10-Q: Cannae Holdings Reports Q1 2025 Results; D&B Sale Expected to Close in Q3

Cannae Holdings reports a net loss of $115.0 million for Q1 2025, with the Dun & Bradstreet sale expected to close in the third quarter.

Summary

• Cannae Holdings reported a net loss of $115.0 million for the three months ended March 31, 2025, compared to a net loss of $91.8 million for the same period in 2024.
• The company's restaurant revenue decreased to $99.1 million from $106.5 million in the prior year.
• The pending sale of Dun & Bradstreet (D&B) is expected to close in the third quarter of 2025, with Cannae expected to receive $631.8 million in cash proceeds.
• Cannae recorded an impairment of $68.1 million related to its investment in D&B due to the pending sale.
• The company invested $25.0 million in Black Knight Football Club (BKFC) and holds a 44.3% ownership interest as of March 31, 2025.
• A new stock repurchase program was authorized on March 24, 2025, allowing the company to repurchase up to 10.0 million shares of its common stock.
• Cannae entered into an agreement on May 12, 2025, to acquire an additional 30% ownership interest in JANA Partners for $67.5 million upfront and potential further payments.
• William P. Foley transitioned from CEO to Vice Chairman, with Doug Ammerman appointed as Chairman and Ryan R. Caswell as CEO, effective May 12, 2025.
• The company declared a dividend of $0.12 per share, payable on June 30, 2025.
• The MSA Termination Agreement terminates the MSA in its entirety as of May 12, 2025 without any further obligations or liabilities other than certain obligations relating to the continuing indemnification and limitation on liability and the remaining obligations of the Company and/or Cannae LLC, as applicable, to pay the Manager.

Sentiment

Score: 4

Explanation: The document presents mixed signals. While the pending D&B sale provides a significant cash infusion, the company reported a larger net loss and declining restaurant revenue. The management transition and new investments add uncertainty.

Positives

• The pending sale of Dun & Bradstreet is expected to provide Cannae with $631.8 million in cash proceeds.
• The company authorized a new stock repurchase program, indicating confidence in its future prospects.
• Cannae is expanding its investment in JANA Partners, potentially increasing its influence in the investment management space.
• The company declared a dividend of $0.12 per share, providing value to shareholders.
• The MSA Termination Agreement terminates the MSA in its entirety as of May 12, 2025 without any further obligations or liabilities other than certain obligations relating to the continuing indemnification and limitation on liability and the remaining obligations of the Company and/or Cannae LLC, as applicable, to pay the Manager.

Negatives

• Cannae Holdings reported a net loss of $115.0 million for Q1 2025, an increase from the $91.8 million loss in the same period last year.
• Restaurant revenue decreased by 6.9% year-over-year.
• The company recorded an impairment of $68.1 million related to its investment in D&B.
• Alight Summarized statement of operations information for Alight for the relevant dates and time periods included in Equity in (losses) earnings of unconsolidated affiliates in our Condensed Consolidated Statements of Operations is presented below.
• BKFC Summarized statement of operation information for Black Knight Football for the relevant dates and time periods included in Equity in (losses) earnings of unconsolidated affiliates in our Condensed Consolidated Statements of Operations is presented below.

Risks

• The D&B sale is subject to shareholder approval, regulatory clearances, and other customary closing conditions, and may not be completed.
• The company's investment in Alight has a fair value below its book value, which could lead to future impairment charges.
• Macroeconomic factors and market conditions could negatively impact the company's performance.
• The company is currently the subject of a proxy contest, which could distract management and disrupt operations.
• The company's effective tax rate was (121.7)% and (156.1)% in the three months ended March 31, 2025 and 2024, respectively.

Future Outlook

The D&B Sale is expected to close in the third quarter of 2025. The company expects to repay the entire balance under the 2020 Margin Facility upon closing of the D&B Sale.

Industry Context

The restaurant industry is facing challenges related to inflation and changing consumer behavior. Cannae's restaurant group is adapting to these challenges by adjusting menu pricing and focusing on long-term profitability. The company's investments in technology-enabled services (Alight) and sports (Black Knight Football) reflect a diversification strategy.

Comparison to Industry Standards

• Comparable store sales for O'Charley's decreased by 14.9% and 99 Restaurants decreased by 0.3%.

Management Changes

Legal Proceedings

• In the ordinary course of business, we are involved in various pending and threatened litigation and regulatory matters related to our operations, some of which include claims for punitive or exemplary damages.

Related Party Transactions

• During the three months ended March 31, 2025 and 2024, we incurred management fee expenses with our Manager of $1.9 million and $9.1 million, respectively.
• During the three months ended March 31, 2025 and 2024, we incurred termination fee expenses with our Manager of $1.7 million and $2.3 million, respectively.

Stakeholder Impact

• Shareholders will be impacted by the D&B sale, the stock repurchase program, and the dividend payment.
• Employees may be affected by the management transition and any potential changes in strategy.
• Customers of the restaurant group may experience changes in menu pricing and service.

Next Steps

• Complete the sale of Dun & Bradstreet.
• Close the acquisition of an additional stake in JANA Partners.
• Repay the balance under the 2020 Margin Facility.
• Execute the new stock repurchase program.
• Monitor the performance of investments in Alight and Black Knight Football.

Key Dates

Keywords

Cannae Holdings, Dun & Bradstreet, Alight, Black Knight Football, JANA Partners, Restaurant Group, Financial Results, Q1 2025, Investment, Acquisition, Sale, Repurchase Program, Dividend