JACKSONVILLE, Fla., Aug. 3, 2023
/PRNewswire/ -- Black Knight, Inc. (NYSE: BKI), a leading provider
of software, data and analytics solutions to the mortgage and
consumer loan, real estate and capital markets verticals, today
announced unaudited financial results for the second quarter and
the six months ended June 30, 2023,
as compared to the prior year periods.
Commentary:
Black Knight Executive Chairman Anthony
Jabbour said, "Our second quarter results were solid in the
face of a very challenging operating environment. As we look
ahead to the balance of the year, we remain focused on executing
our strategic initiatives and improving the company's performance,
yet we acknowledge that market conditions remain uncertain. As
such, we remain steadfast in our focus to control what we can
control and provide innovative solutions and exceptional service to
our clients to drive shareholder value over the long-term."
Black Knight Chief Executive Officer Joe
Nackashi added, "Our second quarter results reflect a weaker
than expected mortgage market coupled with the near-term effects of
the proposed merger with Intercontinental Exchange. Revenue
declined 4% on an organic basis driven by lower origination volumes
as well as indirect effects of the mortgage market on our
Originations Software business. We remain very optimistic about our
long-term growth opportunities and commitment to creating value for
all stakeholders. I want to thank my Black Knight colleagues for
their focus and contributions and our clients for the trust they
place in us to help them achieve their strategic goals."
Second Quarter 2023 Highlights:
- Revenues of $368.2 million, a
decrease of 7%; Organic revenue decrease of 4%
- Operating income of $60.7
million, a decrease of 21%; Operating margin of 16.5%
compared to 19.5%
- Net earnings attributable to Black Knight of $55.3 million compared to $40.3 million; Diluted EPS of $0.35 compared to $0.26; Net earnings margin of 15.0% compared to
10.2%
- Adjusted EBITDA of $160.5
million, a decrease of 16%; Adjusted EBITDA margin was 43.6%
compared to 48.3%; Adjusted EBITDA for the 2022 period includes
$6.1 million related to the
TitlePoint line of business sold in January
2023
- Adjusted operating income of $122.8
million, a decrease of 19%; Adjusted operating margin of
33.4% compared to 38.3%; Adjusted operating income for the 2022
period includes $5.7 million related
to the TitlePoint line of business sold in January 2023
- Adjusted net earnings of $69.2
million, a decrease of 31%; Adjusted EPS of $0.44, a decrease of 32%
Second Quarter 2023 Segment Highlights:
Software Solutions
- Revenues of $323.6 million, a
decrease of 5% on a reported and organic basis
- EBITDA of $168.1 million, a
decrease of 12%; EBITDA margin of 51.9% compared to 56.2%
- Operating income of $134.1
million, a decrease of 13%; Operating margin of 41.4%
compared to 45.6%
Data and Analytics
- Revenues of $44.6 million, a
decrease of 19%; Organic revenue decrease of 1%
- EBITDA of $10.7 million, a
decrease of 40%; EBITDA margin of 24.0% compared to 32.1%
- Operating income of $6.8 million,
a decrease of 50%; Operating margin of 15.2% compared to 24.9%
- Results for the 2022 period include the TitlePoint line of
business that was sold in January
2023
Year-to-Date 2023 Highlights:
- Revenues of $750.4 million, a
decrease of 4%; Organic revenue decrease of 1%
- Operating income of $141.7
million, a decrease of 10%; Operating margin of 18.9%
compared to 20.1%
- Net earnings attributable to Black Knight of $197.1 million compared to $404.9 million; Diluted EPS of $1.27 compared to $2.60; Net earnings margin of 26.3% compared to
51.5%; for the year-to-date 2023 and 2022 periods, the effect of
our investment in Dun & Bradstreet Holdings, Inc. ("DNB") was a
decrease in Net earnings attributable to Black Knight of
$1.9 million, or $0.01 per diluted share, and an increase of
$303.0 million, or $1.95 per diluted share, respectively, including
a gain of $305.4 million, net of tax,
or $1.96 per diluted share,
recognized as a result of the exchange of shares of DNB common
stock as part of the consideration for acquiring the remaining 40%
interest in Optimal Blue Holdco, LLC ("Optimal Blue Holdco") in
February 2022
- Adjusted EBITDA of $341.2
million, a decrease of 10%; Adjusted EBITDA margin was 45.5%
compared to 48.8%; Adjusted EBITDA for the 2022 period includes
$13.4 million related to the
TitlePoint line of business sold in January
2023
- Adjusted operating income of $265.4
million, a decrease of 12%; Adjusted operating margin of
35.4% compared to 38.7%; Adjusted operating income for the 2022
period includes $12.6 million related
to the TitlePoint line of business sold in January 2023
- Adjusted net earnings of $157.0
million, a decrease of 21%; Adjusted EPS of $1.01, a decrease of 20%
Year-to-Date 2023 Segment Highlights:
Software Solutions
- Revenues of $660.3 million, a
decrease of 1% on a reported and organic basis
- EBITDA of $354.8 million, a
decrease of 6%; EBITDA margin of 53.7% compared to 56.5%
- Operating income of $286.7
million, a decrease of 7%; Operating margin of 43.4%
compared to 45.9%
Data and Analytics
- Revenues of $90.1 million, a
decrease of 19%; Organic revenue decrease of 0.4%
- EBITDA of $22.9 million, a
decrease of 38%; EBITDA margin of 25.4% compared to 32.9%
- Operating income of $15.0
million, a decrease of 48%; Operating margin of 16.6%
compared to 25.9%
- Results for the 2022 period include the TitlePoint line of
business that was sold in January
2023
Other Highlights:
- As of June 30, 2023, we owned
18.5 million shares of DNB common stock, which had a fair value of
$213.7 million before tax based on
DNB's closing price of $11.57 as of
June 30, 2023. As of June 30, 2023, we no longer have significant
influence over DNB and our investment is accounted for at fair
value in accordance with ASC 321: Investments -- Equity
Securities. As a result of the change in accounting method, we
recorded an unrealized gain of $55.8
million before tax. The effect of the fair value adjustment
was an increase in Net earnings attributable to Black Knight of
$41.6 million, or $0.27 per diluted share, based on our statutory
income tax rate of 25.5%.
- As of June 30, 2023, we had cash
and cash equivalents of $15.9
million, debt of $2,445.7
million and available capacity of $648.0 million on our revolving credit
facility.
ICE Transaction
On May 4, 2022, we entered into a definitive agreement to
be acquired by Intercontinental Exchange, Inc. ("ICE")
(the "Original Merger Agreement") a leading global provider of
data, technology, and market infrastructure. On March 7, 2023,
we entered into Amendment No. 1 to the Original Merger
Agreement (the "Amendment" and the Original Merger Agreement,
as amended by the Amendment, the "Merger Agreement"), which
provides for, among other things, a reduction in the merger
consideration, valuing Black Knight at $75.00 per share, or a market value of
$11.7 billion, with consideration in
the form of a mix of approximately $68.00 per share in cash and stock with an
exchange ratio of 0.0682 based on ICE's 10-day volume weighted
average price as of March 3, 2023 of $102.62 (the "ICE Transaction"). The ICE
Transaction is expected to close in the third or fourth quarter of
2023, subject to regulatory clearance and the satisfaction of
customary closing conditions.
In connection with entering into the Amendment, on March 7, 2023, we entered into an Equity Purchase
Agreement (the "Empower Divestiture Agreement") with Constellation
Web Solutions Inc., a subsidiary of Constellation Software Inc.
("Constellation") and (solely for the purposes set forth in the
Empower Divestiture Agreement) ICE, pursuant to which, after the
closing of the ICE Transaction, Constellation will purchase our
Empower® LOS business, including its
ExchangeSM, LendingSpace and AIVA solutions (the
"Empower Divestiture Transaction").
On July 14, 2023, we entered into
an Equity Purchase Agreement (the "OB Divestiture Agreement") with
a subsidiary of Constellation, and (solely for the purposes set
forth in the OB Divestiture Agreement) ICE, pursuant to which,
after the closing of the ICE Transaction, Constellation will
purchase our Optimal Blue business (the "OB Divestiture
Transaction").
Each of the Empower Divestiture Agreement and the OB Divestiture
Agreement was entered into in order to address certain
alleged antitrust concerns raised by the United States
Federal Trade Commission ("FTC") regarding the ICE Transaction and
each is subject to customary closing conditions, including but not
limited to the prior completion of the ICE Transaction.
Business Outlook
As a result of the proposed ICE Transaction, Black Knight has
suspended the practice of providing forward-looking guidance. In
addition, Black Knight will not be hosting a conference call
related to its second quarter 2023 financial results.
Definitions of non-GAAP financial measures and the
reconciliations to the most directly comparable GAAP measures are
provided in subsequent sections of the press release narrative and
supplemental schedules.
About Black Knight
Black Knight, Inc. (NYSE:BKI) is an award-winning software,
data and analytics company that drives innovation in the mortgage
lending and servicing and real estate industries, as well as the
capital and secondary markets. Businesses leverage our robust,
integrated solutions across the entire homeownership life cycle to
help retain existing customers, gain new customers, mitigate risk
and operate more effectively.
Our clients rely on our proven, comprehensive, scalable products
and our unwavering commitment to delivering superior client support
to achieve their strategic goals and better serve their customers.
For more information on Black Knight, please visit
www.blackknightinc.com.
Non-GAAP Financial Measures
This earnings release contains non-GAAP financial measures,
including Organic revenue, Adjusted EBITDA, Adjusted EBITDA margin,
Adjusted operating income, Adjusted operating margin, Adjusted net
earnings and Adjusted EPS. These are important financial measures
for us 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.
We use these non-GAAP financial measures for financial and
operational decision making and as a means to evaluate
period-to-period comparisons. We believe these measures 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. We also
present these non-GAAP financial measures because we believe
investors, analysts and rating agencies consider them useful in
measuring our ability to meet our debt service obligations. By
disclosing these non-GAAP financial measures, we believe we offer
investors a greater understanding of, and an enhanced level of
transparency into, the means by which our management operates the
company.
These non-GAAP financial measures are not measures presented in
accordance with GAAP, and our use of these terms may vary from that
of others in our industry. These non-GAAP financial measures should
not be considered as an alternative to revenues, operating income,
operating margin, net earnings, net earnings per share, net
earnings margin or any other measures derived in accordance with
GAAP as measures of operating performance or liquidity.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures are presented in the
attached schedules.
Revenues, EBITDA, EBITDA margin, Operating income and Operating
margin for the Software Solutions and Data and Analytics segments
are presented in conformity with Accounting Standards Codification
Topic 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.
Organic revenue - We define Organic revenue as the change
in Revenues for the current period compared to an adjusted revenue
base for the prior period, which is adjusted to add pre-acquisition
revenues of acquired businesses for the portion of the
prior year matching the portion of the current year that
we owned the acquired businesses, and subtract pre-divestiture
revenues for divested businesses for the portion of the prior year
matching the portion of the current year for which the business was
not owned.
Adjusted EBITDA - We define Adjusted EBITDA as Net
earnings attributable to Black Knight, with adjustments to reflect
the addition or elimination of certain statement of earnings items
including, but not limited to:
- Depreciation and amortization;
- Impairment charges;
- Interest expense, net;
- Income tax expense;
- Other (income) expense, net;
- Equity in losses of unconsolidated affiliates, net of tax;
- Gains related to investments in unconsolidated affiliates, net
of tax;
- Net losses attributable to redeemable noncontrolling
interests;
- equity-based compensation, including certain related payroll
taxes;
- acquisition-related costs, including costs pursuant to purchase
agreements;
- costs related to the ICE Transaction; and
- costs associated with expense reduction initiatives.
These adjustments are reflected in Corporate and Other.
Adjusted EBITDA margin - Adjusted EBITDA margin is
calculated by dividing Adjusted EBITDA by Revenues.
Adjusted operating income -- We define Adjusted operating
income as Operating income, with adjustments to reflect the
addition or elimination of certain statement of earnings items
including, but not limited to:
- equity-based compensation, including certain related payroll
taxes;
- acquisition-related costs, including costs pursuant to purchase
agreements;
- costs related to the ICE Transaction;
- costs associated with expense reduction initiatives; and
- the net incremental depreciation and amortization adjustments
associated with the application of purchase accounting.
These adjustments are reflected in Corporate and Other.
Adjusted operating margin - Adjusted operating
margin is calculated by dividing Adjusted operating income by
Revenues.
Adjusted net earnings - We define Adjusted net
earnings as Net earnings attributable to Black Knight with
adjustments to reflect the addition or elimination of certain
statement of earnings items including, but not limited to:
- equity in losses of unconsolidated affiliates, net of tax;
- gains related to investments in unconsolidated affiliates, net
of tax;
- gain related to the TitlePoint transaction;
- unrealized gain related to investment in DNB;
- the net incremental depreciation and amortization adjustments
associated with the application of purchase accounting;
- equity-based compensation, including certain related payroll
taxes;
- acquisition-related costs, including costs pursuant to purchase
agreements;
- costs related to the ICE Transaction;
- costs associated with expense reduction initiatives;
- costs and settlement (gains) losses associated with significant
legal matters;
- adjustment for income tax expense primarily related to the tax
effect of the non-GAAP adjustments and a discrete income tax
benefit related to the establishment of a deferred tax asset as a
result of our reorganization of certain wholly-owned subsidiaries;
and
- adjustment for redeemable noncontrolling interests primarily
related to the effect of the non-GAAP adjustments.
Adjusted EPS - Adjusted EPS is calculated by
dividing Adjusted net earnings by the diluted weighted average
shares of common stock outstanding.
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:
- the occurrence of any event, change, or other circumstance that
could give rise to a right in favor of ICE or us to terminate the
definitive merger agreement governing the terms and conditions of
the ICE Transaction;
- the possibility that the proposed ICE Transaction, the Empower
Divestiture Transaction or the OB Divestiture Transaction do not
close when expected or at all because required regulatory or other
approvals and other conditions to closing are not received or
satisfied on a timely basis or at all (and the risk that such
approvals may result in the imposition of conditions that could
adversely affect ICE or us or the expected benefits of the proposed
ICE Transaction);
- the outcome of the FTC's lawsuits filed against us and ICE
seeking to block the consummation of the ICE Transaction and of any
other legal proceedings that may be instituted against us or
ICE;
- business uncertainties and contractual restrictions while the
ICE Transaction is pending, which could adversely affect our
business and operations;
- the diversion of management's attention and time from ongoing
business operations and opportunities on merger-related
matters;
- changes to our relationships with our top clients, whom we rely
on for a significant portion of our revenues and profit;
- our ability to comply with or changes to the laws, rules and
regulations that affect our and our clients' businesses;
- our ability to adapt our solutions to technological changes or
evolving industry standards or to achieve our growth
strategies;
- increase in the availability of free or relatively inexpensive
information;
- our ability to protect our proprietary software and information
rights;
- our dependence on our ability to access data from external
sources;
- delays or difficulty in developing or implementing new,
enhanced or existing software, data or hosting solutions;
- changes in general economic, business, regulatory and political
conditions, particularly as they affect the mortgage industry;
- risks associated with the recruitment and retention of our
skilled workforce;
- impacts to our business operations caused by the occurrence of
a catastrophe or global crisis;
- our investment in DNB;
- security breaches against our information systems or breaches
involving our third-party vendors;
- our ability to successfully consummate, integrate and achieve
the intended benefits of acquisitions;
- our existing indebtedness and any additional significant debt
we incur; 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 for the year ended
December 31, 2022 and other filings
with the SEC.
Information for
Investors:
|
|
Information for
Media:
|
|
|
|
Steve
Eagerton
|
|
Michelle
Kersch
|
Black Knight
|
|
Black Knight
|
904.854.3683
|
|
904.854.5043
|
steven.eagerton@bkfs.com
|
|
michelle.kersch@bkfs.com
|
BLACK KNIGHT,
INC.
|
Consolidated Balance
Sheets
|
(In
millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
June 30, 2023
|
|
December 31, 2022
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
15.9
|
|
$
|
12.2
|
Trade receivables,
net
|
|
|
205.4
|
|
|
193.5
|
Prepaid expenses and
other current assets
|
|
|
147.7
|
|
|
132.1
|
Receivables from
related parties
|
|
|
—
|
|
|
0.1
|
Current assets held
for sale
|
|
|
—
|
|
|
5.8
|
Total current
assets
|
|
|
369.0
|
|
|
343.7
|
Property and equipment,
net
|
|
|
129.2
|
|
|
143.0
|
Software,
net
|
|
|
424.9
|
|
|
443.7
|
Other intangible
assets, net
|
|
|
408.8
|
|
|
470.1
|
Goodwill
|
|
|
3,747.8
|
|
|
3,747.8
|
Investments
|
|
|
224.1
|
|
|
171.0
|
Deferred contract
costs, net
|
|
|
189.2
|
|
|
192.6
|
Other non-current
assets
|
|
|
275.5
|
|
|
246.2
|
Non-current assets held
for sale
|
|
|
—
|
|
|
73.5
|
Total
assets
|
|
$
|
5,768.5
|
|
$
|
5,831.6
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade accounts payable
and other accrued liabilities
|
|
$
|
68.9
|
|
$
|
66.5
|
Income taxes
payable
|
|
|
23.4
|
|
|
28.4
|
Accrued compensation
and benefits
|
|
|
70.9
|
|
|
82.8
|
Current portion of
debt
|
|
|
43.8
|
|
|
33.6
|
Deferred
revenues
|
|
|
50.3
|
|
|
59.9
|
Total current
liabilities
|
|
|
257.3
|
|
|
271.2
|
Deferred
revenues
|
|
|
31.1
|
|
|
42.4
|
Deferred income
taxes
|
|
|
204.9
|
|
|
227.5
|
Long-term debt, net of
current portion
|
|
|
2,401.9
|
|
|
2,621.7
|
Other non-current
liabilities
|
|
|
46.4
|
|
|
47.9
|
Total
liabilities
|
|
|
2,941.6
|
|
|
3,210.7
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
|
43.4
|
|
|
47.6
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Additional paid-in
capital
|
|
|
1,363.7
|
|
|
1,398.2
|
Retained
earnings
|
|
|
1,609.4
|
|
|
1,417.1
|
Accumulated other
comprehensive loss
|
|
|
(2.1)
|
|
|
(6.3)
|
Treasury stock, at
cost
|
|
|
(187.5)
|
|
|
(235.7)
|
Total shareholders'
equity
|
|
|
2,783.5
|
|
|
2,573.3
|
Total liabilities,
redeemable noncontrolling interests and shareholders'
equity
|
|
$
|
5,768.5
|
|
$
|
5,831.6
|
BLACK KNIGHT,
INC.
|
Consolidated
Statements of Earnings
|
(In millions, except
per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
|
$
|
368.2
|
|
$
|
394.5
|
|
$
|
750.4
|
|
$
|
781.7
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
214.4
|
|
|
216.8
|
|
|
427.5
|
|
|
424.7
|
Depreciation and
amortization
|
|
|
82.1
|
|
|
92.5
|
|
|
164.7
|
|
|
184.0
|
Transition and
integration costs
|
|
|
11.0
|
|
|
8.2
|
|
|
16.5
|
|
|
15.8
|
Total
expenses
|
|
|
307.5
|
|
|
317.5
|
|
|
608.7
|
|
|
624.5
|
Operating
income
|
|
|
60.7
|
|
|
77.0
|
|
|
141.7
|
|
|
157.2
|
Other income and
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(33.5)
|
|
|
(22.6)
|
|
|
(63.6)
|
|
|
(43.7)
|
Other income
(expense), net
|
|
|
50.0
|
|
|
(2.4)
|
|
|
188.0
|
|
|
(3.6)
|
Total other income
(expense), net
|
|
|
16.5
|
|
|
(25.0)
|
|
|
124.4
|
|
|
(47.3)
|
Earnings before income
taxes and equity in (losses)
earnings of unconsolidated
affiliates
|
|
|
77.2
|
|
|
52.0
|
|
|
266.1
|
|
|
109.9
|
Income tax
expense
|
|
|
21.2
|
|
|
11.6
|
|
|
67.1
|
|
|
10.5
|
Earnings before equity
in (losses) earnings of unconsolidated affiliates
|
|
|
56.0
|
|
|
40.4
|
|
|
199.0
|
|
|
99.4
|
Equity in (losses)
earnings of unconsolidated affiliates, net of tax
|
|
|
(0.7)
|
|
|
(0.1)
|
|
|
(1.9)
|
|
|
303.0
|
Net earnings
|
|
|
55.3
|
|
|
40.3
|
|
|
197.1
|
|
|
402.4
|
Net losses attributable
to redeemable noncontrolling interests
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.5
|
Net earnings
attributable to Black Knight
|
|
$
|
55.3
|
|
$
|
40.3
|
|
$
|
197.1
|
|
$
|
404.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share
attributable to Black Knight shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.36
|
|
$
|
0.26
|
|
$
|
1.27
|
|
$
|
2.62
|
Diluted
|
|
$
|
0.35
|
|
$
|
0.26
|
|
$
|
1.27
|
|
$
|
2.60
|
Weighted average shares
of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
155.0
|
|
|
154.5
|
|
|
154.8
|
|
|
154.4
|
Diluted
|
|
|
155.9
|
|
|
155.6
|
|
|
155.7
|
|
|
155.5
|
BLACK KNIGHT,
INC.
|
Consolidated
Statements of Cash Flows
|
(In
millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30,
|
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net earnings
|
|
$
|
197.1
|
|
$
|
402.4
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
164.7
|
|
|
184.0
|
Amortization of debt
issuance costs and original issue discount
|
|
|
2.0
|
|
|
1.9
|
Gain related to the
TitlePoint transaction
|
|
|
(145.4)
|
|
|
—
|
Unrealized gain
related to investment in DNB
|
|
|
(55.8)
|
|
|
—
|
Deferred income taxes,
net
|
|
|
(21.8)
|
|
|
(144.9)
|
Equity in losses
(earnings) of unconsolidated affiliates, net of tax
|
|
|
1.9
|
|
|
(303.0)
|
Equity-based
compensation
|
|
|
17.9
|
|
|
23.6
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Trade receivables,
including receivables from related parties
|
|
|
(11.7)
|
|
|
(17.4)
|
Prepaid expenses and
other assets
|
|
|
(42.3)
|
|
|
(28.1)
|
Deferred contract
costs
|
|
|
(18.3)
|
|
|
(21.7)
|
Deferred
revenues
|
|
|
(20.9)
|
|
|
(15.3)
|
Trade accounts payable
and other liabilities
|
|
|
(22.9)
|
|
|
8.3
|
Net cash provided by
operating activities
|
|
|
44.5
|
|
|
89.8
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Additions to property
and equipment
|
|
|
(4.1)
|
|
|
(11.8)
|
Additions to
software
|
|
|
(44.9)
|
|
|
(43.7)
|
Proceeds from the
TitlePoint transaction
|
|
|
224.2
|
|
|
—
|
Other investing
activities
|
|
|
—
|
|
|
(4.0)
|
Net cash provided by
(used in) investing activities
|
|
|
175.2
|
|
|
(59.5)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Revolver
borrowings
|
|
|
250.3
|
|
|
585.8
|
Revolver
payments
|
|
|
(443.3)
|
|
|
(195.1)
|
Term loan
payments
|
|
|
(14.4)
|
|
|
(14.4)
|
Payments made for
redeemable noncontrolling interests
|
|
|
—
|
|
|
(433.5)
|
Tax withholding
payments for restricted share vesting
|
|
|
(8.4)
|
|
|
(11.0)
|
Finance lease
payments
|
|
|
—
|
|
|
(0.8)
|
Other financing
activities
|
|
|
(0.2)
|
|
|
(0.4)
|
Net cash used in
financing activities
|
|
|
(216.0)
|
|
|
(69.4)
|
Net increase (decrease)
in cash and cash equivalents
|
|
|
3.7
|
|
|
(39.1)
|
Cash and cash
equivalents, beginning of period
|
|
|
12.2
|
|
|
77.1
|
Cash and cash
equivalents, end of period
|
|
$
|
15.9
|
|
$
|
38.0
|
Supplemental cash flow
information:
|
|
|
|
|
|
|
Interest paid,
net
|
|
$
|
(59.1)
|
|
$
|
(41.9)
|
Income taxes paid,
net
|
|
$
|
(94.9)
|
|
$
|
(124.3)
|
BLACK KNIGHT,
INC.
|
Segment
Information
|
(In
millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2023
|
|
|
Software
|
|
Data and
|
|
Corporate and
|
|
|
|
|
|
Solutions
|
|
Analytics
|
|
Other
|
|
Total
|
Revenues
|
|
$
|
323.6
|
|
$
|
44.6
|
|
$
|
—
|
|
$
|
368.2
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
155.5
|
|
|
33.9
|
|
|
25.0
|
(1)
|
|
214.4
|
Transition and
integration costs
|
|
|
—
|
|
|
—
|
|
|
11.0
|
(2)
|
|
11.0
|
EBITDA
|
|
|
168.1
|
|
|
10.7
|
|
|
(36.0)
|
|
|
142.8
|
Depreciation and
amortization
|
|
|
34.0
|
|
|
3.9
|
|
|
44.2
|
(3)
|
|
82.1
|
Operating income
(loss)
|
|
|
134.1
|
|
|
6.8
|
|
|
(80.2)
|
|
|
60.7
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
(33.5)
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
50.0
|
Earnings before income
taxes and equity in losses of unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
77.2
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
|
21.2
|
Earnings before equity
in losses of unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
56.0
|
Equity in losses of
unconsolidated affiliates, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
(0.7)
|
Net earnings
|
|
|
|
|
|
|
|
|
|
|
$
|
55.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2022
|
|
|
Software
|
|
Data and
|
|
Corporate and
|
|
|
|
|
|
Solutions
|
|
Analytics
|
|
Other
|
|
Total
|
Revenues
|
|
$
|
339.4
|
|
$
|
55.1
|
|
$
|
—
|
|
$
|
394.5
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
148.7
|
|
|
37.4
|
|
|
30.7
|
(1)
|
|
216.8
|
Transition and
integration costs
|
|
|
—
|
|
|
—
|
|
|
8.2
|
(2)
|
|
8.2
|
EBITDA
|
|
|
190.7
|
|
|
17.7
|
|
|
(38.9)
|
|
|
169.5
|
Depreciation and
amortization
|
|
|
35.9
|
|
|
4.0
|
|
|
52.6
|
(3)
|
|
92.5
|
Operating income
(loss)
|
|
|
154.8
|
|
|
13.7
|
|
|
(91.5)
|
|
|
77.0
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
(22.6)
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
(2.4)
|
Earnings before income
taxes and equity in losses of unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
52.0
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
|
11.6
|
Earnings before equity
in losses of unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
40.4
|
Equity in losses of
unconsolidated affiliates, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
(0.1)
|
Net earnings
attributable to Black Knight
|
|
|
|
|
|
|
|
|
|
|
$
|
40.3
|
BLACK KNIGHT,
INC.
|
Segment Information
(Continued)
|
(In
millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2023
|
|
|
Software
|
|
Data and
|
|
Corporate
|
|
|
|
|
|
Solutions
|
|
Analytics
|
|
and Other
|
|
Total
|
Revenues
|
|
$
|
660.3
|
|
$
|
90.1
|
|
$
|
—
|
|
$
|
750.4
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
305.5
|
|
|
67.2
|
|
|
54.8
|
(1)
|
|
427.5
|
Transition and
integration costs
|
|
|
—
|
|
|
—
|
|
|
16.5
|
(2)
|
|
16.5
|
EBITDA
|
|
|
354.8
|
|
|
22.9
|
|
|
(71.3)
|
|
|
306.4
|
Depreciation and
amortization
|
|
|
68.1
|
|
|
7.9
|
|
|
88.7
|
(3)
|
|
164.7
|
Operating income
(loss)
|
|
|
286.7
|
|
|
15.0
|
|
|
(160.0)
|
|
|
141.7
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
(63.6)
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
188.0
|
Earnings before income
taxes and equity in losses of unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
266.1
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
|
67.1
|
Earnings before equity
in losses of unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
199.0
|
Equity in losses of
unconsolidated affiliates, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
(1.9)
|
Net earnings
|
|
|
|
|
|
|
|
|
|
|
$
|
197.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2022
|
|
|
Software
|
|
Data and
|
|
Corporate
|
|
|
|
|
|
Solutions
|
|
Analytics
|
|
and Other
|
|
Total
|
Revenues
|
|
$
|
670.1
|
|
$
|
111.6
|
|
$
|
—
|
|
$
|
781.7
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
291.2
|
|
|
74.9
|
|
|
58.6
|
(1)
|
|
424.7
|
Transition and
integration costs
|
|
|
—
|
|
|
—
|
|
|
15.8
|
(2)
|
|
15.8
|
EBITDA
|
|
|
378.9
|
|
|
36.7
|
|
|
(74.4)
|
|
|
341.2
|
Depreciation and
amortization
|
|
|
71.0
|
|
|
7.8
|
|
|
105.2
|
(3)
|
|
184.0
|
Operating income
(loss)
|
|
|
307.9
|
|
|
28.9
|
|
|
(179.6)
|
|
|
157.2
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
(43.7)
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
(3.6)
|
Earnings before income
taxes and equity in earnings of unconsolidated
affiliates
|
|
|
|
|
|
|
|
|
|
|
|
109.9
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
Earnings before equity
in earnings of unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
99.4
|
Equity in earnings of
unconsolidated affiliates, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
303.0
|
Net earnings
|
|
|
|
|
|
|
|
|
|
|
|
402.4
|
Net losses attributable
to redeemable noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
2.5
|
Net earnings
attributable to Black Knight
|
|
|
|
|
|
|
|
|
|
|
$
|
404.9
|
_______________________________
|
(1)
|
Operating expenses for
Corporate and Other includes equity-based compensation, including
certain related payroll taxes, of $6.7 million and $13.0 million
for the three months ended June 30, 2023 and 2022, respectively,
and $18.3 million and $24.2 million for the six months ended June
30, 2023 and 2022, respectively.
|
(2)
|
Transition and
integration costs primarily consists of costs related to the ICE
Transaction and costs associated with acquisitions.
|
(3)
|
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.
|
BLACK KNIGHT,
INC.
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
(In
millions)
|
(Unaudited)
|
|
Reconciliation of
Revenues to Organic Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
As
|
|
As
|
|
Pre-divestiture
|
|
Adjusted
|
|
Organic
|
|
|
reported
|
|
reported
|
|
revenues(1)
|
|
base
|
|
revenue
|
Servicing
Software
|
|
$
|
221.5
|
|
$
|
221.7
|
|
$
|
—
|
|
$
|
221.7
|
|
— %
|
Origination
Software
|
|
|
102.1
|
|
|
117.7
|
|
|
—
|
|
|
117.7
|
|
(13) %
|
Software
Solutions
|
|
|
323.6
|
|
|
339.4
|
|
|
—
|
|
|
339.4
|
|
(5) %
|
Data and
Analytics
|
|
|
44.6
|
|
|
55.1
|
|
|
(10.0)
|
|
|
45.1
|
|
(1) %
|
Revenues
|
|
$
|
368.2
|
|
$
|
394.5
|
|
$
|
(10.0)
|
|
$
|
384.5
|
|
(4) %
|
_______________________________
|
Note: Amounts may not
recalculate due to rounding.
|
(1)
|
Includes revenues
related to the TitlePoint line of business for the three
months ended June 30, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30,
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
As
|
|
As
|
|
Pre-divestiture
|
|
Adjusted
|
|
Organic
|
|
|
reported
|
|
reported
|
|
revenues(1)
|
|
base
|
|
revenue
|
Servicing
Software
|
|
$
|
442.6
|
|
$
|
444.3
|
|
$
|
—
|
|
$
|
444.3
|
|
— %
|
Origination
Software
|
|
|
217.7
|
|
|
225.8
|
|
|
—
|
|
|
225.8
|
|
(4) %
|
Software
Solutions
|
|
|
660.3
|
|
|
670.1
|
|
|
—
|
|
|
670.1
|
|
(1) %
|
Data and
Analytics
|
|
|
90.1
|
|
|
111.6
|
|
|
(21.1)
|
|
|
90.5
|
|
— %
|
Revenues
|
|
$
|
750.4
|
|
$
|
781.7
|
|
$
|
(21.1)
|
|
$
|
760.6
|
|
(1) %
|
_______________________________
|
Note: Amounts may not
recalculate due to rounding.
|
(1)
|
Includes revenues
related to the TitlePoint line of business for the six months
ended June 30, 2022.
|
BLACK KNIGHT,
INC.
|
Reconciliation of
GAAP to Non-GAAP Financial Measures (Continued)
|
(In
millions)
|
(Unaudited)
|
|
Reconciliation of
Net Earnings to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net earnings
attributable to Black Knight
|
|
$
|
55.3
|
|
$
|
40.3
|
|
$
|
197.1
|
|
$
|
404.9
|
|
Depreciation and
amortization
|
|
|
82.1
|
|
|
92.5
|
|
|
164.7
|
|
|
184.0
|
|
Interest expense,
net
|
|
|
33.5
|
|
|
22.6
|
|
|
63.6
|
|
|
43.7
|
|
Income tax
expense
|
|
|
21.2
|
|
|
11.6
|
|
|
67.1
|
|
|
10.5
|
|
Other (income) expense,
net
|
|
|
(50.0)
|
|
|
2.4
|
|
|
(188.0)
|
|
|
3.6
|
|
Equity in losses of
unconsolidated affiliates, net of tax
|
|
|
0.7
|
|
|
0.1
|
|
|
1.9
|
|
|
2.4
|
|
Gain related to
investment in unconsolidated affiliates, net of tax
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(305.4)
|
|
Net losses attributable
to redeemable noncontrolling interests
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.5)
|
|
EBITDA
|
|
|
142.8
|
|
|
169.5
|
|
|
306.4
|
|
|
341.2
|
|
Equity-based
compensation
|
|
|
6.7
|
|
|
13.0
|
|
|
18.3
|
|
|
24.2
|
|
Acquisition-related
costs
|
|
|
0.7
|
|
|
1.1
|
|
|
0.7
|
|
|
8.7
|
|
ICE Transaction-related
costs
|
|
|
10.3
|
|
|
6.4
|
|
|
15.8
|
|
|
6.4
|
|
Expense reduction
initiatives
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
0.7
|
|
Adjusted
EBITDA
|
|
$
|
160.5
|
|
$
|
190.7
|
|
$
|
341.2
|
|
$
|
381.2
|
|
Net earnings
margin
|
|
|
15.0 %
|
|
|
10.2 %
|
|
|
26.3 %
|
|
|
51.5 %
|
|
Adjusted EBITDA
margin
|
|
|
43.6 %
|
|
|
48.3 %
|
|
|
45.5 %
|
|
|
48.8 %
|
|
|
Reconciliation of
Operating Income to Adjusted Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Operating
income
|
|
$
|
60.7
|
|
$
|
77.0
|
|
$
|
141.7
|
|
$
|
157.2
|
|
Equity-based
compensation
|
|
|
6.7
|
|
|
13.0
|
|
|
18.3
|
|
|
24.2
|
|
Acquisition-related
costs
|
|
|
0.7
|
|
|
1.1
|
|
|
0.7
|
|
|
8.7
|
|
ICE Transaction-related
costs
|
|
|
10.3
|
|
|
6.4
|
|
|
15.8
|
|
|
6.4
|
|
Expense reduction
initiatives
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
0.7
|
|
Depreciation and
amortization purchase accounting adjustment
|
|
|
44.4
|
|
|
52.8
|
|
|
88.9
|
|
|
105.4
|
|
Adjusted operating
income
|
|
$
|
122.8
|
|
$
|
151.0
|
|
$
|
265.4
|
|
$
|
302.6
|
|
Operating
margin
|
|
|
16.5 %
|
|
|
19.5 %
|
|
|
18.9 %
|
|
|
20.1 %
|
|
Adjusted operating
margin
|
|
|
33.4 %
|
|
|
38.3 %
|
|
|
35.4 %
|
|
|
38.7 %
|
|
BLACK KNIGHT,
INC.
|
Reconciliation of
GAAP to Non-GAAP Financial Measures (Continued)
|
(In
millions)
|
(Unaudited)
|
|
Reconciliation of
Net Earnings to Adjusted Net Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net earnings
attributable to Black Knight
|
|
$
|
55.3
|
|
$
|
40.3
|
|
$
|
197.1
|
|
$
|
404.9
|
Equity in losses of
unconsolidated affiliates, net of tax
|
|
|
0.7
|
|
|
0.1
|
|
|
1.9
|
|
|
2.4
|
Gain related to
investment in unconsolidated affiliates, net of tax
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(305.4)
|
Gain related to the
TitlePoint transaction
|
|
|
—
|
|
|
—
|
|
|
(145.4)
|
|
|
—
|
Unrealized gain related
to investment in DNB
|
|
|
(55.8)
|
|
|
—
|
|
|
(55.8)
|
|
|
—
|
Depreciation and
amortization purchase accounting adjustment
(1)
|
|
|
44.4
|
|
|
52.8
|
|
|
88.9
|
|
|
105.4
|
Equity-based
compensation
|
|
|
6.7
|
|
|
13.0
|
|
|
18.3
|
|
|
24.2
|
Acquisition-related
costs
|
|
|
0.7
|
|
|
1.1
|
|
|
0.7
|
|
|
8.7
|
ICE Transaction-related
costs
|
|
|
10.3
|
|
|
6.4
|
|
|
15.8
|
|
|
6.4
|
Expense reduction
initiatives
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
0.7
|
Legal
matters
|
|
|
5.7
|
|
|
2.4
|
|
|
13.2
|
|
|
3.7
|
Income tax expense
adjustment (2)
|
|
|
1.2
|
|
|
(16.3)
|
|
|
22.3
|
|
|
(47.4)
|
Redeemable
noncontrolling interests adjustment (3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.8)
|
Adjusted net
earnings
|
|
$
|
69.2
|
|
$
|
100.5
|
|
$
|
157.0
|
|
$
|
197.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS
|
|
$
|
0.44
|
|
$
|
0.65
|
|
$
|
1.01
|
|
$
|
1.27
|
Weighted average shares
outstanding, diluted
|
|
|
155.9
|
|
|
155.6
|
|
|
155.7
|
|
|
155.5
|
_________________________________
|
(1)
|
Components of the
depreciation and amortization purchase accounting adjustment are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Other intangible
assets
|
|
$
|
30.6
|
|
$
|
36.8
|
|
$
|
61.3
|
|
$
|
73.6
|
Software
|
|
|
13.6
|
|
|
15.8
|
|
|
27.2
|
|
|
31.4
|
Property and
equipment
|
|
|
0.2
|
|
|
0.2
|
|
|
0.4
|
|
|
0.4
|
Depreciation and
amortization purchase accounting adjustment
|
|
$
|
44.4
|
|
$
|
52.8
|
|
$
|
88.9
|
|
$
|
105.4
|
|
|
(2)
|
For the six months
ended June 30, 2022, the income tax expense adjustment includes a
discrete income tax benefit of $14.1 million related to the
establishment of a deferred tax asset as a result of our
reorganization of certain wholly-owned subsidiaries within the
Optimal Blue partnership investment structure.
|
(3)
|
The redeemable
noncontrolling interests adjustment primarily includes the effect
of the net incremental depreciation and amortization adjustments
associated with the application of purchase accounting.
|
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SOURCE Black Knight, Inc.