Cannae Holdings, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Strategic Plan: Long-term plan to increase net asset value (NAV), improve portfolio companies, make new private investments, and return capital to shareholders.
• Portfolio Actions: Worked with Alight on $1.2 billion sale of divisions, transition to new CEO, added board members; AFC Bournemouth revenue up 14% in FY2024, in sixth place in Premier League; new private investments in JANA Partners (20% equity) and Watkins Company; repurchased 9.7 million shares in 2024, initiated quarterly dividend; internalized external manager, Bill Foley as CEO.
• Specific Companies: DNB's financial performance, Alight's financials, CSI's growth, Minden Mill's product launches.

Segment Performance

• DNB: Q4 2024 revenue was $632 million with less than 1% constant currency organic growth. Adjusted EBITDA was $260 million, down $600,000 y-o-y. Full year 2024: 3% organic revenue growth, adjusted EBITDA expanded to $927 million.
• Alight: Q4 2024 total revenue from continuing operations was $680 million, -0.3% y-o-y. Adjusted EBITDA was $217 million, +5% y-o-y. Net leverage at quarter end was 2.8 times.
• Computer Services (CSI): Pro forma revenue growth in high single digits, adjusted EBITDA in mid-single digits.
• Minden Mill Distilling: Launched multiple products in H2 2024, expects significant sales growth in 2025.
• Restaurant Group: Fourth quarter total operating revenue was $110 million, 8% lower y-o-y due to lower restaurant revenue; 99 brand had slight increase in same store revenues.

Guidance

• Plan to rebalance portfolio away from public company investments, prioritize share buybacks.
• Use proceeds from public company share sales to pay down debt and invest in portfolio companies.
• AFC Bournemouth expects continued growth, Minden Mill expects significant sales growth in 2025.

Risks

• Forward-looking statements subject to risks detailed in quarterly shareholder letter and SEC filings, including factors affecting financial and operating results.

Question and Answer

Q: John Campbell from Stephens asked about AFC Bournemouth's potential European placement impact on value and finances.

A: Ryan Caswell said Bournemouth's performance could have significant financial impact from media and match day revenues, and shows credibility of the plan for the team's enterprise value.

Q: John Campbell asked about capital allocation for dividends and buybacks.

A: Ryan Caswell said generating cash flow to fund dividend and buybacks is a focus, prioritizing share buybacks as stock is considered cheap, and dependent on monetization of public company investments.

Q: Ian Zaffino from Oppenheimer asked about Black Knight Football's capital funding.

A: Ryan Caswell said capital needs include player sales, infrastructure (stadium, training facility), potential investment in Lorient and another team, and managing P&L appropriately.

Q: Ian Zaffino asked about Alight's Bill Foley stepping down and stake monetization.

A: Ryan Caswell said Bill Foley is still involved with Alight, new board members are value additive, and Alight is well-positioned strategically after simplifying the business.

Q: Kenneth Lee from RBC Capital Markets asked about JANA partnership activity.

A: Ryan Caswell said discussions with JANA are very active with specific targets, optimistic about material transactions for Cannae.

Q: Kenneth Lee asked about Black Knight FC's stadium plans.

A: Ryan Caswell said they are honing in on whether to redevelop or build a new stadium, with a better view expected on future calls.