Good morning, ladies and gentlemen and welcome to the Cannae Holdings First Quarter 2018 Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions with instructions to be followed at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Jamie Lillis, Investor Relations for Cannae Holdings. Please go-ahead sir.

Thank you, operator and good morning everyone. We appreciate your participation in our first quarter 2018 earnings conference call. Joining me today are Cannae’s President, Brent Bickett, and Chief Financial Officer, Rick Cox. As a reminder, a replay of this call will be available through 11:59 PM Eastern Time on May 17, 2018. Before we begin, I would like to remind you that this conference call may contain forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts including statements about our 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 future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake 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 press release dated yesterday and in the statement regarding forward-looking information, risk factors and other sections of Cannae’s Form S-4 and other filings with the SEC. Let me now turn the call over to Brent.

Thanks, Jamie. To start, we made meaningful progress executing our strategies as we strive to deliver value for our shareholders by monetizing our existing investments and pursuing new investments in sectors with an attractive long-term growth potential. Today, Cannae comprised of three platforms which are our Ceridian HCM business or restaurant group and our tech enabled healthcare services platform TE System. Ceridian has emerged as a market leader in the payroll and HCM software sector and we are pleased with their continued strong financial performance. Given Ceridian’s market position and growth in the past several years, it was appropriate and right time for the company to go public. As most of you are probably aware, Ceridian price that’s initial public offering of 24,150 shares of common stock at a price of $22 per share on April 26th 2018. Ceridian stock trades on the New York Stock Exchange under the ticker symbol CDAY. At the time of the IPO, Cannae participated in a concurrent $100 million private placement where by Cannae purchased an additional 1,521,030 shares of common stock of Ceridian at the IPO price of $22 per share. Cannae currently owns 37,135,921 shares of Ceridian common stock representing a 27% ownership position in Ceridian. Based on CDAY's closing price of $32.95 per share on May 8, 2018, Cannae's stake in Ceridian has a market value of $1.2 billion. Turning to our Restaurant Group. As we discussed last quarter, we entered into a non-binding letter of intent with Newport Holdings on March 12, 2018 to reorganize our respective equity interest in American Blue Ribbon's Holdings. The proposed reorganization would lead Cannae with an approximate 94% ownership interest in O'Charley's and 99 Restaurants, along with a 5% equity interest in family dining and legendary baking, while Newport would own 95% of family…

Thanks Brent. To start off, Ceridian HCM and LifeWorks together generated first quarter revenue of $208.9 million which represents an 11.7% increase from $187 million in the first quarter of 2017. Ceridian HCM which includes both cloud and [indiscernible] solutions delivered first quarter revenue of $187.2 million which represents an 11.8% increase or $19.8 million over the first quarter 2017. HCM adjusted EBITDA in the first quarter was $43.6 million a $12.4 million increase or 39.7% over the first quarter of 2017. In the first quarter of 2018, cloud-based revenue grew 38% to $125.2 million compared to $90.7 million in the first quarter of 2017. In total, more than 3154 customers are now live on the platform up from 2480 at the end of the first quarter of 2017. Ceridian will host a conference call on May 22nd 2018 at 8:00 Eastern Time to discuss their financial results for the first quarter of 2018 in more detail. Turning to our restaurant group, American Blue Ribbon generated revenue of $273.8 million in the first quarter of 2018, up from $272 million in the first quarter of 2017. EBITDA was $5.1 million representing an EBITDA margin of 1.9% in the first quarter which compares to EBITDA of $8.2 million and then EBITDA margin of 3% in the first quarter of 2017. Despite poor weather conditions in Q1, resulting in a negative impact on same store sales we are delighted that in the aggregate same store sales increased 0.1% in the first quarter led by Baker’s Square which expanded by 2% followed by Village Inn which improved by 1.9% and 99 which increased by 1.4%. These strong performances were partially offset by O'Charley's which declined by 1.6%. Importantly, 99 same store sales results outperformed the Black Box regional index same store sales decline…

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. Thank you. Our first question today comes from the line of Jason Deleeuw with Piper Jaffray. Please proceed with your questions.

Thank you. Good morning. Question on the organic revenue growth rate for T-System, 12%. Any sense you can give us like how much the flu impact was. I'm just trying to get a sense of kind of a sustainable organic revenue growth rate that we should expect for T-System.

Yeah, and we're figuring that out too, Jason. And it should be in that double digit, low double digit organic revenue growth. And they did benefit from it. And we did not calculate but it was a heavy flu season and certainly that we benefitted from more coding opportunities than the prior quarter, but we also had more customers that we're coding for as well. One more point about it, on the documentation side, we're still implementing the new [indiscernible] which will have fluctuations over the prior year, but we'll try to normalize that as we move forward throughout the year.

Helpful. Thanks for that. And then when we think about the clinical or the documentation software. There is 1,000 plus customers, what should we think about in terms of growth there from just the existing clients. Are they growing, are you getting revenue? Is there revenue from them is that growing and them how much of the revenue growth is from having to add new clients.

The T-Sheets business, I mean there is a lot of small customers who use the T-Sheets and now are using the T-Sheets evolved and I think collectively that's, Rick, 800 of their customers.

Yeah, I mean we will anticipate about 6% growth rate in the documentation business year-over-year, that’s generally where we're heading.

Got it. And then for the coding business, I think there is opportunities there on the billing side to expand that. Could you just talk about that? Is that the strategic opportunity that you're pursuing?

Yeah, I mean that one is very adjacent to what we're doing, it's the same customer, it's the same sales point person. We just need the capability. So, in our acquisition pipeline we have several billing entities that we have looked at, have not yet executed on. In the meantime, we're also building up our organic capability to offer billing as well. And while we continue to pursue an acquisition, we're not going to wait and just make sure that we could do it ourselves too. But from one of our bigger coding customers we think it's a 4X to 6X revenue opportunity. So, if we're doing $1 million of coding for one of our customers it could be $4 million to $6 million of additional revenue to us. And we think attractive margins. So, we're going down two paths looking at the acquisitions and then secondly working with our offshore partner on developing our own billing capability.

Great. And then the last one on the margins for T-Systems that 25% in this first quarter, is that kind of a good number that we should use going forward or is there some seasonality or some margin expansion that’s coming?

So, I would look to increase that margin, coming out of what happened in Q1 we had a slightly higher margin of about 29% compared to where we’re at Q1 2018. The big difference, there is two primary drivers to that decrease in the first quarter EBITDA margin. The first one is that we had about $500,000 adjustment related to ASC 606 to [indiscernible]. The second driver which is about the significant driver related to the margin pertains to bringing on new customers in the [indiscernible] cycle that have lower margins at the backend of 2017. And the cost for the lower margin there relates specifically to doing onshore processing of the coding as throughout 2018. As we transition that process overseas or offshore we’ll see an increase in those margins getting back to like a more normalized 29 to 30% EBITDA margin.

Our next question is from the line of [indiscernible]. Please proceed with your question.

Hi, I had a couple of questions. Now that we have the Ceridian price, can you give this an update on your thinking regarding that portfolio asset in terms of further monetization or distribution to existing shareholders and is there any tax implications related to that for the shareholders and we’ll stop there for now.

Sure. This is Brent, I’ll take that. We just took it public, obviously we’re subject to a fixed month lock up. We own 27% so what we are viewing the monetization down the road would be and we don’t have any plans to do this but it would be eventually to sell the stock. There is not really a strategy to distribute it or be taxable both Cannae and to the shareholder. So, the path would be to sell it for cash, there will be a tax implication for doing so and that’s at about 21% federal rate. But we’re very pleased with Ceridian, obviously the market receptivity to that IPO was quite strong. We think their market that they are facing and the position in that market is attractive to say the least and so we think this stock has -- we ‘re happy shareholders and want to see where the company goes. So, we have no current plans to do anything other than to continue to assist the company’s growth plan.

Okay. And then just a further clarity on the taxation. I know in the past, I think we were able to distribute Rene ownership in a fairly tax efficient way, might be mis-remembering that. Is there anything that would preclude us from distributing the shares in a more tax efficient way or is there no way to do that?

In terms of Cannae Holdings, there would be no way for us to distribute our 27 % interest in Ceridian on a tax-free basis to the shareholders.

Okay.

We owned over 50% of both Rene and J. Alexander's and that’s what helped enable us to do those two spin-offs.

Okay. And then when we made the transaction to change the ownership structure of the restaurant group businesses, can you help us understand the thinking with that investment on a go forward basis in the past. There have been couple of different things have been talked about public offering. And then we tried to do a transaction with another public company that was not completed as part of that investment. So, we've made some changes. Can you help us understand maybe some of the goals over the next year or two we're going try to achieve and what the thought processes around that holding over the next year or two and how are you thinking potentially about monetization there or structure I guess.

Okay. And you're right. We've all leased for a long time and we have pursued various monetization strategies. What we're trying to do now with Newport is to let them have two concepts that belong together in terms of the family dining and then we would get the two concepts at along together in terms of the casual dining and the larger of the two businesses. We think that 99 has potential to be monetized, it's a very attractive, it continues to significantly outperform its competitors in the Wild Card as candidly as O'Charley's. If we can get that operation back to its growth profile and so it's taking longer than we anticipated. You would have an attractive company with the mid-700s of revenue that we think could be attractive IPO candidate if we were to take it public or to sell it combined or individually. But this reorganization is going to help us I think just to be able to focus our efforts on just two of the concepts rather than candidly 5 concepts. But it is objective for us to right time to monetize it as we try to do in the past.

And you've talked about some initiatives to improve results there. Are you willing to give any benchmark or trying to achieve in terms of EBITDA margin and if so how quickly do we think we can achieve that?

So, this is Rick, obviously turned out a Q1 with the 1.9% EBITDA margin. That's not something to go brag about. But generally speaking, we're generally pretty excited about the restaurant group for Q1. We had a couple of things that happened in terms of increment weather issues and some other one timer cost which I'll explain. But aside from all, we done really well compared to where we were at in Q1. Let's put it that way we're above gross revenue in Q1 compared to Q1 of 2017 despite that bad weather. From an EBITDA margin perspective, we really had 3-4 drivers that impacted our EBITDA margins. The first thing is we had some insurance self-accruals that we have to book. One of them was approximately $1.6 million that related to a spike in health insurance claims that were not anticipated. So that's the first thing. We also had an increase in the minimum wage which impacted our EBITDA margin as well too. Now having said that, we're adjusting our price per play to get our margins in line on personnel, so we're working through that currently. And then we're going through our supply chain and renegotiating our terms, and then looking at our IT infrastructure to reduce our cost there and then lastly when it comes to the legendary baking side, we’re going through and looking at our manufacturing efficiencies to figure out how we can reduce cost and then [sell] off some of unwanted restaurants to get some money in the bank.

Okay, that’s helpful. And then in terms of areas of opportunity for capital deployment in the past we had talked about 100 million type platform investments I think there has been some updated commentary on the recent call. Can you give us an update on where those areas of opportunities are and are we still looking to make platform investments or we should going to be kind of focused on bolt on with the T-System transaction we’ve made.

Yeah, the near-term focus is really the bolt on acquisitions for T-Systems continuing to work through as we discuss the restaurant, reorganization but we’re still evaluating other platform opportunities and those will typically be [candling] more than 200 million plus range to get a company that we could then build upon. But that’s tertiary focus, so the near-term is the restaurants and on T-Systems.

And then one additional question on capital management is what is the share repurchase follow up at this time, is it somewhat off the table or is it still in the mix?

Right now, in the short-term it would be, unless there is a dislocation would be off the table. We have just over 100 million in cash, we want to kind of keep that powder available for those opportunities that we discussed. But we’ll continue to monitor the stock and see where it is, relative to what we feel the fair value is.

Our next question comes from the line of John Campbell with Stephens. Please proceed with your question.

Hey guys its actually Jeff calling on for John. I just have a couple of questions specific to the fundamentals that’s Ceridian. So ARR for customers grew 5% in the past two years, nothing driven more by winning larger customers or by expansion in up sales of additional modules into the base. And then I guess do you expect that 5% increase to continue moving forward?

Jeff, thanks for the question. On Ceridian because there is a gap and now they’re public as Rick mentioned in his opening remarks that Ceridian is going to have their conference call on May 22nd and so other than the information that we disclosed we’re going to defer questions on Ceridian to their call on the 22nd if that’s okay.

Thank you. [Operator Instructions]. The next question is from the line of Brian Warner with Performance Capital. Please proceed with your question.

Hi thanks for answering my questions. Most of them have been touched on but can you give a little more color on the sort of the acquisition pipeline, in terms of sort of the candidates for T-Systems maybe and somewhat related question, roughly nine months ago, when Cannae was in the constructing stage, I recall you’re sort of contemplating a war chest of maybe $600 or $700 or $800 million and as you mentioned before you were talking about maybe $200 million bites in terms of the acquisitions. And I guess I’m just wondering if you have a satisfactory amount of cash or only capital plans to beef that up?

So, to answer the question, yeah. That was one of Bill's comments having $600 million feels about right, it would give us the flexibility to pursue more than one opportunity. And that $200 million zip code again feels about right for the size of the company that we think that we can then grow more quickly. But what we're focused shorter term is on the add on opportunities for T-Systems and one area is billing where we're doing the coding, it's a very natural capability that we can bring to our customer, it's the same customer, it's the same relationship at the customer. We just need the capability. And so, we've looked at several candidates. We passed on two of them but there is several more, it's a very deep pond in healthcare. But in the meantime, we're also building up our own organic capability that we can then bring just bring that ability to market. Now the M&A side, obviously we would be attractive, because you would arguably get more you get the capability and you get customers as well. But we're going down the dual path there. And then also on coding, we're looking at other opportunities on those episodic coding like anesthesiology or oncology or other niche areas of coding that we think are very complementary to what we do. On a documentation side we're looking at potential areas to kind of further our growth whether we're pursuing it's an urgent care or more on the hospital ED sides to see but it's really most of the M&A we're focused on right now it's been on the coding side of the business.

Got it. And then do you have capital plans. You've got about $100 million right now which contrast to some of the comments I guess that you're falling maybe about $600 million?

Yeah. So, we used $124 million. So, we own the debt of our restaurant group. And so, we would expect that to flip back to us over some period of time. So, we had over $200 million but [why we don’t do] re-organizations with our partners at Newport that's going to be that will be trapped there for a period of time. But once the dust settles we look to refinance that and get that back. And then the other areas to get our cash up to that higher level would likely be Ceridian over a period of time. But again, as I mentioned we have no plans to do anything there, we think it's a terrific company and think that the appreciation potential is great. So, we're going to be happy shareholders and continuing to try to help store the company with their management team to continuing success.

Thank you. At this time, I will turn the floor back to Brent Bickett for closing remarks.

Thank you for your time today. And we look forward to speaking with you next quarter.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.