Market Overview

Cannae Reports Second Quarter 2018 Results With $1.08 Billion Book Value of Portfolio Company Investments, or $15.03 Per Share

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Cannae Holdings, Inc. (NYSE:CNNE) ("Cannae" or the "Company") today
reported operating results for the three and six-month periods ended
June 30, 2018.

Highlights

  • On April 30, 2018, Ceridian HCM Holding Inc. (NYSE:CDAY) announced
    the closing of its initial public offering of 24,150,000 shares of
    common stock (which included the over-allotment option) priced at
    $22.00 per share
  • Following the closing of the Ceridian IPO, Cannae owned 37,135,921
    shares representing a 27% stake in Ceridian
  • Based upon the CDAY closing price of $35.19 as of August 10, 2018,
    Cannae's position is worth $1.31 billion
  • On July 27, 2018, Lifeworks Corporation Ltd. was sold to Morneau
    Shepell for $325 million of which Cannae will receive approximately
    $56 million in cash proceeds for its interest
  • On August 1, 2018, Bob Wilhelm, an experienced healthcare services
    executive, was named T-System's new Chief Executive Officer
  • On August 8, 2018, Cannae entered into a definitive agreement in
    partnership with an investment consortium including CC Capital and
    Thomas H. Lee Partners to acquire Dun & Bradstreet (NYSE:DNB) in a
    transaction valued at $6.9 billion. Cannae's commitment is $900
    million of the purchase price. Cannae agreed to use its reasonable
    best efforts to syndicate at least $600 million of its equity
    commitment
  • Total book value of portfolio company investments was $1.080 billion,
    or $15.03 per share, as of June 30, 2018 compared to total book value
    of $1.059 billion, or $14.95 per share, at December 31, 2017

Ceridian

  • Ceridian Cloud revenue of $127.8 million, was up 35.5% year-over-year
  • Total revenue which includes both Cloud and Bureau solutions,
    delivered second quarter revenue of $179.3 million, a 13.8% increase
    over the second quarter 2017 results of $157.5 million
  • Excluding the effect of foreign currency fluctuations, Cloud revenue
    increased 33.4% year-over-year and total revenue increased 12.4%
    year-over-year
  • Operating loss was $11.3 million, as compared to an operating profit
    of $0.9 million in the second quarter of 2017. Excluding $25.3 million
    of IPO and debt refinancing related expenses, operating profit would
    have been $14.0 million
  • Adjusted EBITDA of $33.6 million and EBITDA margin 18.7%, reflecting
    an $11.0 million increase over the second quarter of 2017 Adjusted
    EBITDA of $22.6 million and EBITDA margin of 14.3%
  • 3,308 Dayforce customers were live on the platform at the end of the
    second quarter of 2018, up from 2,690 at the end of the second quarter
    of 2017

Restaurant Group

  • $276.2 million in total revenue and a pretax loss of $5.9 million for
    the second quarter, versus $287.6 million in total revenue and a
    pretax loss of $1.6 million in the second quarter of 2017
  • EBITDA of $8.6 million and EBITDA margin of 3.1% for the second
    quarter, versus EBITDA of $10.6 million and EBIDTA margin of 3.7% in
    the second quarter of 2017
  • Same store sales decreased 1.5% in the second quarter, as Ninety Nine
    same stores sales increased by 0.9%, O'Charley's declined by 2.8%,
    Village Inn declined by 1.0% and Bakers Square declined by 4.2%

T-System

  • $16.4 million in total revenue and a pretax loss of $1.4 million for
    the second quarter of 2018
  • EBITDA of $4.2 million and an EBITDA margin of 25.6% for the second
    quarter of 2018

"I am pleased with our second quarter results and the progress that we
achieved positioning Cannae to deliver continued growth and value for
shareholders," commented Chairman William P. Foley, II. "Cannae owns
37,135,921 shares representing a 27% stake in Ceridian which is now
worth $1.31 billion based upon the company's closing price of $35.19 on
August 10, 2018. We continue to be pleased with Ceridian's growth and
opportunity to further expand their business as can be seen in their
strong results this quarter. Additionally, Lifeworks was sold to Morneau
Shepell for $325 million in proceeds on July 27, 2018. Cannae will
receive approximately $56 million in cash proceeds for its interest in
Lifeworks which we expect to receive at the end of August."

Mr. Foley continued, "I am also pleased with our announcement on August
8, 2018 of our entry into a definitive agreement in partnership with an
investment consortium including CC Capital and Thomas H. Lee Partners to
acquire Dun & Bradstreet (NYSE:DNB). The transaction is valued at $6.9
billion, including the assumption of $1.5 billion of Dun & Bradstreet's
net debt. In an increasingly data-driven world, Dun & Bradstreet's
insight-driven business model and interconnectivity across industries
has positioned the company for continued success. We are excited to grow
the Company, increase operating efficiencies and improve the DNB
customer experience by providing enhanced business solutions.

"The restaurant group delivered operational improvement through the
second quarter despite what remains a challenging industry backdrop for
casual dining. Initiatives have been put in place to reduce expenses,
increase productivity, and improve customer satisfaction levels across
our brands. Importantly, we continue to see significant room for further
margin improvement and are working with ABRH's management team to
deliver profitability that is more in line with peers."

Mr. Foley concluded, "Turning to T-System, we announced on August 1,
2018 that Bob Wilhelm has been named T-System's new Chief Executive
Officer. Bob has the right skillset to build upon T-System's established
documentation and coding businesses as we work to accelerate the
Company's organic growth and execute upon our acquisition strategy to
expand T-System's capabilities. We are excited about T-System and the
future growth potential."

Conference Call

As previously announced, Cannae will host a conference call today,
August 13, 2018, to discuss its second quarter 2018 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 Second Quarter 2018 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 13681328. The telephonic
replay will be available until 11:59 pm (Eastern Time) on August 20,
2018.

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 Holdings, LLC, American Blue Ribbon
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).

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.

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
(Dollar in millions)
Operating (loss) profit $ (11.3 ) $ 0.9 $ 16.0 $ 11.8
Depreciation and amortization 14.2   13.0   28.1   26.1
EBITDA from continuing operations 2.9 13.9 44.1 37.9
Sponsorship management fees 11.5 0.5 12.0 1.0
Intercompany foreign exchange loss (gain) 2.1 (2.8 ) 2.9
Share-based compensation 12.0 4.3 14.7 8.5
Severance charges 1.1 1.6 3.0 3.5
Restructuring consulting fees 2.4 0.2 2.5
IPO transaction costs 3.7     3.7  
Adjusted EBITDA $ 33.6   $ 22.6   $ 77.2   $ 53.8
 

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.

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; our ability,
together with the investment consortium, to close the acquisition of Dun
& Bradstreet, including our ability to fund and/or sell down our equity
commitment pursuant to the definitive agreements entered into in
connection therewith.

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.

SECOND QUARTER SEGMENT INFORMATION

(In millions)

(Unaudited)

  Consolidated  

Restaurant
Group

  T-System  

Corporate
and Other

Three Months Ended
June 30, 2018
Restaurant revenue $ 276.2 $ 276.2 $ $
Other operating revenue 27.7     16.4   11.3  
Total operating revenue 303.9 276.2 16.4 11.3
 
Cost of restaurant revenue 240.1 240.1
Personnel costs 90.3 11.0 8.5 70.8
Depreciation and amortization 15.3 10.7 4.1 0.5
Other operating expenses 25.1   17.9   3.7   3.5  
Total operating expenses 370.8 279.7 16.3 74.8
 
Operating (loss) earnings $ (66.9 ) $ (3.5 ) $ 0.1 $ (63.5 )
 
Interest and investment income $ 1.6 $ $ $ 1.6
Interest (expense) income (0.2 ) (3.8 ) (1.5 ) 5.1
Realized gains and losses 66.5   1.4     65.1  
Total other income (expense) 67.9 (2.4 ) (1.5 ) 71.8
 
Earnings (loss) before tax $ 1.0 $ (5.9 ) $ (1.4 ) $ 8.3
 
Income tax expense (benefit) $ 2.8 $ $ (0.3 ) $ 3.1
Loss from equity investees (19.6 ) (19.6 )
Non-controlling interests (2.6 ) (2.7 )   0.1  
 
Net loss attributable to Cannae common shareholders $ (18.8 ) $ (3.2 ) $ (1.1 ) $ (14.5 )
 
EPS attributable to Cannae common shareholders - basic $ (0.26 )
EPS attributable to Cannae common shareholders - diluted $ (0.26 )
 
Cannae weighted average shares - basic 71.1
Cannae weighted average shares - diluted 71.1
 
Earnings (loss) before tax $ 1.0 $ (5.9 ) $ (1.4 ) $ 8.3
 
Interest (expense) income $ (0.2 ) $ (3.8 ) $ (1.5 ) $ 5.1
Depreciation and amortization 15.3   10.7   4.1   0.5  
 
EBITDA $ 16.5 $ 8.6 $ 4.2 $ 3.7
EBITDA margin 5.4 % 3.1 % 25.6 % 32.7 %

 

 

CANNAE HOLDINGS, INC.

SECOND QUARTER SEGMENT INFORMATION

(In millions)

(Unaudited)

  Consolidated  

Restaurant
Group

 

Corporate
and Other

Three Months Ended
June 30, 2017
Restaurant revenue $ 287.6 $ 287.6 $
Other operating revenue 7.9     7.9  
Total operating revenue 295.5 287.6 7.9
 
Cost of restaurant revenue 248.6 248.6
Personnel costs 44.1 12.8 31.3
Depreciation and amortization 11.6 11.0 0.6
Other operating expenses 26.5   15.6   10.9  
Total operating expenses 330.8 288.0 42.8
 
Operating loss $ (35.3 ) $ (0.4 ) $ (34.9 )
 
Interest and investment income $ 1.3 $ $ 1.3
Interest expense (1.4 ) (1.2 ) (0.2 )
Total other (expense) income (0.1 ) (1.2 ) 1.1
 
Loss before tax $ (35.4 ) $ (1.6 ) $ (33.8 )
 
Income tax benefit $ (22.6 ) $ $ (22.6 )
(Loss) earnings from equity investees (6.8 ) 0.1 (6.9 )
Earnings from discontinued operations, net of tax 145.3 145.3
Non-controlling interests (0.7 ) (0.7 )  
 
Net earnings (loss) attributable to Cannae common shareholders $ 126.4 $ (0.8 ) $ 127.2
 
EPS attributable to Cannae common shareholders - basic $ 1.79
EPS attributable to Cannae common shareholders - diluted $ 1.79
 
Cannae weighted average shares - basic 70.6
Cannae weighted average shares - diluted 70.6
 
Loss before tax $ (35.4 ) $ (1.6 ) $ (33.8 )
 
Interest expense $ (1.4 ) $ (1.2 ) $ (0.2 )
Depreciation and amortization 11.6   11.0   0.6  
 
EBITDA $ (22.4 ) $ 10.6 $ (33.0 )
EBITDA margin % 3.7 % %
 

CANNAE HOLDINGS, INC.

YTD SEGMENT INFORMATION

(In millions)

(Unaudited)

  Consolidated  

Restaurant
Group

  T-System  

Corporate
and Other

Six Months Ended
June 30, 2018
Restaurant revenue $ 550.0 $ 550.0 $ $
Other operating revenue 47.8     33.3   14.5  
Total operating revenue 597.8 550.0 33.3 14.5
 
Cost of restaurant revenue 480.9 480.9
Personnel costs 114.4 23.0 17.4 74.0
Depreciation and amortization 30.2 21.4 8.3 0.5
Other operating expenses 46.3   33.8   7.4   5.1  
Total operating expenses 671.8 559.1 33.1 79.6
 
Operating (loss) earnings $ (74.0 ) $ (9.1 ) $ 0.2 $ (65.1 )
 
Interest and investment income $ 2.9 $ $ $ 2.9
Interest (expense) income (3.2 ) (7.5 ) (1.5 ) 5.8
Realized gains and losses 66.5   1.4     65.1  
Total other income (expense) 66.2 (6.1 ) (1.5 ) 73.8
 
(Loss) earnings before tax $ (7.8 ) $ (15.2 ) $ (1.3 ) $ 8.7
 
Income tax benefit $ (1.2 ) $ $ (0.6 ) $ (0.6 )
(Loss) earnings from equity investees (20.7 ) 0.1 (20.8 )
Non-controlling interests (6.8 ) (6.8 )    
 
Net loss attributable to Cannae common shareholders $ (20.5 ) $ (8.3 ) $ (0.7 ) $ (11.5 )
 
EPS attributable to Cannae common shareholders - basic $ (0.29 )
EPS attributable to Cannae common shareholders - diluted $ (0.29 )
 
Cannae weighted average shares - basic 70.8
Cannae weighted average shares - diluted 70.9
 
(Loss) earnings before tax $ (7.8 ) $ (15.2 ) $ (1.3 ) $ 8.7
 
Interest (expense) income $ (3.2 ) $ (7.5 ) $ (1.5 ) $ 5.8
Depreciation and amortization 30.2   21.4   8.3   0.5  
 
EBITDA $ 25.6 $ 13.7 $ 8.5 $ 3.4
EBITDA margin 4.3 % 2.5 % 25.5 % 23.4 %
 

CANNAE HOLDINGS, INC.

YTD SEGMENT INFORMATION

(In millions)

(Unaudited)

  Consolidated  

Restaurant
Group

 

Corporate
and Other

Six Months Ended
June 30, 2017
Restaurant revenue $ 560.4 $ 560.4 $
Other operating revenue 10.4     10.4  
Total operating revenue 570.8 560.4 10.4
 
Cost of restaurant revenue 484.8 484.8
Personnel costs 60.5 25.7 34.8
Depreciation and amortization 23.0 21.7 1.3
Other operating expenses 44.2   31.1   13.1  
Total operating expenses 612.5 563.3 49.2
 
Operating loss $ (41.7 ) $ (2.9 ) $ (38.8 )
 
Interest and investment income $ 2.3 $ $ 2.3
Interest expense (3.4 ) (3.2 ) (0.2 )
Realized gains and losses 5.1     5.1  
Total other income (expense) 4.0 (3.2 ) 7.2
 
Loss before tax $ (37.7 ) $ (6.1 ) $ (31.6 )
 
Income tax benefit $ (24.4 ) $ $ (24.4 )
(Loss) earnings from equity investees (10.2 ) 0.1 (10.3 )
Earnings from discontinued operations, net of tax 147.7 147.7
Non-controlling interests (2.7 ) (2.7 )  
 
Net earnings (loss) attributable to Cannae common shareholders $ 126.9 $ (3.3 ) $ 130.2
 
EPS attributable to Cannae common shareholders - basic $ 1.80
EPS attributable to Cannae common shareholders - diluted $ 1.80
 
Cannae weighted average shares - basic 70.6
Cannae weighted average shares - diluted 70.6
 
Loss before tax $ (37.7 ) $ (6.1 ) $ (31.6 )
 
Interest expense $ (3.4 ) $ (3.2 ) $ (0.2 )
Depreciation and amortization 23.0   21.7   1.3  
 
EBITDA $ (11.3 ) $ 18.8 $ (30.1 )
EBITDA margin % 3.4 % %
 

CANNAE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS AND ADJUSTED BOOK VALUE
SUMMARY

(In millions)

 
  June 30, 2018  

December 31,
2017

in millions (Unaudited) (Unaudited)
Current assets:
Cash and cash equivalents $ 77.7 $ 245.6
Equity securities 17.7
Other current assets 117.7   86.9  
 
Total current assets $ 195.4 $ 350.2
 
Ceridian equity investment $ 409.0 $ 383.9
Other equity method investments 70.6 41.0
Property and equipment, net 201.9 218.8
Software & intangible assets 201.4 214.5
Goodwill 202.0 202.7
Other non-current assets 79.6   76.1  
Total assets $ 1,359.9 $ 1,487.2
 
Current liabilities:
A/P & other current liabilities $ 114.3 $ 127.6
Notes payable, current 1.4   122.2  
 
Total current liabilities $ 115.7 $ 249.8
 
Notes payable, non-current $ 11.0 $ 12.7
Other non-current liabilities 62.2   71.6  
Total liabilities $ 188.9 $ 334.1
 
Additional paid in capital $ 1,155.4 $ 1,130.2
Retained earnings 0.1 0.2
Accumulated other comprehensive loss (75.5 ) (71.0 )
Non-controlling interests 91.0   93.7  
Cannae shareholder's equity $ 1,171.0   $ 1,153.1  
 
Total liabilities and equity $ 1,359.9 $ 1,487.2
 
 

Adjusted Book Value Summary

June 30,
2018

December 31,
2017

 

(Unaudited)

(Unaudited)

Ceridian

$ 418.3 $ 398.5
LifeWorks 38.5
American Blue Ribbon Holdings 229.1 109.9
T-System 203.9 204.6
Del Frisco's Restaurant Group 17.7
Holding company cash and short-term investments 67.4 215.4
Other 122.8   113.3  
Cannae Book Value $ 1,080.0 $ 1,059.4
Outstanding Cannae shares 71.9 70.9
Cannae Book Value per Share $ 15.03 $ 14.95

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