Cannae Holdings, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Kenai Holdings Incorporated second quarter 2023 financial results conference call. During today's presentation, all parties will be in a listen-only mode. Following the company's brief prepared marks, 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 11.59 p.m. Eastern Time on August 16, 2023. With that, I would like to hand the call over to Rory Ruehmore of Solbury Communications.

Thank you, Operator, and all of you for joining us this afternoon. On the call today, we have our Chief Executive Officer, Rick Massey, Kenai's President, Brian Caswell, 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 Kenai'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 facts, 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 Chief Executive Officer, Rick Massey, who will open with a few brief remarks and then open the line for your questions.

Hey, thanks, Rory. Hello, everybody. Thank you for joining our second quarter Conference call, not a lot of news to report to our investors this quarter. The headline is going to be that we bought back 3.1 million shares of our stock in the past, from May through July, so it's kind of a quarter. We started right after the end of the first quarter. We took a pause. during the first quarter on buybacks, but we got back with both feet. And the second, during May through July, we bought back, as I said, 3.1 million shares. Average price, 1972. That's about 4% of the company, so that pretty much matches our most aggressive buybacks. We continue to believe that our shares represent the best value for you know, for us when we consider this, you know, at shares versus making an investment in another company or an existing company. And so we're pleased to report that. No real activity, no sales of any of our portfolio companies or acquisitions of shares of any of our portfolio companies. Just a couple of notes on a few of the of our portfolio companies that we continue to believe are woefully undervalued, particularly when compared to their peers. Dun & Bradstreet, for an example, showed up with about a 4% growth rate, and that includes headwinds that we all knew about with GSA and credibility and we still believe that that business is going to continue to grow. I think its growth is going to accelerate. Bill is very pleased with the results of their operations. The stock market seems to be sort of in a wait-and-see mode, but it's trading at today about 9.5 times 2023 EBITDA. That's at least a 50% discount to EBITDA, some of its peers, and we all know who they are, in spite of the fact that its margins are better than many, and it's growing faster, and it has no more leverage than some of its peers, and yet it's trading at none and a half times. We think it's way undervalued. We think the team has done a great job. Anthony has brought in a couple of really sharp people, Jenny Gomez being the number one sharp person, and she is really turned around the marketing business as well as the credit risk segment. Alight showed revenues this quarter of 12.7% year over year, and I hope those of you who also own Alight shares have paused to think about the progress that that company has made just since it went public and it was showing 2% revenue growth, and here it showed up with 12.7%. It beat all of it. It re-guided and beat. And the stock sold off a bit on the fact that its BPAS billings weren't as robust as many in the street would estimate. It's sort of our fault that we have not, ours being Kani's and management, that we've not emphasized more the non-BPAS section of that business that grows mid-single digits, is as solid as a rock, 100% retention. Once a customer is on their payroll, their wealth, their health business, it's very, very hard to get them out. And that really is the foundation of that company's revenue growth and its cash flow. You'll probably hear us telling a slightly different story in the future just so that we don't lose sight of the 70% of this company that's not BPAS and still a great company. That's trading at about 10 times 2023 EBITDA. Again, that's that compare that to, we're not going to name the peers, not going to name names, but this company is growing faster and is trading at about a 50% discount-ish to certain peers. And there's no explanation for that other than, you know, there is a PE overhang, and we think that's keeping a clamp on the stock. So we really like the team. We really like the company. it's going to continue to rock for some time. Just one last note, and that's on C-Day, Ceridian. They beat revised guidance. Their revenues were up like 26.5% or 27%. That's been a very good performing stock. It was fantastic. Did you check the price before the call, Brian? Anyway, it's in the low 70s, yeah. So really good. It's trading really well. So I'm not going to go through everything in our portfolio. We take a bunch of them that are undervalued, and we continue to work really hard with these management teams to maximize value and help them grow a streamlined organization. And with that, we'll answer questions.