Good afternoon, ladies and gentlemen, and welcome to the Cannae Holdings, Inc. second quarter 2022 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 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 11:59 P.M. Eastern on August 15th, 2022. With that, I would like to turn the call over to Jamie Lillis of Solebury Trout. Please proceed.
Thank you, operator, and all of you for joining us this afternoon. On the call today, we have our chairman, Bill Foley, our Chief Executive Officer, Rick Massey, Cannae's president, David Ducommun, and Bryan 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 Cannae'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 the 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 to the GAAP financial information, is provided in our shareholder letter. I would now like to turn the call over to Cannae's Chairman, Bill Foley, who will open with a few brief remarks, and then we'll open the line for your questions. Bill?
Yeah. Thank you, Jamie. Through the second quarter, we focused on two main themes to prepare for inflation and a rising interest rate cycle. First, we used our excess liquidity to repurchase our shares, which we believe are trading at a meaningful discount to fair value. Second, we continued to simplify our portfolio by monetizing investments that were either less immune to an inflationary cycle or that helped optimize our tax position. Overall, we are very pleased with our portfolio companies and their ability to continue to generate growing profits in an inflationary environment. During the quarter, we repurchased 4.8 million Cannae common shares. Year to date, we have repurchased 6.8 million shares, representing approximately 8% of our shares outstanding.
In total, we have invested $306 million to repurchase approximately 13% of our shares outstanding since we received approval from our board for our repurchase program in 2021, as we continue to believe that our shares are not only undervalued, but so too are the shares of our portfolio companies. At quarter end, we have completely extinguished the $219 million board repurchase authorization and have only 2.7 million shares remaining on our 2021 authorization. As a result, our board has approved a new three-year, 10 million share repurchase authorization, which further demonstrates our commitment to repurchase our shares when they are trading significantly below intrinsic value like they are today. In June, AmeriLife announced an investment that values Cannae's stake at a significant premium to our original investment.
As a reminder, Cannae invested $121 million for a 20% stake in AmeriLife alongside Thomas H. Lee Partners, or THL, in March 2020. Over the past two years, we have worked in collaboration with THL and the AmeriLife management team to accelerate organic growth and expand through strategic M&A. We are very pleased with the results, and it led to a strategic investment from Genstar Capital, wherein they will take an equal ownership position with THL Partners. This transaction values Cannae's initial investment at $338 million or a 2.8x multiple of our original investment made about two years ago. While we enter our investments from a perspective as a long-term holder, Cannae will monetize a significant portion of our position through two closings anticipated in the second half of this year.
Dun & Bradstreet remains our largest investment and one where we remain very involved given the upside potential that we see in the company. We continue to work closely with Anthony Jabbour, the CEO, and the DNB leadership team as they execute their organic growth strategy while evaluating accretive tuck-in acquisition opportunities and broader strategic alternatives. To that end, DNB's first half organic revenue growth on a constant currency basis was 4.1%, which is in line with their guidance range of 3%-5%. We believe that delivering and accelerating organic revenue growth is key to driving an improved valuation.
We are also pleased that they will begin paying a dividend in September of $0.05 per share per quarter, which will generate approximately $16 million per year in cash flow to Cannae and hopefully improve DNB's trading performance as all of its peers pay a similar dividend and DNB continues to trade well below peer average. Subsequent to the quarter end, we did sell approximately 9.2 million shares of Dun & Bradstreet to minimize our tax obligations in the second half of this year. We continue to see significant upside in D&B shares. Alight is another important public holding for Cannae and one that continues to perform well, reporting second quarter revenue growth of 6.4% with 90% of their anticipated 2022 revenues now under contract.
Importantly, Alight continues to transition to a business process as a service or BPaaS model and recognized 36% YoY growth in their BPaaS revenues. Alight's management team continues to execute very well as they add products to their platform and clients to their roster as they transition to a BPaaS model, which we believe is not yet reflected in their valuation. In fact, given the discount to fair value, the board of directors authorized a $100 million share repurchase program. Management provided guidance for the second half of 2022 and reiterated full year guidance, which represents an increase in YoY revenue of 6%-7% and an increase in adjusted EBITDA between 4.7% and 6.6%. In the second quarter, as noted earlier, we aggressively repurchased our shares and further simplified our portfolio.
We will continue to work with our management teams to ensure that we help them successfully unlock the value that exists within their businesses. We will also look for new private investments like AmeriLife and Sightline, where we can take control positions and apply our playbook to unlock substantial value for our shareholders. We are currently interested in several attractive investment opportunities. Lastly, we'll be hosting our second annual Cannae Holdings Portfolio Conference on December 14th and fifteenth at the Wynn Las Vegas. Last year's inaugural conference was a constructive two-day event filled with in-depth presentations and quality discussions with full executive management teams of our portfolio companies. This year will be a continuation of that same format. We believe that this was a great event and look forward to another successful conference in December.
We hope all of you can join us in Las Vegas in December. I'll now turn the call back to the operator to begin our question-and-answer session.
Thank you. We will now conduct a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in a question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star one to ask a question at this time. One moment while we pull up our first question. Our first question comes from John Campbell with Stephens. Please proceed.
Hey, guys. Good afternoon.
Afternoon, John.
Hey, John.
Hey, congrats on the positive development with AmeriLife. That was nice. It sounds like almost a 3x return. You mentioned plans for kind of monetizing that in the back half of this year. Any sense for what that timing looks like? Then maybe, I don't know if it's maybe too early, but how much you guys have monetized?
Yeah, John. Well, it's gonna be a two-stage process. It looks like the first half of the transaction, which will be a cash payment, will occur late August or early September, and the second half probably about 30-45 days later. In our case, we're going to roll about 20% of our overall investment back into a continuing position in AmeriLife. We feel like we're gonna, again, get another double or triple out of this investment over the next couple three years. We are going to take a fair amount of cash off the table.
Okay, that's helpful. As a reminder, I guess on AmeriLife, is that on the 10% performance fee. Is that right?
I'm sorry, John.
On the LTIP, is it on the 10% fee?
AmeriLife is one of our.
It's all under Trasimene, John.
Yeah.
This is our Trasimene portfolio.
Got it. Then back to the Textor and the, I guess, the Eagle Football deal. I didn't see any specifics mentioned, so I'm guessing you guys are probably still ironing out some details. It looked like there was a development maybe a couple weeks ago that maybe the deal was going through or it was kind of, I guess, in formation. Any sense for what your ultimate commitment is gonna be and then maybe how you're looking from a funding standpoint? Then, you know, I know it's probably still too early there, but, you know, thoughts on whether you're gonna roll that debt into equity over time.
Yeah, John, we anticipate it's gonna be about $100 million commitment if things come together. There's still a lot of loose ends with this transaction that we're trying to pull together. We have to ensure that the various football assets that John Textor is involved with can get a PCAOB audit and we can get that audit on a timely basis, and that they can further fill the balance of the commitment that they need to acquire OL and then contribute other assets into Eagle Football. It really remains a moving target at this time. We like the idea, we like the concept, and if it proceeds, it'll be roughly $100 million commitment.
Okay, very helpful. Again, I guess probably too early, but any sense for, you know, I don't know if there's any kind of framework on the returns. I've seen some figures out there, some targets they've put out as far as the revenue growth over time from Lyon in particular, but any sense for what that kind of helping frame up the return potential?
Yeah. We hate to speculate on that, John, right now, really. It's I mean, there's just so many moving elements with this transaction that it's pretty speculative to really try and estimate returns at this point.
Okay. Understood. We'll keep tabs on it in the future. I'll get back in the queue. Thanks, guys.
Thanks, John.
Once again, ladies and gentlemen, to ask a question, please press star one on your telephone keypad. Our next question comes from Ian Zaffino with Oppenheimer. Please proceed.
Ian.
Hey, guys.
Hey.
Thank you very much for all the details. Just wanted to ask you on the Dun & Bradstreet. I see you sold some of the shares there. What's sort of the motivation of that sale? Maybe kind of your thoughts on the business or confidence in the business or and the thesis playing out, maybe the way you initially thought? Thanks.
Well, I mean, we really like the investment. We like where the company's going. The 9.2 million shares that we sold happened to be shares that we acquired in the IPO at a value of around $21.60 or $21.65. We were in kind of a tough tax position in terms of having disposed of Ceridian, some Ceridian shares, incurring a very large tax bill. We thought, you know, we all got together, and we said, "You know, we own 88 million shares of this company. It's a significant position.
If we were going to raise some cash for some other investments, does it make sense to reduce our investment in Dun & Bradstreet and take a tax loss?" Which, of course, for TransDigm is pretty hurtful because we're obviously have to recover that loss before any distributions can be made. We just felt like it was time to take some money off the table, and we raised about $135-$140 million with that sale. And that money's currently in the bank, and we did that really to give us a bankroll to repurchase our shares from time to time. We wanted to make sure we didn't have to go into a line of credit to repurchase shares.
Okay. Great. And then also, how else are you thinking about sources of monetization? Is there anything that you're gonna, you know, immediately exit or you could remove to exit? If there's maybe a discussion about that. Thanks.
Yeah. We really don't wanna liquidate any more of our Ceridian shares that we have remaining at this time. We really feel like Ceridian just reported great earnings. It's got a great path to the future. Obviously, we've been monetizing that investment for a couple of years now. The balance of our portfolio companies, we're really pretty excited about, and we just feel like they're really not being treated very fairly in the marketplace, like a lot of other companies. With the AmeriLife monetization and the Dun & Bradstreet sale, we're kind of in a good cash position to make a couple of investments but also continue to repurchase shares, which is a pretty high priority in our viewpoint right now.
Thank you. If I could squeeze in one more on, Bill, your last point about that. You know, when you look at, like, your buybacks and how aggressive you wanna be, are you looking at maybe a spread with the NAV? If you are, like, at what point does the spread become just so large that you have to act super aggressively, you know, or not? Maybe help us understand, you know, some of the thinking in the buyback and then how it relates to, like, the NAV discount and stock. Thanks.
Yeah. I mean, I think really you kinda saw what happened in the first half when we really kind of stepped up when we took out the FNF position, which frankly, they were going to have to go to market with that position prior to, I think it was around November 1st of this year, due to the five-year window that they had to sell their shares that they got in as part of the spin-out. We like that acquisition. That was in the $17.70 range, and we thought that was really a value to our shareholders.
You know, so we're gonna be in the market buying shares back at current levels and even higher, and we would get much more aggressive if we again get a pretty stiff downturn in the marketplace, and we got back down below that $20-$19 range. You see us kind of really piling on at that point.
Okay. None of that thinking changes if you're gonna get banged on taxes with this bill that just passed with one of the houses and probably get passed with the other houses? Thanks.
Yeah. Well, we think we have our tax situation pretty much in hand with the sales that we've had over this past year. We don't really feel like we're paying taxes. I mean, because we liquidated Ceridian as an investment. We're gonna have a tax consequence on AmeriLife for a good portion of that investment. We feel like we're pretty well positioned right now relative to looking at inflation, looking at higher interest rates, and then looking at our portfolio companies. A number of them are just sort of immune to inflation and interest rates.
They're recurring revenue models, and they're kind of all part of our playbook of what we like to look for and what we like to invest in, which are companies that can be strong in really good times and be very dependable in time when times get a little tougher.
Understood. Thank you very much for the color.
You bet.
Our next question comes from Chris Sica with Singular Research. Please proceed.
Hi, good afternoon. I had a question on, you know, where are you seeing the best possible investment in either public or private markets and why?
Yeah, we're moving now. You know, we have two SPACs that have not been deployed, so we continue to look for SPAC opportunities. Very difficult in today's environment, in today's market. People that are selling the company are frankly not particularly interested in partnering with a SPAC. We've, and Rick can talk more about this if he'd like to, but we've really been doing lots of screens and looking hard at companies to either take private or companies that are private that we can make investments in, or take control of. Rick, do you wanna add anything to that? 'Cause you're the one-
No, that's all. Sorry, go ahead, please.
No, I mean, that's. It's waiting for you.
No. It's
Okay.
We've got some interesting companies where we've talked to management and you can see. You know, they're all gonna be around the Bill model, subscription model, pain point in the economy, very much, you know, a utility that if they don't open the, you know, the customer doesn't open. Same model. We are looking at a handful of those, and some of them will not be surprising if we get them done, and maybe a couple of them might be. There's a lot of good stuff out there and a lot of people that wanna partner with Bill.
Okay, thanks. You know, do you have an idea about how many new acquisitions or investments you've made?
Well, I mean, I can take that. You know, we're trying to look for investments in the $100 million-$300 million range. It really depends upon monetization of various assets and our buyback program. Our goal is to do two or three of these investments a year and kind of build up our portfolio and not build it up in the way we possibly have in the past through the SPAC acquisitions or the backstopping that we had done with Alight and Paysafe. We've moved away from that model, and the market is, you know, the market's difficult right now, so we have to navigate the market and navigate inflation and interest rates.
Okay, great. Thanks for your answers.
Our next question comes from John Campbell with Stephens. Please proceed.
Hey, guys. Thanks for the extra question.
You bet.
Maybe this is a question for Bryan. It's just a housekeeping question, but it looks like you closed the quarter $75 million in cash. I saw in the update letter, I guess as of August 5th, you guys had $190 million. If I add in that D&B monetization, I'm still coming up maybe a little bit short. Is there anything to call out that makes up the difference between those two?
Paid management fees at the end of the quarter, but it should have been $75 plus, like, another $127 on D&B, less the management fee. It should come out to exactly what we've got on the balance sheet now.
Oh, okay. I was taking a net with the management fees. Okay. Makes sense. Bill, on the Austerlitz one and two, it does sound like it's, you know, finding a combination partner is probably a lot harder than it was last year around this time.
Sure.
Can you remind us what that process looks like if you don't find a partner? I think there's a 2-year, maybe timeframe on that. What the mechanics look like. Is there a return to cash from the trust? What does that look like for you guys?
Yes, you're exactly right. What happens after the two-year point, unless we get an extension from our investors, is that that money in trust is returned to the shareholders. It's too bad because these are a couple of good acquisition candidates that we have in place, and we're working hard to find candidates to merge with. As you can imagine, in this kind of environment, it's difficult. It's not easy. Rick is working really hard on it with Duke and Ryan Caswell, and we have several different candidates, but they all are process-oriented. We're working on all of them every day.
Okay. That's helpful. Thank you, guys.
Thank you. At this time, I would like to turn the call back over to Mr. Foley for closing comments.
Thanks, operator, and thank you to everyone who joined our call today. While the future path of the market remains ambiguous, we will remain focused on what we can control, which is driving operational improvements across our portfolio companies through our playbook, buying back our shares, given the steep discount to fair value, and finding exceptional investment opportunities and monetizing investments. Overall, we'll remain nimble and adept in our approach to the opportunities that we see in the market as we strive to create long-term shareholder value. We look forward to speaking with all of you again on our third quarter 2022 earnings call. Thanks again for your time today.
Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.