Q1 2024 Cannae Holdings Inc Earnings Call

Operator: Good afternoon, ladies and gentlemen, and welcome to the Cannae Holdings Inc. First Quarter 2024 Financial Results Conference Call. During today's presentation, all parties will be in a listen-only mode.

Good afternoon, ladies and gentlemen, and welcome to the <unk> Holdings, Inc. First quarter 2024 financial results Conference call. During today's presentation, all parties will be in a listen only mode. Following the company's prepared remarks, the conference will be opened for questions with instructions.

Operator: Following the company's prepared remarks, the conference will be open for questions, with instructions to follow at that time. As a reminder, this conference call is being recorded, and a replay will be available through 11:59 p.m. Eastern Time on May 16th, 2024. With that, I would like to turn the call over to Jamie Lillis of Solberry Strategic Communications. Please go ahead. Thank you, Rory.

Operator: <unk> to follow at that time as a reminder, this conference call is being recorded and a replay is available through 11 59 P. M. Eastern time on May 16th 2024 with that I would like to turn the call over to Jamie Lillis of so Barry strategic communications.

Jamie Lillis: Please go ahead.

Jamie Lillis: Thank you, Operator, and all of you for joining us. On the call today, we have our Chairman and Chief Executive Officer, Bill Foley, Cannae's President, Ryan Caswell, and Bryan Coy, our Chief Financial Officer. Before we begin, I would like to remind listeners that this conference call and the Q&A following our remarks may contain forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about Cannae's expectations, hopes, intentions, or strategies regarding the future, are forward-looking statements.

Jamie Lillis: Thank you operator, and all of you for joining us on the call today, we have our chairman and Chief Executive Officer, Bill Foley, <unk>, President Bryan Caswell, and Brian <unk>, our Chief Financial Officer.

Jamie Lillis: Before we begin I would like to remind listeners that this conference call and the Q&A. Following our remarks may contain forward looking statements that involve a number of risks and uncertainties statement.

Jamie Lillis: Statements that are not historical facts, including statements about <unk> 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.

Jamie Lillis: 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. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, the risks and other factors detailed in our quarterly shareholder letter, which was released this afternoon, and in our other filings with the SEC.

Jamie Lillis: 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.

Jamie Lillis: The company undertakes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise.

Jamie Lillis: Risks and uncertainties, which forward looking statements are subject to include but are not limited to the risks and other factors detailed in our quarterly shareholder letter, which was released this afternoon.

Jamie Lillis: In our other filings with the SEC.

Jamie Lillis: Today's remarks will also include references to non-GAAP financial measures. Additional information, including a reconciliation between the non-GAAP financial information and the GAAP financial information, is provided in our shareholder letter. I would now like to turn the call over to Bill. Thank you.

Jamie Lillis: Today's remarks will also include references to non-GAAP financial measures.

Jamie Lillis: Additional information, including a reconciliation between the non-GAAP financial information to the GAAP financial information is provided in our shareholder letter I would now like to turn the call over to Bill.

Bill: Thank you Jamie.

William Patrick Foley: Since returning as CEO of Cannae in February, I have been focused on executing a strategic plan designed to both grow the net asset value, or NAV, of our portfolio and close our share price discount to NAV. Our strategy has three main levers, including improving the performance and valuation of our portfolio companies, making new investments primarily in private companies that will grow NAV, and when appropriate, returning capital to shareholders, which until today was done primarily through Cannae share repurchases at a discount to NAV.

Bill: Since returning as CEO of <unk> in February <unk> been focused on executing a strategic plan designed to both grow the net asset value or NAV of our portfolio includes our share price discount to NAV.

William Patrick Foley: Our strategy has three main levers, including improving the performance and valuation of our portfolio of companies, making new investments primarily in private companies that will grow NAV.

William Patrick Foley: And when appropriate return capital to shareholders, which until today was done primarily through can I share repurchases at a discount to NAV.

William Patrick Foley: I believe we're all happy with the continued success across all three pillars of our strategy. First, I would like to discuss the performance of our two largest holdings, Dun & Bradstreet and Delight, which continued to make progress throughout the quarter and we believe will drive additional growth in NAV. I'll let Ryan get into more details on the specifics of each company's quarter, but I want to highlight a few key points.

William Patrick Foley: I believe we're all happy with the continued success across all three pillars of our strategy.

Ryan: Bruce I would like to discuss the performance of our two largest holdings Dun and Bradstreet and delight, which continued to make progress throughout the quarter and we believe will drive additional growth in NAV.

Ryan: I'll, let Brian get into more details on the specifics of each company's quarter, but I want to highlight a few key points.

William Patrick Foley: Dun & Bradstreet produced 4.3% year-over-year organic growth, which is up from the first quarter of last year. But more importantly, Anthony and his team continue to invest in new products and continue to build confidence in hitting their midterm target of 5-7% organic growth. This is quite a turnaround from a business that had negative growth when we acquired it. We continue to believe that there is significant upside in D&B's stock price, and we're encouraged by the D&B board of directors, of which I am the chairman, to authorize a share repurchase program for up to 10 million shares of Dun & Bradstreet Common Stock. In the first quarter, Light announced the sale of its payroll and professional services business to an affiliate of HIG Capital for up to $1.2 billion.

William Patrick Foley: <unk> produced a four 3% year over year organic growth, which is up from the first quarter of last year, but more importantly, Anthony as team continued to invest in new products and continued to build confidence in hitting your midterm target of 5% to 7% organic growth.

William Patrick Foley: It was quite a turnaround from a business that had negative growth when we acquired <unk>.

William Patrick Foley: We continue to believe that there's significant upside in dnb stock price and we're encouraged by the Dnb's board of directors of which I am the chairman authorized a share repurchase program for up to 10 million shares of Dun <unk> Bradstreet's common stock.

William Patrick Foley: The sale values the segment at approximately 10 times its estimated 2023 EBITDA and 24 times its estimated unlevered free cash flow. We worked with Stefan for more than six months on this transaction, and we were excited to get it announced, as it should greatly simplify Alight's business, improve profitability, reduce their leverage to less than 3x debt-to-EBITDA, and allow the company to buy back more shares. I'm confident in the leadership of both DNB and Delite, and we look forward to their continued progress in 2024, which we believe will eventually translate into improving stock price performance and growing our NAV.

William Patrick Foley: In the first quarter of light announced the sale of their payroll and professional services business to an affiliate of each <unk> capsule for up to $1 $2 billion. The sale values. This segment is approximately 10 times. Its estimated 2023 EBITDA in 'twenty four times its estimated unlevered free cash flow.

William Patrick Foley: We worked with stfan for more than six months on this transaction and we were excited to get it announced it should greatly simplify our lights business improve profitability reduce their leverage to less than three <unk> debt to EBITDA and allow the company to buy back more shares.

William Patrick Foley: I'm confident in the leadership of both Dnb and Deloitte and we look forward to their continued progress in 2024, which we believe eventually will translate into improving stock price performance and growing our NAV.

William Patrick Foley: I'm very proud of our work at AFC Bournemouth, our football club. In the first full season under our ownership, the Cherries have already achieved their highest Premier League point total in the 125-year history of the club, and the season isn't over yet.

William Patrick Foley: I'm very proud of our work at AFC born with our football club in the first full season under our ownership. The juries have already achieved their highest Premier League point total in the 125 year history of the club and the season isn't over yet.

William Patrick Foley: Turning to capital returns to shareholders, we completed our previously announced Dutch tender wherein we repurchased 9.7 million shares of Cannae Common Stock, representing 13% of the shares outstanding for approximately $222 million at $22.95 per share. While we bought the shares back at a premium to where they are trading today, we believe it was an effective use of capital, given the quantity of shares acquired in such a compressed timeframe. However, our stock price performance post-tender illustrates that we also need to grow our NAV through increasing our portfolio to continue to close the NAV discount.

William Patrick Foley: Turning to capital returns to shareholders, we completed our previously announced Dutch tender where in we repurchased nine 7 million shares of <unk> common stock revenues, representing 13% of the shares outstanding for approximately $222 million and $22 95 per share.

William Patrick Foley: Well, we bought the shares back at a premium to where they're trading today. We believe it is an effective use of capital given the quantity of shares acquired in such a compressed timeframe.

William Patrick Foley: Stock price performance post tender illustrates that we also need to grow NAV.

William Patrick Foley: Through increasing our portfolio to continue to close Ian a discount.

William Patrick Foley: Since starting our share repurchase program, we've repurchased approximately 34% of our common shares outstanding as compared to March 31st, 2021, having returned more than $733 million in capital at a significant discount to NAV. Looking forward, we have approximately 13 million shares remaining on our buyback authorization, which we plan to utilize at a measured pace. Today we announced a dividend of 12 cents per share, per quarter payable on June 28th to provide an additional return of capital to our long-term shareholders.

William Patrick Foley: Since starting our share repurchase program, we repurchased approximately 34% of our common shares outstanding as compared to March 31, 2021 have returned more than $733 million in capital at a significant discount to NAV.

William Patrick Foley: Looking forward, we have approximately 13 million shares remaining on our buyback authorization, which we plan to utilize at a measured pace.

William Patrick Foley: We today, we announced a dividend of <unk> 12 per share.

William Patrick Foley: Per quarter.

William Patrick Foley: Payable on June 20, <unk> to provide an additional return of capital to our long term shareholders. We.

William Patrick Foley: We will initially fund the dividends, including the one next month, through the sale of assets, but over time, we are looking to make cash flow generative acquisitions that will be a source of cash to fund the dividend. In the first quarter, we sold 10 million shares of D&B for approximately $101 million, and 2.5 million shares of Dayforce for total proceeds of $177 million. We used the proceeds from these sales to fund the tender offer as well as for general corporate purposes.

William Patrick Foley: We initially will fund the dividends, including the one next month through the sale of assets, but over time, we're looking to make cash flow generative acquisitions.

William Patrick Foley: Be a source of cash to fund the dividend.

William Patrick Foley: In the first quarter, we sold 10 million shares of Dnb for approximately $101 million and $2.

William Patrick Foley: 5 million shares of D Force for total proceeds of $177 million. We used the proceeds from these sales to fund the tender offer as well as for general corporate purposes.

William Patrick Foley: Going forward, when we need capital to fund potential investments, share buybacks, and the dividend, we expect to sell portions of our public holdings. This will also serve to gradually rebalance our portfolio away from public company investments towards high-return private investments, which we expect will maximize value for our shareholders. Lastly, in the first quarter, we announced the internalization and winding down of Cannae's management agreement with Trasmean Capital, effective in July and over the next three years.

William Patrick Foley: Forward, when we need capital to fund potential investments share buybacks and the dividend, we expect to sell portions of our public holdings. This will all social serve to gradually rebalance our portfolio away from public company investments towards high return private investments, which we expect will maximize value for our shareholders.

William Patrick Foley: Lastly, in the first quarter, we announced the internalization and wind down of <unk> management agreement with Trasimene capital effective in July and occurring over the next three years. We felt this transaction was accretive for our shareholders as it will reduce total management expense and further aligns canine management with shareholders given the.

William Patrick Foley: We felt this transaction was a treaty for our shareholders as it will reduce total management expense and further align Cannae management with shareholders, given the majority of our compensation will now be in Cannae stock. We believe over time that this will also drive an increase in Cannae's stock price. I'd like to now turn the call over to Ryan.

Ryan: City of our compensation will now be into nice stock. We believe over time that this will also drive an increase in <unk> stock price.

William Patrick Foley: Like to now turn the call over to Ryan.

Ryan Richard Caswell: Thank you, Bill. I will now spend a few minutes on updates on some of our key portfolio companies and provide a bit more detail on potential new investments. For the first quarter, D&B reported revenue of $564 million, representing 4.3% year-over-year organic growth, which is an acceleration compared to 3.2% organic growth in the prior year's first quarter. The company generated 6% growth in adjusted EBITDA in the quarter, which equated to $201 million at a 36% margin.

Ryan: Thank you Bill I will now spend a few minutes on updates on some of our key portfolio companies and provide a bit more detail on potential new investments.

Ryan Richard Caswell: For the first quarter D&B reported revenue of $564 million, representing four 3% year over year organic growth, which is an acceleration compared to three 2% organic growth in the prior year first quarter. The company generated 6% growth in adjusted EBITDA in the quarter.

Ryan Richard Caswell: Which equated to $201 million at a 36% margin.

Ryan Richard Caswell: Importantly, DNB also improved free cash flow conversion. Leverage at D&B today is 3.7 times EBITDA, which has moved down from four times one year ago, and management expects it to be at 3.5 times by the end of 2024. We remain optimistic about the future for D&B as it is improving key metrics and investing in the right areas to achieve its midterm guidance, and we believe this will drive upside in the stock market.

Ryan Richard Caswell: Importantly, Dnb also improved free cash flow conversion.

Ryan Richard Caswell: Leverage at D&B today is three seven times debt to EBITDA, which has moved down from four times, one year ago and management expects to be at three five times by the by the end of 2024, we remain.

Ryan Richard Caswell: Optimistic about the future for Dnb as they are improving key metrics and investing in the right areas to achieve their mid term guidance and we believe this will drive upside in the stock.

Ryan Richard Caswell: Yeah.

Ryan Richard Caswell: Alight's first quarter results, unfortunately, were below expectations with continuing operations posting $559 million in revenue, representing a year-over-year decline of 4.6%, primarily associated with lower volumes, timing of large deals, and the wind-down of a light-toasted business.

Ryan Richard Caswell: Our lifes first quarter results. Unfortunately were below expectations with continuing operations posting $559 million in revenue.

Ryan Richard Caswell: Representing a year over year decline of four 6% primarily associated with lower volumes timing of large deals and the wind down of a white hosted business.

Ryan Richard Caswell: However, adjusted EBITDA increased to $116 million, representing a year-over-year gain of 4%, and total company operating cash flow increased nearly 39% to $100 million from the prior year. We are pleased to see that the company now has nearly $7 billion of revenue under contract, of which over $5 billion is in 2024 and 2025. We remain confident that the life business will reaccelerate in the second half of the year.

Ryan Richard Caswell: However, adjusted EBITDA increased to 106 $116 million.

Ryan Richard Caswell: Representing a year over year gain of 4%.

Ryan Richard Caswell: Total company operating cash flow increased nearly 39% to $100 million from the prior year.

Ryan Richard Caswell: We are pleased to see the company now has nearly $7 billion of revenue under contract of which over $5 billion in 2024 and 2025.

Ryan Richard Caswell: We remain confident that our life business will reaccelerate in the second half of the year.

Ryan Richard Caswell: As Bill noted, we believe the sale of their payroll and professional services business is an important step to improving Alight's business model's attractiveness to investors and valuation. Lastly, I want to highlight that Alight's board authorized the repurchase of up to an additional $200 million of the company's Class A common stock and noted it plans to be more aggressive and consistent in its return of capital to shareholders. Turning to Black Knights football, we are excited about the progress we have made since our purchase of AFC Bournemouth in late 2022.

Ryan Richard Caswell: As Bill noted, we believe the sale of their payroll and professional services business is an important step to improving our lights business model attractiveness to investors and valuation.

Ryan Richard Caswell: Lastly, I want to highlight that our lights board authorized the repurchase of up to an additional $200 million of the company's class a common stock and noted it plans to be more aggressive and consistent in its return of capital to shareholders.

Ryan Richard Caswell: Our management team has worked to enhance the quality of Bournemouth's competitive position and on-field performance, improve the business operations of the club, and upgrade Bournemouth's facility. In this first complete season under Black Knight ownership, the Cherries have 48 points, putting them in 10th place in the Premier League table.

Ryan Richard Caswell: Turning to Black Knight football we are excited about the progress we have made since our purchase of AFC Barnett in late 2022 or.

Ryan Richard Caswell: Our influence off the pitch is also evident as demonstrated by the 50% increase year-over-year in hospitality revenue, a 40% increase in sponsorship, and a 13% increase in ticketing, all compared to the previous year. We believe AFC's growth and success both on and off the field will ultimately drive significant value creation for our shareholders. Unfortunately, we have not had the same success at F.C. Lorient, where we own 40%. The team is currently in 17th place in League 1 with two matches remaining, and in their current position, they would be relegated to the lower league if the season ended today. While we were frustrated, we were asked to see Lori Edson.

Ryan Richard Caswell: Our management team has worked to enhance the quality of born myths competitive position and on field performance and improve the business operations of the club and upgrade born myths facilities.

Ryan Richard Caswell: We would note that our put-call arrangement to buy the remaining stake had contemplated this potential scenario, and the valuation for the remaining stake is much lower if the team is relegated to the second tier. Additionally, in the quarter, we close on the 25% interest in Hibernian FC, a nearly 150-year-old Scottish premiership club based in Edinburgh. Hibernian is sitting in seventh place in the table with three matches remaining.

Ryan Richard Caswell: In this first complete complete season under Black Knight ownership, the charities have 48 points, putting them in 10th place in the Premier League table.

Ryan Richard Caswell: Our influence off the pitch is also evident as demonstrated by the 50% increase year over year in hospitality revenue, 40% increase in sponsorship and a 13% increase in ticketing all compared to the previous year.

Ryan Richard Caswell: We believe ASC born mystic SaaS, both on and off the field will ultimately drive significant value creation for our shareholders.

Ryan Richard Caswell: We unfortunately have not had the same success at ash seal oriented where we own 40%.

Ryan Richard Caswell: The team is currently in 17 place and league one with two matches remaining and then the current position would be relegated to the lower if the season ended today.

Ryan Richard Caswell: While we are frustrated where XD Lori add sets, we would note that our put call arrangement to buy the remaining stake had contemplated this potential scenario in evaluation for the remaining stake is much lower if the team is relegated to the second division.

Ryan Richard Caswell: We are the first multi-club ownership group approved by the Scottish FA to own a stake in a team in the Scottish Premiership and are excited about the opportunities at Hibernian going forward. Computer Services, or CSI, has also continued to outperform, and in its fiscal year ended February 29, the company secured 44 core banking deals across the US, a 33% year-over-year increase resulting in record sales which should drive future revenue. Fiscal 2024 also included the acquisition of loan origination software provider Hawthorne River.

Ryan Richard Caswell: Additionally, in the quarter, we closed on the 25% interest in Hibernia NFC, a nearly 150 year old Scottish Premier Premiership cloud based in Edinburgh.

Ryan Richard Caswell: Hibernia and is sitting in <unk> place in the table with three matches remaining.

Ryan Richard Caswell: We are the first multi club ownership group approved by the Scottish FAA to own a stake in a team in the Scottish Premier ship and are excited about the opportunities at Hibernia and going forward.

Ryan Richard Caswell: Computer services or CSI has also continued to outperform.

Ryan Richard Caswell: And they're in their fiscal year ended February 29, the company secured 44 core banking deals across the U S.

Ryan Richard Caswell: A 33% year over year increase resulting in record sales, which should drive future revenue.

Ryan Richard Caswell: Fiscal 2024 also included the acquisition of loan origination software provider Hawthorne River.

Ryan Richard Caswell: The launch of CSI's instant payment offering and the closing of the previously announced new investment from which Cannae received a $37 million cash distribution. We remain very excited about our investment in CSI. Unfortunately, Sightline has not seen the same success.

Ryan Richard Caswell: The launch of CSI instant payment offering and the closing of the previously announced new investment from which can I received a $37 million cash distribution.

Ryan Richard Caswell: We remain very excited about our investment in CSI.

Ryan Richard Caswell: Unfortunately.

Ryan Richard Caswell: <unk> had not seen the same success as we have discussed before the company has experienced declining operational results in a challenged liquidity position given lower than expected uptake uncertain of their cashless products and as a result has underperformed expectations management has refocused their efforts to improve the company's performance.

Ryan Richard Caswell: As we have discussed before, the company has experienced declining operational results in a challenged liquidity position, given lower than expected uptake on certain of their cashless products, and as a result, has underperformed expectations. Management has refocused its efforts to improve the company's performance and liquidity position, including the sale of their mobile app engagement platform in the first quarter. We hope these actions drive improvement in their results and cash flow going forward.

Ryan Richard Caswell: And liquidity position, including the sale of their mobile App engagement platform in the first quarter.

Ryan Richard Caswell: We hope we hope these actions drive improvement in their results and cash flow going forward.

Ryan Richard Caswell: Lastly, I want to give a quick update on Minden Mill. We have made significant progress since we closed the acquisition in May 2023. We have completed some minor remodels around the facility, and the tasting room is open for the spring and summer seasons. We hired a master distiller with 20 years of experience, and last week, we launched our first product, an ultra-premium vodka called High Ground Estate Vodka. High Ground has been reviewed and awarded an exceptional 94 out of 100 points by the Beverage Tasting Institute, and we are optimistic about its initial sales.

Ryan Richard Caswell: Lastly, I want to give a quick update on <unk> mill.

Ryan Richard Caswell: We have made significant progress since we closed the acquisition in May 2023.

Ryan Richard Caswell: We have completed some minor remodels around the facility and the tasting room is open for the spring and summer season.

Ryan Richard Caswell: We hired a master to stellar with 20 years of experience in last week launched our first product and ultra premium vodka called high ground state vodka.

Ryan Richard Caswell: Hi ground has been reviewed and awarded an exceptional 94 out of 100 points by the beverage tasting Institute and we are optimistic about the initial sales there.

Bryan D. Coy: The company also has multiple other products in the final stage of development, including a bourbon blend and coffee liqueur, which are expected to be ready for sale by the end of the year. While still early, we are excited about the progress today. As Bill noted earlier, private company investments have been a driving force behind Cannae's success historically, and we believe they are a more efficient use of Cannae's capital. We are looking for new investments that will grow NAV and, ideally, provide operating cash flow to Cannae.

Ryan Richard Caswell: The company also has multiple other products in the final stage of development, including our Berman Bourbon blend in coffee the core which are expected to be ready for sale by the end of the year.

Bryan D. Coy: While still early we are excited about the progress to date.

Bryan D. Coy: As Bill noted earlier private company investments have been a driving force behind <unk> success, historically, and we believe a more efficient use of <unk> capital.

Bryan D. Coy: We are looking for new investments that will grow our NAV and ideally provide operating cash flow to can I we.

Bryan D. Coy: We are focused on acquiring profitable businesses where we have knowledge of the sector, relationships with industry executives, and can add value through our ownership. We have been looking to source these acquisitions across our networks, as well as in conjunction with our partners at JANA, which we discussed on the fourth quarter call. We are hopeful that we can find something over the next few quarters. I'll now turn the call over to Bryan to touch on our financial position.

Bryan D. Coy: We're focused on on on acquiring profitable businesses, where we have knowledge of the sector relationships with industry executives and can add value through our ownership.

Bryan D. Coy: We have been looking to source these acquisitions across our networks as well as in conjunction with our partners at Janna, which we discussed on the fourth quarter call. We are hopeful that we can find something over the next few quarters.

Bryan D. Coy: Thank you, Bryan. While we don't typically spend much time on specific income statement line items in our financials, given the dynamics around the accounting treatment for our investments, I did want to address a couple of key points. First, as discussed before, we've been restructuring our restaurant group, having closed more than half of the O'Charlie's restaurants to focus resources on the more profitable locations. This restructuring is already producing positive results.

Bryan: I'll now turn the call over to Brian to touch on our financial position.

Bryan: Thanks, Ryan while we don't typically spend much time on specific income statement line items on our financials given the dynamics around the accounting treatment for our investments I did want to address a couple of key points first as discussed before we have been restructuring our restaurant group, having closed more than half of the O Charlie's restaurants to focus resources on the.

Bryan D. Coy: A more profitable locations. This restructuring is already producing positive results our store level operating cash flow as a percentage of restaurant revenues has increased from eight 4% of restaurant revenues in the first quarter of 2023 to 10.0 in the first quarter of 2024 and is also the driver to the overall decline in our first quarter.

Bryan D. Coy: Store-level operating cash flow as a percentage of restaurant revenues has increased from 8.4 percent of restaurant revenues in the first quarter of 2023 to 10.0 percent in the first quarter of 2024 and is also the driver of the overall decline in our first quarter revenues from $154 million in the first quarter of last year to $111 million in the first quarter of 2024. We believe these changes will deliver cash flow to Cannae. Bill touched on the winding-down of the external management agreement and the reduction in fees, and I wanted to provide additional detail.

Bryan D. Coy: <unk> from $154 million in the first quarter of last year to 111 million in the first quarter of 2024, we believe these changes will deliver cash flow to <unk>.

Bryan D. Coy: Bill touched on the wind down of the external management agreement and a reduction in fees and I wanted to provide additional detail.

Bryan D. Coy: Management fees were $9.1 million this quarter and will be the same in the second quarter. Therefore, management fees for the trailing 12 months ending June 30, 2024, prior to the commencement of the wind-down, will be $37 million. Comparatively, annual management fees for the 12 months after July will be $7.6 million, and there will also be a $6.7 million termination fee payment. Both of these values will be fixed for the next three years, at which point they will be eliminated.

Bryan D. Coy: Fees were $9 1 million this quarter and will be the same in the second quarter. Therefore management fees for the trailing 12 months ending June 32024 prior to commencement of the wind down will be $37 million.

Bryan D. Coy: Comparatively annual management fees for the 12 months after July will be $7 6 million and there'll be an addition also be a $6 7 million termination fee payment. Both of these values will be fixed for the next three years at which point they will be eliminated.

Bryan D. Coy: Bill and Ryan will also receive compensation as Cannae employees, the majority of which is in Cannae stock. We believe the reduction in management fees and the majority of compensation in Cannae stock is a benefit to Cannae shareholders. Our balance sheet and liquidity position remain solid. Cannae has $26 million in corporate cash today and $150 million in immediate capacity on our margin. The only outstanding debt presently is $60 million under our FNF note that matures near the end of 2025.

Bryan D. Coy: And Ryan will also receive compensation as deny employees. The majority of which is in can I stock. We believe the reduction in management fees and the majority of compensation and can I stock as a benefit to <unk> shareholders.

Bryan D. Coy: Our balance sheet and liquidity position remains solid and I has 26 million in corporate cash today and $150 million in immediate capacity on a margin level.

Bryan D. Coy: The only outstanding debt presently is $60 million under our FNF note that matures near the end of 2025 during.

Bryan D. Coy: During the first quarter of 2024, Cannae paid down $25 million of the note balance in exchange for a lower fixed interest rate, saving over $4 million annually. We also transferred our margin loan to a new bank, saving approximately $1 million annually going forward on rates and extending maturity to 2027. At the close today, Cannae's aggregate net asset value was $2.1 billion, or $33.35 per share, reflecting the completion of our tender offer and returning $222 million to Cannae shareholders. With that, I'll now turn the call back over to the operator to begin our question and answer session.

Bryan D. Coy: During the first quarter of 2024 can I pay down $25 million of the note balance in exchange for a lower fixed interest rate savings over $4 million annually. We also transferred our margin loan to a new bank saving approximately $1 million annually going forward on rates and extend the maturity to 2027.

Bryan D. Coy: To close today can ice aggregate net asset value was $2 1 billion or 33 point.

Bryan D. Coy: $33 35 per share, reflecting the completion of our tender offer and returning 222 million to can I shareholders.

Bryan D. Coy: With that I'll now turn the call back over to the operator to begin our question and answer session.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star, then 2.

Bryan D. Coy: We will now begin the question and answer session.

Operator: Ask a question you May press star one on your Touchtone phone, if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press star two.

Operator: Our first question comes from John Campbell with Stephens. Please go ahead.

John Robert Campbell: Hey guys, good afternoon. It was a little surprising to us, but I totally get the rationale. It seems like that could be just another tool you guys could use to maybe close the discount to some extent. A two-part question here on that, but maybe if you could just start off, how long do you anticipate having that dividend in place?

Speaker Change: Hey, guys good afternoon.

John Robert Campbell: Congrats on getting the dividend in place that they're a little surprising to us, but I totally get the rationale it seems like that could be just another tool that you guys could use maybe close the discount to some extent.

John Robert Campbell: Two part question here on that but maybe if you could just start off how long you envision on having that dividend in place.

William Patrick Foley: Oh, it's going to be in place for as long as we're around. And the goal, of course, is to start modestly with a $0.12 per share, per quarter dividend. And then, as we've done with FNF, as you know, increase that dividend as cash flow allows. So we're committed to the dividend going forward on a consistent basis.

John Robert Campbell: Well this is going to be in place.

William Patrick Foley: For as long as were ruined.

William Patrick Foley: Okay.

William Patrick Foley: The goal of course is the start modestly with a <unk> <unk>.

William Patrick Foley: Per share per quarter dividend and then as we've done with FNF as you know.

William Patrick Foley: Increase that dividend as cash flow allows so we're committed to the dividend going forward on it.

William Patrick Foley: Consistent basis.

unknown: Okay, that makes sense. And then that kind of does align with what Ryan was just saying around looking for companies that can help generate free cash flow for you guys. So that makes sense.

Speaker Change: Okay that makes sense and then that kind of.

unknown: That doesn't align with what Brian was just saying around looking for companies that generate can help generate free cash flow for you guys. So that makes sense.

John Robert Campbell: So the second part of this question is mainly kind of related to how you fund it. And Bill, you mentioned, you know, if needed, you would, you would, you know, look to monetization efforts to fund it. But as I look at the math here, I mean, it looks like a 30 million payout right now. You know, you guys are saving, I don't know, 15 or 20 million or so from the Trasimene wind down.

Speaker Change: The second part of this question is mainly kind of related to how you fund it and Bill you'd mentioned you know if needed you would you would look to monetization efforts to find it but as I look at the math here I mean, it looks like a 30 million payout right now.

John Robert Campbell: You guys are saving all of 15 or $20 million or so from the trasimene wind down and then Brian just rattled off a couple of different saving areas. So it just seems like maybe you don't have to do a lot of reshuffling you can support this dividend kind of as it is today is that the right way to think about it yes. It is John you've got it right.

John Robert Campbell: And then, you know, Brian just rattled off, you know, a couple different saving areas. So it just seems like maybe you don't have to do a lot of reshuffling. You can support this dividend kind of as it is today. Is that the right way to think about it?

William Patrick Foley: Yeah, it is. John, you got it right.

William Patrick Foley: We have one more management fee payment in July then there's really it really ramps down after that.

John Robert Campbell: We have one more management fee payment in July, and it really ramps down after that. We have been in the process of selling down our C-Day shares, and that would be to the extent we need some cash flow. That would probably be the source of that cash, the remaining C-Day shares. I'm disposing of those.

William Patrick Foley: We are have been in the process of selling down our our CDA shares and that would be to the extent, we need some cash flow that would probably be the source of that cash.

John Robert Campbell: The remaining <unk> shares.

John Robert Campbell: On disposing of those.

William Patrick Foley: But we don't see a big risk in terms of cash flow for this dividend because we are saving. And we've saved other money in other ways in terms of other salaries and other expenses. So we're not quite at equality with $30 million or $31 million a year in dividend payout, but we're not very far off, frankly.

John Robert Campbell: But we don't see a big.

William Patrick Foley: A big risk in terms of cash flow for this dividend because we are saving.

William Patrick Foley: We've received other money in other ways in terms of other salaries and other expenses. So we're not quite as a quality with $30 million or $31 million a year dividend payout, but we're not very far off frankly.

John Robert Campbell: Yeah, makes sense. And I want to extend congratulations on the Cherries. Ryan, you've created a bunch of Cherries fans over here in Little Rock. So congratulations to you guys on a great season. Thank you.

Speaker Change: Yeah makes sense and I want to extend congrats on a on the Terry's Ryan you've created a bunch of curious fans over here in little rock. So congrats to you guys on a great Susan.

Speaker Change: Thank you.

Operator: Again, if you have a question, please press star and then 1. Our next question comes from Ian Zaffino on behalf of Oppenheimer. Please go ahead.

John Robert Campbell: Again, if you have a question. Please press star and then one our next question comes from Ian Zaffino with Oppenheimer. Please go ahead.

Ian Alton Zaffino: I agree. Thank you very much, and thanks for the very fruitful conference call. I appreciate that. I wanted to basically get a higher-level view here and ask, you know, as you move more to private, is there going to be a theme in private that you're going to look for? You know, I know you touched on Jana a little bit. Maybe give us a little bit more of a fuller discussion, kind of like what you're seeing, what you've been surprised by, what has been brought to the table, and any other color you can give us on what to look for maybe in a potential investment. Thanks.

Ian Alton Zaffino: Hi, great. Thank you very much and.

Speaker Change: Alright, Fulsome conference call I appreciate that.

Ian Alton Zaffino: Wanted to basically take a higher level view from here.

Ian Alton Zaffino: Ask you know as you move more to private.

Ian Alton Zaffino: In private that Youre going to look for.

Ian Alton Zaffino: I know you touched on Jana a little bit can you maybe give us a little bit more of a fulsome discussion I kind of like what you're seeing what you've been surprised by what's moved off the table.

Ian Alton Zaffino: And any other color you can give us on what to look for maybe another capsule in basketball.

William Patrick Foley: Yeah, so we're really going to stick kind of stick to our knitting if you look at the history of FNF over the past 20 or 30 years, and the acquisitions we've made, they've been in this financial services FinTech space, and that, and they've been related to the real estate market in America. So we have a number of different ideas that we're looking at right now. Some things are very, very inexpensive, and John M. Zaffino, Kenneth Lee, Rory Rumore, William Foley, Ryan Caswell, Cannae Holdings; we look at three or four or five things that have kind of germinated to the top of the table.

Speaker Change: Yes, so we're really going to stick as kind of stick to our knitting. If you look at the.

William Patrick Foley: The history of FNF over the past 20, or 30 years and the acquisitions. We've made have been in this financial services.

William Patrick Foley: <unk> space and that's in.

William Patrick Foley: And they have been.

William Patrick Foley: Related to.

William Patrick Foley: To the real estate.

William Patrick Foley: The real estate markets.

William Patrick Foley: In America. So we have a number of different ideas that we're looking at right now.

William Patrick Foley: Some things are very very inexpensive.

William Patrick Foley: Particularly if there is.

William Patrick Foley: Re component.

William Patrick Foley: Bold.

William Patrick Foley: That's really that's really where we're searching right now and we've got.

William Patrick Foley: Three or four or five things that are kind of germinated to the top of the top of the top of the table.

William Patrick Foley: And we look at three or four different transactions a week. Generally speaking, we discard them all, but we do have one potential transaction we're working on where we've issued a letter of intent, and we have a couple of other ideas that should develop over the next 60 days to 90 days, but they'll be conservative; they'll be cash flow-generating ideas, if that helps.

William Patrick Foley: We look at three.

William Patrick Foley: Three or four different transactions a week.

William Patrick Foley: Generally speaking discard almost scared them all but we do have one potential transaction, we're working on which we've issued a letter of intent and we have a couple of other ideas that are the <unk>.

William Patrick Foley: Should develop over the next 60 days to 90 days.

William Patrick Foley: But there'll be conservative there'll be cash flow generating.

William Patrick Foley: Ideas.

Speaker Change: That helps.

Ian Alton Zaffino: No, that does. And if you could also give us maybe an update on any potential deals on the European sports side. I know that's been a common area you talked about, maybe big synergies, you say like transfer fees. Any new developments on that front? And how does that compete with capital versus kind of what I asked you in your first question?

William Patrick Foley: Now that does then if you could also give us maybe an update on our end.

Ian Alton Zaffino: Any potential deals on the European sports side, I know that's been a.

Ian Alton Zaffino: Culinary you talked about as maybe you think synergies and you see that transfer fees.

Ian Alton Zaffino: Any new developments on that front door and heard about that.

Ian Alton Zaffino: How does that compete with capital versus kind of what are they asking your first.

Ian Alton Zaffino: Question.

William Patrick Foley: Yeah, so we are looking at a lot of different opportunities, particularly in Europe, not really Africa or South America, but particularly in Europe, teams that could be feeder teams or development squads for one of our Primary Leagues, teams such as Bournemouth, or Hibernian, or Lorient, and again, we probably see We have two or three different opportunities a week, and we're just being very careful. We want to make sure that whatever we buy or buy into has cash flows, that it's sustainable.

Speaker Change: Yes. So we are looking at a lot of different opportunities.

William Patrick Foley: Particularly in Europe, really not Africa, or South America, but particularly in Europe teams that could it could be feeder teams or development squads for one of our one of our <unk>.

William Patrick Foley: Primary lead teams such as board or.

Speaker Change: Hi, Bernie and L'oreal.

William Patrick Foley: And.

William Patrick Foley: Again, we probably see.

William Patrick Foley: Two or three different opportunities a week and we're just being very careful we want to make sure that whatever we buy or buy into the cash flows.

William Patrick Foley: It's not going to be an investment that requires additional capital infusions, and they need to be teams that are geographically placed so that they make sense from our multi-club model that we're trying to pursue. And they have to be in low-risk countries. So you're really talking about the kind of Benelux, the Scandinavian teams, Eastern European teams in very stable situations. Probably not a La Liga team or a Serie A team

William Patrick Foley: Sustainable it's not a not going to be an investment that requires additional capital infusions.

William Patrick Foley: And they need to be teams that are geographically placed so that they make sense from our multi club model that we're trying to pursue and they have to be in.

William Patrick Foley: Have to be in low risk countries, so you're really talking about kind of <unk>.

William Patrick Foley: Benelux.

William Patrick Foley: The Scandinavian teams.

William Patrick Foley: Eastern European teams in and very stable situations.

William Patrick Foley: Probably not.

William Patrick Foley: La Liga team or Syria team Theres, a little bit expensive, but we have seen opportunities in both in both of those leagues.

William Patrick Foley: They're a little bit expensive, but we have seen opportunities in both of those leagues. So I'd say it's a very patient approach, and we're trying to be careful. And we want to really develop our multi-club strategy and model so that these teams support each other, and they play a similar style of football. Coaches can be developed at a more junior or a higher band team, such as a band five or a band four, where the Premier League is obviously band one. And League One is band one, and Serie A is band one, as well as the Deutsche League and La Liga.

William Patrick Foley: So I'd say, it's a very patient approach and we're trying to be careful and we want to really develop our multi club strategy and model. So that these teams support each other they play a similar still play a similar style of football the Kochi coaches can be developed.

William Patrick Foley: At a more junior or.

William Patrick Foley: A.

William Patrick Foley: Higher bands teams such as of our band five or Ben for.

William Patrick Foley: Premier League has obviously been one league one as band one in <unk>, one as well as the.

William Patrick Foley: Deutsche League and La Liga So it's all of the idea of trying to make things come together and work together and we don't have anything pending right now, but we're looking we're constantly looking but we're being very judicious with our with our cash spend.

William Patrick Foley: So it's all about the idea of trying to make things come together and work together. And we don't have anything pending right now, but we're looking. We're constantly looking, but we're being very judicious with our cash spend. We're being very careful, and we're also talking to outside investors that may want to invest in Black Knight Football Club and take an ownership position. And again, as we take in new investors, that will result in a mark to our valuation, which will be positive. So that's kind of the football story. And Ryan and I really spend quite a bit of time on the football side, just looking at different situations.

William Patrick Foley: Being very careful and we're also talking to outside investors that may want to may want to invest with Black Knight football club.

William Patrick Foley: Taken ownership position and again as we as we've taken new investors that that will result in a mark to our valuation which will be a positive. So that's kind of the football story, Ryan that I really spent quite a bit of time on the on the football side.

William Patrick Foley: Just looking at different situations.

Ian Alton Zaffino: Okay, good. And then just one more question, if I could, if we look at kind of like a light and, you know, post an asset sale or that, I mean, should that be a standalone company? Do you think or, you know, an attractive strategic partner to another company? Like, how do you kind of think about that in general? And I don't know if you can answer that, but if you can, I'd love to hear from William Foley.

William Patrick Foley: Okay.

Speaker Change: Just one more question if I could.

Ian Alton Zaffino: Kind of like a light.

Ian Alton Zaffino: Posted an asset sale or that I mean should that be a standalone company, the bronco or attractive strategic partner to another company like how do you kind of talk about that in general and I understand that but if you can.

Speaker Change: I'd love to hear the answer.

William Patrick Foley: Well, what I can tell you is that by disposing of the payroll business and the professional services business, it has greatly simplified Alight. Alight is now a very significant benefits company, one of the largest in the country. And just as we responded to companies who were interested in our payroll business, and if someone develops, or a company develops, is interested in talking about the balance of a light, then that's obviously something we'd discuss and we'd consider.

William Patrick Foley: What I can tell you is that by disposing of the payroll business in the professional services business. It has greatly simplified light light is now a very.

William Patrick Foley: Significant benefits company.

William Patrick Foley: One of the largest in the country.

William Patrick Foley: Just as we responded to them.

William Patrick Foley: Companies, who are interested in our payroll business and our.

William Patrick Foley: Our professional services business.

William Patrick Foley: If someone someone develops or company develops as interested in talking about the balance of the light.

William Patrick Foley: Obviously somebody would discuss and we'd consider.

Ian Alton Zaffino: Okay, thank you very much.

Speaker Change: Okay. Thank you very much.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Bill Foley for any closing remarks.

Ian Alton Zaffino: This concludes our question and answer session I would like to turn the conference back over to Bill Foley for any closing remarks.

William Patrick Foley: Thank you, operator. I appreciate everyone's attention, appreciate the questions, and we look forward to speaking to you next quarter. Thank you.

William Patrick Foley: Well, thank you operator, and I appreciate everyone's attention and appreciate the questions and we look forward to speaking to you next quarter. Thank you.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.