Good afternoon, ladies and gentlemen, and welcome to the Cannae Holdings Inc. First Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, and a replay is available through 11:59 p.m. Eastern Time on May 16, 2024. With that, I would like to turn the call over to Jamie Lillis of Solebury Strategic Communications. Please go ahead.

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. 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, 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 and in our other filings with the SEC. Today's remarks will also include references to non-GAAP financial measures. 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.

Thank you Jamie. 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 is 3 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, return capital to shareholders, which until today was done primarily through Cannae share repurchases at a discount to NAV. I believe we're all happy with the continued success across all 3 pillars of our strategy. First, I would like to discuss the performance of our 2 largest holdings, Dun & Bradstreet and Alight, 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. Dun & Bradstreet produced a 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% to 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 D&B's Board of Directors, of which I am the Chairman, authorized a share repurchase program for up to 10 million shares of Dun & Bradstreet common stock. In the first quarter, Alight announced the sale of their Payroll and Professional Services business to an affiliate of H.I.G. Capital for up to $1.2 billion. The sale…

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 first quarter. The company generated 6% growth in adjusted EBITDA in the quarter, which equated to $201 million at a 36% margin. Importantly, D&B also improved free cash flow conversion. Leverage at DNB today is 3.7x debt-to-EBITDA, which has moved down from 4x 1 year ago, and management expects to be at 3.5x by the end of 2024. We remain optimistic about the future for D&B as they are improving key metrics and investing in the right areas to achieve their midterm guidance, and we believe this will drive upside in the stock. 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 Alight's hosted business. 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 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 Alight's business will reaccelerate in the second half of the year. As Bill noted, we believe the sale of their Payroll and Professional Services business is an important step to improving Alight's business model, attractiveness to investors and valuation. Lastly, I want to highlight that Alight's Board authorized the repurchase of up…

Thanks, Ryan. 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’Charley’s restaurants to focus resources on the more profitable locations. This restructuring is already producing positive results at store level operating cash flow as a percentage of restaurant revenues has increased from 8.4% 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 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 wind down of the external management agreement and the reduction in fees, and I wanted to provide additional detail. 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 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 be an -- also be a $6.7 million termination fee payment. Both of these values will be fixed for the next 3 years, at which point they will be eliminated. 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's shareholders. Our balance sheet and liquidity position remained solid. Cannae has $26 million in corporate cash today and $150 million in immediate capacity on our margin loan. The only outstanding debt presently is $60 million under our FNF note that matures near the end of 2025. 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 extend the maturity to 2027. At the close today, Cannae's aggregate net asset value is $2.1 billion or [ $33.35 ] per share, reflecting the completion of our tender offer and returning $222 million to Cannae's shareholders. With that, I'll now turn the call back over to the operator to begin our question-and-answer session.

[Operator Instructions] Our first question comes from John Campbell with Stephens.

Congrats on getting the dividend in place. 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 2-part question here on that. But maybe if you could just start off, how long do you envision on having that dividend in place?

Well, it's going to be in place for as long as we're around. And the goal, of course, is to start modestly, but it's well set per share per quarter dividend. And then as we've done with FNF, as you know, increased that dividend as cash flow allows. So we're committed to the dividend going forward on a consistent basis.

Okay. That makes sense. And then the kind of -- that does align with what Ryan was just saying around looking for companies that generate -- can help generate free cash flow for you guys. So that makes sense. So the second part of this question is mainly kind of related to how you fund it. And Bill, you mentioned if needed, you would 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 guys are saving, I don't know, $15 million or $20 million or so from the Trasimene wind down. And then Bryan 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, maybe 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 got it right. We have one more management fee payment in July, then it really ramps down after that. We are -- have been in the process of selling down our CDAY shares. And that would be to the extent we need some cash flow, that would probably be a source of that cash with the remaining CDAY shares. I'm disposing of those. 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 as a quality with $30 million or $31 million a year dividend payout, but we're not very far off, frankly.

Yes. Makes sense. And I want to extend congrats on the Cherries, Ryan. You've created a bunch of Cherries fans over here in [ Lovelock ]. So congrats to you guys on the great season.

Thank you.

[Operator Instructions] Our next question comes from Ian Zaffino with Oppenheimer.

[indiscernible] basically, you got a higher level view here and ask, as you move more to private, is there going to be a theme in private that you're going to look for? I know you touched on JANA a little bit. Can you maybe give us a little bit more of a fulsome discussion and kind of like what you're seeing? What you've been surprised by? What has been top of the table? And any other color you could give us on what to look for maybe in a potential investment?

Yes. So we're really going to stick -- to 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's -- 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 that some things are very, very inexpensive, particularly if there's some -- an interest rate component involved. And that's really where we're searching right now. And we've got 3 or 4 or 5 things that are kind of germinated to the top of the table. And we look at 3, 4 different transactions a week and generally speaking, discard almost -- discard them all, but we do have one potential transaction we're working on in which we've issued a letter of intent. And we have a couple of other ideas that are -- that should develop over the next 60 days to 90 days. And -- but they'll be conservative, there'll be cash flow generating ideas if that helps.

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 it maybe big synergies. You save a transfer fees. Any new developments on that front or? And how does that compete with capital versus kind of what I asked you in your first question.

Yes. So we are looking at a lot of different opportunities 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 primary league teams such as Bournemouth or Hibernian or Lorient. And again, we probably see 2 or 3 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 is sustainable. 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 kind of Benelux, the Scandinavian teams, Eastern European teams in very stable situations, probably not a LaLiga team or a Serie A team. 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, they'll play a similar style of football that coaches can be developed at a more junior or a higher band team such as a band 5 or band 4, where Premier League is obviously band 1 and Ligue 1 is band 1 and Serie A is band 1 as well as the Deutsche League and LaLiga. So it's all 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 with 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 a positive. So that's kind of the football story. And Ryan and I really spent quite a bit of time on the football side, just looking at different situations.

Okay. Good. And then just one more question, if I could. If we look at kind of like Alight and post an asset sale of that? I mean should that be a standalone company you think or attractive strategic partner to another company? Or like how do you kind of think about that general? And I don't know if you can answer that, but if again, I'd love to hear the answer.

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 that were interested in our Payroll business and our Professional Services business. If someone develops or a company develops is interested in talking about the balance of Alight, then that's obviously something we'd discuss and we'd consider.

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

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

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