Cannae Holdings, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Kaniyia Holdings Inc. First Quarter 2025 Financial Results Conference Call. During today's presentation, all participants 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 the replay is available to 1159 p.m. Eastern Time on May 26, 2025. With that, I would like to turn the call over to Jamie Lillis of Solvery Strategic Communications. Please go ahead.

Thank you, operator, and all of you for joining us. On the call today, we have Kaniyia's Chief Executive Officer, Ryan 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 assumption 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 FCC. Today's remarks will also include references to non-GAP financial measures. Additional information, including a reconciliation between the non-GAP financial information to the GAP financial information is provided in our shareholder letter. I would now like to turn the call over to Ryan.

Thank you, Jamie. Given the executive

management's discussion announcement from earlier today, I would first like to start by welcoming Bill Foley to his new role as vice chairman, and Doug Ammerman to his new role as chairman. More importantly, I want to thank Bill for his mentorship and all that he has provided to Canai and its portfolio companies. Under Bill's leadership, we have made great progress and have significant opportunities in front of us to increase shareholder value. I look forward to continuing to work with Bill and Doug and their new roles and the entire board as we continue to position Canai for long-term success as a permanent capital vehicle. We remain committed to long-term sustainable, excuse me, we remain committed to creating long-term sustainable shareholder value through the execution of our strategic plan, including, one, rebalancing the portfolio away from current public investments and opportunistically investing in attractive companies with positive cash flows. Two, returning capital to shareholders. And three, improving the operational performance of Canai's portfolio companies.

I

am excited to report that we continue to make progress on all fronts. In late March, our largest public investment, Dun & Bradstreet, announced a definitive agreement to be acquired by Clear Lake Capital in an all-cash transaction, valuing DNB at 4.1 billion of equity, from which at closing Canai will receive 632 million of proceeds. This capital provides Canai with significant flexibility and allows us an ability to return a meaningful amount of capital to our shareholders. As previously announced, post-transaction closing, we expect to use at least 460 million of these proceeds for share repurchases, dividends, and debt repayment, of which at least 300 million will be used to repurchase shares, 101 million to repay Canai's margin loan, and we will retain 60 million to pay future dividends. These actions will provide significant capital to our shareholders and we believe will help close the stock price discount to NAV. We are grateful to the entire DNB team for their hard work since our initial take private of the business and know that they will perform well with their new partners at Clear Lake. The transaction is expected to close in the third quarter of this year. With the expected sale of DNB and the 2024 share sales of Dayforce, Alight, DNB, and PaySafe, we will have sold approximately 1.1 billion of our public portfolio stakes since the beginning of 2024 and expect to utilize approximately 730 million as either a return to shareholders through repurchases and dividends or as a debt repayment. We believe this demonstrates our commitment to our strategy of rebalancing our portfolio and returning a significant amount of capital to our shareholders. Today we announced the expansion of our strategic relationship with JANA partners and investment firm focused on creating value through shareholder engagement. Canai has entered into an agreement to acquire an additional 30% stake in JANA for $67.5 million with potential further payment of up to $26 million contingent on JANA's future assets under management.

Post-closing, Canai will have total ownership of 50%.

This additional investment in JANA broadens the scope of our partnership established in February 2024, enhancing and expanding Canai's ability to allocate capital towards propriety and monetary acquisitions and investment opportunities that complement JANA's strategy and investment activities. The widened strategic relationship also provides Canai with additional ownership and cash distributions from a high-performing private company and represents another aspect of Canai's strategy to rebalance its portfolio to attractive companies that produce cash. We are excited to continue our partnership with Barry, Scott, and the JANA team. The transaction is expected to close in the third quarter of this year. Also today, Canai appointed Bill Royen and Woody Tyler to its board effective as of June 1st, 2025. Both individuals bring strong track records in investment management, having successfully worked at both public pension and private investment funds where each oversaw and managed multibillion-dollar portfolios across a variety of strategies.

Furthermore,

each has extensive experience working with portfolio companies, public and private boards, and other stakeholders to make strategic decisions that drive future value. We expect that Bill Royen will serve on Canai's corporate governance and nominating committee and related person transaction committee, and Woody will serve on Canai's related person transaction committee. We are delighted to have them both and believe that they will add significant value to Canai.

I

would now like to go through a few of our portfolio companies. CNB reported revenue of 580 million, which represents .6% constant currency organic growth, compared to the prior year's first quarter. Adjusted EBITDA was 211 million for the first quarter of 2025, $9.6 million above the prior year's first quarter. Notably, both revenue and adjusted EBITDA were above consensus expectations. Also, the company's adjusted EBITDA margin increased 70 basis points to .4% in the first quarter of 2025. A light reported total revenue from continuing operation of 548 million for the first quarter of 2025, a 2% decrease from the first quarter of 2024. Adjusted EBITDA was 118 million for the first quarter, a $2 million increase compared to the first quarter of 2024. Both of these results were ahead of consensus estimates. Management also affirmed their previous guidance for the full year 2025 with the midpoint for revenue of 2.36 billion and adjusted EBITDA of 633 million. A light leverage now sits at 3.1 times EBITDA. The company also has their investor day and management provided midterm targets of 4 to 6% organic revenue growth and 30% adjusted EBITDA margins by 2027. While expecting 1 billion of cumulative free cash flow generation between 2025 and 2027. We were excited to see these financial targets and are hopeful that as the light continues to show operational improvement and delivers on guidance, the market will recognize the embedded value in the business. Turning to Black Knight's football, we made significant progress over the quarter. Starting with the holding company, Black Knight's football club raised approximately $133 million of new capital in the first quarter, half of which has already been funded and the other half will be funded later this year. As part of the capital raise, Kenai will contribute $50 million of which 25 million has already been funded. And the remaining capital will come from Bill and a group of third party investors. This capital provides Black Knight with significant strategic flexibility as we look to continue investments in the team, infrastructure and holding company. During the quarter, we continue to build out the management team data capabilities and connectivity between the holding company and the respective clubs with the goal of optimizing player development and pathways and commercial opportunities amongst our teams. While we're still in the early stages, we're excited about the progress to date and the potential impact. Moving to the individual teams, at AFC Bournemouth, we made significant progress in the quarter from an infrastructure perspective. First, we opened our new world-class performance center for the first team in the academy. The facility is over 66,000 square feet with four new brass pitches, one full-size outdoor artificial pitch and a full-size indoor artificial pitch. We believe this facility is one of the best in the world, highlights our ambitions as a club and will be a critical tool for player development and recruiting, which in turn is critical for AFC Bournemouth's continued success on the field. Second, on April 25th, we announced the signing of an agreement to acquire Vitality Stadium, AFCB's home since 1910. This transaction is expected to close later this week and we are far along in working on expansion and redevelopment plans. We are currently looking at a two-phase approach that when complete will nearly double capacity of Vitality to approximately 20,000 seats. We are looking at modular construction, which will provide a significant upgrade to the stadium but do so in a cost-effective way with higher returns on capital. We will provide updates as we move forward and the plans are finalized. AFCB also continues to perform well on the pitch as they have set a new points record in the Premier League with 53 points and have two matches to go. The Cherries were selected to be one of four teams to represent the Premier League in the US in the 2025 Summer Series and will play matches in New York, Chicago and Atlanta, between July 26th and August 3rd. Additionally, AFCB will field a team in the TST Soccer Tournament that takes place in North Carolina in June. We believe these global opportunities demonstrate the improving brand and commercial opportunities at AFCB. Lastly, we are excited to note that for the first time ever, AFCB was recognized in Sportico's list of the world's 50 most valuable soccer clubs. Sportico valued AFCB's board members at $630 million. The valuation utilized Sportico's 2023 season revenue of $203 million and represents a 3.11 times multiple of revenue. The Sportico valuation represents equity appreciation of more than 40% when compared to the total amount of capital BKFC has invested in AFC board members today. Turning to FC Lorient, last Saturday the team was crowned champions of League 2 and earned promotion back to League 1, the highest division in French football. This is a significant accomplishment for FC Lorient and with the team returning to League 1, it provides significantly more strategic value to Black Knight football. I would also like to note that one of the key players responsible for their success was Eli Jr. Coopy, who AFC board members acquired in January and kept on loan at FC Lorient for the remainder of the season. This player transaction between clubs again demonstrates the value of multiple teams and player pathways within the group. Hibernian FC has also achieved great results as they currently sit in third place in the Scottish Premier League, which would allow them entry into European competition. During the year, Hibernian went on an 18-game streak where they were unbeaten in 17 of the 18 matches, equaling a -year-old club record. Lastly, earlier in the month, BKFC announced a strategic affiliation with Orlando City SC of the MLS. This partnership gives BKFC its first direct connection to professional soccer in North America. This agreement will benefit BKFC by giving it another player development pathway, an additional scouting channel, and expanded commercial opportunities to offer sponsors of BKFC

clubs. I'll now turn the call over to Brian to touch on our financial

positions. Thanks, Brian. Knight's first quarter total operating revenue of 103 million was 7% lower than the prior year on lower restaurant revenue. Notably, there were five fewer stores, with 3% in the 2025 period compared to the prior year. Although the aggregate same-store sales were down, this was almost entirely attributable to the old Charlie's brand. The same-store sales for the 99 restaurants brand were nearly even at a .3% drop. This is a big testament to the 99 brand as the casual dining industry experienced a very tough quarter and several weather incidents and unstable macroeconomic conditions. On a same-store basis, the 99 brand has equaled or outperformed the barred casual dining index in each of the last 16 four-week periods. At the operating expense level, aggregate operating expenses were 125 million in the first quarter of 2025, or 27 million below the prior year. Restaurant group reduced quarterly expenses by 7 million, reflecting the drop in top line and attention to corporate and brand support expense. A significant portion of the decrease also relates to 10 million of ISA payments in the prior year period, as well as 5 million lower manager expenses. The remaining improvement represents lower corporate operating expenses. Specifically with regard to the operating expense of the restaurant group, we have continued to make significant changes. The old Charlie's brand implemented a significant skew reductions last month, along with other store-level improvements aimed at producing labor and enhancing the guest experience. We also have a new president, a new chief operating officer, and a new chief financial officer in place. Next month, the restaurant group will move from its long-time headquarters to a new location that's approximately 20% the size of the current space. This change alone will cut more than seven figures annually from the restaurant group's support costs. New management has also performed a detailed review of all locations and has identified changes that we expect to improve store-level and regional operating costs. Canaya had net recognized gains of 7 million in the first quarter of 2025 compared to 5 in the prior year. The current quarter figure includes non-cash fair value losses on PaySafe and Rapid 7, offset by gains from the sale of Wine Direct's e-commerce. On that, our initial investment of 10 million in Wine Direct was in 2017, and with this year's sale of their e-commerce division, Canaya realized a $15 million gain in Q1, received 14 million in cash, and still holds its interest in the remaining billboard business. A significant change in our financial statement presentation is that Dunn-Brass Street is no longer included in equity method investments on the balance sheet and earnings from unconsolidated affiliates on our P&L. With the signing of the agreement to be acquired by Clear Lake, Anaya's entry into a voting and support agreement gap requires us to present them as assets of discontinued operations on the balance sheet, and their results as loss from discontinued operations in the P&L and statement of cash flow. All prior period balances were reclassified to conform to this presentation. Our equity and earnings and losses of unconsolidated affiliates posted a 2 million net loss in Q1 2025 compared to 18 million gain in the prior year. The 2024 figure included a large gain from CSI offset by losses posted by a light and site one. Unlike most of our investments, the CSI partnership has marked a fair value once per year, and their growth this year resulted in an additional $16 million gain in the fair value we're holding, and follows the $41 million gain reported last year. This means Canaya has received 37 million of cash distributions, and its remaining ownership has a fair value that is 120% of Canaya's original investment. After our sale last week of 9 million shares of D&B for 81 million, Canaya has 188 million in corporate cash and short-term investments, offset by 149 million of debt. On that, during the quarter, we amended our F&F into repaying 12.2 million, lowering the interest rate by 200 basis points and extending the maturity to 2030.

That concludes our prepared remarks, and we'll be happy to take your questions now.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 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 2. The first question comes from Kenneth Lee with RBC Capital Markets. Please go ahead.

Hey, good afternoon. Thanks for taking my question, and congrats, Ryan, on your new role. Just one on the JANA partners. Now that there's a plan to be a 50% owner, could you talk a little bit more about the revenue and earnings profile of the business, and perhaps also as well, just remind us again the assets under management of the business? Thanks.

Hey, Ken, this is Ryan. First off, thank you. I'm just trying to think what, I

think at a high level, I don't want to get into kind of revenue and earning figures, but I think at a high level, the business has, you know, significantly higher AUM than we have originally invested. It's north of $2 billion, and it's been performing very well from a financial profile. So we are very excited about the investment. You know, I think when we look at the deal value, you know, we think it's at an attractive price, and we're really optimistic around what we can do with JANA going forward. And I think it shows kind of how we're trying to, that we will try and prioritize new investments with them that we think could be very impactful with Kani, in addition to our investment in their business, which we think is also,

you know, will be very positive for the company.

Gotcha. And then just a brief follow-up here. Is there, are there any longer-term plans to potentially increase the ownership percentage of JANA partners sometime down the line? Thanks.

There are no, at the current time, there are no plans to increase the ownership percentage. We think the structure that we have today works very well.

Okay, very helpful there.

And just one more follow-up, if I may. Have there been any subsequent or recent discussions with the investor, Carnot Capital, and any kind of thoughts around some of the recent actions that you've taken there?

You know, in terms of the dialogue,

you know, I think that you can look publicly and see what's out there. You know, I, you know, we obviously have a view of what we are doing in our strategic plan, and we continue to move forward on that plan. And, you know, we're open to, you know, discussions with them or any other investors as we move forward

about how we create shareholder value. Gotcha. Very helpful there. Thanks again.

Once again, if you have a question, please press star, then one. The next question comes from Ian Dufino with Oppenheimer. Please go ahead.

Hi, thank you very much. So I just wanted to delve a little bit into the Vitality Stadium acquisition, you know, help us understand the opportunity there, some of the economics there, and what's kind of going on. Thank you.

Of course. The deal hasn't closed yet, so I want to be sensitive around some of the specific financial metrics, but I, you know, at a high level, we think that it's a very attractive, you know, the stadium investment and redevelopment is an incredibly attractive proposition for the team. First off, as we talked about on the last call, we've been looking at, you know, whether we do a new stadium or whether we do a redevelopment. And if we looked at the financial analysis, we believe that it was much more compelling from a financial perspective to do a redevelopment. Look at the fans have been in the stadium since 1910, so there's an identity with the stadium, but we're also able to significantly improve the, you know, the brand, the look of the stadium, the feel and get a lot more fans in there. But we think that, you know, just looking at the return on assets will be, you know, for the total investment to EBITDA that can generate and through both phases, as I mentioned in my prepared marks, there'll be a phase one and phase two, but it'll be, you know, kind of a mid-teens type return without thinking of any financing or other ways. So it's, you know, we think it's both a great opportunity for the club, the brand, and

we think it's attractive financially as well.

Okay,

thank

you. And then also, you know, when you think about like incremental capital that you plan to deploy going forward on M&A, how are you thinking about that? Because I know you talk a lot about Black Knight being a big kind of source of maybe some acquisitions you could do or something else, but is that kind of how you're thinking about it now in that you want to create more of these kind of network effects of owning multiple teams or do you think we're kind of done with that and we're going to deploy capital elsewhere?

Thanks. Well, I mentioned on the call that Black Knight raised a bunch of capital that we, that Kaniyia participated in. I think in the short term, that's not going to be a focus of capital, but for the additional 25 million that I referenced on the call. I think, look, I think a deal like the JANA deal is obviously an area that we've put, that we've invested some capital. We obviously looked at Watkins last year, but how we're thinking about capital more broadly is we've obviously are returning a significant amount of capital related to the BNB transaction and share repurchases, dividends, and then paying down some of the margin loans. But at the same time, we need to also be mindful of, you know, there will be, we will opportunistically make investments in businesses or situations that we think can deliver an attractive return. But clearly in the short term, we're

using the majority of our capital to buy back stocks. All right. Thank you very much.

This concludes the question and answer session. I would like to turn the conference back over to Ryan Castle for any closing remarks. Please go ahead.

Thank you. In conclusion, we believe there remains significant embedded value in Kaniyia's portfolio and upside in our stock price as we continue to execute on our strategic plan and position Kaniyia for long-term success as a permanent capital vehicle. Thank you for your time.

The conference is now concluded. Thank you for attending today's presentation.