The following is a summary of the Cannae Holdings, Inc. (CNNE) Q2 2024 Earnings Call Transcript:

Financial Performance:

• Revenue in Q2 2024 decreased by $35 million or 23% year over year due to a 27% reduction in restaurant locations.

• The cost of restaurant revenues fell more sharply than revenue, leading to an improvement in expense margins.

• Cannae reported an operating revenue of $576 million and adjusted EBITDA growth of 5.7%, reaching $218 million.

• Cannae took a $141 million impairment on the book value of their investment in Sightline due to market adoption challenges.

Business Progress:

• Alight closed the sale of their Payroll and Professional Services business for up to $1.2 billion, using the proceeds to repay debt and decrease net leverage to 2.8 times.

• Cannae is continuing to explore new investment opportunities in private markets to increase net asset value (NAV).

• Announced the hiring of Tim Bezbatchenko as BKFC's first President to enhance player recruitment and commercial opportunities.

• Launched High Ground Vodka under Minden Mill and plans for further development of brown liquor products.

• Continued organizational realignment in the Restaurant Group, resulting in increased adjusted EBITDA and reduced operating expenses.

Opportunities:

• Potential future divestment of public company investments enabling redeployment of capital into private market investments or returns to shareholders.

• Forecasting a mid-term adjusted EBITDA margin target of 28% for Alight, indicating an opportunity for a more focused business model capable of higher margins.

• Partnership with JANA Partners offers opportunities for co-investments in undervalued public companies and capability enhancements.

Risks:

• Cannae's investment in Sightline experienced market adoption challenges, affecting expected performance and necessitating an impairment.

• Older products underperforming at Sightline, leading to continued negative operational cash flow.

More details: Cannae Holdings IR

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