Black Knight, Inc. (NYSE:BKI), a leading provider of software, data
and analytics solutions to the mortgage and consumer loan, real
estate and capital market verticals, today announced financial
results for the third quarter and nine months ended
September 30, 2017.
Revenues for the third quarter of 2017 decreased
1% to $263.8 million from $267.1 million in the prior year quarter.
Net earnings attributable to Black Knight for the third quarter of
2017 were $14.7 million, or $0.21 per diluted share, compared to
$11.2 million, or $0.16 per diluted share, in the prior year
quarter. The results for the third quarter of 2017 include expenses
associated with the spin-off of Black Knight from Fidelity National
Financial, Inc. ("FNF") (the "Distribution").
Adjusted Revenues for the third quarter of 2017
decreased 1% to $264.8 million from $268.6 million in the prior
year quarter. Excluding the effect of the Property Insight
realignment, Adjusted Revenues growth for the third quarter of 2017
was 2%. Adjusted Net Earnings for the third quarter of 2017
increased 22% to $54.3 million, or $0.36 per diluted share,
compared to $44.6 million, or $0.29 per diluted share, in the prior
year quarter.
Adjusted EBITDA for the third quarter of 2017
increased 7% to $128.2 million from $119.8 million in the prior
year quarter. Adjusted EBITDA Margin was 48.4% compared to 44.6% in
the prior year quarter.
Black Knight Executive Chairman Bill Foley said,
“We successfully completed the spin-off from FNF, which provides
several key benefits such as a less complex corporate structure,
enhanced trading liquidity and eligibility for index inclusion.
Along with this milestone achievement, we continued to execute
against our long-term strategic initiatives to drive organic
growth. During the third quarter in particular, we expanded our
relationships with several key existing clients through cross-sell
and won new clients in existing markets.”
Black Knight Chief Executive Officer Tom Sanzone
added, “During the third quarter, we delivered Adjusted Revenues
growth of 2%, excluding the effect of the Property Insight
realignment, and Adjusted EBITDA increased 7%, which drove Adjusted
EBITDA Margin expansion of 380 basis points to 48.4%. The
fundamentals of our business remain strong, and we remain focused
on converting our significant implementation pipeline. As our
clients continue to search for ways to increase efficiency and
reduce risk and compliance exposure, Black Knight remains the right
company at the right time to offer solutions to help them overcome
these complex challenges and optimize performance.”
Revenues for the nine months ended September 30,
2017 increased 3% to $784.1 million from $764.5 million in the 2016
period. Net earnings attributable to Black Knight for the nine
months ended September 30, 2017 were $35.1 million, or $0.51 per
diluted share, compared to $34.0 million, or $0.50 per diluted
share, in the 2016 period. The results for the nine months ended
September 30, 2017 include expenses associated with the debt
refinancing, Term Loan B repricing, resolution of a legacy legal
matter and the Distribution.
Adjusted Revenues for the nine months ended
September 30, 2017 increased 2% to $787.7 million from $770.3
million in the 2016 period. Excluding the effect of the Property
Insight realignment, Adjusted Revenues growth for the nine months
ended September 30, 2017 was 5%. Adjusted Net Earnings for the nine
months ended September 30, 2017 increased 18% to $153.0 million, or
$1.00 per diluted share, compared to Adjusted Net Earnings of
$130.2 million, or $0.85 per diluted share, in the 2016 period.
Adjusted EBITDA for the nine months ended
September 30, 2017 increased 8% to $373.9 million from $346.4
million in the 2016 period. Adjusted EBITDA Margin was 47.5%
compared to 45.0% in the 2016 period.
Definitions of non-GAAP financial measures and
the reconciliations to related GAAP measures are provided in
subsequent sections of the press release narrative and supplemental
schedules. Black Knight has not provided a reconciliation of
forward-looking Adjusted Net Earnings Per Share and Adjusted EBITDA
growth to the most directly comparable GAAP financial measures, due
primarily to variability and difficulty in making accurate
forecasts and projections of non-operating matters that may arise,
as not all of the information necessary for a quantitative
reconciliation is available to Black Knight without unreasonable
effort.
Segment Information
Software Solutions (formerly Technology)
Adjusted Revenues for the third quarter of 2017
increased 2% to $224.5 million from $221.0 million in the prior
year quarter. Our servicing software business had Adjusted Revenues
growth of 6%, primarily driven by higher loan volumes on our core
servicing software solution and price increases. In our origination
software business, Adjusted Revenues declined 17%, primarily driven
by lower Exchange volumes as a result of the 43% decline in
refinancing originations as reported by the Mortgage Bankers
Association. Adjusted EBITDA increased 5% to $131.5 million from
$125.1 million, with an Adjusted EBITDA Margin of 58.6%, an
increase of 200 basis points compared to the prior year
quarter.
Adjusted Revenues for the nine months ended
September 30, 2017 increased 5% to $665.6 million from $636.6
million in the 2016 period. Adjusted EBITDA increased 7% to $387.9
million from $363.4 million, with an Adjusted EBITDA Margin of
58.3%, an increase of 120 basis points compared to the 2016
period.
Data and Analytics
Adjusted Revenues for the third quarter of 2017
were $40.3 million compared to $47.6 million in the prior year
quarter. Excluding the effect of the Property Insight realignment,
Adjusted Revenues increased $1.0 million, or 3%, from the prior
year quarter driven by growth in our property data and multiple
listing service businesses. Adjusted EBITDA was $7.6 million
compared to $8.4 million in the prior year quarter, with an
Adjusted EBITDA Margin of 18.9%, an increase of 130 basis points
compared to the prior year quarter.
Adjusted Revenues for the nine months ended
September 30, 2017 were $122.1 million compared to $133.7 million
in the 2016 period. Excluding the effect of the Property Insight
realignment, Adjusted Revenues increased $11.7 million, or 11%,
from the 2016 period. Adjusted EBITDA increased 4% to $22.9 million
from $22.0 million in the 2016 period, with an Adjusted EBITDA
Margin of 18.8%, an increase of 230 basis points compared to the
2016 period.
Realignment of Property
Insight
Effective January 1, 2017, Property Insight, LLC
("Property Insight"), an indirect Black Knight subsidiary that
provides information used by title insurance underwriters, title
agents and closing attorneys to source and underwrite title
insurance for real property sales and transfer, realigned its
commercial relationship with FNF. In connection with the
realignment, Property Insight employees responsible for title plant
posting and maintenance were transferred to FNF. Under the new
commercial arrangement, Black Knight continues to own the title
plant technology and retains sales responsibility for third
parties, other than FNF. As a result of the realignment, Black
Knight no longer recognizes revenues or expenses related to title
plant posting and maintenance, but charges FNF a license fee for
use of the technology to access and maintain the title plant data.
Had the realignment taken place on January 1, 2016, Black Knight
revenues and expenses for 2016 would have been lower by
approximately $30 million with essentially no effect to Adjusted
EBITDA.
Distribution of FNF's Ownership Interest
On September 29, 2017, the transactions pursuant
to the previously announced merger agreement among Black Knight
Financial Services, Inc., FNF, Black Knight, Inc. and several
subsidiaries of FNF were completed. The merger agreement was
approved on September 27, 2017 at a special meeting of shareholders
of Black Knight Financial Services, Inc.
The transactions effectively resulted in the
indirect distribution of FNF’s equity interests in Black Knight
Financial Services, Inc. to the holders of FNF Group common stock.
Upon the closing of the transactions, Black Knight, Inc. became the
new public parent of Black Knight Financial Services, Inc., and
Black Knight Inc.'s shares began trading on the New York Stock
Exchange under the trading symbol "BKI" on October 2, 2017.
References to Black Knight throughout this
release are to Black Knight, Inc. after the Distribution and to
Black Knight Financial Services, Inc. prior to the
Distribution.
Share Repurchase Program
There were no share repurchases during the third
quarter of 2017. As of September 30, 2017, Black Knight had
approximately 8.8 million shares remaining under its share
repurchase authorization.
Balance Sheet
As of September 30, 2017, Black Knight had
cash and cash equivalents of $146.2 million and debt of $1,542.0
million. As of September 30, 2017, Black Knight had available
capacity of $350.0 million on its revolving credit facility.
Business Outlook
The following forward-looking statements reflect
Black Knight’s expectations as of today's date. Given the number of
risk factors, uncertainties and assumptions discussed below, actual
results may differ materially. Black Knight does not intend to
update its forward-looking statements until its next quarterly
results announcement, other than in publicly available
statements.Black Knight’s full year 2017 outlook is as follows:
- Revenues and Adjusted Revenues growth are expected to be
approximately 2.5% (5.5% adjusting to reflect the Property Insight
realignment as if it had taken place on January 1, 2016),
reflecting timing delays in certain client implementations
- Adjusted Net Earnings Per Share is expected to be in the range
of $1.36 to $1.38
- Adjusted EBITDA growth is expected to be approximately 10%
Earnings Conference Call and Audio
Webcast
Black Knight will host a conference call to
discuss the third quarter 2017 financial results on
November 1, 2017, at 5:00 p.m. ET. The conference call can be
accessed live over the phone by dialing (877) 407-4018, or for
international callers (201) 689-8471. A replay will be available
from 8:00 p.m. ET on November 1, 2017 through November 8,
2017, and can be accessed by dialing (844) 512-2921, or for
international callers (412) 317-6671, and entering replay passcode
13672323.
The call will also be webcast live from Black
Knight's investor relations website at http://investor.bkfs.com.
Following completion of the call, a recorded replay of the webcast
will be available on the website.
About Black Knight
Black Knight (NYSE:BKI) is a leading provider of
integrated software, data and analytics solutions that facilitate
and automate many of the business processes across the
homeownership lifecycle.
Black Knight is committed to being a premier
business partner that clients rely on to achieve their
strategic goals, realize greater success and better serve their
customers by delivering best-in-class software, services and
insights with a relentless commitment to excellence, innovation,
integrity and leadership. For more information on Black Knight,
please visit www.blackknightinc.com.
Non-GAAP Financial Measures
This earnings release presents non-GAAP
financial information, including Adjusted Revenues, Adjusted
Revenues Excluding the Effect of the Property Insight Realignment,
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Earnings and
Adjusted Net Earnings Per Share. These are important financial
performance measures for Black Knight, but are not financial
measures as defined by generally accepted accounting principles
("GAAP"). The presentation of this financial information is not
intended to be considered in isolation of or as a substitute for,
or superior to, the financial information prepared and presented in
accordance with GAAP. Black Knight uses these non-GAAP financial
performance measures for financial and operational decision making
and as a means to evaluate period-to-period comparisons. Black
Knight believes they provide useful information about operating
results, enhance the overall understanding of past financial
performance and future prospects and allow for greater transparency
with respect to key metrics used by management in its financial and
operational decision making, including determining a portion of
executive compensation. Reconciliations of these measures to the
most directly comparable GAAP financial measures are presented in
the attached schedules.
Adjusted Revenues and Adjusted EBITDA for the
Software Solutions and Data and Analytics segments are presented in
conformity with Accounting Standards Codification 280, Segment
Reporting. These measures are reported to the chief operating
decision maker for purposes of making decisions about allocating
resources to the segments and assessing their performance. For
these reasons, these measures are excluded from the definition of
non-GAAP financial measures under the Securities and Exchange
Commission's ("SEC'") Regulation G and Item 10(e) of Regulation
S-K.
Adjusted Revenues - We define
Adjusted Revenues as Revenues adjusted to include the revenues that
were not recorded by Black Knight during the periods presented due
to the deferred revenue purchase accounting adjustment recorded in
accordance with GAAP. These adjustments are reflected in Corporate
and Other. This adjustment for the full year 2017 is expected to be
approximately $4.5 million.
Adjusted Revenues Excluding the Effect of the Property
Insight Realignment - We define Adjusted Revenues
excluding the effect of the Property Insight realignment as
Adjusted Revenues for the respective 2016 period determined on the
basis as if the Property Insight realignment had taken place on
January 1, 2016.
Adjusted EBITDA - We define
Adjusted EBITDA as Net earnings, with adjustments to reflect the
addition or elimination of certain income statement items
including, but not limited to:
- Depreciation and amortization;
- Interest expense;
- Income tax expense;
- Other expense, net;
- Loss (gain) from discontinued operations, net of tax;
- deferred revenue purchase accounting adjustment recorded in
accordance with GAAP;
- equity-based compensation, including related payroll
taxes;
- costs associated with debt and/or equity offerings, including
the Distribution;
- spin-off related transition costs; and
- acquisition-related costs.
These adjustments are reflected in Corporate and
Other.
Adjusted EBITDA Margin -
Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by
Adjusted Revenues.
Adjusted Net Earnings - We
define Adjusted Net Earnings as Net earnings with adjustments to
reflect the addition or elimination of certain income statement
items including, but not limited to:
- the net incremental depreciation and amortization adjustments
associated with the application of purchase accounting;
- deferred revenue purchase accounting adjustment;
- equity-based compensation, including related payroll
taxes;
- costs associated with debt and/or equity offerings, including
the Distribution;
- spin-off related transition costs;
- acquisition-related costs;
- significant legal and regulatory matters; and
- adjustment for income tax expense at our full year estimated
effective tax rate of approximately 37% for the three and nine
months ended September 30, 2017 and 2016, assuming the conversion
of all the shares of Class B common stock into shares of Class A
common stock prior to the Distribution and assuming the effect of
the non-GAAP adjustments.
Adjusted Net Earnings Per Share
- For the periods prior to the Distribution, we calculate per share
amounts assuming the exchange of all shares of Class B common stock
into shares of Class A common stock at the beginning of the
respective period. We also include the dilutive effect of any
unvested restricted shares of common stock.
Forward-Looking Statements
This press release contains forward-looking
statements that involve a number of risks and uncertainties.
Statements that are not historical facts, including statements
regarding expectations, hopes, intentions or strategies regarding
the future are forward-looking statements. Forward-looking
statements are based on Black Knight management's beliefs, as well
as assumptions made by, and information currently available to,
them. 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.
Black Knight undertakes no obligation to update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
The risks and uncertainties that forward-looking
statements are subject to include, but are not limited to:
- security breaches against our information systems;
- our ability to maintain and grow our relationships with our
customers;
- changes to the laws, rules and regulations that affect our and
our customers’ businesses;
- our ability to adapt our services to changes in technology or
the marketplace;
- the effect of any potential defects, development delays,
installation difficulties or system failures on our business and
reputation;
- changes in general economic, business, regulatory and political
conditions, particularly as they affect the mortgage industry;
- risks associated with the availability of data;
- the effects of our substantial leverage on our ability to make
acquisitions and invest in our business;
- our ability to successfully integrate strategic
acquisitions;
- risks associated with our spin-off from FNF, including
limitations on our strategic and operating flexibility as a result
of the tax-free nature of the spin-off; and
- other risks and uncertainties detailed in the “Statement
Regarding Forward-Looking Information,” “Risk Factors” and other
sections of our Annual Report on Form 10-K and other filings with
the SEC.
|
SCHEDULE I |
BLACK KNIGHT, INC. |
Condensed Consolidated Balance
Sheets |
(In millions) |
|
|
September 30, 2017 |
|
December 31, 2016 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
146.2 |
|
|
$ |
133.9 |
|
Trade
receivables, net |
169.2 |
|
|
155.8 |
|
Prepaid
expenses and other current assets |
42.5 |
|
|
45.4 |
|
Receivables from related parties |
18.5 |
|
|
4.1 |
|
Total
current assets |
376.4 |
|
|
339.2 |
|
Property
and equipment, net |
165.0 |
|
|
173.0 |
|
Computer
software, net |
422.1 |
|
|
450.0 |
|
Other
intangible assets, net |
248.5 |
|
|
299.5 |
|
Goodwill |
2,306.8 |
|
|
2,303.8 |
|
Other
non-current assets |
231.2 |
|
|
196.5 |
|
Total
assets |
$ |
3,750.0 |
|
|
$ |
3,762.0 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Trade
accounts payable and other accrued liabilities |
$ |
52.1 |
|
|
$ |
55.2 |
|
Accrued
compensation and benefits |
39.2 |
|
|
61.1 |
|
Current
portion of long-term debt |
55.1 |
|
|
63.4 |
|
Deferred
revenues |
54.2 |
|
|
47.4 |
|
Total
current liabilities |
200.6 |
|
|
227.1 |
|
Deferred revenues |
98.1 |
|
|
77.3 |
|
Deferred income taxes,
net |
301.8 |
|
|
7.9 |
|
Long-term debt, net of
current portion |
1,486.9 |
|
|
1,506.8 |
|
Other non-current
liabilities |
12.5 |
|
|
3.5 |
|
Total
liabilities |
2,099.9 |
|
|
1,822.6 |
|
|
|
|
|
Equity: |
|
|
|
Additional paid-in capital |
1,594.9 |
|
|
810.8 |
|
Retained
earnings |
54.2 |
|
|
65.7 |
|
Accumulated other comprehensive earnings (loss) |
1.0 |
|
|
(0.8 |
) |
Total
shareholders' equity |
1,650.1 |
|
|
875.7 |
|
Noncontrolling
interests |
— |
|
|
1,063.7 |
|
Total
equity |
1,650.1 |
|
|
1,939.4 |
|
Total
liabilities and equity |
$ |
3,750.0 |
|
|
$ |
3,762.0 |
|
SCHEDULE II |
BLACK KNIGHT, INC. |
Condensed Consolidated Statements of
Earnings |
(Unaudited) |
(In millions, except per share
data) |
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues |
$ |
263.8 |
|
|
$ |
267.1 |
|
|
$ |
784.1 |
|
|
$ |
764.5 |
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
Operating
expenses |
140.7 |
|
|
152.2 |
|
|
428.2 |
|
|
433.4 |
|
Depreciation and amortization |
51.3 |
|
|
56.8 |
|
|
154.2 |
|
|
154.2 |
|
Transition and integration costs |
4.0 |
|
|
1.1 |
|
|
8.5 |
|
|
2.2 |
|
Total
expenses |
196.0 |
|
|
210.1 |
|
|
590.9 |
|
|
589.8 |
|
Operating income |
67.8 |
|
|
57.0 |
|
|
193.2 |
|
|
174.7 |
|
Other income and
expense: |
|
|
|
|
|
|
|
Interest
expense |
(14.1 |
) |
|
(16.9 |
) |
|
(44.8 |
) |
|
(50.6 |
) |
Other
expense, net |
(0.6 |
) |
|
(1.4 |
) |
|
(17.1 |
) |
|
(6.2 |
) |
Total
other expense, net |
(14.7 |
) |
|
(18.3 |
) |
|
(61.9 |
) |
|
(56.8 |
) |
Earnings before income
taxes |
53.1 |
|
|
38.7 |
|
|
131.3 |
|
|
117.9 |
|
Income tax expense |
9.2 |
|
|
6.3 |
|
|
24.3 |
|
|
19.2 |
|
Net
earnings |
43.9 |
|
|
32.4 |
|
|
107.0 |
|
|
98.7 |
|
Less: Net earnings
attributable to noncontrolling interests |
29.2 |
|
|
21.2 |
|
|
71.9 |
|
|
64.7 |
|
Net earnings
attributable to Black Knight |
$ |
14.7 |
|
|
$ |
11.2 |
|
|
$ |
35.1 |
|
|
$ |
34.0 |
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Earnings per
share: |
|
|
|
|
|
|
|
Net earnings per share
attributable to Black Knight common shareholders: |
|
|
|
|
|
|
|
Basic |
$ |
0.22 |
|
|
$ |
0.17 |
|
|
$ |
0.52 |
|
|
$ |
0.52 |
|
Diluted(1) |
$ |
0.21 |
|
|
$ |
0.16 |
|
|
$ |
0.51 |
|
|
$ |
0.50 |
|
Weighted
average shares of common stock outstanding: |
|
|
|
|
|
|
|
Basic |
67.9 |
|
|
65.9 |
|
|
67.7 |
|
|
65.9 |
|
Diluted(1) |
68.5 |
|
|
67.9 |
|
|
152.7 |
|
|
67.8 |
|
|
______________ |
(1) For the periods presented, potentially
dilutive securities include unvested restricted stock awards and
the shares of Class B common stock prior to the Distribution. The
shares of Class B common stock did not share in the earnings or
losses of Black Knight and were, therefore, not participating
securities. Accordingly, basic and diluted net earnings per share
of Class B common stock have not been presented. The numerator in
the diluted net earnings per share calculation is adjusted to
reflect our income tax expense at an expected effective tax rate
assuming the conversion of the shares of Class B common stock into
shares of Class A common stock on a one-for-one basis, prior to the
Distribution, for the nine months ended September 30, 2017. The
expected effective tax rate for the nine months ended September 30,
2017 was 41.1%, including certain discrete items recorded during
the period. The denominator includes approximately 84.4 million
shares of Class B common stock outstanding for the nine months
ended September 30, 2017. However, the approximately 83.7 million
shares of Class B common stock for the three months ended September
30, 2017 and 84.8 million shares of Class B common stock for the
three and nine months ended September 30, 2016 have been excluded
in computing diluted net earnings per share because including them
on an "if-converted" basis would have an anti-dilutive effect. The
denominator also includes the dilutive effect of approximately 0.6
million shares of unvested restricted shares of common stock for
the three and nine months ended September 30, 2017 and
approximately 2.0 million and 1.9 million shares for the three and
nine months ended September 30, 2016, respectively. |
|
|
Nine months ended September 30,
2017 |
Earnings before income
taxes |
|
$ |
131.3 |
|
Income tax expense
excluding the effect of noncontrolling interests |
|
54.0 |
|
Net earnings |
|
$ |
77.3 |
|
Diluted shares |
|
152.7 |
|
Diluted net earnings
per share |
|
$ |
0.51 |
|
SCHEDULE III |
BLACK KNIGHT, INC. |
Condensed Consolidated Statements of Cash
Flows |
(Unaudited) |
(In millions) |
|
|
Nine months ended September 30, |
|
2017 |
|
2016 |
Cash flows from
operating activities: |
|
|
|
Net
earnings |
$ |
107.0 |
|
|
$ |
98.7 |
|
Adjustments to reconcile net earnings to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
154.2 |
|
|
154.2 |
|
Amortization of debt issuance costs, bond premium and original
issue discount |
2.5 |
|
|
2.0 |
|
Loss on
extinguishment of debt, net |
12.6 |
|
|
— |
|
Deferred
income taxes, net |
4.8 |
|
|
3.7 |
|
Equity-based compensation |
14.2 |
|
|
9.5 |
|
Changes
in assets and liabilities: |
|
|
|
Trade and
other receivables, including receivables from related parties |
(19.9 |
) |
|
(23.1 |
) |
Prepaid
expenses and other assets |
3.1 |
|
|
(7.0 |
) |
Deferred
contract costs |
(35.6 |
) |
|
(41.1 |
) |
Deferred
revenues |
27.6 |
|
|
15.8 |
|
Trade
accounts payable and other accrued liabilities |
(30.7 |
) |
|
(2.2 |
) |
Net cash
provided by operating activities |
239.8 |
|
|
210.5 |
|
Cash flows from
investing activities: |
|
|
|
Additions
to property and equipment |
(5.3 |
) |
|
(24.0 |
) |
Additions
to computer software |
(37.1 |
) |
|
(31.9 |
) |
Business
acquisitions, net of cash acquired |
— |
|
|
(150.2 |
) |
Other
investing activities |
(4.0 |
) |
|
— |
|
Net cash
used in investing activities |
(46.4 |
) |
|
(206.1 |
) |
Cash flows from
financing activities: |
|
|
|
Borrowings |
400.0 |
|
|
55.0 |
|
Senior
Notes redemption |
(390.0 |
) |
|
— |
|
Senior
Notes redemption fee |
(18.8 |
) |
|
— |
|
Debt
service payments |
(25.9 |
) |
|
(138.0 |
) |
Distributions to members |
(75.3 |
) |
|
(48.5 |
) |
Purchases
of treasury stock |
(46.6 |
) |
|
— |
|
Capital
lease payments |
(11.6 |
) |
|
— |
|
Tax
withholding payments for restricted share vesting |
(4.3 |
) |
|
— |
|
Debt
issuance costs |
(8.6 |
) |
|
— |
|
Net cash
used in financing activities |
(181.1 |
) |
|
(131.5 |
) |
Net
increase (decrease) in cash and cash equivalents |
12.3 |
|
|
(127.1 |
) |
Cash and
cash equivalents, beginning of period |
133.9 |
|
|
186.0 |
|
Cash and
cash equivalents, end of period |
$ |
146.2 |
|
|
$ |
58.9 |
|
Supplemental cash flow
information: |
|
|
|
Interest
paid |
$ |
(45.2 |
) |
|
$ |
(39.6 |
) |
Income
taxes paid, net |
$ |
(13.6 |
) |
|
$ |
(16.0 |
) |
SCHEDULE IV |
BLACK KNIGHT, INC. |
Segment Information |
(Unaudited) |
(In millions) |
|
|
|
Three months ended September 30,
2017 |
|
|
Software Solutions |
|
Data and Analytics |
|
Corporate and
Other |
|
Total |
Revenues |
|
$ |
224.5 |
|
|
$ |
40.3 |
|
|
$ |
(1.0 |
) |
(1 |
) |
$ |
263.8 |
|
Expenses: |
|
|
|
|
|
|
|
|
Operating
expenses |
|
93.0 |
|
|
32.7 |
|
|
15.0 |
|
|
140.7 |
|
Transition and integration costs |
|
— |
|
|
— |
|
|
4.0 |
|
|
4.0 |
|
EBITDA |
|
131.5 |
|
|
7.6 |
|
|
(20.0 |
) |
|
119.1 |
|
Depreciation and
amortization |
|
24.3 |
|
|
3.7 |
|
|
23.3 |
|
(2 |
) |
51.3 |
|
Operating income
(loss) |
|
107.2 |
|
|
3.9 |
|
|
(43.3 |
) |
|
67.8 |
|
Interest expense |
|
|
|
|
|
|
|
(14.1 |
) |
Other expense, net |
|
|
|
|
|
|
|
(0.6 |
) |
Earnings before income
taxes |
|
|
|
|
|
|
|
53.1 |
|
Income tax expense |
|
|
|
|
|
|
|
9.2 |
|
Net earnings |
|
|
|
|
|
|
|
$ |
43.9 |
|
|
________________________ |
Note: The
Software Solutions segment was formerly known as the Technology
segment. |
(1)
Revenues for Corporate and Other represent deferred revenue
purchase accounting adjustments recorded in accordance with
GAAP. |
(2) Depreciation and amortization for Corporate and
Other primarily represents net incremental depreciation and
amortization adjustments associated with the application of
purchase accounting recorded in accordance with GAAP. |
|
|
Three months ended September 30,
2016 |
|
|
Software Solutions |
|
Data and Analytics |
|
Corporate and
Other |
|
Total |
Revenues |
|
$ |
221.0 |
|
|
$ |
47.6 |
|
|
$ |
(1.5 |
) |
(1 |
) |
$ |
267.1 |
|
Expenses: |
|
|
|
|
|
|
|
|
Operating
expenses |
|
95.9 |
|
|
39.2 |
|
|
17.1 |
|
|
152.2 |
|
Transition and integration costs |
|
— |
|
|
— |
|
|
1.1 |
|
|
1.1 |
|
EBITDA |
|
125.1 |
|
|
8.4 |
|
|
(19.7 |
) |
|
113.8 |
|
Depreciation and
amortization |
|
29.0 |
|
|
2.1 |
|
|
25.7 |
|
(2 |
) |
56.8 |
|
Operating income
(loss) |
|
96.1 |
|
|
6.3 |
|
|
(45.4 |
) |
|
57.0 |
|
Interest expense |
|
|
|
|
|
|
|
(16.9 |
) |
Other expense, net |
|
|
|
|
|
|
|
(1.4 |
) |
Earnings before income
taxes |
|
|
|
|
|
|
|
38.7 |
|
Income tax expense |
|
|
|
|
|
|
|
6.3 |
|
Net earnings |
|
|
|
|
|
|
|
$ |
32.4 |
|
|
________________________ |
Note: The
Software Solutions segment was formerly known as the Technology
segment. |
(1)
Revenues for Corporate and Other represent deferred revenue
purchase accounting adjustments recorded in accordance with
GAAP. |
(2)
Depreciation and amortization for Corporate and Other primarily
represents net incremental depreciation and amortization
adjustments associated with the application of purchase accounting
recorded in accordance with GAAP. |
SCHEDULE IV (CONTINUED) |
BLACK KNIGHT, INC. |
Segment Information |
(Unaudited) |
(In millions) |
|
|
|
Nine months ended September 30,
2017 |
|
|
Software Solutions |
|
Data and Analytics |
|
Corporate and
Other |
|
Total |
Revenues |
|
$ |
665.6 |
|
|
$ |
122.1 |
|
|
$ |
(3.6 |
) |
(1 |
) |
$ |
784.1 |
|
Expenses: |
|
|
|
|
|
|
|
|
Operating
expenses |
|
277.7 |
|
|
99.2 |
|
|
51.3 |
|
|
428.2 |
|
Transition and integration costs |
|
— |
|
|
— |
|
|
8.5 |
|
|
8.5 |
|
EBITDA |
|
387.9 |
|
|
22.9 |
|
|
(63.4 |
) |
|
347.4 |
|
Depreciation and
amortization |
|
74.9 |
|
|
11.0 |
|
|
68.3 |
|
(2 |
) |
154.2 |
|
Operating income
(loss) |
|
313.0 |
|
|
11.9 |
|
|
(131.7 |
) |
|
193.2 |
|
Interest expense |
|
|
|
|
|
|
|
(44.8 |
) |
Other expense, net |
|
|
|
|
|
|
|
(17.1 |
) |
Earnings before income
taxes |
|
|
|
|
|
|
|
131.3 |
|
Income tax expense |
|
|
|
|
|
|
|
24.3 |
|
Net earnings |
|
|
|
|
|
|
|
$ |
107.0 |
|
|
|
________________________ |
Note: The
Software Solutions segment was formerly known as the Technology
segment. |
(1)
Revenues for Corporate and Other represent deferred revenue
purchase accounting adjustments recorded in accordance with
GAAP. |
(2)
Depreciation and amortization for Corporate and Other primarily
represents net incremental depreciation and amortization
adjustments associated with the application of purchase accounting
recorded in accordance with GAAP. |
|
|
Nine months ended September 30,
2016 |
|
|
Software Solutions |
|
Data and Analytics |
|
Corporate and
Other |
|
Total |
Revenues |
|
$ |
636.6 |
|
|
$ |
133.7 |
|
|
$ |
(5.8 |
) |
(1 |
) |
$ |
764.5 |
|
Expenses: |
|
|
|
|
|
|
|
|
Operating
expenses |
|
273.2 |
|
|
111.7 |
|
|
48.5 |
|
|
433.4 |
|
Transition and integration costs |
|
— |
|
|
— |
|
|
2.2 |
|
|
2.2 |
|
EBITDA |
|
363.4 |
|
|
22.0 |
|
|
(56.5 |
) |
|
328.9 |
|
Depreciation and
amortization |
|
80.2 |
|
|
6.5 |
|
|
67.5 |
|
(2 |
) |
154.2 |
|
Operating income
(loss) |
|
283.2 |
|
|
15.5 |
|
|
(124.0 |
) |
|
174.7 |
|
Interest expense |
|
|
|
|
|
|
|
(50.6 |
) |
Other expense, net |
|
|
|
|
|
|
|
(6.2 |
) |
Earnings before income
taxes |
|
|
|
|
|
|
|
117.9 |
|
Income tax expense |
|
|
|
|
|
|
|
19.2 |
|
Net earnings |
|
|
|
|
|
|
|
$ |
98.7 |
|
|
________________________ |
Note: The
Software Solutions segment was formerly known as the Technology
segment. |
(1)
Revenues for Corporate and Other represent deferred revenue
purchase accounting adjustments recorded in accordance with
GAAP. |
(2)
Depreciation and amortization for Corporate and Other primarily
represents net incremental depreciation and amortization
adjustments associated with the application of purchase accounting
recorded in accordance with GAAP. |
SCHEDULE V |
BLACK KNIGHT, INC. |
Reconciliation of GAAP to Non-GAAP Financial
Measures |
(Unaudited) |
(In millions) |
|
Reconciliation of Revenues to Adjusted
Revenues / |
Adjusted Revenues Excluding the Effect of the
Property Insight Realignment |
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
Consolidated: |
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues |
$ |
263.8 |
|
|
$ |
267.1 |
|
|
$ |
784.1 |
|
|
$ |
764.5 |
|
Deferred
revenue purchase accounting adjustment |
1.0 |
|
|
1.5 |
|
|
3.6 |
|
|
5.8 |
|
Adjusted
Revenues |
264.8 |
|
|
268.6 |
|
|
787.7 |
|
|
770.3 |
|
Effect of
Property Insight realignment |
— |
|
|
(8.3 |
) |
|
— |
|
|
(23.3 |
) |
Adjusted
Revenues Excluding the Effect of the Property Insight
Realignment |
$ |
264.8 |
|
|
$ |
260.3 |
|
|
$ |
787.7 |
|
|
$ |
747.0 |
|
Adjusted
Revenues Growth Excluding the Effect of the Property Insight
Realignment |
2 |
% |
|
|
|
5 |
% |
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
Data and
Analytics: |
2017 |
|
2016 |
|
2017 |
|
2016 |
Adjusted
Revenues |
$ |
40.3 |
|
|
$ |
47.6 |
|
|
$ |
122.1 |
|
|
$ |
133.7 |
|
Effect of
Property Insight realignment |
— |
|
|
(8.3 |
) |
|
— |
|
|
(23.3 |
) |
Adjusted
Revenues Excluding the Effect of the Property Insight
Realignment |
$ |
40.3 |
|
|
$ |
39.3 |
|
|
$ |
122.1 |
|
|
$ |
110.4 |
|
Adjusted
Revenues Growth Excluding the Effect of the Property Insight
Realignment |
3 |
% |
|
|
|
11 |
% |
|
|
Reconciliation of Net Earnings to Adjusted
EBITDA |
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net
earnings |
$ |
43.9 |
|
|
$ |
32.4 |
|
|
$ |
107.0 |
|
|
$ |
98.7 |
|
Depreciation and amortization |
51.3 |
|
|
56.8 |
|
|
154.2 |
|
|
154.2 |
|
Interest
expense |
14.1 |
|
|
16.9 |
|
|
44.8 |
|
|
50.6 |
|
Income
tax expense |
9.2 |
|
|
6.3 |
|
|
24.3 |
|
|
19.2 |
|
Other
expense, net |
0.6 |
|
|
1.4 |
|
|
17.1 |
|
|
6.2 |
|
EBITDA |
119.1 |
|
|
113.8 |
|
|
347.4 |
|
|
328.9 |
|
Deferred
revenue purchase accounting adjustment |
1.0 |
|
|
1.5 |
|
|
3.6 |
|
|
5.8 |
|
Equity-based compensation |
4.1 |
|
|
3.4 |
|
|
14.4 |
|
|
9.5 |
|
Debt
and/or equity offering expenses |
2.4 |
|
|
0.5 |
|
|
5.8 |
|
|
0.6 |
|
Spin-off
related transition costs |
1.6 |
|
|
— |
|
|
2.7 |
|
|
— |
|
Acquisition-related costs |
— |
|
|
0.6 |
|
|
— |
|
|
1.6 |
|
Adjusted
EBITDA |
$ |
128.2 |
|
|
$ |
119.8 |
|
|
$ |
373.9 |
|
|
$ |
346.4 |
|
Adjusted
EBITDA Margin |
48.4 |
% |
|
44.6 |
% |
|
47.5 |
% |
|
45.0 |
% |
SCHEDULE VI |
BLACK KNIGHT, INC. |
Reconciliation of Net Earnings to Adjusted Net
Earnings |
(Unaudited) |
(In millions, except per share
data) |
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net earnings |
$ |
43.9 |
|
|
$ |
32.4 |
|
|
$ |
107.0 |
|
|
$ |
98.7 |
|
Depreciation and amortization purchase accounting adjustment |
23.3 |
|
|
24.9 |
|
|
68.2 |
|
|
65.0 |
|
Deferred
revenue purchase accounting adjustment |
1.0 |
|
|
1.5 |
|
|
3.6 |
|
|
5.8 |
|
Equity-based compensation |
4.1 |
|
|
3.4 |
|
|
14.4 |
|
|
9.5 |
|
Debt
and/or equity offering expenses |
2.4 |
|
|
0.5 |
|
|
18.5 |
|
|
0.6 |
|
Spin-off
related transition costs |
1.6 |
|
|
— |
|
|
2.7 |
|
|
— |
|
Acquisition-related costs |
— |
|
|
0.6 |
|
|
— |
|
|
1.6 |
|
Legal and
regulatory matters |
0.5 |
|
|
1.3 |
|
|
4.0 |
|
|
6.2 |
|
Income
tax expense adjustment |
(22.5 |
) |
|
(20.0 |
) |
|
(65.4 |
) |
|
(57.2 |
) |
Adjusted Net
Earnings |
$ |
54.3 |
|
|
$ |
44.6 |
|
|
$ |
153.0 |
|
|
$ |
130.2 |
|
|
|
|
|
|
|
|
|
Adjusted Net Earnings
Per Share |
$ |
0.36 |
|
|
$ |
0.29 |
|
|
$ |
1.00 |
|
|
$ |
0.85 |
|
Weighted Average
Adjusted Shares Outstanding |
152.2 |
|
|
152.7 |
|
|
152.7 |
|
|
152.7 |
|
Information for
Investors: |
|
Information for
Media: |
|
|
|
Bryan Hipsher |
|
Michelle Kersch |
Black Knight |
|
Black Knight |
904.854.3219 |
|
904.854.5043 |
bryan.hipsher@bkfs.com |
|
michelle.kersch@bkfs.com |
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