Cannae Reports First Quarter 2018 Results with $1.06 Billion Book Value of Portfolio Company Investments, or $14.95 Per Share
Highlights
- On
April 26, 2018 ,Ceridian HCM Holding Inc. (NYSE:CDAY) priced its initial public offering of 24,150,000 shares (including a greenshoe option) at$22.00 per share - Concurrent with the IPO, Cannae participated in a private placement to purchase 1,521,030 shares of CDAY common stock at the IPO price, representing an aggregate investment of
$33.4 million - Following the IPO and private placement, Cannae owned 37,135,921 shares, representing a 27% stake in Ceridian
- Based upon the CDAY closing price of
$32.95 as ofMay 8, 2018 Cannae’s position is worth$1.22 billion - On
March 12, 2018 , Cannae entered into a non-binding letter of intent withNewport Holdings to reorganize the Companies’ respective interests inAmerican Blue Ribbon Holdings - On
March 13, 2018 , Cannae entered into an Assignment and Assumption Agreement with ABRH’s lenders to purchase all of the outstanding loans and lending commitments under the ABRH Credit Facility of$124 million , which resulted in Cannae becoming ABRH’s sole lender - Total book value of portfolio company investments was
$1.059 billion as of March 31, 2018 roughly flat compared to total book value atDecember 31, 2017 - Book value per share was
$14.95 as of March 31, 2018 unchanged from the quarter endedDecember 31, 2017 - Total holding company cash stood at
$104 million as ofMarch 31, 2018 , representing a decrease of$111 million from the quarter endedDecember 31, 2017 due to the purchase of ABRH’s credit facility
Ceridian
- First quarter total revenue for
Ceridian HCM and Lifeworks of$208.9 million , an 11.7% increase over the first quarter of 2017, and pretax earnings of$4.2 million , versus$187.0 million in total revenue and a pretax loss of$9.2 million in the first quarter of 2017 Ceridian HCM , which includes bothCloud and Bureau solutions, delivered first quarter revenue of$187.2 million , an 11.8% increase over the first quarter 2017 result of$167.4 million - Ceridian HCM Adjusted EBITDA of
$43.6 million , a$12.4 million increase over the first quarter of 2017, and HCM Adjusted EBITDA margin of 23.3%, versus HCM Adjusted EBITDA of$31.2 million and HCM Adjusted EBITDA margin of 18.6% in the first quarter of 2017 - Cloud-based revenues grew 38.0% to
$125.2 million in the first quarter of 2018 versus$90.7 million in the first quarter of 2017 - 3,154 Dayforce customers were live on the platform at the end of the first quarter of 2018, up from 2,480 at the end of the first quarter of 2017
$273.8 million in total revenue and a pretax loss of$9.3 million for the first quarter, versus$272.7 million in total revenue and a pretax loss of$4.5 million in the first quarter of 2017- EBITDA of
$5.1 million and an EBITDA margin of 1.9% for the first quarter, versus EBITDA of$8.2 million and an EBITDA margin of 3.0% in the first quarter of 2017 - Same store sales increased 0.1% in the first quarter, as Ninety Nine same stores sales increased by 1.4%, O'Charley's declined by 1.6%,
Village Inn improved by 1.9% andBakers Square expanded by 2.0%
T-System
$16.9 million in total revenue and$0.1 million in pretax earnings for the first quarter of 2018- EBITDA of
$4.3 million and an EBITDA margin of 25.4% for the first quarter of 2018
“We made meaningful progress in demonstrating the value of our largest portfolio company which positions the Company to deliver substantial value for our shareholders,” commented Chairman
Mr. Foley continued, “We signed a non-binding letter of intent in March with
“Turning to T-System, we are pleased with the Company’s results in the first quarter of 2018, which showed strong growth from the first quarter of 2017, driven by new customer wins in their Documentation Software division and a heavy flu season which increased volume in the Coding Solutions division. Looking forward, we believe T-System is well positioned to increase market share with the expectation of continued organic growth as well as the addition of selective add-on acquisitions to broaden the Company’s product capabilities and customer base.”
Mr. Foley concluded, “Looking forward, we are continuing to seek attractive investment opportunities as we evaluate opportunities for capital re-investment.”
Conference Call
As previously announced, Cannae will host a conference call tomorrow,
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 holds majority and minority equity investment stakes in a number of entities, including
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).
HCM 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, LifeWorks EBITDA, 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 environmental reserve charges. HCM Adjusted EBITDA margin is determined by calculating the percentage HCM Adjusted EBITDA is of Total HCM Revenue.
| Three Months ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| (Dollar in millions) | ||||||||
| HCM operating profit | $ | 27.3 | $ | 10.9 | ||||
| Depreciation and amortization | 13.9 | 13.1 | ||||||
| HCM EBITDA from continuing operations | 41.2 | 24.0 | ||||||
| Sponsorship management fees | 0.5 | 0.5 | ||||||
| Intercompany foreign exchange loss (gain) | (2.8 | ) | 0.8 | |||||
| Share-based compensation | 2.7 | 4.2 | ||||||
| Severance charges | 1.9 | 1.9 | ||||||
| Restructuring consulting fees | 0.1 | (0.2 | ) | |||||
| HCM Adjusted EBITDA | $ | 43.6 | $ | 31.2 | ||||
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
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
|
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 | 20.1 | — | 16.9 | 3.2 | ||||||||||||
| Total operating revenue | 293.9 | 273.8 | 16.9 | 3.2 | ||||||||||||
| Cost of restaurant revenue | 240.8 | 240.8 | — | — | ||||||||||||
| Personnel costs | 24.1 | 12.0 | 8.9 | 3.2 | ||||||||||||
| Depreciation and amortization | 14.9 | 10.7 | 4.2 | — | ||||||||||||
| Other operating expenses | 21.2 | 15.9 | 3.7 | 1.6 | ||||||||||||
| Total operating expenses | 301.0 | 279.4 | 16.8 | 4.8 | ||||||||||||
| Operating (loss) earnings | $ | (7.1 | ) | $ | (5.6 | ) | $ | 0.1 | $ | (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 | $ | (8.8 | ) | $ | (9.3 | ) | $ | 0.1 | $ | 0.4 | ||||||
| Income tax (benefit) expense | $ | (4.0 | ) | $ | — | $ | (0.3 | ) | $ | (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 | $ | (1.7 | ) | $ | (5.1 | ) | $ | 0.4 | $ | 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 | $ | (8.8 | ) | $ | (9.3 | ) | $ | 0.1 | $ | 0.4 | ||||||
| Interest (expense) income | $ | (3.0 | ) | $ | (3.7 | ) | $ | — | $ | 0.7 | ||||||
| Depreciation and amortization | 14.9 | 10.7 | 4.2 | — | ||||||||||||
| EBITDA | $ | 9.1 | $ | 5.1 | $ | 4.3 | $ | (0.3 | ) | |||||||
| EBITDA margin | 3.1 | % | 1.9 | % | 25.4 | % | — | % | ||||||||
|
CANNAE HOLDINGS, INC. FIRST QUARTER SEGMENT INFORMATION (In millions) (Unaudited) |
||||||||||||
| Consolidated | Restaurant Group |
Corporate |
||||||||||
| Three Months Ended | ||||||||||||
| March 31, 2017 | ||||||||||||
| Restaurant revenue | $ | 272.7 | $ | 272.7 | $ | — | ||||||
| Other operating revenue | 2.6 | — | 2.6 | |||||||||
| Total operating revenue | 275.3 | 272.7 | 2.6 | |||||||||
| Cost of restaurant revenue | 236.1 | 236.1 | — | |||||||||
| Personnel costs | 16.5 | 12.9 | 3.6 | |||||||||
| Depreciation and amortization | 11.4 | 10.8 | 0.6 | |||||||||
| Other operating expenses | 17.5 | 15.5 | 2.0 | |||||||||
| Total operating expenses | 281.5 | 275.3 | 6.2 | |||||||||
| Operating loss | $ | (6.2 | ) | $ | (2.6 | ) | $ | (3.6 | ) | |||
| Interest and investment income | $ | 1.0 | $ | — | $ | 1.0 | ||||||
| Interest expense | (2.1 | ) | (1.9 | ) | (0.2 | ) | ||||||
| Realized gains and losses | 5.1 | — | 5.1 | |||||||||
| Total other income (expense) | 4.0 | (1.9 | ) | 5.9 | ||||||||
| (Loss) earnings before tax | $ | (2.2 | ) | $ | (4.5 | ) | $ | 2.3 | ||||
| Income tax benefit | $ | (1.8 | ) | $ | — | $ | (1.8 | ) | ||||
| Loss from equity investees | (3.4 | ) | — | (3.4 | ) | |||||||
| Earnings from discontinued operations, net of tax | 2.3 | — | 2.3 | |||||||||
| Non-controlling interests | (2.0 | ) | (2.0 | ) | — | |||||||
| Net earnings (loss) attributable to Cannae common shareholders | $ | 0.5 | $ | (2.5 | ) | $ | 3.0 | |||||
| EPS attributable to Cannae common shareholders - basic | $ | 0.01 | ||||||||||
| EPS attributable to Cannae common shareholders - diluted | $ | 0.01 | ||||||||||
| Cannae weighted average shares - basic | 70.6 | |||||||||||
| Cannae weighted average shares - diluted | 70.6 | |||||||||||
| (Loss) earnings before tax | $ | (2.2 | ) | $ | (4.5 | ) | $ | 2.3 | ||||
| Interest expense | $ | (2.1 | ) | $ | (1.9 | ) | $ | (0.2 | ) | |||
| Depreciation and amortization | 11.4 | 10.8 | 0.6 | |||||||||
| EBITDA | $ | 11.3 | $ | 8.2 | $ | 3.1 | ||||||
| EBITDA margin | 4.1 | % | 3.0 | % | 119.2 | % | ||||||
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CANNAE HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AND ADJUSTED BOOK VALUE SUMMARY (In millions) |
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|
March 31, |
December 31, |
|||||||
| in millions | (Unaudited) | (Unaudited) | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 125.3 | $ | 245.6 | ||||
| Equity securities | — | 17.7 | ||||||
| Other current assets | 92.2 | 86.9 | ||||||
| Total current assets | $ | 217.5 | $ | 350.2 | ||||
| Ceridian equity investment | $ | 374.6 | $ | 383.9 | ||||
| Other equity method investments | 40.8 | 41.0 | ||||||
| Property and equipment, net | 209.8 | 218.8 | ||||||
| Software & intangible assets | 209.1 | 214.5 | ||||||
| Goodwill | 202.0 | 202.7 | ||||||
| Other non-current assets | 86.8 | 76.1 | ||||||
| Total assets | $ | 1,340.6 | $ | 1,487.2 | ||||
| Current liabilities: | ||||||||
| A/P & other current liabilities | $ | 116.6 | $ | 127.6 | ||||
| Notes payable, current | 1.4 | 122.2 | ||||||
| Total current liabilities | $ | 118.0 | $ | 249.8 | ||||
| Notes payable, non-current | $ | 11.1 | $ | 12.7 | ||||
| Other non-current liabilities | 62.9 | 71.6 | ||||||
| Total liabilities | $ | 192.0 | $ | 334.1 | ||||
| Additional paid in capital | $ | 1,131.9 | $ | 1,130.2 | ||||
| Retained earnings | 2.8 | 0.2 | ||||||
| Accumulated other comprehensive loss | (75.6 | ) | (71.0 | ) | ||||
| Non-controlling interests | 89.5 | 93.7 | ||||||
| Cannae shareholder's equity | $ | 1,148.6 | $ | 1,153.1 | ||||
| Total liabilities and equity | $ | 1,340.6 | $ | 1,487.2 | ||||
| Adjusted Book Value Summary |
|
March 31, |
|
December 31, |
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|
|
(Unaudited) |
|
(Unaudited) |
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| Ceridian/Fleetcor | $ | 391.2 | $ | 398.5 | ||||
| American Blue Ribbon Holdings | 229.3 | 109.9 | ||||||
| T-System | 208.6 | 204.6 | ||||||
| Del Frisco's Restaurant Group | — | 17.7 | ||||||
| Holding Company Cash | 104.3 | 215.4 | ||||||
| Other | 125.7 | 113.3 | ||||||
| Cannae Book Value | $ | 1,059.1 | $ | 1,059.4 | ||||
| Outstanding Cannae shares | 70.9 | 70.9 | ||||||
| Cannae Book Value per Share | $ | 14.95 | $ | 14.95 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180509006459/en/
Source:
Solebury Trout
Jamie Lillis, 203-428-3223
Managing Director
jlillis@soleburyir.com