Cannae Holdings, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Kenai Holdings Incorporated Second Quarter 2022 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 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 1159 p.m. Eastern on August 15, 2022. With that, I would like to turn the call over to Jamie Lillis, of Fulbury Trout. Please proceed.

Thank you, operator, and all of you for joining us this afternoon. On the call today, we have our chairman, Bill Foley, our chief executive officer, Rick Massey, tonight's president, David Ducamin, and Brian 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 Kaniyia'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 the 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 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 Kaniyia's Chairman, Bill Foley, who will open with a few brief remarks, then we'll open the line for your questions. Bill?

Yeah, thank you, Jamie. Through the second quarter, we focused on two main themes to prepare for inflation and a rising interest rate cycle. First, we used our excess liquidity to repurchase our shares, which we believe are trading at a meaningful discount to fair value. Second, we continue to simplify our portfolio by monetizing investments that were either less immune to an inflationary cycle or that helped optimize our tax position. Overall, we are very pleased with our portfolio companies and their ability to continue to generate growing profits in an inflationary environment. During the quarter, we repurchased $4.8 million Kenai Common Shares. Year to date, we have repurchased 6.8 million shares, representing approximately 8% of our shares outstanding. In total, we have invested $306 million to repurchase approximately 13% of our shares outstanding since we received approval from our board for our repurchase program in 2021, as we continue to believe that our shares are not only undervalued, but so too are the shares of our portfolio companies. At quarter end, we have completely extinguished the 219 board repurchase authorization and have only 2.7 million shares remaining on our 2021 authorization. As a result, our board has approved a new three-year 10 million share repurchase authorization, which further demonstrates our commitment to repurchase our shares when they're trading significantly below intrinsic value like they are today. In June, AmeriLife announced an investment that values Kenai's stake at a significant premium to our original investment. As a reminder, Kenai invested $121 million for a 20% stake in AmeriLife alongside Thomas H. Lee Partners, or THL, in March of 2020. Over the past two years, we have worked in collaboration with THL and the AmeriLife management team to accelerate organic growth and expands through strategic M&A. We are very pleased with the results, and as it led to a strategic investment from Genstar Capital, wherein they will take an equal ownership position with THL Partners. This transaction values Kenai's initial investment at $338 million, or a 2.8x multiple of our original investment made about two years ago. While we enter our investments from a perspective as a long-term holder, Kenai will monetize a significant portion of our position through two closings anticipated in the second half of this year. Dun & Bradstreet remains our largest investment and one where we remain very involved given the upside potential that we see in the company. We continue to work closely with Anthony DeJabour, the CEO, and the DMB leadership team as they execute their organic growth strategy while evaluating accretive tuck-in acquisition opportunities and broader strategic alternatives. To that end, D&B's first half organic revenue growth on a constant currency basis was 4.1%, which was in line with their guidance range of 3% to 5%. We believe that delivering and accelerating organic revenue growth is key to driving an improved valuation. We are also pleased that they will begin paying a dividend in September of $0.05 per share per quarter, which will generate approximately $16 million per year in cash flow to Kenai and hopefully improve DMV's trading performance as all of its peers pay a similar dividend and DMV continues to trade well below peer average. Subsequent to the quarter end, we did sell approximately 9.2 million shares of Dun & Bradstreet to minimize our tax obligations in the second half of this year. We continue to see significant upside in D&B shares. Alight is another important public holding for Kenai, and one that continues to perform well, reporting second quarter revenue growth of 6.4%, with 90% of their anticipated 2022 revenues now under contract. Importantly, Alight continues to transition to a business process as a service or BPAS model and recognize 36% year-over-year growth in their BPAS revenues. Alight's management team continues to execute very well as they add products to their platform and clients to their roster as they transition to a BPAS model, which we believe is not yet reflected in their valuation. In fact, Given the discount to fair value, the Board of Directors authorized a 100 million share repurchase program. Management provided guidance for the second half of 2022 and reiterated full-year guidance, which represents an increase in year-over-year revenue of 6% to 7% and an increase in adjusted EBITDA between 4.7% and 6.6%. In the second quarter, as noted earlier, we aggressively repurchased our shares and further simplified our portfolio. We will continue to work with our management teams to ensure that we help them successfully unlock the value that exists within their businesses. We will also look for new private investments like AmeriLife and Sideline where we can take control positions and apply our playbook to unlock substantial value for our shareholders. We are currently interested in several attractive investment opportunities. Lastly, we will be hosting our second annual Kenai Holdings Portfolio Conference on December 14th and 15th at the Wynn Las Vegas. Last year's inaugural conference was a constructive two-day event filled with in-depth presentations and quality discussions with full executive management teams of our portfolio companies. And this year will be a continuation of that same format. We believe that this was a great event and look forward to another successful conference in December. We hope all of you can join us in Las Vegas in December. I'll now turn the call back to the operator to begin our question and answer session.