Attached files
| file | filename |
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| EX-99.1 - SECOND QUARTER 2016 PRESS RELEASE AND FINANCIAL RESULTS - Black Knight, Inc. | bkfsq22016ex991.htm |
| 8-K - SECOND QUARTER 2016 FORM 8-K - Black Knight, Inc. | bkfs2016q28k.htm |
1 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affili te. © 2016 Bl ck Knight Financial Tech ology Solutions, LLC. All Rights Reserved.
Black Knight Financial Services, Inc.
Second Quarter 2016 Earnings Results
July 20, 2016
2 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
Disclaimer
Forward-Looking Statements
This presentation 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:
electronic 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 impact our and our customers’ businesses; our ability to adapt our services to changes in technology or the
marketplace; the impact 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 impact 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; risks associated
with our structure and status as a “controlled company;” our ability to successfully integrate strategic acquisitions; and other risks and
uncertainties detailed in the “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and other sections of our Annual Report on
Form 10-K and other filings with the Securities and Exchange Commission.
Non-GAAP Financial Measures
This presentation contains non-GAAP financial measures, including Adjusted Revenues, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted
Net Earnings from Continuing Operations, Pro Forma Adjusted Net Earnings from Continuing Operations, Adjusted Net Earnings per Share from
Continuing Operations and Pro Forma Adjusted Net Earnings per Share from Continuing Operations. These are important financial performance
measures for Black Knight, but are not financial measures as defined by 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 that 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. Black Knight has not provided a
reconciliation of forward-looking Adjusted Net Earnings Per Share from Continuing Operations and Adjusted EBITDA 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. See the Appendix for further information.
3 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
GAAP Financial Results
Metrics Second Quarter First Half
Revenues $255.5 million, +10% $497.4 million, +8%
Net Earnings Attributable to
Black Knight Financial
Services, Inc.
$11.4 million $22.8 million
Net Earnings Per Share
Attributable to Black Knight
Financial Services, Inc.
$0.17 $0.34
4 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
Financial Highlights
Metrics Second Quarter First Half
Adjusted Revenues $257.5 million, +10% $501.7 million, +8%
Adjusted EBITDA $116.5 million, +14% $226.6 million, +13%
Adjusted EBITDA Margin 45.2%, +170 bps 45.2%, +210 bps
Adjusted Net Earnings from
Continuing Operations
$44.7 million, +21% $85.6 million, +19%
Adjusted Net Earnings Per
Share from Continuing
Operations
$0.29 $0.56
5 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
Technology
55.2% 57.6%
Q2 2015 Q2 2016
$191
$213
Q2 2015 Q2 2016
$376
$416
YTD 2015 YTD 2016
+240 bps Y/Y
expansion
+12% Y/Y
growth
Adjusted EBITDA Margin (%)
+11% Y/Y
growth
+250 bps Y/Y
expansion
Adjusted Revenues ($ in millions)
54.8% 57.3%
YTD 2015 YTD 2016
Servicing Technology revenue growth
driven by increased loan counts
coupled with price escalation
Origination Technology revenue
growth driven by client
implementations in the prior year,
increased transaction volumes and the
eLynx acquisition
Margin expansion driven by revenue
contribution and cost efficiencies
Second Quarter Highlights
6 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
Data and Analytics
14.6% 15.3%
Q2 2015 Q2 2016
$44 $44
Q2 2015 Q2 2016
$89 $86
YTD 2015 YTD 2016
+70 bps Y/Y
expansion
+1% Y/Y
growth
Adjusted EBITDA Margin (%)
Decrease of
3% Y/Y
Decrease of
20 bps Y/Y
Adjusted Revenues ($ in millions)
16.0% 15.8%
YTD 2015 YTD 2016
Slight increase in revenue vs. the prior
year quarter
Margin expansion of 70 basis points
Second Quarter Highlights
7 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
Capital Structure
(1) Excludes unamortized bond premium, original issue discount and debt issuance costs
($ in millions) As of 6/30/16 Maturity Interest Rate
Cash and Cash Equivalents $ 28
Revolver ($400mm) 80 2020 LIBOR + 200bps
Term A Loan 760 2020 LIBOR + 200bps
Term B Loan 396 2022 LIBOR + 300bps / 75bps floor
Senior Notes 390 2023 5.75%
Total Long-term Debt(1) $1,626
Capital Lease Obligation 10 2017 0.00%
Total Debt $1,636
Net Debt $1,608
LTM 6/30/16 Adjusted EBITDA $ 440
Total Debt / LTM Adjusted EBITDA 3.7x
Net Debt / LTM Adjusted EBITDA 3.7x
8 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
Full Year 2016 Financial Guidance
Financial Metric Guidance
Revenue and Adjusted Revenue
Growth
+ 8% to 10%
Adjusted EBITDA Growth + 10% to 12%
Adjusted Net Earnings Per Share from
Continuing Operations
$1.11 to $1.15
Full Year 2016 guidance is based upon the following estimates and assumptions:
Interest expense of ~$70 million
Depreciation and amortization expense of ~$115 million (excluding incremental depreciation and
amortization expense resulting from purchase accounting)
Fully-distributed tax rate of ~37%
Diluted weighted-average shares outstanding of ~153 million shares
CAPEX of $80 million to $90 million
9 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
Appendix
10 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
Non-GAAP Financial Measures
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 of 2016 is expected to be
approximately $7.3 million.
Adjusted EBITDA – We define Adjusted EBITDA as Net earnings from continuing operations, with adjustments to reflect the
addition or elimination of certain income statement items including, but not limited to (i) depreciation and amortization; (ii) interest
expense; (iii) income tax expense; (iv) the deferred revenue purchase accounting adjustment recorded in accordance with GAAP;
(v) equity-based compensation; (vi) charges associated with significant legal and regulatory matters; (vii) member management fees
paid to FNF and THL Managers LLC; (viii) exit costs, impairments and other charges; (ix) one-time costs associated with the initial
public offering; and (x) other expenses, net. 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 from Continuing Operations and Pro Forma Adjusted Net Earnings from Continuing Operations –
We define Adjusted Net Earnings from Continuing Operations as Net earnings from continuing operations with adjustments to reflect
the addition or elimination of certain income statement items including, but not limited to, (i) adjustments to calculate Adjusted
EBITDA as described above; (ii) adjustment for the net incremental depreciation and amortization adjustments associated with the
application of purchase accounting; (iii) non-recurring items in Other expense, net; (iv) adjustment for income tax expense at our
estimated effective tax rate, excluding noncontrolling interests; and (v) assuming the exchange of all the outstanding shares of our
Class B common stock into shares of our Class A common stock, which eliminates the noncontrolling interests in Black Knight. For
periods that include the results of operations prior to the third quarter of 2015, Pro Forma Adjusted Net Earnings from Continuing
Operations would further include pro forma adjustments to present interest expense as if the amount of debt outstanding and
applicable interest rates as a result of the debt refinancing were consistent for all periods prior to the debt refinancing.
Adjusted Net Earnings Per Share from Continuing Operations and Pro Forma Adjusted Net Earnings Per Share from
Continuing Operations – We calculate per share amounts assuming the exchange of all shares of Class B common stock into
shares of our Class A common stock at the beginning of the respective period, as well as the dilutive effect of any unvested
restricted shares of Class A common stock.
11 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
Non-GAAP Reconciliations: Adjusted Revenues and Adjusted EBITDA
Three Months Ended
June 30,
Six Months Ended
June 30,
($ in millions) 2016 2015 2016 2015
Revenues $ 255.5 $ 232.1 $ 497.4 $ 459.3
Deferred revenue adjustment 2.0 2.6 4.3 5.0
Adjusted Revenues $ 257.5 $ 234.7 $ 501.7 $ 464.3
Three Months Ended
June 30,
Six Months Ended
June 30,
LTM Ended
June 30,
($ in millions) 2016 2015 2016 2015 2016
Net earnings from continuing operations $ 33.2 $ 7.9 $ 66.3 $ 22.5 $ 126.2
Depreciation and amortization 49.2 48.8 97.4 94.7 197.0
Interest expense 16.9 25.5 33.7 56.3 67.2
Income tax expense 6.7 0.3 12.9 0.4 25.9
Other expense, net 4.0 4.6 4.8 4.6 4.8
EBITDA 110.0 87.1 215.1 178.5 421.1
Equity-based compensation 3.4 7.7 6.1 9.5 8.0
Deferred revenue adjustment 2.0 2.6 4.3 5.0 8.9
Transition and integration costs 1.1 1.4 1.1 3.6 1.1
IPO costs — 3.3 — 3.7 0.7
Adjusted EBITDA $ 116.5 $ 102.1 $ 226.6 $ 200.3 $ 439.8
Adjusted EBITDA Margin (%) 45.2% 43.5% 45.2% 43.1% 45.0%
12 Black Knight Financial Services
TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, or an affiliate. © 2016 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.
Non-GAAP Reconciliation: Adjusted Net Earnings from Continuing Operations
and Pro Forma Adjusted Net Earnings from Continuing Operations
(1) Periods prior to the third quarter of 2015 are presented on a pro forma basis.
Three Months Ended
June 30,
Six Months Ended
June 30,
($ in millions, except per share) 2016 2015 2016 2015
Net earnings from continuing operations $ 33.2 $ 7.9 $ 66.3 $ 22.5
Depreciation and amortization adjustment 20.3 22.5 40.1 43.4
Equity-based compensation 3.4 7.7 6.1 9.5
Deferred revenue adjustment 2.0 2.6 4.3 5.0
Other expense, net adjustment 4.0 4.8 4.9 4.8
Transition and integration costs 1.1 1.4 1.1 3.6
Interest expense adjustment — 8.8 — 23.3
IPO costs — 3.3 — 3.7
Income tax expense adjustment (19.3) (22.2) (37.2) (43.7)
Adjusted Net Earnings from Continuing Operations /
Pro Forma Adjusted Net Earnings from Continuing Operations (1)
$ 44.7 $ 36.8 $ 85.6 $ 72.1
Adjusted Net Earnings Per Share from Continuing Operations /
Pro Forma Adjusted Net Earnings Per Share from Continuing Operations (1)
$ 0.29 $ 0.24 $ 0.56
Weighted Average Adjusted Shares Outstanding /
Pro Forma Adjusted Shares Outstanding (1)
152.7 152.5 152.7