Cannae Reports First Quarter 2019 Results with $1.15 Billion Book Value of Portfolio Company Investments, or $15.99 Per Share
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 ofMarch 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 ofMarch 31, 2019 compared to total book value of$1.125 billion , or$15.58 per share, atDecember 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
$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% andBakers 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
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
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
Conference Call
As previously
announced, Cannae will host a conference call on
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).
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
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
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, 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 | |||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190509005156/en/
Source:
CONTACT: Jamie Lillis, Managing Director, Solebury Trout, 203-428-3223, jlillis@soleburytrout.com