Cannae Reports First Quarter 2018 Results with $1.06 Billion Book Value of Portfolio Company Investments, or $14.95 Per Share

Wed, 05/09/2018

LAS VEGAS--(BUSINESS WIRE)--Cannae Holdings, Inc. (NYSE:CNNE) (“Cannae” or the “Company”) today reported operating results for the three-month period ended March 31, 2018.

Highlights

On April 26, 2018, Ceridian HCM Holding Inc. (NYSE:CDAY) priced its initial public offering of 24,150,000 shares (including a greenshoe option) at $22.00 per share
Concurrent with the IPO, Cannae participated in a private placement to purchase 1,521,030 shares of CDAY common stock at the IPO price, representing an aggregate investment of $33.4 million
Following the IPO and private placement, Cannae owned 37,135,921 shares, representing a 27% stake in Ceridian
Based upon the CDAY closing price of $32.95 as of May 8, 2018 Cannae’s position is worth $1.22 billion
On March 12, 2018, Cannae entered into a non-binding letter of intent with Newport Holdings to reorganize the Companies’ respective interests in American Blue Ribbon Holdings
On March 13, 2018, Cannae entered into an Assignment and Assumption Agreement with ABRH’s lenders to purchase all of the outstanding loans and lending commitments under the ABRH Credit Facility of $124 million, which resulted in Cannae becoming ABRH’s sole lender
Total book value of portfolio company investments was $1.059 billion as of March 31, 2018 roughly flat compared to total book value at December 31, 2017
Book value per share was $14.95 as of March 31, 2018 unchanged from the quarter ended December 31, 2017
Total holding company cash stood at $104 million as of March 31, 2018, representing a decrease of $111 million from the quarter ended December 31, 2017 due to the purchase of ABRH’s credit facility

Ceridian

First quarter total revenue for Ceridian HCM and Lifeworks of $208.9 million, an 11.7% increase over the first quarter of 2017, and pretax earnings of $4.2 million, versus $187.0 million in total revenue and a pretax loss of $9.2 million in the first quarter of 2017
Ceridian HCM, which includes both Cloud and Bureau solutions, delivered first quarter revenue of $187.2 million, an 11.8% increase over the first quarter 2017 result of $167.4 million
Ceridian HCM Adjusted EBITDA of $43.6 million, a $12.4 million increase over the first quarter of 2017, and HCM Adjusted EBITDA margin of 23.3%, versus HCM Adjusted EBITDA of $31.2 million and HCM Adjusted EBITDA margin of 18.6% in the first quarter of 2017
Cloud-based revenues grew 38.0% to $125.2 million in the first quarter of 2018 versus $90.7 million in the first quarter of 2017
3,154 Dayforce customers were live on the platform at the end of the first quarter of 2018, up from 2,480 at the end of the first quarter of 2017

Restaurant Group

$273.8 million in total revenue and a pretax loss of $9.3 million for the first quarter, versus $272.7 million in total revenue and a pretax loss of $4.5 million in the first quarter of 2017
EBITDA of $5.1 million and an EBITDA margin of 1.9% for the first quarter, versus EBITDA of $8.2 million and an EBITDA margin of 3.0% in the first quarter of 2017
Same store sales increased 0.1% in the first quarter, as Ninety Nine same stores sales increased by 1.4%, O'Charley's declined by 1.6%, Village Inn improved by 1.9% and Bakers Square expanded by 2.0%

T-System

$16.9 million in total revenue and $0.1 million in pretax earnings for the first quarter of 2018
EBITDA of $4.3 million and an EBITDA margin of 25.4% for the first quarter of 2018

“We made meaningful progress in demonstrating the value of our largest portfolio company which positions the Company to deliver substantial value for our shareholders,” commented Chairman William P. Foley, II. “On April 26, 2018, Ceridian successfully completed its initial public offering of 24,150,000 million shares of common stock at a price of $22.00 per share. Ceridian raised approximately $590 million in net proceeds which it used to repay debt. Concurrent with the IPO, Cannae participated in a private placement whereby the Company purchased an additional 1,521,030 common shares of Ceridian stock at the IPO price, which brings Cannae’s total ownership in Ceridian to 37,135,921 common shares. Based on CDAY’s closing price of $32.95 per share on May 8, 2018, Cannae’s ownership position is worth approximately $1.2 billion.”

Mr. Foley continued, “We signed a non-binding letter of intent in March with Newport Holdings to reorganize our respective equity interests in American Blue Ribbon Holdings. The proposed reorganization will leave Cannae with approximately 94% ownership in 99 Restaurants and O’Charley’s along with an approximately 5% interest in Family Dining and Legendary Baking. Upon completion of the reorganization, which is expected to occur in the second quarter, our restaurant group will be greatly simplified, and American Blue Ribbon’s management team will be able to focus their attention on two large restaurant concepts which have similar market facing attributes. Looking forward, we see significant room for operational improvement and are working with ABRH’s management team to reduce expenses, increase productivity and improve customer satisfaction levels across our brands.”

“Turning to T-System, we are pleased with the Company’s results in the first quarter of 2018, which showed strong growth from the first quarter of 2017, driven by new customer wins in their Documentation Software division and a heavy flu season which increased volume in the Coding Solutions division. Looking forward, we believe T-System is well positioned to increase market share with the expectation of continued organic growth as well as the addition of selective add-on acquisitions to broaden the Company’s product capabilities and customer base.”

Mr. Foley concluded, “Looking forward, we are continuing to seek attractive investment opportunities as we evaluate opportunities for capital re-investment.”