Good afternoon, ladies and gentlemen, and welcome to the Cannae Holdings Incorporated Fourth Quarter and Full Year 2023 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 open for questions with instructions to follow at that time. As a reminder, this conference call is being recorded, and a replay is available through 11:59 PM Eastern Time on February 28th, 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 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 our Chairman and CEO, Bill Foley who will open with a few brief remarks followed by Ryan Caswell. We will then open the line for your questions.

Thanks, Jamie. As we previously announced, I have assumed the role of CEO, and Rick Massey has taken on the role of Vice Chairman of our Board of Directors. I'd like to thank Rick for his many contributions to Cannae over the last four years and look forward to continuing to work with him. As CEO, I will focus on returns to shareholders, both immediate and longer term. I am very aware of the deep discounts that Cannae's shares trade to net asset value and appreciate the input from our shareholders on the importance of share buybacks. In my letter released this afternoon, I noted the company's intention to commence a modified Dutch auction tender to repurchase $200 million worth of Cannae's common stock at a price per share between $20.75 and $23.75. The transaction will commence in early March and will be funded by cash on hand. Further details, including the terms and conditions of the tender offer, will be filed with the SEC over the coming weeks. The Dutch tender is in addition to our previously approved share repurchase programs, under which we have repurchased approximately 24% of our shares outstanding, compared to March 31st, 2021, having returned more than $510 million in capital. Additionally, Cannae still has 12.6 million shares remaining on our previous share buyback authorizations, which is in addition to the tender offer that we've announced today, and when taken together, speaks to our commitment and one way we're looking to close Cannae's share price discount to net asset value. As a top five holder of Cannae, I am very aligned with our shareholders in creating value and seeing our share price not only appreciate towards the fair value of our portfolio, but also growing that value. Looking back over our history, private company investments have been an important part of Cannae's success. Ceridian is the best example, where we've now received over $2.1 billion in gross proceeds from the sales of stock in this company.

Thank you, Bill. Continuing to find attractive investments is critical to our long-term success, and I'm excited with our announcement today of our strategic investment in partnership with Jana Partners, where we acquired a minority stake for approximately 1.58 million Cannae common shares and $18 million in cash. I'm thrilled to partner with Barry Rosenstein, Scott Ostfeld, and the Jana team who have built an incredible track record as public company investors. We believe a partnership with Jana creates significant upside for Cannae as a result of one, sourcing new control opportunities for Cannae. Jana's business is based on finding undervalued public companies with specific catalysts to unlock value. Cannae and Jana can collectively work together to find situations where Cannae can be part of the catalyst to unlock value with the target company, i.e., Cannae acquired to carve out the company or provide other capital solutions. This relationship will be beneficial to both Cannae through the sourcing of these opportunities as well as Jana by giving them a different tool to execute their strategy, that is, leveraging Cannae as a catalyst to a target company, thus driving returns for both entities. The second reason why we're excited about this investment is that we believe there will be an increase in the value of the Jana platform. Jana's standalone business is well positioned for success, given its industry-leading returns and long track record of success. We believe their standalone business, coupled with the opportunities from our partnership, will enable Jana to enhance their already strong performance and help grow their business to its optimal scale, thus increasing the overall value of Jana's business. Three, closing of Cannae's stock price to NAV gap. Over time, we believe by leveraging the Jana relationship, Cannae's ability to source proprietary acquisition opportunities and make new investments, and with the improving performance of Cannae's underlying portfolio, the stock price to NAV gap will close, resulting in significant returns to our shareholders. Cross-equity ownership of the transaction aligns both parties in the other's success. I would note that Cannae will not pay fees on its investment in Jana funds or future opportunities, and additionally, the Jana investment will not be subject to any of the Trasimene management or incentive fees. I would also like to talk about the CSI investment. Through our relationship with Frank Martire and Bridgeport Partners, we participated in CSI's LBO in 2022. CSI has outperformed all expectations and brought in a new large investor in December, valuing the company at approximately $2 billion, a 31% increase from the take-private valuation. As part of this investment, Cannae received a $37 million cash distribution, or 43% of the initial capital that we invested. While the implied value of our ongoing position represents 104% of our original investments. I would next like to turn to Black Knight Football. At AFC Bournemouth, our management team has done a terrific job transforming Bournemouth both on and off the field. Currently, the team is ranked in 13th place, which is up from last year's 15th place, and we believe we can move higher than that. Additionally, the business side of Bournemouth has performed very strong, with hospitality up approximately 50% year-over-year, ticketing up 13% year-over-year, and sponsorship up 40% year-over-year. In January, Black Knight Football announced that it purchased a minority interest in Hibernian Football Club of the Scottish Premier League. We are excited to partner with the Gordon family and believe that Hibernian will be a strong contributor to our multi-club ownership strategy. We believe finding private investments like these, where we can acquire operating companies, partner with management teams, and actively engage to help grow their businesses, will drive value for our shareholders. Moving on to our listed companies, DNB's constant currency growth of 5.1% from the quarter is an acceleration from the 4.8% in the third quarter and 3.2% in the second and first quarters. While Alight's top line revenue growth was 1.9%, the company posted 12% growth in adjusted EBITDA and hit $2.2 billion in BPaaS total contract value bookings since 2021, $700 million over the three-year target of $1.5 billion that they had set. Alight also has more than $6.5 billion of future revenue under contract. The team is also working with Stephan on Alight's strategic portfolio review, which they announced this morning. We believe that we can expand Alight's profitability and recurring revenue model while building a more valuable business. Finally, starting in the third quarter of this year, Trasimene's fees will be reduced by approximately 16% going forward as a result of Rick Massey moving into the Vice Chairman role. To conclude, we are very optimistic with what the future holds for Cannae and our shareholders as we find new high-return investments, continue with our share buybacks, and gradually rebalance our portfolio. Taken together, I believe this will have the dual effect of driving our net asset value higher while closing our share price to NAV discount.

Thanks, Ryan. At the close today, Cannae's aggregate net asset value was $2.43 billion, or $33.61 per Cannae share, compared with the third quarter's $2.38 billion, or $33.67 per share. Cannae's liquidity position is strong with $149 million of corporate cash and short-term investments net of the cash invested in the Jana transaction. The company also has $150 million of undrawn capacity under its existing margin loan. The only outstanding debt presently is approximately $60 million under a revolver that matures near the end of 2025. Under an amendment to that revolver, we paid down $25 million of the balance and fixed the interest rate at 7%, saving Cannae approximately $4 million annually in interest payments. I'll now turn the call back to the operator to begin the Q&A session.

We will now start the question-and-answer session. Our first question comes from Kenneth Lee of RBC Capital Markets. Please go ahead.

Hey, good evening, and thanks for taking the question. First one on the tender offer. I wonder if you could talk a little bit more about the motivation for pursuing a tender offer versus perhaps some of the other options you could have pursued? Thanks.

Well, really, we moved to the tender offer plan to accelerate our share repurchase program to retire shares. We found that as we were repurchasing shares, first, we were blacked out at various points in time due to earnings releases or activities that we were involved in. For example, the Jana transaction. And also, we were limited by the number of shares we can buy per day. While we can do large bulk or large share block transactions, they were becoming few and far between for us to execute against. So, we felt like at this point, with our share price trading at this NAV discount, that we should just accelerate our buyback program, which, in effect, that's what the tender offer is doing, and retire more shares more quickly.

Got you. And then in terms of funding the tender offer you mentioned using cash on hand, I presume that there could be some drawdown potentially in the loan facilities, but just want to get a little bit more color around that. Thanks.

Yeah, it could be a combination of drawdown under our margin loan facility, or it could be a continued sale of some of our liquid public securities. We have about $150 million cash on hand right now. So the $200 million figure really is only $50 million short of what we actually have on hand in the bank at this point. So we're really not concerned about raising the additional $50 million. If we actually have a green shoe, which would be 15% of the $200 million, that would be an additional $30 million. But we're very confident that we can raise those funds really expeditiously and easily.

Got you. Very helpful there. And if I could ask another follow up here, could you just talk a little bit more about the Jana partnership? I wonder if you could get a little bit more detail in terms of the voting arrangements and any kind of detail around that in terms of supporting the management and the board there? Thanks.

Yeah. So, as we noted in our press release, we agreed to a voting agreement with Jana. We view this as a partnership we're excited to work together. They are taking stock in Cannae, and we are taking stock in Jana, and we believe the cross-ownership will incentivize both of us to work together. And we believe it will be a benefit to both businesses through theirs in terms of driving returns and increasing AUM and to ours in terms of sourcing proprietary acquisitions of operating businesses.

Got you. And just one final follow-up for me, if I may. You talked a little bit about how some of the partnering on potential opportunities with Jana could look like, but wondering if you could just further flesh that out in terms of potential structures of making control acquisitions with Jana and I think you mentioned a bit about some carve-outs. Just wondering if you could just perhaps talk on a hypothetical or some other further flesh out of some of the opportunities. How could they look? Thanks.

I think you should definitely review Jana's investment deck, as it will provide you with valuable insights. Ryan can share that with you if you're interested. This document is what they utilize when seeking funding from external sources. Currently, there are no specific transactions under consideration. However, some opportunities that Jana is exploring and has shared with us seem quite promising, even though nothing is imminent at this moment. We expect to see several transactions happening each year, and we aim to partner with them on those.

Got you. And actually, just one more, if I could squeeze in, would it also be possible for Jana perhaps to invest in any of the portfolio companies within the Cannae portfolio? Is that also a possibility?

Everything really is on the table with Jana. I'm sure they can help us with some of our portfolio companies in terms of looking at alternative strategies relative to sales of all or a portion of the assets, going private transactions, all kinds of different situations. The Jana Group is a very skilled group of investment professionals, and we really look forward to the partnership.

Our next question comes from Jonathan Bass of Stephens. Please go ahead.

Hey, guys. Thanks for taking my questions. I was hoping you could address the public versus private investment philosophy. Where do you guys see the team spending the majority of their time and efforts moving forward? And out of the private investments you have today, ignoring the size, what do you see as having the most promising return potential over the next handful of years?

Look, I think, in terms of public versus private, we are going to be much more focused on private investments going forward. I think it works better. If you think of what Cannae is and the capital that it has, and how we can most effectively leverage our permanent capital, we believe looking at private businesses will be better than the public, and we like the public businesses that we have. But I think you'll see us sell down those names over time and look to reinvest in private businesses. And then in terms of the portfolio of private businesses that we have today, I don't have a perfect answer, but I'll say just because we were talking about it before, I think you heard a little bit about some of the results that you've seen at Bournemouth and Black Knight Football. In terms of the success that we've had on both the business side and the football side, we believe that going forward we'll be able to continue those successes. Furthermore, we think the multi-club network that we are building, as we build that out, there's more value to extract from that. So we're very excited about the investment, we're very excited about what the team has done to date, and we think there's big upside going forward.

And also, if you look back at our public company investments, they're really a result of something that was private that converted into public assets. So, Dun & Bradstreet, we engaged in a going private transaction, then took it public and we still have our position in that company. Alight was the result of a private company that was converted into a public company via SPAC that we had sponsored. And Ceridian or Dayforce, of course, is a long-term investment that was private for years and years and years. As it went public, we then began disposing of our interest in Dayforce, and we're down to a fairly small number of shares. Paysafe, again, was a SPAC transaction that we participated in and were a sponsor of, and the same with System1. So, really our public company assets that we've acquired have generally started out as private assets that converted into a public company.

Okay. Thank you. And on Ryan's last point there, touching on the multi-club strategy with the new minority stake in Hibernian, can you maybe highlight the multi-club strategy, what it is, and why it makes sense, why it can be successful?

The Premier League is a challenging league to compete in as it is considered the top football league in the world, featuring owners from sovereign wealth funds and private equity firms. We have an interest in Bournemouth and have discovered that having stakes in other clubs within prominent leagues offers benefits during the transfer window, allowing for the acquisition and loaning of players. The Scottish Premier League is a fantastic league that doesn't have immigration issues regarding Scotland and the UK, and it produces a strong pool of players who can potentially join Bournemouth. Additionally, we can lend players to Hibernian to develop them in the Scottish Premier League, who can later return to the English Premier League. The same approach applies to FC Lorient in France's League One; for example, we recently recalled a player we loaned to them and acquired Dango Ouattara, who is now part of Bournemouth. By owning a share of another team, such as our 40% stake in a League One club, we effectively only pay 60% of the player's transfer fee to other shareholders. This creates a strategic and financial advantage, prompting our interest in investing in more clubs within various leagues to support the growth of Bournemouth in the Premier League standings. Currently, Bournemouth is positioned at the top of the hierarchy, with other teams supporting us while we also aid them by supplying players and collaborating on team development and transfer strategies. This model isn't new; Manchester City has successfully implemented it over the past 15 to 20 years, now owning 13 or 14 clubs. While we may not reach that number, acquiring a few more clubs would be intriguing.

All right. Thanks for the color, guys.

Yeah. Thank you, operator. We are very excited with the opportunities ahead and confident in our strategy as we transform our portfolio, which we believe will deliver value to our shareholders. We look forward to speaking with you again on our first quarter 2024 earnings calls. Have a great day.

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