ) | (3.7 | ) | — | 0.7 | |||||||||||||||
| Total other (expense) income | (1.7 | ) | (3.7 | ) | — | 2.0 | |||||||||||||||
| (Loss) earnings before tax | $ | (9.7 | ) | $ | (9.3 | ) | $ | (0.8 | ) | $ | 0.4 | ||||||||||
| Income tax benefit | $ | (5.5 | ) | $ | — | $ | (1.8 | ) | $ | (3.7 | ) | ||||||||||
| (Loss) earnings from equity investees | (1.1 | ) | 0.1 | — | (1.2 | ) | |||||||||||||||
| Non-controlling interests | (4.2 | ) | (4.1 | ) | — | (0.1 | ) | ||||||||||||||
| Net (loss) earnings attributable to Cannae common shareholders | $ | (1.1 | ) | $ | (5.1 | ) | $ | 1.0 | $ | 3.0 | |||||||||||
| EPS attributable to Cannae common shareholders – basic | $ | (0.02 | ) | ||||||||||||||||||
| EPS attributable to Cannae common shareholders – diluted | $ | (0.02 | ) | ||||||||||||||||||
| Cannae weighted average shares – basic | 70.6 | ||||||||||||||||||||
| Cannae weighted average shares – diluted | 70.6 | ||||||||||||||||||||
| (Loss) earnings before tax | $ | (9.7 | ) | $ | (9.3 | ) | $ | (0.8 | ) | $ | 0.4 | ||||||||||
| Interest (expense) income | $ | (3.0 | ) | $ | (3.7 | ) | $ | — | $ | 0.7 | |||||||||||
| Depreciation and amortization | 14.3 | 10.7 | 3.6 | — | |||||||||||||||||
| EBITDA | $ | 7.6 | $ | 5.1 | $ | 2.8 | $ | (0.3 | ) | ||||||||||||
| EBITDA margin | 2.6 | % | 1.9 | % | 18.2 | % | — | % | |||||||||||||
| CANNAE HOLDINGS, INC. | |||||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS AND ADJUSTED BOOK VALUE SUMMARY |
|||||||||||
|
(In millions) |
|||||||||||
|
March 31, |
December 31, |
||||||||||
| in millions | (Unaudited) | (Unaudited) | |||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 121.2 | $ | 323.0 | |||||||
| Other current assets | 101.6 | 128.7 | |||||||||
| Total current assets | $ | 222.8 | $ | 451.7 | |||||||
| Ceridian equity investment | $ | 392.6 | $ | 359.7 | |||||||
| Dun & Bradstreet equity investment | 502.7 | — | |||||||||
| Other equity method investments | 35.5 | 37.5 | |||||||||
| Lease assets | 240.6 | — | |||||||||
| Property and equipment, net | 168.7 | 176.4 | |||||||||
| Software & intangible assets | 162.1 | 175.8 | |||||||||
| Goodwill | 164.8 | 164.8 | |||||||||
| Other non-current assets | 91.3 | 93.6 | |||||||||
| Total assets | $ | 1,981.1 | $ | 1,459.5 | |||||||
| Current liabilities: | |||||||||||
| A/P & other current liabilities | $ | 182.2 | $ | 154.1 | |||||||
| Notes payable, current | 5.9 | 5.9 | |||||||||
| Total current liabilities | $ | 188.1 | $ | 160.0 | |||||||
| Notes payable, non-current | $ | 206.3 | $ | 42.2 | |||||||
| Other non-current liabilities | 360.7 | 57.6 | |||||||||
| Total liabilities | $ | 755.1 | $ | 259.8 | |||||||
| Additional paid in capital | $ | 1,148.8 | $ | 1,146.2 | |||||||
| Retained earnings | 71.4 | 45.8 | |||||||||
|
Less: Treasury stock, 10,638 shares as of March 31, 2019 and December 31, 2018, respectively, at cost |
(0.2 | ) | (0.2 | ) | |||||||
| Accumulated other comprehensive loss | (65.6 | ) | (67.2 | ) | |||||||
| Non-controlling interests | 71.6 | 75.1 | |||||||||
| Cannae shareholder’s equity | $ | 1,226.0 | $ | 1,199.7 | |||||||
| Total liabilities and equity | $ | 1,981.1 | $ | 1,459.5 | |||||||
| Adjusted Book Value Summary |
March 31, |
December 31, |
|||||||||
| (Unaudited) | (Unaudited) | ||||||||||
| Dun & Bradstreet | $ | 503.3 | $ | — | |||||||
| Ceridian | 394.4 | 365.4 | |||||||||
| American Blue Ribbon Holdings | 106.8 | 112.8 | |||||||||
| Ninety Nine | 58.5 | 57.7 | |||||||||
| T-System | 190.1 | 193.5 | |||||||||
| Holding company cash and short-term investments | 63.2 | 308.2 | |||||||||
| Other Investments | 88.1 | 87.0 | |||||||||
| CDAY Margin Loan | (150.0 | ) | — | ||||||||
| FNF Revolver | (100.0 | ) | — | ||||||||
| Cannae Book Value | $ | 1,154.4 | $ | 1,124.6 | |||||||
| Outstanding Cannae shares | 72.2 | 72.2 | |||||||||
| Cannae Book Value per Share | $ | 15.99 | $ | 15.58 | |||||||
Contacts
CONTACT: Jamie Lillis, Managing Director, Solebury Trout, 203-428-3223, [email protected]
