Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cannae Holdings Inc (CNNE, Financial) successfully executed a strategic sale of Alight's payroll and professional services business for up to $1.2 billion, enhancing cash flow and reducing debt.
- Dun & Bradstreet, a major holding, reported a 4.3% year-over-year organic revenue growth and a 5.7% growth in adjusted EBITDA, indicating improved financial performance.
- Cannae Holdings Inc (CNNE) returned over $235 million to shareholders in 2024 through dividends and share buybacks, demonstrating a commitment to shareholder value.
- AFC Bournemouth, under Cannae Holdings Inc (CNNE)'s ownership, achieved its highest Premier League points total, leading to a 19% revenue increase, showcasing successful sports investment.
- The partnership with JANA Partners is expected to unlock value in undervalued public companies, potentially creating new investment opportunities for Cannae Holdings Inc (CNNE).
Negative Points
- Cannae Holdings Inc (CNNE) took a $141 million impairment on its Sightline investment due to poor market adoption and cash flow issues, impacting overall financial results.
- Operating revenues decreased by 23% compared to the prior year, largely due to a reduction in restaurant locations, indicating challenges in the restaurant segment.
- Alight's second-quarter revenue from continuing operations decreased by 4% year-over-year, reflecting challenges in maintaining growth post-business sale.
- FC Lorient, partially owned by Cannae Holdings Inc (CNNE), was relegated to Ligue 2, negatively impacting the sports investment portfolio.
- The Restaurant Group faced a 27% reduction in locations and laid off 20% of corporate employees, highlighting ongoing restructuring challenges.
Q & A Highlights
Q: Can you provide a high-level refresh on your investment thesis for Dun & Bradstreet (D&B) and why you view its valuation as deeply discounted?
A: Initially, we saw D&B as an undervalued business with great data assets and market penetration. We believed there were cost savings to be enacted and potential for revenue growth through product investment. Despite frustrations with its current trading position, we believe the team is on the right path to create additional value. - Ryan Caswell, President
Q: Regarding AFC Bournemouth, what level of investment do you expect over the next year, and would you consider reducing ownership given the club's recent success?
A: The exact capital needs are still being determined due to the ongoing transfer window. We anticipate some investment over the season but are not currently looking to reduce ownership unless offered an exceptional price. We believe there are more opportunities to create shareholder value. - Ryan Caswell, President
Q: With the management change and payroll sale at Alight, is a strategic sale still a consideration?
A: While we can't comment on specific sales, we are open to reallocating capital from public company investments like Alight into new investments or shareholder returns. The decision will depend on the situation and opportunities available. - Ryan Caswell, President
Q: How do you prioritize capital allocation between stock buybacks and returning capital to shareholders?
A: We believe in a strategy that combines capital returns to shareholders, including dividends and buybacks, with investments that grow NAV. The allocation is assessed on a case-by-case basis, considering investment opportunities and stock trading conditions. - Ryan Caswell, President
Q: Regarding the JANA partnership, what can we expect in terms of potential transactions or investments?
A: The partnership aims to leverage JANA's skills for enacting change and Cannae's capital for acquisitions. The exact playbook is still developing, but it could involve co-investments with other firms, depending on the size and needs of the target business. - Ryan Caswell, President
Q: What drove the impairment charge for Sightline, and were there any industry changes affecting this decision?
A: The impairment was primarily due to legacy products not gaining expected traction, combined with pressure from developing a new product. This affected cash flow and profitability, leading to the valuation adjustment. - Bryan Coy, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
