Cannae Holdings, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Kenai Holdings Inc. Third 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 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 1159 p.m. Eastern Time on November 14, 2023. With that, I would like to turn the call over to Jamie Lillis of Solberry 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, Kaniyia'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 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 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 and the GAAP financial information is provided in our shareholder letter. I would now like to turn the call over to Kani's CEO, Rick Massey.

Hey, thanks, Jamie. And thanks, everyone, for joining us on a third quarter conference call. As Jamie mentioned, Brian Coyer, CFO, Ryan Caswell, our president, they're both here with me. I want to remind you that we file online two things, one of which is our shareholder letter, which we filed about half an hour ago, hour ago or so. That's got a much more detailed discussion of our various portfolio companies, cash position, et cetera. And secondly, we file a, Brian dutifully files some of the parts, which essentially is our net asset value per investment, and then broken down on a per share basis, per can I share basis. We do that on a monthly basis. So if you, that's right? Yeah. So we, those, I recommend you check in on those. You'll get really more than I can tell you on this short phone call. So I'll be brief since all that information is out there public. We still believe that stock is our, our own stock is our best investment with our precious capital. We, as you may have noted from our shoulder letter, Our buyback authority was replenished by our board a couple of weeks ago, and so we have well over 10 million shares of authority. We bought back 2.7 million shares in the third quarter, which turns out to be about roughly 4% of the company in that three-month period of time. And since we started our little journey on buybacks, we've bought back almost a quarter of the company with about half a billion dollars. And we have no reason to discontinue that operation. As I said, everything, based on what we see out there, we don't see anything better than buying back our own stock. It's hard to turn down a double, essentially on liquidation value. that hits you and that's there instantly. I'll just mention a couple, three portfolio companies in alphabetical order. Alight had a really, really good quarter, 8.4% revenue growth, which excited the market. The 26% BPAS growth, that's their sort of comprehensive enterprise offering. that is really selling well and providing increasing margins to Alight. For those of you who are cash flow nerds like me, the most promising and encouraging news out of Alight was that they spiked their, they grew their EBITDA margin by about 175 basis points to nearly 20%, which is really good. and in my opinion, and they blew it out on cash flow. Their cash flow was a multiple of cash flow over the corresponding quarter. So they're finally getting the benefit of this restructuring that they're doing and the automation that's embedded within the movement of employees from call centers to mobile. Stefan mentioned on his earnings call that In the Q&A, he mentioned that they were able to – they're handling hundreds of thousands more – I don't recall the precise number – hundreds of thousands, maybe a million more employees during this enrollment period, and yet the number of calls and the number of call center people is flat. Their mobile uptake has tripled. over the past year, over the, over last year's enrollment period. So this is right up, right up the plan. You're starting to see the benefits of automation. The company's humming. The stock is way depressed, not for any reason other than the fact that there is a lot of PE overhang and, and when the, when that certain private equity firm is sold, they've sold it. They've really trashed the stock, uh, afterwards. We don't know where they are. They've gone off the board. They don't report their ownership anymore. They're below 10%. But we are certainly hoping that they're there. We see some excess volume there. So we're hoping that that's them moving out of the stock and maybe they'll be out shortly. D&B is another one that's woefully undervalued. This morning I did the math. They're trading at about a 40% discount to peer multiples, despite the fact that they're growing in line with peers. And revenue-wise, they grew 5.8% on a before FX basis. And the third quarter revenues over third quarter of 2022 and their margin expanded a little bit, and they are able to delever a little bit. So they do have a little bit too much leverage. We ought to be thinking about strategies to reduce that, and Alight has a little bit too much leverage, and we're thinking about trying to come up with some strategies to help delever those businesses. That we think will help. At least it will give them some buyback power. So Ceridian, as usual, just knocked it out of the park for the third quarter. I'll just note that UBS, I just was handed a report. UBS just picked up both I got it right here. Just picked up, Kevin who was covering a light at C.S., moved to UBS and just initiated on Alight and Ceridian, $10 price target on Alight and an $87 price target on Ceridian. So obviously pretty bullish on those. I'm going to turn it over to Brian to talk about a handful of things.