Good afternoon, ladies and gentlemen, and welcome to the Cannae Holdings, Inc. Q1 2023 financial results conference call. During today's presentation, all parties will be in a listen-only mode. Following the company's brief 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 as a replay is available through 11:59 P.M. Eastern time on May 16th, 2023. With that, I would like to turn the call over to Rory Rumore of Solebury Strategic Communications. Please go ahead. Thank you, operator, and all of you for joining us this afternoon. On the call today, we have our Chief Executive Officer, Rick Massey, 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 Cannae's 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 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 Cannae's Chief Executive Officer, Rick Massey, who will open with a few brief remarks and then open the line for your questions. Hey, thanks, Rory. It's Rick Massey. Thank you all for joining the call. I'll try to be brief, but I'm gonna stand on a soapbox here for a second. We are not in the everybody on these calls or including us listen to a lot of earnings calls, and we've heard a lot of management prognostications on the market and the economy and all that. We're not dumb enough to get out and start making guesses about where the economy is headed. I'll say, talking to the CEOs of the companies that we deal with, there's a lot of uncertainty out there. What we are convinced of is that our portfolio, almost to a company, is grossly undervalued. I'm gonna go through just a few examples and of companies that have recently reported. Our largest holding, for an example, is Dun & Bradstreet. We've got 79 and change million shares. It's trading at a very low multiple of EBITDA, enterprise value to EBITDA. They reported a overall organic growth of 3%, that may or may not disappoint you. If you look at their peers, you'll see that their two peers in the consumer credit business, the closest peers to Dun & Bradstreet, one of them had revenues, revenue growth of 2%, and one had revenue shrinkage of 4.5%. Yet those two companies trade at almost twice the EBITDA multiple of Dun & Bradstreet. We're a little clueless about that. Dun & Bradstreet does not have that much more debt than some of its peers. It has a better margin, and like I said, it has better growth than its peers have shown. What you'll see if you look under the cover on Dun & Bradstreet is Anthony and the team there have done an incredible job of turning around their marketing services divisions by using essentially a data management platform where customers can use their own data, third-party data, and Dun & Bradstreet data to perfect their account-based marketing. It's going like gangbusters. Hoovers had a 60% churn rate. That is a 40% customer retention rate just a few years ago when they set about to fix Hoovers. It has a retention rate now in the eighties. Stunning turnaround for Dun & Bradstreet, yet the market is they're selling it off, and it's really disappointing to us. We wish that there more attention to be paid to Dun & Bradstreet because they've done a really nice job under the covers, fixing a very broken company. They've got it back to growth and growth faster than peers, and yet they've not been rewarded for that. Peers trade at, like I said, twice the multiple. I said I'd be brief. I'll try to be a little quicker. Alight reported today 15% revenue growth in the Q1. 15%. Their BPaaS, which is sort of their enterprise offering, multi-application offering, BPaaS sales were up 50%. Their bookings were a little soft. That's because they have had all these giant jumbo contracts that they've signed and are now in execution mode, like Exxon and GE and others. ADP, the closest comp to Alight, grew at 9%. This company, Alight, one of my favorites in the whole universe of stocks, grew at 15%. Yet Alight's trading at about half the multiple of ADP. Go figure. It's a little depressing. We know that the market was disappointed that Stephan and the team at Alight didn't forecast or upgrade their forecast for 2023. I would just ask all of you and those investors to listen to a number of calls that have been made in the Q1 and see how many companies who beat their guidance actually for the Q1 actually came out and raised for 2023. In my own anecdotal experience, it's a very low percentage because of the uncertainty in the markets out there. Who can blame Stefan and Katie for not sticking their necks out and forecasting increasing growth in a choppy sort of economy. Look at CDAY. CDAY beat the market substantially in terms of its guidance, and the stock's down 15% since their earnings call. You go figure. It makes no sense. It's trading in, like, the mid-50s now. It's in our last sale, we sold 1 million shares and $78, that was a good trade, and we probably would sell another 1 million at $78 if it ever gets back there. At 55, it's dumb. It's just a really dumb price. Paysafe, everybody's whipping child. Paysafe actually turned in high single digits revenue growth, flat EBITDA growth, which is pretty amazing given the mess that Bruce and the team inherited. The stock's up a little bit, but they did. This is a business that did $420 million of EBITDA in 2022, and on track to do even better than that in 2023. It's kind of been thrown out with the bathwater too. This quarter, we are, we're looking at a lot of things, but we are not sure it's timely given the all the noise in the capital markets, the, especially the debt capital markets, and all the uncertainty in the economy on the back half of the year. You know, don't be surprised if we don't strike at something in the second quarter, and don't be surprised if we do. We are not, we did not buy back any shares in the Q1, and it's principally because we don't have a lot of extra capital to do so. In order to raise that capital, we're gonna have to sell one of those aforementioned holdings at a very disappointing price, and we're just not that dumb. It doesn't make sense to sell Dun & Bradstreet at $10 when it's worth $15 and so that you can go buy your shares back at a deep discount too. It just doesn't make sense to me. The math doesn't work. You may be some of our investors may be disappointed we didn't buy back any shares, but we think it's prudent. It's just prudent portfolio management. Ryan Caswell is our president. He's been busy with our Black Knight Financial. I know there may be some questions about that. Where are we sitting? How is, how is Bournemouth doing, and what did they? Are they out of the death zone, and what's your view? No. We've been, I think we talked about it the last time. We spent some money in the transfer window, and the team has performed much better. It looks like we are very close, if not out of the relegation zone, which is a great outcome. We're doing a lot on the business side, from a commercial perspective in terms of increasing sponsorships, thinking about optimizing ticketing revenue. We're very pleased with the football performance to hopefully stay up in the Premier League, which will allow all of the other stuff and the multi-club strategy to perform much better. We think we got a steal on Bournemouth, or Bill got a steal. He and Ryan are the ones that wormed their way into the process and got a deal. We paid 0.8x revenues. The comps are now probably 2x what they were at the time, maybe 5x. You're seeing people pay 5x for small EPL teams. That's gonna turn out to be a really good one for us, and we're excited about it. I don't have anything else. Did I miss anything, Bryan? Nope. No? Okay. Bryan Coy, our CFO, is here with us. Unless you have anything to report, we'll just go to questions. Oh, let's go to questions, operator. Thank you. We will now begin our question and answer session. To ask a question, you may press Star then One on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. The first question comes with Ian Zaffino with Oppenheimer. Please go ahead. Hi, thank you very much. Hi. How are you guys? Good, good. Great. Thanks for all the commentary. This is helpful. Since you threw that out there, I'm gonna press you a little bit on this. You know, you basically almost have 100% upside if you buy back your stock, right? I mean, my argument is bird in the hand if you buy back your stock versus, you know, one... two in the bush. Help us understand this, right? 'Cause if I'm sitting here, I would rather buy back something that's worth half the price right now, as opposed to sitting and waiting, kind of like what your prepared remarks, indicate. Just square that and push you a little bit on your thinking there. Thanks. I think the underlying assumption is that we are buying back at a 50% discount to book value. It's not clear that buybacks have any effect on market value. I'll say we ran a grand experiment in 2022, and we bought back, I don't know, 12% or 15% of our company, and the stock actually, you know, declined. Yes, if you buy our stock at $20 and the tangible book or what the net book value per share is $40, it's a theoretical double, but it's a theoretical double to book value per share, and clearly, we don't trade on book value per share. I would rather we think that the market for our stock is depressed, not because we don't buy back enough shares, but because our portfolio companies are poorly valued. That's why our strategy is let's just before we go sell something, let's wait for it to hit, you know, the target price, the price that we sort of thought about when we went into the deals in the first place. Okay. I don't know if that satisfies you or not, but when you when the assumption behind the, it's an instant double is only in the case of a liquidation, and we're not in liquidation. Yeah, we could buy it at $20. If we liquidated tomorrow, we'd get $40 a share. These are rough. I don't know what our actual stuff is, but it's $40, $42 or whatever. What is it? Thirty-five. You tell me. It's $35. $35. Okay. roughly today. $35. That's only in the case of a liquidation. We're not in a liquidation. If the shareholders want us to liquidate, you know, we'd be glad to listen to that. Even then, liquidating at these values would be, it seems to me, to be pretty dumb. You know, we're not naturally sellers at deep discounts. Okay. Understood. Then, maybe a little bit in the same vein here. You kind of threw out the straw man of selling Dun & Bradstreet. You know, this kind of dovetails into the next question as you sold some CDAY. Why not more CDAY? Why talk about, you know, selling Dun & Bradstreet and why not talk about selling CDAY or more CDAY or maybe just your thinking is different on CDAY? Well, Ian, great point, great question, and I appreciate you pushing us on these because our credibility is everything. That's not to say. We sold 1 million shares. We've got 5 left, 5 million left. I'm not gonna say one. We can't and shouldn't say one way or another what we're gonna do with that inventory, but it wouldn't surprise me for us to sell more. I think we'd prefer to sell it back in the $78 range versus the $55 or $56 range. You might forgive us if we hold out a little bit to see if it doesn't bounce back to that. It's sort of an. That CDAY's a... If you look at the chart, it's really interesting because they blew out their numbers and their stock's down 15% since May 3rd when their numbers came out. Doesn't make any sense at all. Okay, great. Thank you very much. Sure. Thank you, Ian. Thank you. The next question comes with John Campbell with Stephens Inc. Please go ahead. Hey, guys. Good afternoon. Hey, John. Hey, Rick. You were on fire with evaluation rundowns on your, on your soapbox. We agree with your stance there. You got a lot of puzzling kind of disconnects across a handful of these public investments, we hear you there. On Bournemouth, I mean, obviously, great kind of run of things of late, you know, several points above that relegation line. It does seem like you guys are in a good spot. You mentioned last call that, I think you were kind of tongue in cheek, but mentioned existential threat if you were to go and be relegated. That's a good outcome so far. Oh, no, it wasn't a, it wasn't an existential threat for Bryan and I. It was just for Ryan Caswell, who's sitting here with us. Heard that, heard that. In the, you know, in the past calls, you guys have talked to maybe 3-4 times your investment on Bournemouth, and you're talking about maybe a 5-7 year type horizon. Then Matthew, I think you've repeated twice that the implied takeout or the implied value is about 8.8x revenue, so a really good price. You know, when you look at Man U stock, I'm not close enough to that to determine whether that's, you know, pure apples to apples. That one's at about 5x revenues. Rick, I think you mentioned your perceived peer group's about 5x, so that seems to kind of check up. You know, if you guys were to get that on Bournemouth, I mean that's pretty substantial. I think it's about $8 per share of incremental value for you guys, about a 40% boost. That's. I was just doing the math in my head. I think you're in the right range, John. That, that seems to be a pretty meaningful opportunity. I mean, obviously, as we assess the portfolio, there's, you know, the lion's share of the value is kind of tied to public assets. We can see the price day-to-day. On private side, that's where there's maybe a little bit of extra torque. You know, Bournemouth seems to be the clear opportunity here. My question here after that rambling is, you know, what do you think the steps you guys need to take to juice the revenue to get things going where you think you can eventually be awarded that 5 x valuation? Ryan will handle that. I mean, I think when we took over Bournemouth, if you looked at the commercial side of the business, it wasn't run as well as we would've hoped or as well as we think that we can do it. We believe that was a big opportunity. We've hired some people over there specifically focused on that. Clearly, part of the thesis is you have to stay in the Premier League to get that valuation, which we think we're doing. We also believe that building out the multi-club model, which started with our investment in Lorient, and we're looking at a few others, we think that further cements and helps the value because it helps create sort of additional sponsorship to make your brand look more, you know, like some of the clubs if you look further up the standings or the table. Look, I don't think we'd sell it. I don't think we're looking to sell it tomorrow. I think there's some work that we need to do, but we think we're very much on the way in terms of, one, requalification for the Premier League. Secondly, building out, all of the commercial side of the business, really taking the learnings from the Vegas Golden Knights and kind of enhancing what they were doing. It's, you know, I don't think it's, and I don't think we could flip it today, John, but I think we are creating the value to get to those comparable transaction multiples that you mentioned earlier. Yeah. John, we were kind of thinking of this as a, you know, 5-7 year hold. You know, kind of 3, 4 times our money as sort of a baseline IRR. I'm not promising that, but that's what we were thinking. It's gonna take a while. You've got the best... You know, Bill brought, what's the guy's name that just joined? Tim Frevola. Tim Frevola. Tim Frevola over there from the Knights. According to Bill, he's already working magic and Frevola ran with the business side. I mean, I don't know you call it the revenue, the tickets, sponsorships, concessions, food, beverage, all that stuff. Correct. Right. They were more of mine. They were. Yeah over there. There's a long way to go on the downside, but there's a lot of upside. Yeah. Agreed. Yeah. Makes sense. That seems like a very promising opportunity. We'll be keeping tabs on that. This is one just kind of minor housekeeping item, I noticed in the shareholder letter last go around, I think you guys said a 50.1%, so a majority ownership position in BKFE. It looks like on the April update and also in the shareholder letter, it's saying 49%. Obviously not a big difference. Yeah. I took those extra shares and put them in my pocket, John. No. What happened was, the company established, as with all companies that we're associated with, a management incentive plan with equity for people like Frevola. We were slightly diluted by that, and we wrote a check this week to get us back. It was at three and a half million dollars, to get us back to 50.1%. Good catch. Okay. Good catch. You're reading our stuff. We appreciate it. Yeah. Absolutely. Last one here, and this is another housekeeping item, the $133 million commitment you guys have called out for BKFE, does that include both Bournemouth and Lorient, right? Yes. We have to pay the seller of Bournemouth another- Twenty ... check, another $20 for- GBP 20 million. Yeah, for s taying in the Premier League. Staying in the Premier League. Yeah. Yeah. Okay. That's incremental to the $40 that's already planned for 3Q? No, no. No, no. Nope, that's included. Okay, included. All right. That's all I got. Thanks, guys. Thank you, John. Appreciate your interest. The next question comes with Chris Sakai with Singular Research. Please go ahead. Hi. Good afternoon. Hey, Chris. Just wanted to ask about potential investments. Where are you seeing better valuations now, in public or private investments? Public. I don't think the private market has adjusted its valuation expectations to where you see a lot of publicly traded companies trading right now. All I have to do is refer to our the portfolio discussion that I had at the outset. Those are public companies, and they've just been crushed. We don't think the internal valuations that PE have gotten anywhere near that. Okay. Yeah. Go ahead. You're likely to see us do... You're likely to see us. I mean, there are some privates out there that we're looking at, but you're likely to see us probably tilt toward the, you know, the kind of go private model or investing in public companies, at these depressed prices versus the kind of crazy prices that are that we're still seeing with PE. I wanna emphasize, go privates depend on a functioning debt capital markets, and that's not going on now. They're just not... Nobody's doing deals now. It is totally dead. Okay. Yeah. Thanks for that. Then can you mention or provide some color on where you're looking for your next investment? Not without getting too specific enough that we're still. I'll just say we're still Ryan and Bill are definitely looking at building out the multi-club strategy. I like the idea of building a multi-sport business under Bill and Ryan's leadership. They're. That's one area that I know that they're spending a lot of time on. I'm kind of spending my time on the traditional, I would call it traditional Bill Foley companies, Chris. Utilities, tech-heavy, either tech services or just pure software. You know, another thing is, we start our investment approaches at home, and I. It may be that some of the best investments we make over the next year could be in some of our existing portfolio companies. Okay, great. Thanks for the answers. Thank you. Thanks for the question. This concludes our Q&A session. I would like to turn the conference back over to Mr. Rick Massey, Chief Executive Officer, for any closing remarks. Please go ahead. I wanna make sure that we've not. Ms. Operator. RBC. We usually have RBC on the call. Are they? I don't wanna drop off if they've, if they, if they have a question. Can we have a moment of silence for, you know, for our group there and see if they wanna ping in on us? If not, I'll say thank you. Thanks for joining us. Thanks for your interest. I hope you see the value in our stock and in the portfolio that we have. It's clearly there. We're excited about maximizing that. Okay. All right. I see here that we do have another questioner. Good. I'll review. Okay. It comes from Kenneth Lee with RBC Capital Markets. There we go. Please go ahead. Hey, Ken. Hey, guys. Good afternoon, and thanks for taking my question. Thanks for. Sure, man. Um- We knew you'd probably be on the call. We didn't wanna just, you know, hang up without giving you a chance to badger us one way or another. No, I'm just kidding. No, absolutely. Absolutely. Appreciate the time. Just one on the AFC Bournemouth. As you look out further and perhaps this also goes with the other clubs as well, you know, how dependent are the profitability of club ownership, how dependent is it gonna be upon the enforcement of UEFA Fair Play regulations? You know, just want to gauge your thoughts around that. Do you, do you need to have Fair Play strongly enforced or are your projections, you know, pretty able to handle it without a strong enforcement there? Thanks. Yeah. I mean, I think there's a few different components of UEFA Fair Play. In general, a lot of that stuff is aimed more at the big clubs and people who are spending a lot of money to try and get into European competitions. You know, I think it's a little bit less focused. You know, obviously, having the same regulations, but it's less focused on the smaller teams. Frankly, I think it probably helps the competitive balance for smaller teams on the margin. We've definitely thought about it. It's definitely incorporated in our projections. You know, I think there are other teams that are going to have bigger issues with it than Bournemouth would. Gotcha. Very helpful there. One follow-up, if I may. Is there any thoughts around the legacy restaurant business? What are your longer-term thoughts there? Could we potentially see some either some actions or view around that business? Thanks. Hey, Ken, this is Bryan. I mean, the one thing I'll say is that, our restaurant group has just done a yeoman's job in the last 24 months. They've faced a pandemic, they've faced great labor crisis, they've faced commodity and lately inflation. They've done a great job. We've closed just year over year, they closed 17 restaurants that were underperforming and had a drag on the business, and it's had great effects. They, you know, average guest check, they've raised prices, average guest checks up 9%. I think they're doing a yeoman's job in an industry that's just had unprecedented obstacles in its past the couple of years. You know, we like the business. I don't know that we're gonna be in it long term, but you know, with what's been going on in the last couple of years, it's definitely not been the right time to think about moving it. We're very happy with the way that they have managed through that. Gotcha. Gotcha. Very helpful there. Very helpful there. One last question. Hey, Ken, you ask all the questions you want. Our time is yours. Sure. No, we appreciate your interest. No, we really appreciate it again. Just looking at a high level, just based on all the comments early in the call, would you say that further monetizations within the portfolio, is that gonna be predicated upon improving valuations, or would a deeper discount in your own shares, you know, cause you to review it further? I just want to once again gauge what could be the potential catalyst down the line in terms of further portfolio monetizations. Thanks. That's a, that is a really good question. The answer from, and Bill may have a different point of view, but our job is to manage the portfolio of companies that we have, and it's really hard to to work on a dual track where you're watching out for your own shares and the discounts there. We think we get paid to maximize the value of the portfolio, not the shares. I would say the answer to your question is yes. It's like I would say it's like 70%, this is me, 75% of that's dependent on about portfolio valuation and 25% stock valuation. That's kind of the way we look at it. It just doesn't make a lot of sense to sell shares of Dun & Bradstreet at $10 bucks, at down here at half the multiple that its comps trade, so that we can buy our shares back or sit on cash or do whatever else there is with it. It doesn't make sense or make another investment. It doesn't make a lot of sense. We think that the market's gonna eventually reward both Cannae and Dun & Bradstreet with Dun & Bradstreet, and we think it's gonna reward both Cannae and Alight with Alight. Hopefully they'll happen together, and we won't have to choose. Gotcha. Gotcha. Very helpful there. Thanks again. Well, that was a helpful question, and it's you're helping us sharpen the way we think about this. This is hard. These are hard questions that we have, we have to answer. These are hard. Right now, it just feels dumb to sell any of these things at anywhere near the prices that we're talking now. Got you. Thanks again. With that, we conclude our question and answer session. I would like to turn the conference back over to Mr. Rick Massey for any closing remarks. Please go ahead, sir. I think I already did. Thanks a lot. Thanks for your interest. We look forward to speaking with you again next quarter. Obviously, any of you wanna have some side chats with us, work through Rory and Brian and to set something up. We'd be happy to talk. Have a good rest of the day. This concludes today's conference. Thank you for attending today's presentation. You may now disconnect. Have a good day.