Cannae Holdings Inc

Previous wording

The statements contained in this Quarterly Report on Form 10-Q (this "Quarterly Report") that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements regarding our expectations, hopes, intentions or strategies regarding the future. All forward-looking statements included in this Quarterly Report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other comparable terminology. It is important to note that our actual results could vary materially from those forward-looking statements contained herein due to many factors, including, but not limited to: changes in general economic, business and political conditions, including changes in the financial markets and changes in macroeconomic conditions resulting from the outbreak of a pandemic or escalation of the current conflicts in Ukraine and the Middle East; risks associated with the Investment Company Act of 1940; our potential inability to find suitable acquisition candidates, acquisitions in lines of business that will not necessarily be limited to our traditional areas of focus, or difficulties in integrating acquisitions; significant competition that our operating subsidiaries face; risks related to the externalization of certain of our management functions to our Manager; and other risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of our Annual Report on Form 10-K for the year ended December 31, 2023 (our "Annual Report") and other filings with the Securities Exchange Commission ("SEC").

Current wording

The statements contained in this Quarterly Report on Form 10-Q (this "Quarterly Report") that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements regarding our expectations, hopes, intentions or strategies regarding the future. All forward-looking statements included in this Quarterly Report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other comparable terminology. It is important to note that our actual results could vary materially from those forward-looking statements contained herein due to many factors, including, but not limited to: changes in general economic, business and political conditions, including changes in the financial markets and changes in macroeconomic conditions resulting from the outbreak of a pandemic or escalation of the conflicts in Ukraine and the Middle East; risks associated with the Investment Company Act of 1940; our potential inability to find suitable acquisition candidates, acquisitions in lines of business that will not necessarily be limited to our traditional areas of focus, or difficulties in integrating acquisitions; significant competition that our operating subsidiaries face; risks related to the externalization of certain of our management functions to our Manager; and other risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of our Annual Report on Form 10-K for the year ended December 31, 2023 (our "Annual Report") and other filings with the Securities Exchange Commission ("SEC").

Previous wording

For an additional description of our business, including descriptions of segments and recent business developments, see the discussion in Note A -Basis of Financial Statements and Note E -Segment Information to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report, which is incorporated by reference into this Part I, Item 2.

Current wording

The following discussion should be read in conjunction with our Annual Report. For an additional description of our business, including descriptions of segments and recent business developments, see the discussion in Note A -Basis of Financial Statements and Note E -Segment Information to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report, which is incorporated by reference into this Part I, Item 2.

Previous wording

Average weekly sales per restaurant are typically higher in the first and fourth quarters than in other quarters, and we typically generate a disproportionate share of our earnings from operations in the first and fourth quarters. Holidays, severe weather and other disruptive conditions may impact sales volumes seasonally in some operating regions.

Current wording

Restaurant Group. Average weekly sales per restaurant are typically higher in the first and fourth quarters than in other quarters, and we typically generate a disproportionate share of our earnings from operations in the first and fourth quarters. Holidays, severe weather and other disruptive conditions may impact sales volumes seasonally in some operating regions.

Previous wording

Recent years were a period of high inflation relative to long-term inflation expectations in the U.S. This inflationary environment primarily impacted the commodity and labor costs of our Restaurant Group. We have adjusted menu pricing to account for these cost increases to an extent, but will continue to balance the impact of inflationary pressures on costs with the value proposition offered to customers with a focus on long-term profitability.

Current wording

Recent years were a period of high inflation relative to long-term inflation expectations in the U.S. This inflationary environment primarily impacted the commodity and labor costs of our Restaurant Group. We have adjusted menu pricing to account for these cost increases to an extent, but will continue to balance the impact of inflationary pressures on our costs with the value proposition offered to customers, focusing on long-term profitability.

Previous wording

As of March 31, 2024, the fair value of our ownership interest in Dun & Bradstreet based on quoted market prices was $693.2 million and the book value of our recorded asset for D&B was $704.9 million. While the fair value of our investment in Dun & Bradstreet is below our book value, there are no other indicators that our investment is other than temporarily impaired. D&B has consistently grown its revenue and cash flow since when we initially invested in Dun & Bradstreet. Due to these factors, we consider the decline in value to be temporary as of March 31, 2024. Though we do not currently believe our investment in D&B is other than temporarily impaired, because the fair value is currently below the book value of our investment in Dun & Bradstreet, further declines in fair value of the investment, deterioration in D&B's actual or forecasted results of operations or adverse changes in the U.S. macroeconomic environment could result in an impairment charge in future periods to record our asset at fair value.

Current wording

As of June 30, 2024, the fair value of our ownership interest in Dun & Bradstreet based on quoted market prices was $639.4 million and the book value of our recorded asset for D&B was $700.5 million. While the fair value of our investment in Dun & Bradstreet is below our book value as of June 30 2024, there are no other indicators that our investment is other than temporarily impaired. As of June 30, 2024, the fair value of our investment in D&B has been below book value for approximately one quarter. [As of the date of filing of this Quarterly Report, the fair value of our investment in D&B is above our book value as of June 30, 2024.] Due to these factors, we consider the decline in fair value to be temporary as of June 30, 2024. Though we do not currently believe our investment in D&B is other than temporarily impaired, because the fair value is below the book value of our investment as of June 30, 2024, declines in fair value of D&B, deterioration in D&B's actual or forecasted results of operations or adverse changes in the U.S. macroeconomic environment could result in an impairment charge in future periods to record our asset at fair value.

Previous wording

As of March 31, 2024, the fair value of our ownership interest in Alight based on quoted market prices was $516.9 million and the book value of our recorded asset for Alight was $488.3 million. The fair value of our investment in Alight is above our book value and there are no other indicators of impairment. Alight has consistently outperformed market expectations and our expectations for its results of operations from when we initially invested in Alight. Though our investment in Alight is not currently impaired, further declines in fair value of the investment, deterioration in Alight's actual or forecasted results of operations or adverse changes in the U.S. macroeconomic environment could result in an impairment charge in future periods to record our asset at fair value.

Current wording

As of June 30, 2024, the fair value of our ownership interest in Alight based on quoted market prices was $387.3 million and the book value of our recorded asset for Alight was $492.1 million. While the fair value of our investment in Alight is below our book value as of June 30, 2024, there are other indicators that our investment is not other than temporarily impaired as of June 30, 2024. The fair value of our investment in Alight has been below book value for approximately one quarter. Alight recently completed the sale of the Payroll & Professional Services Business and used a portion of the proceeds to payoff a significant portion of its debt, improving its' capital strength. Alight has consistently reported strong gross profit and operating cash flows subsequent to our initial investment. Due to these factors, we consider the decline in fair value to be temporary as of June 30, 2024. Though we do not currently believe our investment in Alight is other than temporarily impaired, because the fair value is below the book value of our investment as of June 30, 2024, further declines in fair value of the investment, deterioration in Alight's actual or forecasted results of operations or adverse changes in the U.S. macroeconomic environment could result in an impairment charge in future periods to record our asset at fair value.

Previous wording

As of March 31, 2024, the book value of our investment in Sightline accounted for under the equity method of accounting was $154.9 million. Based on a valuation using a hybrid discounted cash flow and market comparison approach, the aggregate fair market value of our ownership of Sightline equity was approximately $162.3 million as of September 30, 2023. The fair value measurement is considered a level 3 fair value measure. The primary inputs in the valuation were the forecasted results of operations of Sightline and the discount rate used in the discounted cash flow analysis. The primary significant unobservable input used was the 29% discount rate used in the discounted cash flow analysis. Though we do not believe our investment in Sightline is currently impaired, further declines in fair value of the investment, deterioration in Sightline's actual or forecasted results of operations or adverse changes in the U.S. macroeconomic environment could result in an impairment charge in future periods to record our asset at fair value.

Current wording

As of June 30, 2024, the book value of our investment in Sightline accounted for under the equity method of accounting prior to recording impairment was $154.7 million. Based on a valuation using a hybrid discounted cash flow and market comparison approach and adjusted for the risk of a capital shortfall at the business, the aggregate fair market value of our ownership of Sightline equity was approximately $13.7 million as of June 30, 2024. The fair value measurement is considered a level 3 fair value measure. The primary inputs in the valuation were the forecasted results of operations of Sightline, the discount rate used in the discounted cash flow analysis and the adjustment for the risk of a capital shortfall. The primary significant unobservable input used was the 35% discount rate used in the discounted cash flow analysis and the 50% adjustment for the risk of capital shortfall.

Previous wording

As of March 31, 2024, we had a net deferred tax asset of $29.0 million, which is primarily attributable to temporary differences for our investments in unconsolidated affiliates held through partnerships. In the quarter ended March 31, 2024, we recorded a valuation allowance of $59.9 million on the Company's federal net operating loss ("NOL") carryforwards and certain deferred taxes related to our consolidated partnerships. In the first quarter of 2024 it was determined that the net taxable capital gain from our sales of shares of Dayforce and D&B would likely be offset by other sources of current year taxable loss. Accordingly, we determined it was uncertain whether we would be able to use the Company's available federal NOL carryforwards and certain other deferred taxes. One of the factors used in assessing the need for a valuation allowance on net deferred tax assets is whether a company is in a three-year cumulative book loss position and for the three years ended December 31, 2023, the Company is in a cumulative book loss position. The Company is relying on deferred tax liabilities, and the ability to carry back capital losses, as sources of income to facilitate the recovery of its remaining deferred tax assets. The Company’s prospective investment strategy, fluctuations in the fair market value of its ownership interests prior to any dispositions and other factors may influence the timing of reversals of deferred tax assets and liabilities and their ultimate impact on taxable income or loss, which could have an effect on the recoverability of deferred tax assets. As of March 31, 2024, the Company has a valuation allowance of $59.9 million representing a full allowance on its federal NOL carry forwards and certain other federal deferred taxes and of $4.7 million related to state NOLs as it is more likely than not that the tax benefit of certain state NOLs will not be realized before the NOLs expire. At this time, we consider it more likely than not that we will have sufficient taxable income and available excess capital gain from prior year periods that will allow us to realize our other deferred tax assets. The Company will continue to monitor the recoverability of deferred tax assets on a quarterly basis and may need to record an additional valuation allowance on its net deferred tax asset in future periods.

Current wording

As of June 30, 2024, we had a net deferred tax asset of $63.2 million, which is primarily attributable to temporary differences for our investments in unconsolidated affiliates held through partnerships. In the six months ended June 30, 2024, we recorded an additional valuation allowance of $58.8 million on the Company's federal net operating loss ("NOL") carryforwards and certain deferred taxes related to our consolidated partnerships. In the first quarter of 2024 it was determined that the net taxable capital gain from our sales of shares of Dayforce and D&B would likely be offset by other sources of current year taxable loss. Accordingly, we determined it was uncertain whether we would be able to use the Company's available federal NOL carryforwards and certain other deferred taxes. One of the factors used in assessing the need for a valuation allowance on net deferred tax assets is whether a company is in a three-year cumulative book loss position and for the three years ended December 31, 2023, the Company is in a cumulative book loss position. The Company is relying on deferred tax liabilities, and the ability to carry back capital losses, as sources of income to facilitate the recovery of its remaining deferred tax assets. The Company’s prospective investment strategy, fluctuations in the fair market value of its ownership interests prior to any dispositions and other factors may influence the timing of reversals of deferred tax assets and liabilities and their ultimate impact on taxable income or loss, which could have an effect on the recoverability of deferred tax assets. As of June 30, 2024, the Company has a federal valuation allowance of $58.7 million representing a full valuation allowance on its federal NOL carryforwards and certain other deferred taxes where it is not more likely than not that the tax benefit will be realized. Additionally, a state valuation allowance of $4.7 million has been recorded representing certain state NOLs where it is not more likely than not that the tax benefit of certain state NOLs will be realized before the NOLs in those certain states expire. At this time, we consider it more likely than not that we will have sufficient taxable income and available excess capital gain from prior year periods that will allow us to realize our other deferred tax assets. The Company will continue to monitor the recoverability of deferred tax assets on a quarterly basis and may need to record an additional valuation allowance on its net deferred tax asset in future periods.

Previous wording

The following is a discussion of the material fluctuations in our consolidated results of operations for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The material changes in revenues, expenses and pre-tax loss from the three months ended March 31, 2024 and 2023 are discussed in further detail at the segment level below.

Current wording

The following is a discussion of the material fluctuations in our consolidated results of operations for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The material changes in revenues, expenses and pre-tax loss for the three months ended June 30, 2024 and 2023 are discussed in further detail at the segment level below.

Previous wording

(Loss) earnings before income taxes and equity in earnings (losses) of unconsolidated affiliates decreased $77.5 million, or 278.8%, in the three months ended March 31, 2024 compared to the corresponding period in 2023.

Current wording

Loss before income taxes and equity in losses of unconsolidated affiliates decreased (increased loss) $106.3 million, or 168.5%, in the three months ended June 30, 2024 compared to the corresponding period in 2023.

Previous wording

Equity in earnings (losses) of unconsolidated affiliates for thethree months ended March 31, 2024 and 2023 consisted of the following:

Current wording

Equity in losses of unconsolidated affiliates for thethree months ended June 30, 2024 and 2023 consisted of the following:

Previous wording

Income tax expense was $53.4 million and $2.6 million in the three-month periods ended March 31, 2024 and 2023, respectively. Our effective tax rate was (107.4)% and 9.4% in the three months ended March 31, 2024 and 2023, respectively. Our effective tax rate fluctuates depending on our estimate of ultimate income tax liability and changes in the characteristics of net earnings, such as the weighting of operating income versus other income or earnings and losses of unconsolidated affiliates. The change in our effective tax rate in the three months ended March 31, 2024 compared to the corresponding period in 2023 is primarily attributable to recording of a valuation allowance in the current period of $59.9 million on our federal net operating loss carryforwards and certain deferred taxes within our consolidated partnerships.

Current wording

Income tax expense (benefit) was $19.7 million and $(19.2) million in the six-month periods ended June 30, 2024 and 2023, respectively. Our effective tax rate was (9.0)% and 54.4% in the six months ended June 30, 2024 and 2023, respectively. Our effective tax rate fluctuates depending on our estimate of ultimate income tax liability and changes in the characteristics of net earnings, such as the weighting of operating income versus other income or earnings and losses of unconsolidated affiliates. The change in our effective tax rate in the six months June 30, 2024 compared to the corresponding period in 2023 is attributable to the recording of a valuation allowance in the current period of $58.8 million on our federal net operating loss carryforwards and certain deferred taxes within our consolidated partnerships, the impact to the rate of equity in losses of unconsolidated affiliates relative to pre-tax loss and the impairment recorded to our investment in Sightline.

Previous wording

The increase in equity in earnings of CSI was primarily driven by the sale of a portion of CSI to a third party by BGPT Catalyst, LP, the entity through which we own our interest in CSI.

Current wording

The equity in earnings of CSI in the six months ended June 30, 2024 was primarily driven by the sale of a portion of CSI to a third party by BGPT Catalyst, LP, the entity through which we own our interest in CSI.

Previous wording

Total revenues for the Restaurant Group segment decreased $42.0 million, or 28.3%, in the three months ended March 31, 2024, compared to the corresponding period in 2023. The change was attributable to approximately $34.9 million of incremental revenue included in the three months ended March 31, 2023 associated with stores that were closed prior to 2024. In addition, there was a decline in comparable store sales.

Current wording

Total revenues for the Restaurant Group segment decreased $37.6 million, or 25.9%, in the three months ended June 30, 2024, compared to the corresponding period in 2023. The change was attributable to approximately $30.4 million of incremental revenue included in the three months ended June 30, 2023 associated with O'Charley's stores that were closed prior to 2024 and a decline in comparable store sales.

Previous wording

Comparable Store Sales. One method we use in evaluating the performance of our restaurants is to compare sales results for restaurants period over period. A new restaurant is included in our comparable store sales figures starting in the first period following the restaurant's first seventy-eight weeks of operations. Changes in comparable store sales reflect changes in sales for the comparable store group of restaurants over a specified period of time. This measure highlights the performance of existing restaurants, as the impact of new restaurant openings is excluded. Comparable store sales for our O'Charley's and 99 Restaurants brands decreased by 6.5% and 2.8%, respectively, in the three months ended March 31, 2024 compared to the comparable period in 2023. The decrease is primarily attributable to a decrease in guest counts, partially offset by an increase in the average amount spent by customers each visit.

Current wording

Comparable Store Sales. One method we use in evaluating the performance of our restaurants is to compare sales results for restaurants period over period. A new restaurant is included in our comparable store sales figures starting in the first period following the restaurant's first seventy-eight weeks of operations. Changes in comparable store sales reflect changes in sales for the comparable store group of restaurants over a specified period of time. This measure highlights the performance of existing restaurants, as the impact of new restaurant openings is excluded. Comparable store sales for our O'Charley's and 99 Restaurants brands decreased by 8.0% and 3.2%, respectively, in the three months ended June 30, 2024 compared to the corresponding period in 2023. The decrease is primarily attributable to a decrease in guest counts, partially offset by an increase in the average amount spent by customers each visit.

Previous wording

Cost of restaurant revenue decreased directionally consistent with Restaurant revenues. Cost of restaurant revenue as a percentage of restaurant revenue was 88.5% and 88.6% in the three months ended March 31, 2024 and 2023, respectively.

Current wording

Cost of restaurant revenue decreased directionally consistent with Restaurant revenues. Cost of restaurant revenue as a percentage of restaurant revenue was 87.0% and 88.5% in the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Summarized financial information for Dun & Bradstreet for the relevant dates and time periods included in Equity in earnings (losses) of unconsolidated affiliates in our Statements of Operations is presented below.

Current wording

Summarized statement of operations information for Dun & Bradstreet for the relevant dates and time periods included in Equity in earnings (losses) of unconsolidated affiliates in our Statements of Operations is presented below.

Previous wording

As of March 31, 2024, we own approximately 9.5% of the outstanding common stock of Alight. We account for our ownership of Alight under the equity method of accounting; therefore, its results do not consolidate into ours.

Current wording

As of June 30, 2024, we own approximately 9.7% of the outstanding common stock of Alight. We account for our ownership of Alight under the equity method of accounting; therefore, its results do not consolidate into ours.

Previous wording

On March 20, 2024, Alight entered into a definitive agreement to sell its professional services segment and its Payroll & Professional Services Business. Closing of the transaction is subject to various closing conditions, including regulatory approvals, and is expected to close by mid-year 2024. Beginning with the quarter ended March 31, 2024, Alight began accounting for the assets and liabilities of the Payroll & Professional Services Business as “held for sale” and its operating results as discontinued operations. Accordingly, Alight's results presented for the period ended March 31, 2023 have been retrospectively revised to reflect the Payroll & Professional Services Business as discontinued operations.

Current wording

On March 20, 2024, Alight entered into a definitive agreement to sell the Payroll & Professional Services Business. The transaction closed on July 12, 2024. Beginning with the quarter ended March 31, 2024, Alight began accounting for the assets and liabilities of the Payroll & Professional Services Business as “held for sale” and its operating results as discontinued operations. Accordingly, Alight's results presented for the periods ended June 30, 2023 have been retrospectively revised to reflect the Payroll & Professional Services Business as discontinued operations.

Previous wording

Summarized financial information for Alight for the relevant dates and time periods included in Equity in earnings (losses) of unconsolidated affiliates in our Condensed Consolidated Statements of Operations is presented below.

Current wording

Summarized statement of operations information for Alight for the relevant dates and time periods included in Equity in earnings (losses) of unconsolidated affiliates in our Condensed Consolidated Statements of Operations is presented below.

Previous wording

As of March 31, 2024, we own approximately 46.6% of the ownership interest of Black Knight Football. We account for our ownership of BKFE under the equity method of accounting and report our equity in the earnings or loss of BKFE on a three-month lag; therefore, its results do not consolidate into ours. Accordingly, our net loss for the three months ended March 31, 2024 and 2023 includes our equity in BKFE’s losses for the three months ended December 31, 2023 and for the period from December 13, 2022 (the date we acquired our initial interest in BKFE) through December 31, 2022, respectively.

Current wording

As of June 30, 2024, we own approximately 45.5% of the ownership interest of Black Knight Football. We account for our ownership of BKFC under the equity method of accounting and report our equity in the earnings or loss of BKFC on a three-month lag; therefore, its results do not consolidate into ours. Accordingly, our net loss for the three and six months ended June 30, 2024 includes our equity in Black Knight Football’s losses for the three and six months ended March 31, 2024 and our net loss for the three and six months ended June 30, 2023 includes our equity in Black Knight Football's losses for the three months ended March 31, 2023 and the period from December 13, 2022 (the date we acquired our initial interest in BKFC) through March 31, 2023, respectively.

Previous wording

Summarized financial information for BKFE for the relevant dates and time periods included in Equity in earnings (losses) of unconsolidated affiliates in our Condensed Consolidated Statements of Operations is presented below.

Current wording

Summarized statement of operation information for Black Knight Football for the relevant dates and time periods included in Equity in earnings (losses) of unconsolidated affiliates in our Condensed Consolidated Statements of Operations is presented below.

Previous wording

Black Knight Football's total revenue is primarily attributable to Premier League media rights revenue earned by AFCB and to a lesser extent, matchday and sponsorship revenue. For the three months ended December 31, 2023, revenues were more than offset by $42.8 million of personnel cost and $28.0 million of depreciation and amortization of property and equipment and intangible assets by AFCB.

Current wording

Black Knight Football's total revenue is primarily attributable to Premier League media rights revenue earned by AFCB and matchday and sponsorship revenue. Total revenues for Black Knight Football increased $13.6 million, or 34.8%, in the three months ended March 31, 2024, compared to the corresponding period in 2023. The increase in revenue was primarily attributable to an increase in matchday and sponsorship revenue. In the three months ended March 31, 2024, total revenue of $49.4 million was more than offset by $43.7 million of personnel cost and $28.0 million of depreciation and amortization of property and equipment and intangible assets by AFCB.

Previous wording

Personnel costs increased $8.3 million in the three months ended March 31, 2024, compared to the corresponding period in 2023. The change in personnel costs was primarily driven by a $5.2 million increase in success bonuses paid related to our sales of shares of Dayforce and a $2.9 million increase in stock-based compensation cost.

Current wording

Personnel costs increased $9.2 million in the three months ended June 30, 2024, compared to the corresponding period in 2023. The change in personnel costs was primarily driven by a $7.0 million increase in stock-based compensation cost and a $1.5 million increase in success bonuses paid related to our sales of shares of Dayforce.

Previous wording

Other operating expenses increased $8.1 million in the three months ended March 31, 2024 compared to the prior year period. The change in the three-month period was primarily driven by increased legal and termination fees associated with the termination of the management agreement with Trasimene.

Current wording

Other operating expenses increased $3.8 million in the three months ended June 30, 2024 compared to the prior year period. The change in the three-month period was primarily driven by increased professional fees and termination fees associated with the termination of the management agreement with Trasimene.

Previous wording

Cash Requirements. Our short and long term cash requirements include management fees, personnel costs, other operating expenses, taxes, payments of interest and principal on our debt, capital expenditures, dividends on our common stock, and other potential business acquisitions or investments, including the JANA Fund Commitment. On May 9, 2024, our Board declared cash dividends of $0.12 per share, payable on June 28, 2024, to Cannae common shareholders of record as of June 14, 2024. There are no restrictions on our retained earnings regarding our ability to pay dividends to stockholders. The declaration of any future dividends is at the discretion of our Board of Directors. Additional uses of cash flow over the short and long term are expected to include stock repurchases and debt repayments.

Current wording

Cash Requirements. Our short and long term cash requirements include management fees, personnel costs, other operating expenses, taxes, payments of interest and principal on our debt, capital expenditures, dividends on our common stock, and other potential business acquisitions or investments, including the JANA Fund Commitment. On July 30, 2024, our Board declared cash dividends of $0.12 per share, payable on September 30, 2024, to Cannae common shareholders of record as of September 16, 2024. There are no restrictions on our retained earnings regarding our ability to pay dividends to stockholders. The declaration of any future dividends is at the discretion of our Board. Additional uses of cash flow over the short and long term are expected to include stock repurchases and debt repayments.

Previous wording

As of March 31, 2024, we had cash and cash equivalents of $238.3 million, of which $223.8 million was cash held by the corporate holding company, $45.8 million of short-term investments held by the corporate holding company, and $150.0 million of capacity under our existing holding company credit facilities with the ability to add an additional $350.0 million of borrowing capacity by amending our 2020 Margin Facility. As of March 31, 2024, $8.8 million of our short term investments are pledged as collateral for letters of credit for our Restaurant Group.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $45.7 million, of which $28.9 million was cash held by the corporate holding company, $8.9 million of short-term investments held by the corporate holding company, and $150.0 million of capacity under our existing holding company credit facilities with the ability to add an additional $350.0 million of borrowing capacity by amending our 2020 Margin Facility. As of June 30, 2024, $8.8 million of our short term investments are pledged as collateral for letters of credit for our Restaurant Group.

Previous wording

We continually assess our capital allocation strategy, including decisions relating to monetizing investments, reducing debt, repurchasing our stock, and/or conserving cash. We believe that all anticipated cash requirements for current operations, including the Tender Offer discussed below, will be met from internally generated funds, cash dividends from subsidiaries, cash generated by investment securities, potential sales of non-strategic assets, and borrowings on existing credit facilities. Our short-term and long-term liquidity requirements are monitored regularly to ensure that we can meet our cash requirements. We forecast the needs of all of our subsidiaries and periodically review their short-term and long-term projected sources and uses of funds, as well as the asset, liability, investment and cash flow assumptions underlying such forecasts.

Current wording

We continually assess our capital allocation strategy, including decisions relating to monetizing investments, reducing debt, repurchasing our stock, and/or conserving cash. We believe that all anticipated cash requirements for current operations will be met from internally generated funds, cash dividends from subsidiaries, cash generated by investment securities, potential sales of non-strategic assets, and borrowings on existing credit facilities. Our short-term and long-term liquidity requirements are monitored regularly to ensure that we can meet our cash requirements. We forecast the needs of all of our subsidiaries and periodically review their short-term and long-term projected sources and uses of funds, as well as the asset, liability, investment and cash flow assumptions underlying such forecasts.

Previous wording

Cash Flows for the Three Months Ended March 31, 2024

Current wording

Cash Flows for the Six Months Ended June 30, 2024

Previous wording

Operating Cash Flow. Our cash flows used in operations for the three months ended March 31, 2024 and 2023 totaled $36.0 million and $19.7 million, respectively. The increase in cash used in operations of $16.3 million is primarily attributable to increased investment success bonuses paid related to sales of Dayforce and legal costs and termination fees associated with the Third Amended MSA.

Current wording

Operating Cash Flow. Our cash flows used in operations for the six months ended June 30, 2024 and 2023 totaled $46.2 million and $34.6 million, respectively. The increase in cash used in operations of $11.6 million is primarily attributable to increased investment success bonuses paid related to sales of Dayforce and professional fees and termination fees associated with the Third Amended MSA.

Previous wording

Investing Cash Flows. Our cash flows provided by (used in) investing activities for the three months ended March 31, 2024 and 2023 were $194.5 million and $(44.4) million, respectively. The increase in cash provided by investing activities of $238.9 million in the 2024 period from the 2023 period is primarily attributable to higher proceeds from sales of investments in the 2024 period compared to the 2023 period.

Current wording

Investing Cash Flows. Our cash flows provided by (used in) investing activities for the six months ended June 30, 2024 and 2023 were $252.5 million and $(51.0) million, respectively. The increase in cash provided by investing activities of $303.5 million in the 2024 period from the 2023 period is primarily attributable to higher proceeds from sales of investments and a decrease in new investments made in the 2024 period compared to the 2023 period.

Previous wording

Financing Cash Flows. Our cash flows (used in) provided by financing activities for the three months ended March 31, 2024 and 2023 were $(26.4) million and $1.2 million, respectively. The increase in cash used in financing activities of $27.6 million is primarily attributable to the partial repayment of the FNF Revolver in the three months ended March 31, 2024.

Current wording

Financing Cash Flows. Our cash flows used in financing activities for the six months ended June 30, 2024 and 2023 were $266.8 million and $49.4 million, respectively. The increase in cash used in financing activities of $217.4 million is primarily attributable to the Tender Offer, partial repayment of the FNF Note and dividends paid in the six months ended June 30, 2024, partially offset by treasury repurchases in the six months ended June 30, 2023.

Previous wording

On February 26, 2024, the Company, Cannae LLC and Trasimene entered into a Third Amended and Restated Management Services Agreement (the "Third Amended MSA"). The Third Amended MSA amends the management services agreement primarily to (i) provide for a termination of the agreement by the Company effective June 30, 2027, (ii) reduce the management fee to a fixed amount of $7.6 million annually effective beginning July 2, 2024 and (iii) provide for payment of the termination fee under the agreement of $20 million to be paid by the Company to Trasimene in installments of $6.7 million annually over the three-year period ended July 1, 2026. The Third Amended and Restated MSA has a termination date of June 30, 2027 unless earlier terminated by the Company or Trasimene.

Current wording

On February 26, 2024, the Company, Cannae LLC and Trasimene entered into the Third Amended MSA. The Third Amended MSA amends the management services agreement primarily to (i) provide for a termination of the agreement by the Company effective June 30, 2027, (ii) reduce the management fee to a fixed amount of $7.6 million annually effective beginning July 2, 2024 and (iii) provide for payment of the termination fee under the agreement of $20 million to be paid by the Company to Trasimene in installments of $6.7 million annually over the three-year period ended July 1, 2026. The Third Amended has a termination date of June 30, 2027 unless earlier terminated by the Company or Trasimene.

Previous wording

As of March 31, 2024, our required annual payments relating to these contractual obligations were as follows:

Current wording

As of June 30, 2024, our required future payments relating to these contractual obligations were as follows:

Previous wording

We did not repurchase any Cannae common stock pursuant to the 2022 Repurchase Program during the three months ended March 31, 2024. Since the original commencement of the 2022 Repurchase Program through market close on March 31, 2024, we have repurchased a total of 7,404,537 common shares for approximately $145.3 million in the aggregate, or an average of $19.63 per share. As of the date of this Quarterly Report, there are 2,595,463 shares available for repurchase under the 2022 Repurchase Program.

Current wording

We repurchased 300,000 shares of Cannae common stock for $5.6 million, or an average of $18.80 per share pursuant to the 2022 Repurchase Program during the three months ended June 30, 2024. Since the original commencement of the 2022 Repurchase Program through market close on June 30, 2024, we have repurchased a total of 7,704,537 shares of Cannae common stock for approximately $151.0 million in the aggregate, or an average of $19.59 per share. As of the date of this Quarterly Report, there are 2,295,463 shares available for repurchase under the 2022 Repurchase Program.

Previous wording

On February 21, 2024, we issued 1.85 million shares of common stock of the Company from the Company’s treasury and paid $18.3 million in cash, in the aggregate, to certain partners of JANA Partners Capital, LLC and JANA Partners

Current wording

On February 21, 2024, we issued 1.85 million shares of common stock of the Company from the Company’s treasury and paid $18.3 million in cash, in the aggregate, to certain partners of JANA Partners Capital, LLC and JANA Partners Management, LP (together, "JANA") in exchange for a 19.99% equity interest in JANA.