Cannae(US:CNNE)2025-08-11 20:47Part I: FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, equity, and cash flows, along with detailed notes explaining accounting policies, investments, fair value measurements, segment information, revenue recognition, debt, commitments, and discontinued operations Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | | :-------------------------------- | :-------------------------- | :--------------------------- | :---------------- | | Total Assets | $1,785.8 | $2,228.9 | $(443.1) | | Total Liabilities | $429.1 | $413.6 | $15.5 | | Total Equity | $1,356.7 | $1,815.3 | $(458.6) | | Cash and cash equivalents | $66.7 | $131.5 | $(64.8) | | Assets of discontinued operations held for sale | $528.0 | $0.0 | $528.0 | | Investments in unconsolidated affiliates | $629.9 | $764.9 | $(135.0) | Condensed Consolidated Statements of Operations | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :-------------------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Total operating revenues | $110.2 | $118.0 | $213.4 | $228.7 | | Operating loss | $(60.9) | $(23.0) | $(82.3) | $(63.6) | | Net loss from continuing operations | $(229.5) | $(148.9) | $(268.2) | $(224.0) | | Net loss from discontinued operations, net of tax | $(11.0) | $(6.1) | $(87.3) | $(22.8) | | Net loss attributable to Cannae Holdings, Inc. common shareholders | $(238.8) | $(155.0) | $(351.8) | $(244.9) | | Basic Net loss per share | $(3.93) | $(2.49) | $(5.72) | $(3.68) | Condensed Consolidated Statements of Comprehensive (Loss) Earnings | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :---------------------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net loss | $(240.5) | $(155.0) | $(355.5) | $(246.8) | | Other comprehensive earnings (loss), net of tax | $5.8 | $(1.1) | $3.7 | $2.3 | | Comprehensive loss attributable to Cannae Holdings, Inc. common shareholders | $(233.0) | $(156.1) | $(348.1) | $(242.6) | Condensed Consolidated Statements of Equity - Total Cannae shareholders' equity decreased from $1,836.5 million as of December 31, 2024, to $1,381.4 million as of June 30, 2025, a decrease of $455.1 million9 - Retained earnings decreased significantly from $567.1 million to $200.1 million in the six months ended June 30, 2025, primarily due to net losses and dividends declared920 - Treasury stock increased from $724.7 million to $838.6 million, reflecting share repurchases920 Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | Change (Millions) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :---------------- | | Net cash used in operating activities | $(12.5) | $(46.2) | $33.7 | | Net cash provided by investing activities | $77.5 | $252.5 | $(175.0) | | Net cash used in financing activities | $(129.8) | $(266.8) | $137.0 | | Net decrease in cash and cash equivalents | $(64.8) | $(60.5) | $(4.3) | | Cash and cash equivalents at end of period | $66.7 | $45.7 | $21.0 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of the accounting policies, significant estimates, recent developments, and specific financial statement line items, offering crucial context for the unaudited condensed consolidated financial statements Note A — Basis of Financial Statements - Cannae Holdings, Inc. primarily acquires interests in operating companies, actively managing and supporting a core group for the long term, with significant equity ownership stakes in companies like Dun & Bradstreet, Alight, Paysafe, Black Knight Football, CSI, Watkins Holdings, JANA Partners, Minden Mill, AmeriLife, O'Charley's, and 99 Restaurants25 - Dun & Bradstreet (D&B) Sale: D&B entered a definitive agreement to be acquired by Clearlake Capital Group, L.P. for $9.15 per share, expected to close in Q3 2025. Cannae agreed to vote its shares in favor and sold 10.0 million D&B shares for $89.5 million in Q2 2025, reducing its ownership to 59.0 million shares (13.2%). D&B is now presented as a discontinued operation and assets held for sale303132 - Black Knight Football (BKFC): Cannae invested an additional $25.0 million in BKFC, increasing its ownership to 42.5%, with a commitment for another $25.0 million in Q3 202533 - WineDirect Transaction: Received $20.4 million (including $13.6 million cash and a 21.6% interest in WineDirect Fulfillment valued at $6.8 million) from the spin-off and sale of WineDirect's divisions, recording a $15.0 million gain34 - Stock Repurchase Programs: Repurchased 2,295,463 shares for $42.1 million under the 2022 program and 3,492,076 shares for $69.4 million under the 2023 program during the six months ended June 30, 2025. A new 2025 Repurchase Program for up to 10.0 million shares was authorized353637 - JANA Partners Investment: Agreed to acquire an additional 30% ownership in JANA Partners for $67.5 million upfront and potential further payments, increasing total ownership to 50% upon Q3 2025 closing38 - Management Services Agreement (MSA) Termination: The MSA with Trasimene Capital Management, LLC was terminated effective May 12, 2025, with remaining obligations for management and termination fees totaling $24.7 million39 - Executive Management Transition: William P. Foley transitioned from CEO/CIO/Chairman to non-executive Vice Chairman, receiving a $17.2 million lump-sum payment and accelerated equity awards. Doug Ammerman was appointed Chairman, and Ryan R. Caswell became CEO4041 - Dividends Declared: Declared a $0.12 per share dividend payable June 30, 2025, and a $0.15 per share dividend payable September 30, 202542 - The effective tax rate was 1.3% and (12.1)% for the three and six months ended June 30, 2025, respectively, primarily due to an $84.8 million valuation allowance recorded on federal and state net operating loss carryforwards and certain deferred taxes related to investments5051 Note B — Investments | Affiliate | Ownership at June 30, 2025 | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------- | :------------------------- | :----------------------- | :--------------------------- | | Alight | 7.6% | $229.1 | $374.0 | | BKFC | 42.5% | $106.0 | $108.3 | | CSI | 6.4% | $103.9 | $88.2 | | Watkins | 49.3% | $73.6 | $78.5 | | JANA | 19.99% | $56.9 | $56.3 | | Other | various | $60.4 | $59.6 | | Total | | $629.9 | $764.9 | | Affiliate | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :------------------ | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Alight | $(81.7) | $2.2 | $(83.6) | $(9.1) | | BKFC | $(12.3) | $(17.9) | $(22.7) | $(25.3) | | CSI | $0.0 | $0.2 | $15.7 | $41.1 | | JANA | $0.4 | $0.5 | $2.8 | $0.0 | | Total | $(95.7) | $(14.6) | $(97.6) | $3.0 | - Recorded a $59.1 million impairment in the investment of Alight for the six months ended June 30, 2025, due to the sustained decrease in fair market value below book value56 Note C — Fair Value Measurements - The Put Right liability is accounted for at fair value calculated using a Monte Carlo Simulation with Level 2 fair value hierarchy inputs, including the Company's common stock price and growth rate, the two-year duration of the DSA, implied volatility, and a discount rate based on US treasury securities66 - As of June 30, 2025, the Put Right liability was $13.2 million66 Note D — Variable Interest Entities - Cannae holds variable interests in unconsolidated affiliates, primarily BKFC, CSI, and Minden Mill, but is not the primary beneficiary70 - Cannae has guaranteed certain payment obligations of BKFC related to investment commitments for football club acquisitions, estimated between $42.4 million and $77.1 million as of June 30, 202571 Note E — Segment Information - Cannae has identified three reportable segments: Restaurant Group, Alight, and Black Knight Football (BKFC). Dun & Bradstreet is no longer a reportable segment due to its reclassification as a discontinued operation7677 - Restaurant Group: Consists primarily of the operations of O'Charley's (65.4% ownership) and 99 Restaurants (88.5% ownership)80 - Alight: Represents Cannae's 7.6% ownership interest in Alight, a technology-enabled services company delivering human capital management solutions. Accounted for using the equity method80 - Black Knight Football: Represents Cannae's 42.5% ownership interest in BKFC, which owns and operates AFC Bournemouth (English Premier League), holds significant minority interests in FC Lorient (French Ligue 1) and The Hibernian Football Club Limited (Scottish Premiership), and acquired a controlling interest in Moreirense Futebol Clube (Portuguese Primeira Liga) in June 2025. Accounted for using the equity method with a three-month lag81 Note F — Revenue Recognition - Total operating revenues decreased by $7.8 million (6.6%) for the three months and $15.3 million (6.7%) for the six months ended June 30, 2025, compared to the prior year periods82 - Restaurant revenue, primarily from food and beverage sales, is the main component and is recognized at the point of sale. Other operating revenue includes income from resort operations, real estate sales, and lodging rentals8283 - Deferred revenue, primarily from restaurant gift card sales, was $13.4 million as of June 30, 2025, down from $16.2 million at December 31, 202484 Note G — Notes Payable - Total notes payable decreased from $181.0 million at December 31, 2024, to $168.4 million at June 30, 202587 - 2020 Margin Facility: Had an outstanding balance of $101.0 million at June 30, 2025, incurring interest at 7.65%. It has $49.0 million of unused capacity and an option to increase capacity to $500.0 million. The balance is classified as a current liability as it is expected to be repaid upon the closing of the D&B Sale in Q3 20259091 - FNF Revolver: Had an outstanding principal of $47.5 million at June 30, 2025, with a fixed interest rate of 5.0% and no available borrowing capacity. The maturity date was extended to November 17, 20309495 | Gross Principal Maturities of Notes Payable (In millions) | | :------------------------ | :---------------- | | 2025 (remaining) | $101.8 | | 2026 | $13.4 | | 2027 | $0.2 | | 2028 | $2.0 | | 2029 | $0.1 | | Thereafter | $51.1 | | Total | $168.6 | Note H — Commitments and Contingencies - The Company is involved in various pending and threatened legal and regulatory matters, including class action lawsuits, but management does not believe the ultimate resolution will have a material adverse effect on its financial condition, results of operations, or cash flows9698 - Unconditional purchase obligations, primarily for the Restaurant Group's food and beverage, totaled $38.3 million as of June 30, 2025, with $24.4 million due in the remainder of 202599 Note I — Supplemental Cash Flow Information - Cash paid for interest was $4.0 million and for income taxes was $0.2 million for the six months ended June 30, 2025101 - Non-cash investing and financing activities included $6.8 million equity in Fulfillment received as consideration in the WD Transaction and a $12.2 million reduction of outstanding principal under the FNF Revolver through the exchange of real estate101 Note J — Discontinued Operations - Dun & Bradstreet (D&B) was reclassified as a discontinued operation due to its pending sale, resulting in a $68.1 million impairment recorded in the six months ended June 30, 2025102 - Assets of discontinued operations held for sale (representing the investment in D&B) were $528.0 million at June 30, 2025, down from $691.9 million at December 31, 2024103 - Net loss from discontinued operations (D&B) was $(11.0) million for the three months and $(87.3) million for the six months ended June 30, 2025103 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, condition, and future outlook, discussing key factors influencing revenues, expenses, and profitability, as well as liquidity and capital resources. It also highlights critical accounting policies and recent developments Seasonality and Macroeconomic Conditions - The Restaurant Group typically experiences higher average weekly sales and a disproportionate share of earnings in the first half of the year109 - Inflationary pressures, particularly on commodity and labor costs, continue to impact the Restaurant Group, leading to menu pricing adjustments to balance cost increases with customer value110 - Various macroeconomic factors, including consumer spending, capital market volatility, and inflation, are anticipated to drive uncertainty and instability for the Company in fiscal 2025111 Critical Accounting Policies and Estimates - Management continuously monitors investments in unconsolidated affiliates for indications of other-than-temporary declines in fair value below book value114 - A $68.1 million impairment was recorded for the investment in Dun & Bradstreet in the six months ended June 30, 2025, due to its reclassification as held for sale116 - A $59.1 million impairment was recorded for the investment in Alight in the six months ended June 30, 2025, due to a sustained decrease in fair market value below book value for over a year117 - A $84.8 million valuation allowance was recorded on federal and state net operating loss carryforwards and certain deferred taxes in the six months ended June 30, 2025, due to current market and investee-specific conditions impacting the ability to utilize deferred tax assets119 Results of Operations This section analyzes the consolidated financial performance and the performance of each reportable segment (Restaurant Group, Alight, Black Knight Football) and the Corporate and Other segment, detailing revenue and expense fluctuations and their impact on net earnings or loss for the three and six months ended June 30, 2025, compared to 2024 Consolidated Results of Operations - Total operating revenues decreased by $7.8 million (6.6%) for the three months and $15.3 million (6.7%) for the six months ended June 30, 2025, compared to the prior year periods121 - Operating loss increased from $(23.0) million to $(60.9) million for the three months and from $(63.6) million to $(82.3) million for the six months ended June 30, 2025121 - Net loss attributable to common shareholders increased from $(155.0) million to $(238.8) million for the three months and from $(244.9) million to $(351.8) million for the six months ended June 30, 2025121 - Equity in (losses) earnings of unconsolidated affiliates shifted from $(14.6) million loss to $(95.7) million loss for the three months and from $3.0 million earnings to $(97.6) million loss for the six months ended June 30, 2025, primarily due to Alight's goodwill impairment130135 Restaurant Group Segment Analysis - Total revenues for the Restaurant Group segment decreased by $5.7 million (5.3%) for the three months and $13.1 million (6.1%) for the six months ended June 30, 2025, compared to the corresponding prior year periods137141 - Comparable store sales for O'Charley's decreased by 12.1% (three months) and 13.6% (six months), while 99 Restaurants decreased by 0.1% (three months) and 0.2% (six months), primarily due to reduced guest counts138142 - Cost of restaurant revenue as a percentage of Restaurant revenue increased to 89.1% (three months) and 90.4% (six months) in 2025, up from 85.6% and 87.0% in 2024, mainly due to increased spending on beef and poultry140143 Alight Segment Analysis - Cannae's equity in Alight's losses was $(81.7) million for the three months and $(83.6) million for the six months ended June 30, 2025, primarily driven by Alight's goodwill impairment of $983.0 million130135 - Alight's total revenues were $528.0 million (3 months) and $1,076.0 million (6 months) in 2025, slightly down from $538.0 million and $1,097.0 million in 2024145 Black Knight Football Segment Analysis - Total revenues for Black Knight Football increased by $11.8 million (23.9%) for the three months and $30.4 million (29.8%) for the six months ended March 31, 2025 (reported with a three-month lag), primarily due to AFC Bournemouth's higher league placement and increased player loan revenue148 - Operating loss decreased by $7.5 million (three months) and $21.0 million (six months) in the periods ended March 31, 2025, compared to the corresponding periods in 2024, driven by increased revenue partially offset by higher player salaries149 Corporate and Other Segment Analysis - Personnel costs increased by $17.6 million for the three months and $10.5 million for the six months ended June 30, 2025, primarily due to a $17.2 million cash payment and $8.3 million in accelerated stock vesting related to executive management transition151155 - Other operating expenses increased by $14.5 million for the three months ended June 30, 2025, primarily due to accelerated fees incurred with Trasimene related to the MSA Termination Agreement152 - Recognized (losses) gains, net for the three months ended June 30, 2025, included a $(59.1) million Alight impairment, $(7.6) million Paysafe fair value adjustments, and $(13.2) million Put Right fair value adjustments153 - Recognized (losses) gains, net for the six months ended June 30, 2025, included a $(59.1) million Alight impairment, $15.0 million WD Transaction gain, $(11.0) million Paysafe fair value adjustments, and $(13.2) million Put Right fair value adjustments156 Discontinued Operations Analysis - The financial results of Dun & Bradstreet have been reclassified to discontinued operations due to its pending sale154 Liquidity and Capital Resources - As of June 30, 2025, the Company had $66.7 million in cash and cash equivalents, with $54.3 million held by the corporate holding company158 - The Company had $49.0 million of immediate borrowing capacity under existing credit facilities, with the ability to add an additional $350.0 million by amending its 2020 Margin Facility. An additional $40.0 million was borrowed under the 2020 Margin Facility after June 30, 2025158159 - Due to its unconsolidated holdings, the Company expects to generate a material portion of its cash inflow from investing activities (e.g., distributions from unconsolidated affiliates, sales of investment securities) rather than regular positive operating cash flows162 - Cash used in operating activities decreased by $33.7 million to $(12.5) million for the six months ended June 30, 2025, primarily due to tax refunds received and lower operating expenses163 - Cash provided by investing activities decreased by $175.0 million to $77.5 million for the six months ended June 30, 2025, mainly due to $208.0 million less proceeds from sales of Dayforce shares164 - Cash used in financing activities decreased by $137.0 million to $(129.8) million for the six months ended June 30, 2025, primarily due to reduced treasury stock repurchases and a prior year debt repayment, partially offset by increased dividends paid165 | Obligation | 2025 (remaining) | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | | :------------------------------ | :--------------- | :----- | :----- | :----- | :----- | :--------- | :------ | | Operating lease payments | $12.3 | $24.3 | $22.6 | $20.6 | $17.6 | $111.0 | $208.4 | | Unconditional purchase obligations | $24.4 | $7.7 | $4.1 | $2.1 | $0.0 | $0.0 | $38.3 | | Notes payable | $101.8 | $13.4 | $0.2 | $2.0 | $0.1 | $51.1 | $168.6 | | Fees payable to Manager | $9.4 | $17.0 | $0.0 | $0.0 | $0.0 | $0.0 | $26.4 | | Restaurant Group financing obligations | $0.2 | $0.4 | $0.4 | $0.3 | $0.3 | $0.0 | $1.6 | | Total | $148.1 | $62.8 | $27.3 | $25.0 | $18.0 | $162.1 | $443.3 | - 2022 Repurchase Program: Completed, with 10.0 million shares repurchased for approximately $193.1 million172 - 2023 Repurchase Program: As of June 30, 2025, 3,492,076 shares were repurchased for approximately $69.4 million, with 6,507,924 shares remaining available174 - 2025 Repurchase Program: Authorized for up to 10.0 million shares, with no purchases made as of June 30, 2025175 Item 3. Quantitative and Qualitative Disclosure About Market Risk This section states that there have been no material changes in the market risks from those described in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in market risks were identified during the three months ended June 30, 2025, compared to the disclosures in the Annual Report on Form 10-K for the year ended December 31, 2024176 Evaluation of Disclosure Controls and Procedures - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025178 Changes in Internal Control over Financial Reporting - There were no changes in the Company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting during the quarter ended June 30, 2025179 Part II: OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note H of the Condensed Consolidated Financial Statements for a comprehensive discussion of legal proceedings - Discussion of legal proceedings is incorporated by reference from Note H - Commitments and Contingencies to the Condensed Consolidated Financial Statements180 Item 1A. Risk Factors This section incorporates by reference the risk factors from the Annual Report on Form 10-K and highlights an additional risk related to a proxy contest - The risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, are incorporated by reference181 - An additional risk identified is that the Company is currently the subject of a proxy contest, which could distract management, disrupt operations, result in incremental costs, and adversely affect its results of operations, financial condition, and stock price182184 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides a table summarizing the repurchases of equity securities under authorized programs during the three months ended June 30, 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (as of last day of month) | | :-------------------- | :----------------------------- | :--------------------------- | :-------------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------------- | | 4/1/2025 - 4/30/2025 | 0 | $0.00 | 0 | 22,295,463 | | 5/1/2025 - 5/31/2025 | 2,280,481 | $18.33 | 2,280,481 | 20,014,982 | | 6/1/2025 - 6/30/2025 | 3,507,058 | $19.87 | 3,507,058 | 16,507,924 | | Total | 5,787,539 | $19.26 | 5,787,539 | | - The Company has three active stock repurchase programs (2022, 2023, and 2025 Repurchase Programs), each authorizing the repurchase of up to 10.0 million shares of common stock192 Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reported period - There were no defaults upon senior securities during the three months ended June 30, 2025189 Item 4. Mine Safety Disclosures This section states that the disclosure requirement for mine safety is not applicable to the Company - The disclosure requirement for mine safety is not applicable to the Company190 Item 5. Other Information This section reports that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025191 Item 6. Exhibits This section provides a list of exhibits filed with the Quarterly Report, including various agreements, certifications, and XBRL documents - Management Services Agreement Termination Agreement (effective May 12, 2025) - Director Services Agreement between Cannae Holdings, Inc. and William P. Foley II (effective May 12, 2025) - Certifications of Principal Executive Officer and Chief Financial Officer pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 - Inline XBRL Instance Document and related Taxonomy Extension Documents195