þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 36-4798491 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
601 Riverside Avenue, Jacksonville, Florida | 32204 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) | Emerging growth company o |
Page | |
Item 1. | Condensed Consolidated Financial Statements (Unaudited) |
June 30, 2017 | December 31, 2016 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 99.3 | $ | 133.9 | |||
Trade receivables, net | 163.6 | 155.8 | |||||
Prepaid expenses and other current assets | 58.7 | 45.4 | |||||
Receivables from related parties | 11.0 | 4.1 | |||||
Total current assets | 332.6 | 339.2 | |||||
Property and equipment, net | 170.7 | 173.0 | |||||
Computer software, net | 432.7 | 450.0 | |||||
Other intangible assets, net | 265.3 | 299.5 | |||||
Goodwill | 2,306.8 | 2,303.8 | |||||
Other non-current assets | 211.1 | 196.5 | |||||
Total assets | $ | 3,719.2 | $ | 3,762.0 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Trade accounts payable and other accrued liabilities | $ | 45.8 | $ | 55.2 | |||
Accrued compensation and benefits | 39.1 | 61.1 | |||||
Current portion of long-term debt | 55.0 | 63.4 | |||||
Deferred revenues | 47.2 | 47.4 | |||||
Total current liabilities | 187.1 | 227.1 | |||||
Deferred revenues | 91.2 | 77.3 | |||||
Deferred income taxes | 12.4 | 7.9 | |||||
Long-term debt, net of current portion | 1,499.7 | 1,506.8 | |||||
Other non-current liabilities | 2.9 | 3.5 | |||||
Total liabilities | 1,793.3 | 1,822.6 | |||||
Commitments and contingencies (Note 6) | |||||||
Equity: | |||||||
Class A common stock; $0.0001 par value; 350,000,000 shares authorized; 70,057,538 and 68,867,482 shares issued and outstanding as of June 30, 2017 and 69,091,008 shares issued and outstanding as of December 31, 2016 | — | — | |||||
Class B common stock; $0.0001 par value; 200,000,000 shares authorized, 84,612,711 and 84,826,282 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | — | — | |||||
Preferred stock; $0.0001 par value; 25,000,000 shares authorized; issued and outstanding, none | — | — | |||||
Additional paid-in capital | 816.5 | 810.8 | |||||
Retained earnings | 86.1 | 65.7 | |||||
Accumulated other comprehensive earnings (loss) | 0.1 | (0.8 | ) | ||||
Treasury stock, 1,190,056 and 0 shares as of June 30, 2017 and December 31, 2016, respectively, at cost | (46.6 | ) | — | ||||
Total shareholders' equity | 856.1 | 875.7 | |||||
Noncontrolling interests | 1,069.8 | 1,063.7 | |||||
Total equity | 1,925.9 | 1,939.4 | |||||
Total liabilities and equity | $ | 3,719.2 | $ | 3,762.0 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | $ | 262.2 | $ | 255.5 | $ | 520.3 | $ | 497.4 | |||||||
Expenses: | |||||||||||||||
Operating expenses | 142.0 | 144.4 | 287.5 | 281.2 | |||||||||||
Depreciation and amortization | 50.1 | 49.2 | 102.9 | 97.4 | |||||||||||
Transition and integration costs | 3.3 | 1.1 | 4.5 | 1.1 | |||||||||||
Total expenses | 195.4 | 194.7 | 394.9 | 379.7 | |||||||||||
Operating income | 66.8 | 60.8 | 125.4 | 117.7 | |||||||||||
Other income and expense: | |||||||||||||||
Interest expense | (14.0 | ) | (16.9 | ) | (30.7 | ) | (33.7 | ) | |||||||
Other expense, net | (14.5 | ) | (4.0 | ) | (16.5 | ) | (4.8 | ) | |||||||
Total other expense, net | (28.5 | ) | (20.9 | ) | (47.2 | ) | (38.5 | ) | |||||||
Earnings before income taxes | 38.3 | 39.9 | 78.2 | 79.2 | |||||||||||
Income tax expense | 9.1 | 6.7 | 15.1 | 12.9 | |||||||||||
Net earnings | 29.2 | 33.2 | 63.1 | 66.3 | |||||||||||
Less: Net earnings attributable to noncontrolling interests | 21.0 | 21.8 | 42.7 | 43.5 | |||||||||||
Net earnings attributable to Black Knight Financial Services, Inc. | $ | 8.2 | $ | 11.4 | $ | 20.4 | $ | 22.8 | |||||||
Other comprehensive earnings (loss): | |||||||||||||||
Unrealized holding gains (losses), net of tax | 1.4 | (0.6 | ) | 0.6 | (1.3 | ) | |||||||||
Reclassification adjustments for losses included in net earnings, net of tax (1) | 0.1 | 0.2 | 0.2 | 0.3 | |||||||||||
Total unrealized gains (losses) on interest rate swaps, net of tax (2) | 1.5 | (0.4 | ) | 0.8 | (1.0 | ) | |||||||||
Foreign currency translation adjustment | — | (0.1 | ) | 0.1 | (0.1 | ) | |||||||||
Other comprehensive earnings (loss) | 1.5 | (0.5 | ) | 0.9 | (1.1 | ) | |||||||||
Comprehensive earnings attributable to noncontrolling interests | 24.0 | 21.1 | 44.3 | 41.7 | |||||||||||
Comprehensive earnings | $ | 33.7 | $ | 32.0 | $ | 65.6 | $ | 63.4 | |||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Earnings per share: | |||||||||||||||
Net earnings per share attributable to Black Knight Financial Services, Inc., Class A common shareholders: | |||||||||||||||
Basic | $ | 0.12 | $ | 0.17 | $ | 0.30 | $ | 0.35 | |||||||
Diluted | $ | 0.11 | $ | 0.17 | $ | 0.29 | $ | 0.34 | |||||||
Weighted average shares of Class A common stock outstanding (Note 2): | |||||||||||||||
Basic | 67.7 | 65.9 | 67.7 | 65.9 | |||||||||||
Diluted | 153.0 | 152.7 | 153.0 | 152.7 |
(1) | Amounts reclassified to net earnings relate to losses on interest rate swaps and are included in Interest expense on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited). Amount is net of income tax expense of less than $0.1 million for the three months ended June 30, 2017 and $0.1 million for the three months ended June 30, 2016. Amount is net of income tax expense of $0.1 million and $0.2 million for the six months ended June 30, 2017 and 2016, respectively. |
(2) | Net of income tax expense of $0.9 million and $0.5 million for the three and six months ended June 30, 2017, respectively. Net of income tax benefit of $0.3 million and $0.6 million for the three and six months ended June 30, 2016, respectively. |
Class A common stock | Class B common stock | Treasury stock | ||||||||||||||||||||||||||||||||||||||
Shares | $ | Shares | $ | Additional paid-in capital | Retained earnings | Accumulated other comprehensive earnings (loss) | Shares | $ | Noncontrolling interests | Total equity | ||||||||||||||||||||||||||||||
Balance, December 31, 2016 | 69.1 | $ | — | 84.8 | $ | — | $ | 810.8 | $ | 65.7 | $ | (0.8 | ) | — | $ | — | $ | 1,063.7 | $ | 1,939.4 | ||||||||||||||||||||
Issuance of restricted shares of Class A common stock | 0.9 | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Exchange of Class B common stock for Class A common stock | 0.2 | — | (0.2 | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Tax withholding payments for restricted share vesting | (0.1 | ) | — | — | — | (4.3 | ) | — | — | — | — | — | (4.3 | ) | ||||||||||||||||||||||||||
Purchases of treasury stock | — | — | — | — | — | — | — | (1.2 | ) | (46.6 | ) | — | (46.6 | ) | ||||||||||||||||||||||||||
Equity-based compensation expense | — | — | — | — | 10.0 | — | — | — | — | — | 10.0 | |||||||||||||||||||||||||||||
Net earnings | — | — | — | — | — | 20.4 | — | — | — | 42.7 | 63.1 | |||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | 0.1 | — | — | 0.1 | 0.2 | |||||||||||||||||||||||||||||
Unrealized gain on interest rate swaps | — | — | — | — | — | — | 0.8 | — | — | 1.6 | 2.4 | |||||||||||||||||||||||||||||
Tax distributions to members | — | — | — | — | — | — | — | — | — | (38.3 | ) | (38.3 | ) | |||||||||||||||||||||||||||
Balance, June 30, 2017 | 70.1 | $ | — | 84.6 | $ | — | $ | 816.5 | $ | 86.1 | $ | 0.1 | (1.2 | ) | $ | (46.6 | ) | $ | 1,069.8 | $ | 1,925.9 |
Six months ended June 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 63.1 | $ | 66.3 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 102.9 | 97.4 | |||||
Amortization of debt issuance costs, bond premium and original issue discount | 1.2 | 1.4 | |||||
Loss on extinguishment of debt, net | 12.6 | — | |||||
Deferred income taxes, net | 4.5 | 1.9 | |||||
Equity-based compensation | 10.1 | 6.1 | |||||
Changes in assets and liabilities, net of acquired assets and liabilities: | |||||||
Trade and other receivables, including receivables from related parties | (16.3 | ) | (5.9 | ) | |||
Prepaid expenses and other assets | (15.1 | ) | (16.5 | ) | |||
Deferred contract costs | (25.6 | ) | (28.6 | ) | |||
Deferred revenues | 13.7 | 3.0 | |||||
Trade accounts payable and other accrued liabilities, including accrued compensation and benefits | (27.7 | ) | (2.7 | ) | |||
Net cash provided by operating activities | 123.4 | 122.4 | |||||
Cash flows from investing activities: | |||||||
Additions to property and equipment | (4.0 | ) | (17.4 | ) | |||
Additions to computer software | (26.5 | ) | (22.1 | ) | |||
Business acquisitions, net of cash acquired | — | (150.2 | ) | ||||
Net cash used in investing activities | (30.5 | ) | (189.7 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings | 400.0 | 55.0 | |||||
Senior Notes redemption | (390.0 | ) | — | ||||
Senior Notes redemption fee | (18.8 | ) | — | ||||
Debt service payments | (12.0 | ) | (97.0 | ) | |||
Distributions to members | (38.3 | ) | (48.5 | ) | |||
Purchases of treasury stock | (46.6 | ) | — | ||||
Capital lease payments | (9.0 | ) | — | ||||
Tax withholding payments for restricted share vesting | (4.3 | ) | — | ||||
Debt issuance costs | (8.5 | ) | — | ||||
Net cash used in financing activities | (127.5 | ) | (90.5 | ) | |||
Net decrease in cash and cash equivalents | (34.6 | ) | (157.8 | ) | |||
Cash and cash equivalents, beginning of period | 133.9 | 186.0 | |||||
Cash and cash equivalents, end of period | $ | 99.3 | $ | 28.2 | |||
Supplemental cash flow information: | |||||||
Interest paid | $ | (32.6 | ) | $ | (30.1 | ) | |
Income taxes paid | $ | (11.9 | ) | $ | (12.2 | ) |
(1) | Basis of Presentation |
• | Black Knight Holdings, Inc. ("BKHI"), a wholly-owned subsidiary of FNF, will contribute all of its 83.3 million shares of Black Knight Class B common stock and all of its units of BKFS LLC to New BKH in exchange for 100% of the shares of New BKH common stock; |
• | Following which BKHI will convert into a limited liability company and will then distribute to FNF all of the shares of New BKH common stock held by BKHI; |
• | Immediately thereafter, FNF will distribute the shares of New BKH common stock to its shareholders (the "Spin-off"), provided that such distribution shall be subject to the conversion of such shares of New BKH common stock into shares of New Black Knight common stock. |
• | Immediately following the Spin-off, Merger Sub One will merge with and into New BKH (the "New BKH merger"). |
• | In the New BKH merger, each outstanding share of New BKH common stock (other than shares owned by New BKH) will be exchanged for one share of New Black Knight common stock. New BKH shares owned by New BKH immediately prior to the New BKH merger shall be canceled for no consideration. |
• | Immediately following the New BKH merger, Merger Sub Two will merge with and into Black Knight (the "BKFS merger"). |
• | In the BKFS merger, each outstanding share of Black Knight Class A common stock (other than shares owned by Black Knight) will be exchanged for one share of New Black Knight common stock. Black Knight Class A shares owned by Black Knight immediately prior to the BKFS merger shall be canceled for no consideration; and |
• | New Black Knight will be the public company following the completion of the distribution and mergers. |
June 30, 2017 | December 31, 2016 | ||||||
Unrestricted: | |||||||
Cash | $ | 85.1 | $ | 129.8 | |||
Cash equivalents | 12.2 | 1.8 | |||||
Total unrestricted cash and cash equivalents | 97.3 | 131.6 | |||||
Restricted cash equivalents (1) | 2.0 | 2.3 | |||||
Total cash and cash equivalents | $ | 99.3 | $ | 133.9 |
June 30, 2017 | December 31, 2016 | ||||||
Trade receivables — billed | $ | 123.4 | $ | 115.4 | |||
Trade receivables — unbilled | 42.5 | 42.6 | |||||
Total trade receivables | 165.9 | 158.0 | |||||
Allowance for doubtful accounts | (2.3 | ) | (2.2 | ) | |||
Total trade receivables, net | $ | 163.6 | $ | 155.8 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Property and equipment | $ | 7.3 | $ | 7.3 | $ | 14.4 | $ | 14.2 | |||||||
Computer software | 20.7 | 18.6 | 41.2 | 36.9 | |||||||||||
Other intangible assets | 17.0 | 17.9 | 34.0 | 35.7 | |||||||||||
Deferred contract costs | 5.1 | 5.4 | 13.3 | 10.6 | |||||||||||
Total | $ | 50.1 | $ | 49.2 | $ | 102.9 | $ | 97.4 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Basic: | |||||||||||||||
Net earnings attributable to Black Knight | $ | 8.2 | $ | 11.4 | $ | 20.4 | $ | 22.8 | |||||||
Shares used for basic net earnings per share: | |||||||||||||||
Weighted average shares of Class A common stock outstanding | 67.7 | 65.9 | 67.7 | 65.9 | |||||||||||
Basic net earnings per share | $ | 0.12 | $ | 0.17 | $ | 0.30 | $ | 0.35 | |||||||
Diluted: | |||||||||||||||
Earnings before income taxes | $ | 38.3 | $ | 39.9 | $ | 78.2 | $ | 79.2 | |||||||
Income tax expense excluding the effect of noncontrolling interests | 20.9 | 14.0 | 33.9 | 28.0 | |||||||||||
Net earnings | $ | 17.4 | $ | 25.9 | $ | 44.3 | $ | 51.2 | |||||||
Shares used for diluted net earnings per share: | |||||||||||||||
Weighted average shares of Class A common stock outstanding | 67.7 | 65.9 | 67.7 | 65.9 | |||||||||||
Dilutive effect of unvested restricted shares of Class A common stock | 0.6 | 2.0 | 0.5 | 2.0 | |||||||||||
Weighted average shares of Class B common stock outstanding | 84.7 | 84.8 | 84.8 | 84.8 | |||||||||||
Weighted average shares of common stock, diluted | 153.0 | 152.7 | 153.0 | 152.7 | |||||||||||
Diluted net earnings per share | $ | 0.11 | $ | 0.17 | $ | 0.29 | $ | 0.34 |
June 30, 2017 | December 31, 2016 | ||||||||||
Shares | Ownership Percentage | Shares | Ownership Percentage | ||||||||
Class A common stock: | |||||||||||
THL and its affiliates | 33.8 | 22.0 | % | 39.3 | 25.5 | % | |||||
Restricted shares | 1.9 | 1.3 | % | 2.9 | 1.9 | % | |||||
Other, including those publicly traded | 33.2 | 21.6 | % | 26.9 | 17.5 | % | |||||
Total shares of Class A common stock | 68.9 | 44.9 | % | 69.1 | 44.9 | % | |||||
Class B common stock: | |||||||||||
FNF subsidiary | 83.3 | 54.3 | % | 83.3 | 54.1 | % | |||||
THL and its affiliates | 1.3 | 0.8 | % | 1.5 | 1.0 | % | |||||
Total shares of Class B common stock | 84.6 | 55.1 | % | 84.8 | 55.1 | % | |||||
Total common stock outstanding | 153.5 | 100.0 | % | 153.9 | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | $ | 17.2 | $ | 17.8 | $ | 29.4 | $ | 34.2 | |||||||
Operating expenses | 3.1 | 4.3 | 6.4 | 7.7 | |||||||||||
Guarantee fee | 0.2 | 1.0 | 1.2 | 2.0 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating expenses | $ | 0.1 | $ | 0.4 | $ | 0.2 | $ | 0.8 | |||||||
Software and software-related purchases | — | 0.2 | — | 1.1 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Data and analytics services | $ | 8.3 | $ | 11.5 | $ | 12.7 | $ | 21.9 | |||||||
Servicing, origination and default technology services | 8.9 | 6.3 | 16.7 | 12.3 | |||||||||||
Total related party revenues | $ | 17.2 | $ | 17.8 | $ | 29.4 | $ | 34.2 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Data entry, indexing services and other operating expenses | $ | 1.1 | $ | 2.6 | $ | 2.5 | $ | 4.9 | |||||||
Corporate services | 2.5 | 2.9 | 5.0 | 5.2 | |||||||||||
Technology and corporate services | (0.4 | ) | (0.8 | ) | (0.9 | ) | (1.6 | ) | |||||||
Total related party expenses, net | $ | 3.2 | $ | 4.7 | $ | 6.6 | $ | 8.5 |
June 30, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||||
Principal | Debt Issuance Costs | Discount | Total | Principal | Debt Issuance Costs | Premium (Discount) | Total | ||||||||||||||||||||||||
Term A Loan | $ | 1,030.0 | $ | (8.2 | ) | $ | — | $ | 1,021.8 | $ | 740.0 | $ | (7.0 | ) | $ | — | $ | 733.0 | |||||||||||||
Term B Loan | 392.0 | (2.7 | ) | (1.6 | ) | 387.7 | 394.0 | (3.4 | ) | (0.8 | ) | 389.8 | |||||||||||||||||||
Revolving Credit Facility | 150.0 | (4.8 | ) | — | 145.2 | 50.0 | (3.7 | ) | — | 46.3 | |||||||||||||||||||||
Senior Notes, issued at par | — | — | — | — | 390.0 | — | 11.1 | 401.1 | |||||||||||||||||||||||
Total long-term debt | 1,572.0 | (15.7 | ) | (1.6 | ) | 1,554.7 | 1,574.0 | (14.1 | ) | 10.3 | 1,570.2 | ||||||||||||||||||||
Less: Current portion of long-term debt | 55.5 | (0.5 | ) | — | 55.0 | 64.0 | (0.6 | ) | — | 63.4 | |||||||||||||||||||||
Long-term debt, net of current portion | $ | 1,516.5 | $ | (15.2 | ) | $ | (1.6 | ) | $ | 1,499.7 | $ | 1,510.0 | $ | (13.5 | ) | $ | 10.3 | $ | 1,506.8 |
2017 (remaining) | $ | 27.8 | |
2018 | 55.5 | ||
2019 | 81.3 | ||
2020 | 107.0 | ||
2021 | 132.7 | ||
Thereafter | 1,167.7 | ||
Total | $ | 1,572.0 |
Balance Sheet Account | June 30, 2017 | December 31, 2016 | ||||||
Other non-current assets | $ | 2.8 | $ | — | ||||
Other non-current liabilities | $ | 2.1 | $ | 2.2 |
Three months ended June 30, 2017 | Three months ended June 30, 2016 | ||||||||||||||
Amount of Gain Recognized in OCE | Amount of Loss Reclassified from Accumulated OCE into Net earnings | Amount of Gain (Loss) Recognized in OCE | Amount of Loss Reclassified from Accumulated OCE into Net earnings | ||||||||||||
Swap agreements | |||||||||||||||
Attributable to noncontrolling interests | $ | 2.8 | $ | 0.2 | $ | (1.0 | ) | $ | 0.3 | ||||||
Attributable to Black Knight Financial Services, Inc. | 1.4 | 0.1 | (0.6 | ) | 0.2 | ||||||||||
Total | $ | 4.2 | $ | 0.3 | $ | (1.6 | ) | $ | 0.5 |
Six months ended June 30, 2017 | Six months ended June 30, 2016 | ||||||||||||||
Amount of Gain Recognized in OCE | Amount of Loss Reclassified from Accumulated OCE into Net earnings | Amount of Loss Recognized in OCE | Amount of Loss Reclassified from Accumulated OCE into Net earnings | ||||||||||||
Swap agreements | |||||||||||||||
Attributable to noncontrolling interests | $ | 1.2 | $ | 0.4 | $ | (2.3 | ) | $ | 0.5 | ||||||
Attributable to Black Knight Financial Services, Inc. | 0.6 | 0.2 | (1.3 | ) | 0.3 | ||||||||||
Total | $ | 1.8 | $ | 0.6 | $ | (3.6 | ) | $ | 0.8 |
Shares | Weighted Averaged Grant Date Fair Value | |||||
Balance, December 31, 2016 | 2,908,374 | * | ||||
Granted | 884,570 | $ | 37.90 | |||
Forfeited | (19,163 | ) | $ | 29.35 | ||
Vested | (1,840,719 | ) | * | |||
Balance, June 30, 2017 | 1,933,062 | * |
* | The BKFS LLC profits interest units that were converted into restricted shares in connection with our initial public offering had a weighted average grant date fair value of $2.10 per unit. The fair value of the restricted shares at the date of conversion, May 20, 2015, was $24.50 per share. The original grant date fair value of the vested restricted shares, which were originally granted as profits interests units, was $2.01 per unit. |
• | Technology - offers software and hosting solutions that support loan servicing, loan origination and settlement services. |
• | Data and Analytics - offers data and analytics solutions to the mortgage, real estate and capital markets industries. These solutions include property ownership data, lien data, servicing data, automated valuation models, collateral risk scores, prepayment and default models, lead generation and other data solutions. |
Three months ended June 30, 2017 | |||||||||||||||
Technology | Data and Analytics | Corporate and Other | Total | ||||||||||||
Revenues | $ | 220.5 | $ | 42.9 | $ | (1.2 | ) | (1) | $ | 262.2 | |||||
Expenses: | |||||||||||||||
Operating expenses | 91.0 | 33.0 | 18.0 | 142.0 | |||||||||||
Transition and integration costs | — | — | 3.3 | 3.3 | |||||||||||
EBITDA | 129.5 | 9.9 | (22.5 | ) | 116.9 | ||||||||||
Depreciation and amortization | 23.5 | 3.8 | 22.8 | (2) | 50.1 | ||||||||||
Operating income (loss) | 106.0 | 6.1 | (45.3 | ) | 66.8 | ||||||||||
Interest expense | (14.0 | ) | |||||||||||||
Other expense, net | (14.5 | ) | |||||||||||||
Earnings before income taxes | 38.3 | ||||||||||||||
Income tax expense | 9.1 | ||||||||||||||
Net earnings | $ | 29.2 |
(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 June 30, 2016 | |||||||||||||||
Technology | Data and Analytics | Corporate and Other | Total | ||||||||||||
Revenues | $ | 213.2 | $ | 44.3 | $ | (2.0 | ) | (1) | $ | 255.5 | |||||
Expenses: | |||||||||||||||
Operating expenses | 90.3 | 37.5 | 16.6 | 144.4 | |||||||||||
Transition and integration costs | — | — | 1.1 | 1.1 | |||||||||||
EBITDA | 122.9 | 6.8 | (19.7 | ) | 110.0 | ||||||||||
Depreciation and amortization | 25.8 | 2.3 | 21.1 | (2) | 49.2 | ||||||||||
Operating income (loss) | 97.1 | 4.5 | (40.8 | ) | 60.8 | ||||||||||
Interest expense | (16.9 | ) | |||||||||||||
Other expense, net | (4.0 | ) | |||||||||||||
Earnings before income taxes | 39.9 | ||||||||||||||
Income tax expense | 6.7 | ||||||||||||||
Net earnings | $ | 33.2 |
(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. |
Six months ended June 30, 2017 | |||||||||||||||
Technology | Data and Analytics | Corporate and Other | Total | ||||||||||||
Revenues | $ | 441.1 | $ | 81.8 | $ | (2.6 | ) | (1) | $ | 520.3 | |||||
Expenses: | |||||||||||||||
Operating expenses | 184.7 | 66.5 | 36.3 | 287.5 | |||||||||||
Transition and integration costs | — | — | 4.5 | 4.5 | |||||||||||
EBITDA | 256.4 | 15.3 | (43.4 | ) | 228.3 | ||||||||||
Depreciation and amortization | 50.6 | 7.3 | 45.0 | (2) | 102.9 | ||||||||||
Operating income (loss) | 205.8 | 8.0 | (88.4 | ) | 125.4 | ||||||||||
Interest expense | (30.7 | ) | |||||||||||||
Other expense, net | (16.5 | ) | |||||||||||||
Earnings before income taxes | 78.2 | ||||||||||||||
Income tax expense | 15.1 | ||||||||||||||
Net earnings | $ | 63.1 | |||||||||||||
Balance sheet data: | |||||||||||||||
Total assets | $ | 3,182.2 | $ | 352.6 | $ | 184.4 | $ | 3,719.2 | |||||||
Goodwill | $ | 2,115.0 | $ | 191.8 | $ | — | $ | 2,306.8 |
(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. |
Six months ended June 30, 2016 | |||||||||||||||
Technology | Data and Analytics | Corporate and Other | Total | ||||||||||||
Revenues | $ | 415.6 | $ | 86.1 | $ | (4.3 | ) | (1) | $ | 497.4 | |||||
Expenses: | |||||||||||||||
Operating expenses | 177.3 | 72.5 | 31.4 | 281.2 | |||||||||||
Transition and integration costs | — | — | 1.1 | 1.1 | |||||||||||
EBITDA | 238.3 | 13.6 | (36.8 | ) | 215.1 | ||||||||||
Depreciation and amortization | 51.2 | 4.4 | 41.8 | (2) | 97.4 | ||||||||||
Operating income (loss) | 187.1 | 9.2 | (78.6 | ) | 117.7 | ||||||||||
Interest expense | (33.7 | ) | |||||||||||||
Other expense, net | (4.8 | ) | |||||||||||||
Earnings before income taxes | 79.2 | ||||||||||||||
Income tax expense | 12.9 | ||||||||||||||
Net earnings | $ | 66.3 | |||||||||||||
Balance sheet data: | |||||||||||||||
Total assets | $ | 3,240.8 | $ | 352.9 | $ | 110.1 | $ | 3,703.8 | |||||||
Goodwill | $ | 2,106.1 | $ | 191.5 | $ | — | $ | 2,297.6 |
(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. |
• | our ability to successfully achieve the conditions to and consummate the tax-free spin-off of Black Knight from Fidelity National Financial, Inc. ("FNF"); |
• | uncertainties as to the timing of the spin-off of Black Knight from FNF and any costs, expenses and utilization of resources relating thereto; |
• | the risk of shareholder litigation in connection with the spin-off; |
• | diversion of Black Knight management's time and attention in connection with the spin-off; |
• | 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; |
• | 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 "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of our Annual Report on Form 10-K for the year ended December 31, 2016 and other filings with the Securities and Exchange Commission ("SEC"). |
First lien mortgages | Second lien mortgages | ||||||||||||
as of June 30, | as of June 30, | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Active loans | 31.4 | 31.3 | 2.0 | 1.1 | |||||||||
Market size | 50.8 | (1) | 50.7 | (1) | 15.4 | (2) | 15.8 | (2) | |||||
Market share | 62 | % | 62 | % | 13 | % | 7 | % |
(1) | According to the May Black Knight Mortgage Monitor Report as of May 31, 2017 and 2016 for U.S. first lien mortgages. |
(2) | According to the May 2017 Equifax National Consumer Credit Trends Report as of March 31, 2017 and June 30, 2016 for U.S. second lien mortgages. |
• | Data and Analytics - offers data and analytics solutions to the mortgage, real estate and capital markets industries. These solutions include property ownership data, lien data, servicing data, automated valuation models, collateral risk scores, prepayment and default models, lead generation and other data solutions. |
• | Evolving regulation. Most U.S. mortgage market participants have become subject to increased regulatory oversight and regulatory requirements as federal and state governments have enacted various new laws, rules and regulations. One |
• | Lenders increasingly focused on core operations. As a result of greater regulatory scrutiny and the higher cost of doing business, we believe lenders have become more focused on their core operations and customers. We believe that lenders are increasingly shifting from in-house technologies to solutions with third-party providers who can provide better technology and services more efficiently. Lenders require these vendors to provide best-in-class technology and deep domain expertise and to assist them in maintaining regulatory compliance. |
• | Growing role of technology in the U.S. mortgage industry. Banks and other lenders and servicers have become increasingly focused on technology automation and workflow management to operate more efficiently and meet their regulatory guidelines. We believe that vendors must be able to support the complexity of the market, display extensive industry knowledge and possess the financial resources to make the necessary investments in technology to support lenders. |
• | Increased demand for enhanced transparency and analytic insight. As U.S. mortgage market participants work to minimize the risk in lending, servicing and capital markets, they rely on the integration of data and analytics with technologies that enhance the decision making process. These industry participants rely on large comprehensive third party databases coupled with enhanced analytics to achieve these goals. |
• | 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. |
• | 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 planned tax-free spin-off of Black Knight from FNF; |
◦ | spin-off related transition costs; and |
◦ | acquisition-related costs. |
• | Adjusted EBITDA Margin - Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by Adjusted Revenues. |
Consolidated Results of Operations | |||||||||||||||
The following table presents certain financial data for the periods indicated (in millions): | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | $ | 262.2 | $ | 255.5 | $ | 520.3 | $ | 497.4 | |||||||
Expenses: | |||||||||||||||
Operating expenses | 142.0 | 144.4 | 287.5 | 281.2 | |||||||||||
Depreciation and amortization | 50.1 | 49.2 | 102.9 | 97.4 | |||||||||||
Transition and integration costs | 3.3 | 1.1 | 4.5 | 1.1 | |||||||||||
Total expenses | 195.4 | 194.7 | 394.9 | 379.7 | |||||||||||
Operating income | 66.8 | 60.8 | 125.4 | 117.7 | |||||||||||
Operating margin | 25.5 | % | 23.8 | % | 24.1 | % | 23.7 | % | |||||||
Interest expense | (14.0 | ) | (16.9 | ) | (30.7 | ) | (33.7 | ) | |||||||
Other expense, net | (14.5 | ) | (4.0 | ) | (16.5 | ) | (4.8 | ) | |||||||
Earnings before income taxes | 38.3 | 39.9 | 78.2 | 79.2 | |||||||||||
Income tax expense | 9.1 | 6.7 | 15.1 | 12.9 | |||||||||||
Net earnings | $ | 29.2 | $ | 33.2 | $ | 63.1 | $ | 66.3 | |||||||
Key Performance Metrics (Non-GAAP) | |||||||||||||||
Adjusted Revenues | $ | 263.4 | $ | 257.5 | $ | 522.9 | $ | 501.7 | |||||||
Adjusted EBITDA | $ | 126.3 | $ | 116.5 | $ | 245.7 | $ | 226.6 | |||||||
Adjusted EBITDA Margin | 47.9 | % | 45.2 | % | 47.0 | % | 45.2 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | $ | 262.2 | $ | 255.5 | $ | 520.3 | $ | 497.4 | |||||||
Deferred revenue purchase accounting adjustment | 1.2 | 2.0 | 2.6 | 4.3 | |||||||||||
Adjusted Revenues | $ | 263.4 | $ | 257.5 | $ | 522.9 | $ | 501.7 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net earnings | $ | 29.2 | $ | 33.2 | $ | 63.1 | $ | 66.3 | |||||||
Depreciation and amortization | 50.1 | 49.2 | 102.9 | 97.4 | |||||||||||
Interest expense | 14.0 | 16.9 | 30.7 | 33.7 | |||||||||||
Income tax expense | 9.1 | 6.7 | 15.1 | 12.9 | |||||||||||
Other expense, net | 14.5 | 4.0 | 16.5 | 4.8 | |||||||||||
EBITDA | 116.9 | 110.0 | 228.3 | 215.1 | |||||||||||
Deferred revenue purchase accounting adjustment | 1.2 | 2.0 | 2.6 | 4.3 | |||||||||||
Equity-based compensation | 4.9 | 3.4 | 10.3 | 6.1 | |||||||||||
Debt and/or equity offering expenses | 2.2 | 0.1 | 3.4 | 0.1 | |||||||||||
Spin-off related transition costs | 1.1 | — | 1.1 | — | |||||||||||
Acquisition-related costs | — | 1.0 | — | 1.0 | |||||||||||
Adjusted EBITDA | $ | 126.3 | $ | 116.5 | $ | 245.7 | $ | 226.6 | |||||||
Adjusted EBITDA Margin | 47.9 | % | 45.2 | % | 47.0 | % | 45.2 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Technology | $ | 220.5 | $ | 213.2 | $ | 441.1 | $ | 415.6 | |||||||
Data and Analytics | 42.9 | 44.3 | 81.8 | 86.1 | |||||||||||
Corporate and Other (1) | (1.2 | ) | (2.0 | ) | (2.6 | ) | (4.3 | ) | |||||||
Total | $ | 262.2 | $ | 255.5 | $ | 520.3 | $ | 497.4 |
(1) | Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Technology | $ | 91.0 | $ | 90.3 | $ | 184.7 | $ | 177.3 | |||||||
Data and Analytics | 33.0 | 37.5 | 66.5 | 72.5 | |||||||||||
Corporate and Other | 18.0 | 16.6 | 36.3 | 31.4 | |||||||||||
Total | $ | 142.0 | $ | 144.4 | $ | 287.5 | $ | 281.2 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Technology | $ | 23.5 | $ | 25.8 | $ | 50.6 | $ | 51.2 | |||||||
Data and Analytics | 3.8 | 2.3 | 7.3 | 4.4 | |||||||||||
Corporate and Other (1) | 22.8 | 21.1 | 45.0 | 41.8 | |||||||||||
Total | $ | 50.1 | $ | 49.2 | $ | 102.9 | $ | 97.4 |
(1) | 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 June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Technology | $ | 106.0 | $ | 97.1 | $ | 205.8 | $ | 187.1 | |||||||
Data and Analytics | 6.1 | 4.5 | 8.0 | 9.2 | |||||||||||
Corporate and Other | (45.3 | ) | (40.8 | ) | (88.4 | ) | (78.6 | ) | |||||||
Total | $ | 66.8 | $ | 60.8 | $ | 125.4 | $ | 117.7 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Technology | $ | 129.5 | $ | 122.9 | $ | 256.4 | $ | 238.3 | |||||||
Data and Analytics | 9.9 | 6.8 | 15.3 | 13.6 | |||||||||||
Corporate and Other | (13.1 | ) | (13.2 | ) | (26.0 | ) | (25.3 | ) | |||||||
Total | $ | 126.3 | $ | 116.5 | $ | 245.7 | $ | 226.6 |
Three months ended June 30, | Six months ended June 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Technology | 58.7 | % | 57.6 | % | 58.1 | % | 57.3 | % | |||
Data and Analytics | 23.1 | % | 15.3 | % | 18.7 | % | 15.8 | % | |||
Corporate and Other | N/A | N/A | N/A | N/A | |||||||
Total | 47.9 | % | 45.2 | % | 47.0 | % | 45.2 | % |
Six months ended June 30, | ||||||||
2017 | 2016 | |||||||
Cash flows provided by operating activities | $ | 123.4 | $ | 122.4 | ||||
Cash flows used in investing activities | (30.5 | ) | (189.7 | ) | ||||
Cash flows used in financing activities | (127.5 | ) | (90.5 | ) | ||||
Net decrease in cash and cash equivalents | $ | (34.6 | ) | $ | (157.8 | ) |
Payments due by period | ||||||||||||||||||||
Total | 2017 | 2018-2019 | 2020-2021 | Thereafter | ||||||||||||||||
Long-term debt | $ | 1,572.0 | $ | 27.8 | $ | 136.8 | $ | 239.7 | $ | 1,167.7 | ||||||||||
Interest on long-term debt (1) | 219.0 | 25.4 | 96.9 | 87.1 | 9.6 | |||||||||||||||
Total | $ | 1,791.0 | $ | 53.2 | $ | 233.7 | $ | 326.8 | $ | 1,177.3 |
(1) | These calculations include the effect of our interest rate swaps and assume that (a) applicable margins remain constant; (b) the Term A Loan, Term B Loan and Revolving Credit Facility variable rate debt is priced at the one-month LIBOR rate in effect as of June 30, 2017; (c) only mandatory debt repayments are made; and (d) no refinancing occurs at debt maturity. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program (1) | Maximum Number of Shares That May Yet Be Purchased Under the Program (2) | |||||||||
4/1/2017 - 4/30/2017 | — | $ | — | — | 10,000,000 | ||||||||
5/1/2017 - 5/31/2017 | 416,462 | 39.00 | 416,462 | 9,583,538 | |||||||||
6/1/2017 - 6/30/2017 | 773,659 | 39.28 | 773,659 | 8,809,879 | |||||||||
Total | 1,190,121 | $ | 39.18 | 1,190,121 |
(1) | On January 31, 2017, our Board of Directors authorized a three-year share repurchase program, effective February 3, 2017, under which the Company may repurchase up to 10 million shares of its Class A common stock through February 2, 2020. |
(2) | As of the last day of the applicable month. |
2.1 | Agreement and Plan of Merger, dated as of June 8, 2017, by and among New BKH Corp., Black Knight Financial Services, Inc., Black Knight Holdco Corp., New BKH Merger Sub, Inc., BKFS Merger Sub, Inc. and Fidelity National Financial, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed by Black Knight Financial Services, Inc. on June 9, 2017 (No. 001-37394)) | |
10.1 | Interest Exchange Agreement, dated as of June 8, 2017, by and among Black Knight Financial Services, Inc., Black Knight Holdco Corp., THL Equity Fund VI Investors (BKFS-LM), LLC and THL Equity Fund VI Investors (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Black Knight Financial Services, Inc. on June 9, 2017 (No. 001-37394)) | |
10.2 | Amended and Restated Employment Agreement by and between Joseph M. Nackashi and BKFS I Management, Inc. effective July 17, 2017 | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. | |
32.2 | Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. | |
101 | Interactive data files. |
Date: | July 28, 2017 | BLACK KNIGHT FINANCIAL SERVICES, INC. (registrant) | ||
By: | /s/ Kirk T. Larsen | |||
Kirk T. Larsen | ||||
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit | ||
No. | Description | |
2.1 | Agreement and Plan of Merger, dated as of June 8, 2017, by and among New BKH Corp., Black Knight Financial Services, Inc., Black Knight Holdco Corp., New BKH Merger Sub, Inc., BKFS Merger Sub, Inc. and Fidelity National Financial, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed by Black Knight Financial Services, Inc. on June 9, 2017 (No. 001-37394)) | |
10.1 | Interest Exchange Agreement, dated as of June 8, 2017, by and among Black Knight Financial Services, Inc., Black Knight Holdco Corp., THL Equity Fund VI Investors (BKFS-LM), LLC and THL Equity Fund VI Investors (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Black Knight Financial Services, Inc. on June 9, 2017 (No. 001-37394)) | |
10.2 | Amended and Restated Employment Agreement by and between Joseph M. Nackashi and BKFS I Management, Inc. effective July 17, 2017 | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. | |
32.2 | Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. | |
101 | Interactive data files. |
(a) | Benefits. Employee shall be eligible to receive standard medical and other insurance coverage (for Employee and any covered dependents) provided by the Company or an affiliate to employees generally; and |
(b) | Annual Bonus Opportunity. Employee shall be eligible to receive an annual incentive bonus opportunity under the Black Knight Financial Services, Inc. incentive plan for each calendar year included in the Employment Term during which Employee is an employee of the Company, with such opportunity to be earned based upon attainment of performance objectives established by the Company, Black Knight Financial Services, Inc. or the Compensation Committee of Black Knight Financial Services, Inc. ("Annual Bonus"). Employee's target Annual Bonus shall is 100% of Employee’s Annual Base Salary and maximum Annual Bonus is 200% of Employee’s Annual Base Salary. Employee’s Annual Bonus is subject to the clawback policy of Black Knight Financial Services, Inc., pursuant to which Black Knight Financial Services Inc. may recoup all or a portion of any bonus paid if, after payment, there is a finding of fraud, a restatement of financial results, or errors or omissions that negatively affects or calls into question the business results on which the bonus was based. If owed pursuant to the terms of the plan, the Annual Bonus shall be paid no later than the March 15th first following the calendar year to which the Annual Bonus relates. Except as otherwise provided herein or if the Company, Black Knight Financial Services Inc. or the Compensation Committee of Black Knight Financial Services Inc. determines otherwise, no Annual Bonus shall be paid to Employee unless Employee is employed by the Company on the last day of the measurement period. |
(a) | Notice of Termination. Any purported termination of Employee's employment (other than by reason of death) shall be communicated by written Notice of Termination (as defined herein) from one party to the other in accordance with the notice provisions contained in this Agreement. For purposes of this Agreement, a "Notice of Termination" shall mean a notice that indicates the "Date of Termination" and, with respect to a termination due to "Cause", "Disability" or "Good Reason", sets forth in reasonable detail the facts and circumstances that are alleged to provide a basis for such termination. A Notice of Termination from the Company shall specify whether the termination is with or without Cause or due to Employee's Disability. A Notice of Termination from Employee shall specify whether the termination is with or without Good Reason. |
(b) | Date of Termination. For purposes of this Agreement, "Date of Termination" shall mean the date specified in the Notice of Termination (but in no event shall such date be earlier than the fourteenth (14th) day following the date the Notice of Termination is given) or the date of Employee's death. If the Company disagrees with an Employee’s designated Date of Termination, the Company shall have the right to set an alternative earlier final Date of Termination, which, in and of itself, shall not change the characterization of the termination (e.g., from an Employee Termination Without Good Reason to a Company Termination Without Cause). |
(c) | No Waiver. The failure to set forth any fact or circumstance in a Notice of Termination, which fact or circumstance was not known to the party giving the Notice of Termination when the notice was given, shall not constitute a waiver of the right to assert such fact or circumstance in an attempt to enforce any right under or provision of this Agreement. |
(d) | Cause. For purposes of this Agreement, a termination for "Cause" means a termination by the Company based upon Employee's: (i) persistent failure to perform duties consistent with a commercially reasonable standard of care (other than due to a physical or mental impairment or due to an action or inaction directed by the Company that would otherwise constitute Good Reason); (ii) willful neglect of duties (other than due to a physical or mental impairment or due to an action or inaction directed by the Company that would otherwise constitute Good Reason); (iii) conviction of, or pleading nolo contendere to, criminal or other illegal activities involving dishonesty or moral turpitude; (iv) material breach of this Agreement; (v) material breach of the Company's, Black Knight Financial Services Inc.’s business policies, accounting practices or standards of ethics; (vi) material breach of any applicable non-competition, non-solicitation, trade secrets, confidentiality or similar |
(e) | Disability. For purposes of this Agreement, a termination based upon "Disability" means a termination by the Company based upon Employee's entitlement to long-term disability benefits under the Company's long-term disability plan or policy, as the case may be, as in effect on the Date of Termination. |
(f) | Good Reason. For purposes of this Agreement, a termination for "Good Reason" means a termination by Employee based upon the occurrence (without Employee's express written consent) of any of the following: |
(i) | The Company causes a material change in the geographic location of Employee's principal working location, which the Company has determined to be a relocation of more than thirty-five (35) miles; |
(ii) | The Company causes a material diminution in Employee's title, Annual Base Salary or Annual Bonus cap; or |
(iii) | The Company materially breaches any of its obligations under this Agreement. |
(a) | Termination by the Company for a Reason Other than Cause, Death or Disability and Termination by Employee for Good Reason. If Employee's employment is terminated during the Employment Term by: (1) the Company for any reason other than Cause, Death or Disability; or (2) Employee for Good Reason: |
(i) | The Company shall pay Employee the following (collectively, the "Accrued Obligations"): (A) within five (5) business days after the Date of Termination, any earned but unpaid Annual Base Salary; (B) within a reasonable time following submission of all applicable documentation, any expense |
(ii) | The Company shall pay Employee no later than March 15th of the calendar year following the year in which the Date of Termination occurs, a prorated Annual Bonus based upon the actual Annual Bonus that would have been earned by Employee for the year in which the Date of Termination occurs, ignoring any requirement under the incentive plan that Employee must be employed on the payment date (using Employee's Annual Bonus Opportunity for the prior year if no Annual Bonus Opportunity has been approved for the year in which the Date of Termination occurs), multiplied by the percentage of the calendar year completed before the Date of Termination; and |
(iii) | Subject to Section 26(b) hereof, the Company shall pay Employee as soon as practicable, but not later than the sixty-fifth (65th) day after the Date of Termination, a lump-sum payment equal to 200% of the sum of Employee's (A) Annual Base Salary in effect immediately prior to the Date of Termination (disregarding any reduction in Annual Base Salary to which Employee did not expressly consent in writing), and (B) target Annual Bonus in the year in which the Date of Termination occurs. |
(b) | Termination by the Company for Cause and by Employee without Good Reason. If Employee's employment is terminated during the Employment Term by the Company for Cause or by Employee without Good Reason, the Company's only obligation under this Agreement shall be payment of any Accrued Obligations. |
(c) | Termination due to Death or Disability. If Employee’s employment is terminated during the Employment Term due to death or Disability, the Company shall pay Employee (or to Employee’s estate or personal representative in the case of death), as soon as practicable, but not later than the sixty-fifth (65th) day after the Date of Termination: (i) any Accrued Obligations; plus (ii) the amount of Employee’s accrued Annual Bonus as contained on the internal books of the Company for the month in which the Date of Termination occurs. Additionally, subject to Section 27(b) hereof, all stock option, restricted stock, profits interest and other equity-based incentive awards granted by the Company that were outstanding but not vested as of the Date of Termination shall become immediately vested and/or payable. |
12. | Non-Competition. |
(a) | During Employment Term. During the Employment Term Employee will devote such business time, attention and energies reasonably necessary to the diligent and faithful performance of the services to the Company and its affiliates, and will not engage in any way whatsoever, directly or indirectly, in any business that is a direct competitor with the Company's or its affiliates' principal business, nor solicit customers, suppliers or employees of the Company or its affiliates on behalf of, or in any other manner work for or assist any business which is a direct competitor with the Company's or its affiliates' principal business. In addition, during the Employment Term, Employee will undertake no planning for or organization of any business activity competitive with the work performed as an employee of the Company, and Employee will not combine or conspire with any other employee of the Company or any other person for the purpose of organizing any such competitive business activity. |
(b) | After Employment Term. The parties acknowledge that Employee will acquire substantial knowledge and information concerning the business of the Company and its affiliates as a result of employment. The parties further acknowledge that the |
(c) | Notice to Prospective Employers. Employee agrees that, with respect to each prospective employer with which Employee applies or interviews for employment during the term of Employee’s employment with the Company and within one year after the termination of the Employee’s employment with the Company, Employee will inform the prospective employer of the existence of this Agreement and will provide the prospective employer with a copy of this Agreement. |
(a) | Withholding. The Company or an affiliate thereof may deduct from all compensation and benefits payable under this Agreement any taxes or withholdings the Company is required to deduct pursuant to state, federal or local laws. |
(b) | Section 409A. This Agreement and any payment, distribution or other benefit hereunder shall comply with the requirements of Section 409A of the Code, as well as any related regulations or other guidance promulgated by the U.S. Department of the Treasury or the Internal Revenue Service ("Section 409A"), to the extent applicable. To the extent Employee is a "specified employee" under Section 409A, no payment, distribution or other benefit described in this Agreement constituting a distribution of deferred compensation (within the meaning of Treasury Regulation Section 1.409A-1(b)) to be paid during the six-month period following a separation from service (within the meaning of Treasury Regulation Section 1.409A-1(h)) will be made during such six-month period. Instead, any such deferred compensation shall be paid on the first business day following the six-month anniversary of the separation from service. In no event may Employee, directly or indirectly, designate the calendar year of a payment. To the extent the payment of any amount pursuant to Section 9 of this Agreement constitutes deferred compensation (within the meaning of Treasury Regulation Section 1.409A-1(b)) and such amount is payable within a number of days (e.g., no later than the sixty-fifth (65th) day after the Date of Termination) that begins in one calendar year and ends in a subsequent calendar year, such amount shall be paid in the subsequent calendar year. Any provision that would cause this Agreement or a payment, distribution or other benefit hereunder to fail to satisfy the requirements of Section 409A shall have no force or effect and, to the extent an amendment would be effective for purposes of Section 409A, the parties agree that this Agreement shall be amended to comply with Section 409A. Such amendment shall be retroactive to the extent permitted by Section 409A. For purposes of this Agreement, Employee shall not be deemed to have terminated |
(c) | Excise Taxes. If any payments or benefits paid or provided or to be paid or provided to Employee or for Employee’s benefit pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, employment with the Company or its subsidiaries or the termination thereof (a "Payment" and, collectively, the "Payments") would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then Employee may elect for such Payments to be reduced to one dollar less than the amount that would constitute a "parachute payment" under Section 280G of the Code (the "Scaled Back Amount"). Any such election must be in writing and delivered to the Company within thirty (30) days after the Date of Termination. If Employee does not elect to have Payments reduced to the Scaled Back Amount, Employee shall be responsible for payment of any Excise Tax resulting from the Payments and Employee shall not be entitled to a gross-up payment under this Agreement or any other for such Excise Tax. If the Payments are to be reduced, they shall be reduced in the following order of priority: (i) first from cash compensation, (ii) next from equity compensation, then (iii) pro-rated among all remaining payments and benefits. To the extent there is a question as to which Payments within any of the foregoing categories are to be reduced first, the Payments that will produce the greatest present value reduction in the Payments with the least reduction in economic value provided to Employee shall be reduced first. |
BKFS I MANAGEMENT, INC. | ||
By: | /s/ Thomas J. Sanzone | |
Its: | Chief Executive Officer | |
JOSEPH M. NACKASHI | ||
/s/ Joseph M. Nackashi |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ Thomas J. Sanzone | |
Thomas J. Sanzone Chief Executive Officer |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ Kirk T. Larsen | |
Kirk T. Larsen Executive Vice President and Chief Financial Officer |
1. | The periodic report containing financial statements to which this certificate is an exhibit fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934. |
2. | The information contained in the periodic report to which this certificate is an exhibit fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ Thomas J. Sanzone | |
Thomas J. Sanzone | ||
Chief Executive Officer |
1. | The periodic report containing financial statements to which this certificate is an exhibit fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934. |
2. | The information contained in the periodic report to which this certificate is an exhibit fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ Kirk T. Larsen | |
Kirk T. Larsen | ||
Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
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Jun. 30, 2017 |
Jul. 27, 2017 |
|
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | Black Knight Financial Services, Inc. | |
Entity Central Index Key | 0001627014 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Common Class A [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 68,839,048 | |
Common Class B [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 84,612,711 |
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Related party prepaid fees | $ 58.7 | $ 45.4 |
Long-term debt, net of current portion | $ 1,499.7 | $ 1,506.8 |
Common stock, shares outstanding | 153,500,000 | 153,900,000 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury stock, shares | 1,190,056 | 0 |
Common Class A [Member] | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 350,000,000 | 350,000,000 |
Common stock, share issued | 70,057,538 | 69,091,008 |
Common stock, shares outstanding | 68,867,482 | 69,091,008 |
Common Class B [Member] | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, share issued | 84,612,711 | 84,826,282 |
Common stock, shares outstanding | 84,612,711 | 84,826,282 |
Condensed Consolidated Statements of Operations and Comprehensive Earnings - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | |||||||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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Revenues | $ 262.2 | $ 255.5 | $ 520.3 | $ 497.4 | |||||
Expenses: | |||||||||
Operating expenses | 142.0 | 144.4 | 287.5 | 281.2 | |||||
Depreciation and amortization | 50.1 | 49.2 | 102.9 | 97.4 | |||||
Transition and integration costs | 3.3 | 1.1 | 4.5 | 1.1 | |||||
Total expenses | 195.4 | 194.7 | 394.9 | 379.7 | |||||
Operating income (loss) | 66.8 | 60.8 | 125.4 | 117.7 | |||||
Other income and expense: | |||||||||
Interest expense | (14.0) | (16.9) | (30.7) | (33.7) | |||||
Other expense, net | (14.5) | (4.0) | (16.5) | (4.8) | |||||
Total other expense, net | (28.5) | (20.9) | (47.2) | (38.5) | |||||
Earnings before income taxes | 38.3 | 39.9 | 78.2 | 79.2 | |||||
Income tax expense | 9.1 | 6.7 | 15.1 | 12.9 | |||||
Net earnings | 29.2 | 33.2 | 63.1 | 66.3 | |||||
Less: Net earnings attributable to noncontrolling interests | 21.0 | 21.8 | 42.7 | 43.5 | |||||
Net earnings attributable to Black Knight Financial Services, Inc. | 8.2 | 11.4 | 20.4 | 22.8 | |||||
Unrealized holding gains (losses), net of tax | 1.4 | (0.6) | 0.6 | (1.3) | |||||
Reclassification adjustments for losses included in net earnings, net of tax | [1] | 0.1 | 0.2 | 0.2 | 0.3 | ||||
Total unrealized gains (losses) on interest rate swaps, net of tax | [2] | 1.5 | (0.4) | 0.8 | (1.0) | ||||
Foreign currency translation adjustment | 0.0 | (0.1) | 0.1 | (0.1) | |||||
Other comprehensive earnings (loss) | 1.5 | (0.5) | 0.9 | (1.1) | |||||
Comprehensive earnings attributable to noncontrolling interests | 24.0 | 21.1 | 44.3 | 41.7 | |||||
Comprehensive earnings | 33.7 | 32.0 | 65.6 | 63.4 | |||||
Weighted average shares of Class A common stock outstanding (Note 2): | |||||||||
Reclassification adjustment from AOCI on derivatives, tax | 0.1 | 0.1 | 0.1 | 0.2 | |||||
Derivatives qualifying as hedges, tax | $ 0.9 | $ 0.3 | $ 0.5 | $ 0.6 | |||||
Common Class A [Member] | |||||||||
Net earnings per share attributable to Black Knight Financial Services, Inc., Class A common shareholders: | |||||||||
Basic (in dollars per share) | $ 0.12 | $ 0.17 | $ 0.30 | $ 0.35 | |||||
Diluted (in dollars per share) | $ 0.11 | $ 0.17 | $ 0.29 | $ 0.34 | |||||
Weighted average shares of Class A common stock outstanding (Note 2): | |||||||||
Basic (in shares) | 67.7 | 65.9 | 67.7 | 65.9 | |||||
Diluted (in shares) | 153.0 | 152.7 | 153.0 | 152.7 | |||||
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Basis of Presentation |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying Condensed Consolidated Financial Statements (Unaudited) were prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), and all adjustments considered necessary for a fair presentation have been included. All significant intercompany accounts and transactions have been eliminated. The preparation of these Condensed Consolidated Financial Statements (Unaudited) in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements (Unaudited), as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission ("SEC") on February 24, 2017. Description of Business Black Knight, a majority-owned subsidiary of Fidelity National Financial, Inc. ("FNF"), is a holding company that conducts business through our interest in Black Knight Financial Services, LLC ("BKFS LLC"), our sole asset and a provider of integrated technology, data and analytics solutions that facilitates and automates many of the business processes across the mortgage lifecycle. We believe we differentiate ourselves by the breadth and depth of our comprehensive, integrated solutions and the insight we provide to our clients. Reporting Segments We conduct our operations through two reporting segments: (1) Technology and (2) Data and Analytics. See further discussion in Note 8 — Segment Information. Consolidation BKFS LLC is subject to the consolidation guidance related to variable interest entities as set forth in Accounting Standards Codification ("ASC") Topic 810, Consolidation ("ASC 810"). Black Knight, as the sole managing member of BKFS LLC, has the exclusive authority to manage, control and operate the business and affairs of BKFS LLC and its subsidiaries, pursuant to the terms of the Second Amended and Restated Limited Liability Company Agreement ("LLC Agreement"). Under the terms of the LLC Agreement, Black Knight is authorized to manage the business of BKFS LLC, including the authority to enter into contracts, manage bank accounts, hire employees and agents, incur and pay debts and expenses, merge or consolidate with other entities and pay taxes. Because Black Knight is the primary beneficiary through its sole managing member interest and possesses the rights established in the LLC Agreement, in accordance with the requirements of ASC 810, Black Knight controls BKFS LLC and appropriately consolidates the operations thereof. We account for noncontrolling interests in accordance with ASC 810. Our Class A shareholders indirectly control BKFS LLC through our managing member interest. Our Class B shareholders have a noncontrolling interest in BKFS LLC. Their share of equity in BKFS LLC is reflected in Noncontrolling interests in our Condensed Consolidated Balance Sheets (Unaudited) and their share of net earnings or loss in BKFS LLC is reported in Net earnings attributable to noncontrolling interests in our Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited). Net earnings attributable to noncontrolling interests do not include expenses incurred directly by Black Knight, including income tax expense attributable to Black Knight. Planned Distribution of FNF's Ownership Interest On December 7, 2016, we announced that FNF's Board of Directors approved a tax-free plan (the "Distribution Plan") whereby FNF intends to distribute all 83.3 million shares of Black Knight common stock that it currently owns to FNF Group shareholders. We expect the Distribution Plan to be effectuated through four newly-formed corporations, New BKH Corp. ("New BKH"), Black Knight Holdco Corp. ("New Black Knight"), New BKH Merger Sub, Inc. ("Merger Sub One") and BKFS Merger Sub, Inc. ("Merger Sub Two") as follows:
The Distribution Plan is subject to the filing and acceptance of registration statements relating to the Black Knight spin-off with the SEC; Black Knight shareholder approval; and other customary closing conditions. Significant progress was made on the planned distribution of FNF's ownership interest in Black Knight during the second quarter, with several milestones achieved. FNF announced the receipt of the private letter ruling from the Internal Revenue Service ("IRS") approving certain aspects relating to the tax-free spin-off of the Black Knight shares on May 10, 2017, formal agreements with FNF were signed on June 8, 2017, preliminary Registration Statements on Forms S-4 and S-1 were filed with the SEC on June 13, 2017 and June 21, 2017, respectively, comments from the SEC were received on July 10, 2017 and Amendment No. 1 to Forms S-1 and S-4 were filed with the SEC on July 18, 2017. Once the SEC declares the Registration Statements on Forms S-1 and S-4 effective, the proxy statement/prospectus will be mailed to shareholders and the shareholder vote will be held at the earliest twenty business days after the mailing. We still expect a third quarter closing for the distribution. Realignment of Property Insight Effective January 1, 2017, Property Insight, LLC ("Property Insight"), a 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. This transaction did not result in any gain or loss. Share Repurchase Program On January 31, 2017, our Board of Directors authorized a three-year share repurchase program, effective February 3, 2017, under which the Company may repurchase up to 10 million shares of its Class A common stock. The timing and volume of share repurchases will be determined by our management based on ongoing assessments of the capital needs of the business, the market price of Black Knight common stock and general market conditions. The repurchase program authorizes us to purchase Black Knight common stock from time to time through February 2, 2020, through open market purchases, negotiated transactions or other means, in accordance with applicable securities laws and other restrictions. During the three months ended June 30, 2017, we repurchased approximately 1.2 million shares of our Class A common stock for $46.6 million, or an average of $39.18 per share. At the end of the second quarter, we had approximately 8.8 million shares remaining under our share repurchase program. THL Secondary Offering On May 8, 2017, Black Knight announced the pricing of an underwritten secondary offering of 5,000,000 shares of its Class A common stock (the “Offering”) by affiliates of Thomas H. Lee Partners, L.P. (“THL”) pursuant to a shelf registration statement on Form S-3 filed with the SEC on May 8, 2017. Affiliates of THL in the Offering granted the underwriter an option to purchase up to 750,000 additional shares (the “Overallotment Option"). The Offering closed on May 12, 2017, and the full exercise of the Overallotment Option closed on May 18, 2017. The Company did not sell any shares and did not receive any proceeds related to the Offering or Overallotment Option. See Note 3 — Related Party Transactions for the change in ownership percentages related to these transactions. Reclassifications Certain reclassifications have been made in the 2016 Condensed Consolidated Financial Statements (Unaudited) to conform to the classifications used in 2017. These reclassifications have not changed previously reported Net earnings or Total equity. Cash and Cash Equivalents Cash and cash equivalents include the following (in millions):
_______________ (1) Restricted cash equivalents relate to our subsidiary, I-Net Reinsurance Limited, and are held in trust until the final reinsurance policy is canceled. Trade Receivables, Net A summary of Trade receivables, net of allowance for doubtful accounts, as of June 30, 2017 and December 31, 2016 is as follows (in millions):
Capital Leases Black Knight entered into a one-year capital lease agreement commencing January 1, 2017 with a bargain purchase option for certain computer equipment. The leased equipment has a useful life of five years and will be depreciated on a straight-line basis over this period. The leased equipment was valued based on the net present value of the minimum lease payments, which was $8.4 million (net of imputed interest of $0.1 million). The gross value of assets subject to capital leases was $8.4 million (net of imputed interest of $0.1 million) and $10.0 million (net of imputed interest of $0.1 million) as of June 30, 2017 and December 31, 2016, respectively, and is included in Property and equipment, net on the Condensed Consolidated Balance Sheets (Unaudited). The remaining capital lease obligation of $4.4 million and $5.0 million as of June 30, 2017 and December 31, 2016, respectively, is included in Trade accounts payable and other accrued liabilities on the Condensed Consolidated Balance Sheets (Unaudited). The non-cash investing and financing activity for the six months ended June 30, 2017 and 2016 was $4.4 million and $10.0 million, respectively, and relates to the unpaid portion of the capital lease obligation. Equity-Based Compensation During the first quarter of 2017, Black Knight adopted Accounting Standards Update ("ASU") 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. In connection with the adoption, we made a policy election to account for forfeitures as they occur. The adoption of this ASU did not have a material effect on our business, financial condition or our results of operations. Depreciation and Amortization Depreciation and amortization on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) include the following (in millions):
Deferred contract costs amortization for the six months ended June 30, 2017 includes accelerated amortization of $3.3 million recorded in the first quarter related to certain deferred implementation costs. Transition and Integration Costs Transition and integration costs during the three and six months ended June 30, 2017 primarily represent legal and professional fees related to the planned distribution of FNF's ownership interest in Black Knight. Transition and integration costs during the three and six months ended June 30, 2016 primarily represent acquisition-related costs. Recent Accounting Pronouncements Revenue Recognition (ASC Topic 606, Revenue from Contracts with Customers ("ASC 606")) In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). This ASU supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition. The guidance requires a five-step analysis of transactions to determine when and how revenue is recognized based upon the core principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendment also requires additional disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows arising from contracts with customers. The FASB has issued several additional ASUs since this time that add additional clarification. All of the new standards are effective for the Company on January 1, 2018. In preparation for adoption of ASC 606, we have formed a project team and engaged a third-party professional services firm to assist us with our evaluation. We are applying an integrated approach to analyzing ASC 606's impact on our pattern of revenue recognition, including a review of accounting policies and practices, evaluating differences from applying the requirements of the new standard to our contracts and business practices and assessing the need for changes to our processes, accounting systems and design of internal controls. Based upon our initial assessment, we currently do not anticipate a material change to the pattern of revenue recognition related to revenue earned from the majority of our Technology segment hosted software arrangements, Data and Analytics segment arrangements with transaction or volume-based fees and perpetual license arrangements in our Technology and Data and Analytics segments. However, due to the complexity of certain of our contracts, including contracts for multiple products and services related to each of our segments, the final determination will be dependent on contract-specific terms. During the second quarter, we continued our assessment with increased focus on more detailed contract reviews and further identification of data and disclosure requirements, including the effect on our processes, accounting system and design of internal controls. We continue to assess whether ASC 606 will result in a change in the number of distinct performance obligations within our contractual arrangements for set up and implementation services, which may affect the timing of revenue recognition. Additionally, as ASU 2014-09 includes new accounting principles related to the deferral and amortization of contract acquisition and fulfillment costs, we are evaluating if this will result in any effect to our current capitalization and deferral policies. Based on our initial assessment, we do not expect a significant change to our current practice for capitalizing such costs; however, in certain instances ASC 606 may result in a change to the related amortization period. Further, we continue to analyze our term license arrangements across our segments to determine the effect of any changes in revenue recognition treatment. Under ASC 606, we would generally be required to recognize term license revenues upfront at time of delivery rather than ratably over the related contract period. While our assessment of whether the term license is distinct in certain instances based on the nature of the contract is still ongoing, we have identified circumstances where the promised software license and ongoing services are not distinct from each other. In these scenarios, the timing of revenue recognition will be over time, which is consistent with the treatment under the current revenue recognition standard. We are still in the process of quantifying the effects ASC 606 will have on our consolidated financial statements. The standard allows companies to use either a full retrospective or a modified retrospective adoption approach. We currently anticipate adopting the new standard using the modified retrospective transition approach. Our decision to adopt using the modified retrospective transition approach is dependent on the completion of our analysis of the effect the adoption of ASC 606 will have on our results of operations, financial position and related disclosures. Other Accounting Pronouncements In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This ASU is effective prospectively in fiscal years beginning after December 15, 2017 with early adoption permitted. We do not expect this update to have a material effect on our results of operations or our financial position. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 of the goodwill impairment test that required a hypothetical purchase price allocation. Rather, entities should apply the same impairment assessment to all reporting units and recognize an impairment loss for the amount by which a reporting unit's carrying amount exceeds its fair value, without exceeding the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This update is effective prospectively for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, or those beginning after January 1, 2017 if early adopted. We do not expect this update to have a material effect on our results of operations or our financial position. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic earnings per share is computed by dividing Net earnings attributable to Black Knight by the weighted-average number of shares of Class A common stock outstanding during the period. For the periods presented, potentially dilutive securities include unvested restricted stock awards and the shares of Class B common stock. 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. The expected effective tax rate for the three and six months ended June 30, 2017 was 54.6% and 43.4%, respectively, including certain discrete items recorded during the second quarter. The estimated effective tax rate during the three and six months ended June 30, 2016 was 35.2% and 35.3%, respectively. The denominator includes approximately 84.7 million and 84.8 million shares of Class B common stock outstanding for the three and six months ended June 30, 2017, respectively, and approximately 84.8 million shares for the three and six months ended June 30, 2016. The denominator also includes the dilutive effect of approximately 0.6 million and 0.5 million shares of unvested restricted shares of Class A common stock for the three and six months ended June 30, 2017, respectively, and approximately 2.0 million shares for the three and six months ended June 30, 2016. The shares of Class B common stock do not share in the earnings or losses of Black Knight and are, therefore, not participating securities. Accordingly, basic and diluted net earnings per share of Class B common stock have not been presented. The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share amounts):
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions We are party to certain related party agreements, including those with FNF and THL. The following table sets forth the ownership interests of FNF, THL and other holders of Black Knight common stock (shares in millions):
Transactions with FNF and THL are described below. FNF We have various agreements with FNF and certain FNF subsidiaries to provide technology, data and analytics services, as well as corporate shared services and information technology. We are also a party to certain other agreements under which we incur other expenses or receive revenues from FNF. A detail of the revenues and expenses, net from FNF is set forth in the table below (in millions). The decrease in Revenues from the prior year period are primarily the result of the Property Insight realignment as described in Note 1 — Basis of Presentation.
We paid to FNF a guarantee fee of 1.0% of the outstanding principal of the Senior Notes (as defined in Note 4 — Long-Term Debt) in exchange for the ongoing guarantee by FNF of the Senior Notes. The guarantee fee is included in Interest expense on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited). On April 26, 2017, the Senior Notes were redeemed (see Note 4 — Long-Term Debt for further information), and we are no longer required to pay a guarantee fee. FNF subsidiaries held $49.0 million and $49.3 million as of June 30, 2017 and December 31, 2016, respectively, of principal amount of our Term B Loan (as defined in Note 4 — Long-Term Debt) from our credit agreement dated May 27, 2015, as amended. THL Two managing directors of THL currently serve on our Board of Directors. We purchase software and systems services from certain entities over which THL exercises control. A detail of the expenses, net from THL is set forth in the table below (in millions):
Certain affiliates of THL held $39.4 million of principal amount of our Term B Loan (as defined in Note 4 — Long-Term Debt) as of December 31, 2016 from our credit agreement dated May 27, 2015. They did not hold any of our debt as of June 30, 2017. Revenues and Expenses A detail of related party items included in Revenues is as follows (in millions):
A detail of related party items included in Operating expenses (net of expense reimbursements) is as follows (in millions):
Additionally, related party prepaid fees were less than $0.1 million as of June 30, 2017 and $0.1 million as of December 31, 2016. These fees are included in Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets (Unaudited). Finally, related party deferred revenues were $1.9 million as of June 30, 2017, which are included in current Deferred revenues on the Condensed Consolidated Balance Sheets (Unaudited). We believe the amounts earned from or charged by us under each of the foregoing arrangements are fair and reasonable. We believe our service arrangements are priced within the range of prices we offer to third parties, except for certain corporate services provided to an FNF subsidiary and certain corporate services provided by FNF, which are at cost. However, the amounts we earned or that were charged under these arrangements were not negotiated at arm's length, and may not represent the terms that we might have obtained from an unrelated third party. |
Long-Term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following (in millions):
Principal maturities as of June 30, 2017 for each of the next five years and thereafter are as follows (in millions):
Scheduled maturities noted above exclude the effect of the debt issuance costs of $15.7 million as well as $1.6 million net unamortized debt premium. Credit Agreement On May 27, 2015, our indirect subsidiary, Black Knight InfoServ, LLC ("BKIS"), entered into a credit and guaranty agreement (the "Credit Agreement") with JPMorgan Chase Bank, N.A., as administrative agent, the guarantors party thereto and the other agents and lenders party thereto. The Credit Agreement provided for (i) an $800.0 million term loan A facility (the "Term A Loan"), (ii) a $400.0 million term loan B facility (the "Term B Loan") and (iii) a $400.0 million revolving credit facility (the "Revolving Credit Facility", and collectively with the Term A Loan and Term B Loan, the "Facilities"). The Facilities are guaranteed by substantially all of BKIS's wholly-owned domestic restricted subsidiaries and BKFS LLC, and are secured by associated collateral agreements that pledge a lien on virtually all of BKIS's assets, including fixed assets and intangible assets, and the assets of the guarantors. As of June 30, 2017, the Term A Loan and the Revolving Credit Facility bear interest at the Eurodollar rate plus a margin of 175 basis points, and the Term B Loan bears interest at the Eurodollar rate plus a margin of 225 basis points, subject to a Eurodollar rate floor of 75 basis points. As of June 30, 2017, we have $350.0 million capacity on the Revolving Credit Facility and pay an unused commitment fee of 25 basis points. During the six months ended June 30, 2017, there were $100.0 million of incremental borrowings and no payments on our Revolving Credit Facility and $55.0 million of borrowings and $75.0 million of payments during the six months ended June 30, 2016. As of June 30, 2017, the interest rates on the Term A Loan, Term B Loan and Revolving Credit Facility were 3.00%, 3.50% and 3.00%, respectively. Term B Loan Repricing On February 27, 2017, BKIS entered into a First Amendment to Credit and Guaranty Agreement (the "Credit Agreement First Amendment") with JPMorgan Chase Bank, N.A. as administrative agent. Pursuant to the Credit Agreement First Amendment, the Term B Loan bears interest at rates based upon, at the option of BKIS, either (i) the base rate plus a margin of 125 basis points, or (ii) the Eurodollar rate plus a margin of 225 basis points, subject to a Eurodollar rate floor of 75 basis points. The Term B Loan matures on May 27, 2022. In addition, the Credit Agreement First Amendment permits the Distribution Plan. The amount included in Other expense, net on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) related to the Term B Loan repricing was $1.1 million. Term A Loan and Revolver Refinancing On April 26, 2017, BKIS entered into a Second Amendment to Credit and Guaranty Agreement (the “Credit Agreement Second Amendment”) with the JPMorgan Chase Bank, N.A. as administrative agent, the guarantors party thereto, the other agents party thereto and the lenders party thereto. The Credit Agreement Second Amendment increases (i) the aggregate principal amount of the Term A Loan by $300.0 million to $1,030.0 million and (ii) the aggregate principal amount of commitments under the Revolving Credit Facility by $100.0 million to $500.0 million. The Credit Agreement Second Amendment also reduces the pricing applicable to the loans under the Term A Loan and Revolving Credit Facility by 25 basis points and reduces the unused commitment fee applicable to the Revolving Credit Facility by 5 basis points. The Term A Loan and Revolving Credit Facility bear interest at rates based upon, at the option of BKIS, either (i) the base rate plus a margin of between 25 and 100 basis points depending on the total leverage ratio of BKFS LLC and its restricted subsidiaries on a consolidated basis (the “Consolidated Leverage Ratio”) and (ii) the Eurodollar rate plus a margin of between 125 and 200 basis points depending on the Consolidated Leverage Ratio, subject to a Eurodollar rate floor of zero basis points. In addition, BKIS will pay an unused commitment fee of between 15 and 30 basis points on the undrawn commitments under the Revolving Credit Facility, also depending on the Consolidated Leverage Ratio. Pursuant to the terms of the Credit Agreement Second Amendment, the Term A Loan and the Revolving Credit Facility mature on February 25, 2022. The amount included in Other expense, net on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) related to the Term A Loan and Revolving Credit Facility refinancing was $3.3 million. Senior Notes Through April 25, 2017, BKIS had 5.75% Senior Notes, interest paid semi-annually, which were scheduled to mature on April 15, 2023 (the "Senior Notes"). The Senior Notes were senior unsecured obligations, registered under the Securities Act and contained customary affirmative, negative and financial covenants, and events of default for indebtedness of this type (with grace periods, as applicable, and lender remedies). On April 26, 2017, we redeemed the outstanding Senior Notes at a price of 104.825% (the "Redemption") and paid $0.7 million in accrued interest. The amount included in Other expense, net on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) related to the Senior Notes redemption was $8.2 million. Fair Value of Long-Term Debt The fair value of our Facilities approximates their carrying value at June 30, 2017. The fair value of our Facilities is based upon established market prices for the securities using level 2 inputs. Interest Rate Swaps On March 7, 2017, we entered into an interest rate swap agreement to hedge forecasted monthly interest rate payments on $200.0 million of our floating rate debt (the "March 2017 Swap Agreement"). Under the terms of the March 2017 Swap Agreement, we receive payments based on the 1-month LIBOR rate (equal to 1.25% as of June 30, 2017) and pay a fixed rate of 2.08%. The effective term for the March 2017 Swap Agreement is March 31, 2017 through March 31, 2022. On January 20, 2016, we entered into two interest rate swap agreements to hedge forecasted monthly interest rate payments on $400.0 million of our floating rate debt ($200.0 million notional value each) (the "January 2016 Swap Agreements", and together with the March 2017 Swap Agreement, the "Swap Agreements"). Under the terms of the January 2016 Swap Agreements, we receive payments based on the 1-month LIBOR rate (equal to 1.25% as of June 30, 2017) and pay a weighted average fixed rate of 1.01%. The effective term for the January 2016 Swap Agreements is February 1, 2016 through January 31, 2019. We entered into the Swap Agreements to convert a portion of the interest rate exposure on our floating rate debt from variable to fixed. We designated these Swap Agreements as cash flow hedges. A portion of the amount included in Accumulated other comprehensive earnings (loss) is reclassified into Interest expense as a yield adjustment as interest payments are made on the hedged debt. The fair value of our Swap Agreements is based upon level 2 inputs. We have considered our own credit risk when determining the fair value of our Swap Agreements. The estimated fair values of our Swap Agreements are as follows (in millions):
As of June 30, 2017, a cumulative gain of $0.3 million ($0.2 million net of tax) is reflected in Accumulated other comprehensive earnings (loss), and a cumulative gain of $0.4 million is reflected in Noncontrolling interests. As of December 31, 2016, a cumulative loss of $1.0 million ($0.6 million net of tax) is reflected in Accumulated other comprehensive earnings (loss), and a cumulative loss of $1.2 million is reflected in Noncontrolling interests. Below is a summary of the effect of derivative instruments on amounts recognized in Other comprehensive earnings (loss) ("OCE") on the accompanying Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) for the three months ended June 30, 2017 and 2016 (in millions):
Below is a summary of the effect of derivative instruments on amounts recognized in other comprehensive earnings ("OCE") on the accompanying Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) for the six months ended June 30, 2017 and 2016 (in millions):
Approximately $0.3 million ($0.2 million net of tax) of the balance in Accumulated other comprehensive earnings (loss) and Noncontrolling interests as of June 30, 2017 is expected to be reclassified into Interest expense over the next 12 months. It is our policy to execute such instruments with credit-worthy banks and not to enter into derivative financial instruments for speculative purposes. As of June 30, 2017, we believe our interest rate swap counterparties will be able to fulfill their obligations under our agreements, and we believe we will have debt outstanding through the various expiration dates of the swaps such that the occurrence of future cash flow hedges remains probable. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes As of June 30, 2017 and December 31, 2016, we had no uncertain tax positions. We record interest and penalties related to income taxes, if any, as a component of Income tax expense. Our effective tax rate for the three months ended June 30, 2017 and 2016 was 23.8% and 16.8%, respectively, and 19.3% and 16.3% for the six months ended June 30, 2017 and 2016, respectively. These rates are lower than the typical federal and state statutory rate because of the effect of our noncontrolling interests. The increase in the effective tax rate for the three and six months ended June 30, 2017 is primarily driven by the resolution of a legacy tax matter, partially offset by the effect on adoption of ASU 2016-09 related to the income tax effects of awards that vested. Tax Distributions The taxable income of BKFS LLC is allocated to its members, including Black Knight, and the members are required to reflect on their own income tax returns the items of income, gain, deduction and loss and other tax items of BKFS LLC that are allocated to them. BKFS LLC makes tax distributions to its members in order to enable them to pay taxes on their allocable share of BKFS LLC's taxable income. Tax distributions are calculated based on allocations of income to a member for a particular taxable year without taking into account any losses allocated to the member in a prior taxable year. This practice is consistent with IRS regulations. Subject to certain reductions, tax distributions are generally made based on an assumed tax rate equal to the highest combined marginal federal, state and local income tax rate applicable to a U.S. corporation. BKFS LLC made tax distributions of $38.3 million and $48.5 million during the six months ended June 30, 2017 and 2016, respectively. |
Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal and Regulatory Matters In the ordinary course of business, we are involved in various pending and threatened litigation and regulatory matters related to our operations, some of which include claims for punitive or exemplary damages. Our ordinary course litigation includes purported class action lawsuits, which make allegations related to various aspects of our business. From time to time, we also receive requests for information from various state and federal regulatory authorities, some of which take the form of civil investigative demands or subpoenas. Some of these regulatory inquiries may result in the assessment of fines for violations of regulations or settlements with such authorities requiring a variety of remedies. We believe that none of these actions depart from customary litigation or regulatory inquiries incidental to our business. We review lawsuits and other legal and regulatory matters (collectively “legal proceedings”) on an ongoing basis when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome assuming all appeals have been exhausted. For legal proceedings where it has been determined that a loss is both probable and reasonably estimable, a liability based on known facts and which represents our best estimate has been recorded. Actual losses may materially differ from the amounts recorded and the ultimate outcome of our pending cases is generally not yet determinable. While some of these matters could be material to our operating results or cash flows for any particular period if an unfavorable outcome results, at present we do not believe that the ultimate resolution of currently pending legal proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition. Indemnifications and Warranties We often agree to indemnify our clients against damages and costs resulting from claims of patent, copyright, trademark infringement or breaches of confidentiality associated with use of our software through software licensing agreements. Historically, we have not made any payments under such indemnifications, but continue to monitor the conditions that are subject to the indemnifications to identify whether a loss has occurred that is both probable and estimable that would require recognition. In addition, we warrant to clients that our software operates substantially in accordance with the software specifications. Historically, no costs have been incurred related to software warranties and none are expected in the future, and as such, no accruals for warranty costs have been made. Indemnification Agreement We are party to a cross-indemnity agreement dated December 22, 2014 with ServiceLink Holdings, LLC ("ServiceLink"). Pursuant to this agreement, ServiceLink indemnifies us from liabilities relating to, arising out of or resulting from the conduct of ServiceLink's business or any action, suit or proceeding in which we or any of our subsidiaries are named by reason of being a successor to the business of Lender Processing Services, Inc. and the cause of such action, suit or proceeding relates to the business of ServiceLink. In return, we indemnify ServiceLink for liabilities relating to, arising out of, or resulting from the conduct of our business. |
Equity-Based Compensation |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation | Equity-Based Compensation On February 3, 2017, we granted 884,570 restricted shares of our Class A common stock with a grant date fair value of $37.90 per share, which was based on the closing price of our common stock on the date of grant. Of the 884,570 restricted shares granted, 203,160 restricted shares vest over a three-year period and 681,410 restricted shares vest over a four-year period. The vesting of all the restricted shares granted on February 3, 2017 is also based on certain operating performance criteria. Restricted stock transactions in 2017 are as follows:
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Equity-based compensation expense was $4.9 million and $3.4 million for the three months ended June 30, 2017 and 2016, respectively, and $10.1 million and $6.1 million for the six months ended June 30, 2017 and 2016, respectively. These expenses are included in Operating expenses in the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited). Total unrecognized compensation cost was $47.9 million as of June 30, 2017 and is expected to be recognized over a weighted average period of approximately 2.9 years. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information ASC Topic 280, Segment Reporting ("ASC 280") establishes standards for reporting information about segments and requires that a public business enterprise reports financial and descriptive information about its segments. Segments are components of an enterprise for which separate financial information is available and are evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Black Knight’s chief executive officer is identified as the CODM as defined by ASC 280. To align with the internal management of our business operations based on service offerings, our business is organized into two segments:
Separate discrete financial information is available for these two segments and the operating results of each segment are regularly evaluated by the CODM in order to assess performance and allocate resources. We use EBITDA as the primary profitability measure for making decisions regarding ongoing operations. EBITDA is earnings before Interest expense, Income tax expense and Depreciation and amortization. We do not allocate Interest expense, Other expense, net, Income tax expense, equity-based compensation and certain other items, such as purchase accounting adjustments and acquisition-related costs to the segments, since these items are not considered in evaluating the segments' overall operating performance. Summarized financial information concerning our segments is shown in the tables below (in millions):
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Basis of Presentation (Policies) |
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Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | The accompanying Condensed Consolidated Financial Statements (Unaudited) were prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), and all adjustments considered necessary for a fair presentation have been included. |
Use of Estimates | The preparation of these Condensed Consolidated Financial Statements (Unaudited) in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements (Unaudited), as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Consolidation | BKFS LLC is subject to the consolidation guidance related to variable interest entities as set forth in Accounting Standards Codification ("ASC") Topic 810, Consolidation ("ASC 810"). Black Knight, as the sole managing member of BKFS LLC, has the exclusive authority to manage, control and operate the business and affairs of BKFS LLC and its subsidiaries, pursuant to the terms of the Second Amended and Restated Limited Liability Company Agreement ("LLC Agreement"). Under the terms of the LLC Agreement, Black Knight is authorized to manage the business of BKFS LLC, including the authority to enter into contracts, manage bank accounts, hire employees and agents, incur and pay debts and expenses, merge or consolidate with other entities and pay taxes. Because Black Knight is the primary beneficiary through its sole managing member interest and possesses the rights established in the LLC Agreement, in accordance with the requirements of ASC 810, Black Knight controls BKFS LLC and appropriately consolidates the operations thereof. We account for noncontrolling interests in accordance with ASC 810. Our Class A shareholders indirectly control BKFS LLC through our managing member interest. Our Class B shareholders have a noncontrolling interest in BKFS LLC. Their share of equity in BKFS LLC is reflected in Noncontrolling interests in our Condensed Consolidated Balance Sheets (Unaudited) and their share of net earnings or loss in BKFS LLC is reported in Net earnings attributable to noncontrolling interests in our Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited). Net earnings attributable to noncontrolling interests do not include expenses incurred directly by Black Knight, including income tax expense attributable to Black Knight. |
Recent Accounting Pronouncements | Other Accounting Pronouncements In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This ASU is effective prospectively in fiscal years beginning after December 15, 2017 with early adoption permitted. We do not expect this update to have a material effect on our results of operations or our financial position. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 of the goodwill impairment test that required a hypothetical purchase price allocation. Rather, entities should apply the same impairment assessment to all reporting units and recognize an impairment loss for the amount by which a reporting unit's carrying amount exceeds its fair value, without exceeding the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This update is effective prospectively for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, or those beginning after January 1, 2017 if early adopted. We do not expect this update to have a material effect on our results of operations or our financial position. |
Basis of Presentation (Tables) |
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Schedule of Cash and Cash Equivalents | Cash and cash equivalents include the following (in millions):
_______________ (1) Restricted cash equivalents relate to our subsidiary, I-Net Reinsurance Limited, and are held in trust until the final reinsurance policy is canceled. |
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Trade Receivables, Net | A summary of Trade receivables, net of allowance for doubtful accounts, as of June 30, 2017 and December 31, 2016 is as follows (in millions):
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Schedule of Depreciation and Amortization | Depreciation and amortization on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) include the following (in millions):
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Earnings Per Share (Tables) |
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Schedule of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share amounts):
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Related Party Transactions (Tables) |
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Schedule of related party items | We are party to certain related party agreements, including those with FNF and THL. The following table sets forth the ownership interests of FNF, THL and other holders of Black Knight common stock (shares in millions):
A detail of related party items included in Revenues is as follows (in millions):
A detail of related party items included in Operating expenses (net of expense reimbursements) is as follows (in millions):
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FNF [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of related party items | A detail of the revenues and expenses, net from FNF is set forth in the table below (in millions). The decrease in Revenues from the prior year period are primarily the result of the Property Insight realignment as described in Note 1 — Basis of Presentation.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
THL [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of related party items | A detail of the expenses, net from THL is set forth in the table below (in millions):
|
Long-Term Debt Long-Term Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Long-term debt consisted of the following (in millions):
|
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Schedule of Maturities of Long-term Debt | Principal maturities as of June 30, 2017 for each of the next five years and thereafter are as follows (in millions):
|
Equity-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | Restricted stock transactions in 2017 are as follows:
______________________________
|
Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Summarized Segment Financial Information |
_______________________________________________________
_______________________________________________________
|
Basis of Presentation - Capital Lease (Details) - USD ($) $ in Millions |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Property, Plant and Equipment [Line Items] | |||
Interest included in payments | $ 0.1 | $ 0.1 | |
Capital lease obligations | 8.4 | 10.0 | |
Capital lease obligations, current | 4.4 | $ 5.0 | |
Unpaid portion of capital lease | $ 4.4 | $ 10.0 | |
Assets Held under Capital Leases [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Leased equipment useful life | 5 years | ||
Interest included in payments | $ 0.1 | ||
Capital lease obligations | $ 8.4 |
Basis of Presentation - Trade Receivable, Net (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total trade receivables | $ 165.9 | $ 158.0 |
Allowance for doubtful accounts | (2.3) | (2.2) |
Total trade receivables, net | 163.6 | 155.8 |
Trade receivables — billed | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total trade receivables | 123.4 | 115.4 |
Trade receivables — unbilled | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total trade receivables | $ 42.5 | $ 42.6 |
Earnings Per Share - Additional Disclosures (Details) shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017
shares
|
Jun. 30, 2016
shares
|
Jun. 30, 2017
shares
|
Jun. 30, 2016
shares
|
|
Class of Stock [Line Items] | ||||
Conversion of shares | 1 | |||
Expected effective tax rate | 54.56919% | 35.20% | 43.35038% | 35.30% |
Common Class A [Member] | ||||
Class of Stock [Line Items] | ||||
Weighted average shares of common stock outstanding (in shares) | 67.7 | 65.9 | 67.7 | 65.9 |
Dilutive effect of unvested restricted shares of Class A common stock (in share) | 0.6 | 2.0 | 0.5 | 2.0 |
Common Class B [Member] | ||||
Class of Stock [Line Items] | ||||
Weighted average shares of common stock outstanding (in shares) | 84.7 | 84.8 | 84.8 | 84.8 |
Related Party Transactions - FNF (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Related Party Transaction [Line Items] | |||||
Revenues | $ 17.2 | $ 17.8 | $ 29.4 | $ 34.2 | |
Operating expenses | 3.2 | 4.7 | 6.6 | 8.5 | |
FNF [Member] | |||||
Related Party Transaction [Line Items] | |||||
Revenues | 17.2 | 17.8 | 29.4 | 34.2 | |
Guarantee fee | 0.2 | 1.0 | 1.2 | 2.0 | |
FNF [Member] | Medium-term Notes [Member] | Term Loan B [Member] | |||||
Related Party Transaction [Line Items] | |||||
Related party notes | 49.0 | $ 49.0 | $ 49.3 | ||
FNF [Member] | Senior Notes [Member] | 5.75% Senior Notes [Member] | Guarantee Fee from May 26, 2015 - October 2017 [Member] | |||||
Related Party Transaction [Line Items] | |||||
Guarantee fee, percent of outstanding principal | 1.00% | ||||
FNF [Member] | Operating Expenses [Member] | |||||
Related Party Transaction [Line Items] | |||||
Operating expenses | $ 3.1 | $ 4.3 | $ 6.4 | $ 7.7 |
Related Party Transactions - THL (Details) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2017
USD ($)
director
|
Jun. 30, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Related Party Transaction [Line Items] | |||||
Operating expenses | $ 3.2 | $ 4.7 | $ 6.6 | $ 8.5 | |
THL [Member] | |||||
Related Party Transaction [Line Items] | |||||
Number of related party directors serving on Board of Managers | director | 2 | ||||
Purchases from related party | 0.0 | 0.2 | $ 0.0 | 1.1 | |
THL [Member] | Medium-term Notes [Member] | Term Loan B [Member] | |||||
Related Party Transaction [Line Items] | |||||
Related party notes | $ 39.4 | ||||
THL [Member] | Operating Expenses [Member] | |||||
Related Party Transaction [Line Items] | |||||
Operating expenses | $ 0.1 | $ 0.4 | $ 0.2 | $ 0.8 |
Related Party Transactions - Related Party Revenues (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Related Party Transaction [Line Items] | ||||
Revenues | $ 17.2 | $ 17.8 | $ 29.4 | $ 34.2 |
Data and Analytics Services [Member] | ||||
Related Party Transaction [Line Items] | ||||
Revenues | 8.3 | 11.5 | 12.7 | 21.9 |
Servicing, Origination and Default Technology [Member] | ||||
Related Party Transaction [Line Items] | ||||
Revenues | $ 8.9 | $ 6.3 | $ 16.7 | $ 12.3 |
Related Party Transactions - Related Party Expenses (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Related Party Transaction [Line Items] | |||||
Operating expenses | $ 3.2 | $ 4.7 | $ 6.6 | $ 8.5 | |
Prepaid expense, current | 0.1 | 0.1 | $ 0.1 | ||
Related party, deferred revenue | 1.9 | 1.9 | |||
Data Entry, Indexing Services, and Other Operating Expenses [Member] | |||||
Related Party Transaction [Line Items] | |||||
Operating expenses | 1.1 | 2.6 | 2.5 | 4.9 | |
Corporate Services [Member] | |||||
Related Party Transaction [Line Items] | |||||
Operating expenses | 2.5 | 2.9 | 5.0 | 5.2 | |
Technology and Corporate Services [Member] | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, reimbursements from transactions with related party | $ (0.4) | $ (0.8) | $ (0.9) | $ (1.6) |
Long-Term Debt - Schedule of Maturities (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Disclosure [Abstract] | ||
2017 (remaining) | $ 27.8 | |
2017 | 55.5 | |
2018 | 81.3 | |
2019 | 107.0 | |
2020 | 132.7 | |
Thereafter | 1,167.7 | |
Total long-term debt | 1,572.0 | $ 1,574.0 |
Issuance costs | 15.7 | 14.1 |
Unamortized discount (premium), net | $ 1.6 | $ (10.3) |
Long-Term Debt - Senior Notes (Details) - Senior Notes [Member] - 5.75% Senior Notes [Member] - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Apr. 26, 2017 |
Jun. 30, 2017 |
|
Debt Instrument [Line Items] | ||
Redemption price | 104.825% | |
Stated interest rate | 5.75% | |
Interest expense | $ 0.7 | |
Debt redeemed | $ 8.2 |
Long-Term Debt - Interest Rate Swaps Additional Information (Details) - USD ($) |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
Jan. 20, 2016 |
|
Derivative [Line Items] | |||
Cumulative gain (loss) reflected in Noncontrolling interests | $ 400,000 | $ (1,200,000) | |
Interest Rate Swap [Member] | |||
Derivative [Line Items] | |||
Notional amount | $ 400,000,000.0 | ||
Notional amount per derivative instrument | 200,000,000 | ||
Average fixed interest rate | 1.01% | ||
Gain (loss) on derivative | $ 300,000 | (1,000,000) | |
Gain recognized in other comprehensive income (loss) | (200,000) | ||
Loss recognized in other comprehensive income (loss), net of tax | $ 600,000 | ||
Reclassification in next 12 months, gross | 300,000 | ||
Reclassification in next 12 months, net | $ 200,000 | ||
London Interbank Offered Rate (LIBOR) [Member] | Interest Rate Swap [Member] | |||
Derivative [Line Items] | |||
Notional amount per derivative instrument | $ 200,000,000 | ||
Basis spread on derivative | 1.25% | ||
Stated interest rate | 2.08% |
Long-Term Debt - Swap Agreements in the Balance Sheets (Unaudited) (Details) - Interest Rate Swap [Member] - Designated as Hedging Instrument [Member] - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Other Noncurrent Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | $ 2.8 | $ 0.0 |
Other Noncurrent Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | $ 2.1 | $ 2.2 |
Long-Term Debt - Derivative Instruments Recognized in AOCI (Details) - Interest Rate Swap [Member] - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain Recognized in OCE | $ 4.2 | $ (1.6) | $ 1.8 | $ (3.6) |
Amount of Loss Reclassified from Accumulated OCE into Net earnings | 0.3 | 0.5 | 0.6 | 0.8 |
Attributable to noncontrolling interests [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain Recognized in OCE | 2.8 | (1.0) | 1.2 | (2.3) |
Amount of Loss Reclassified from Accumulated OCE into Net earnings | 0.2 | 0.3 | 0.4 | 0.5 |
Attributable to Black Knight Financial Services, Inc. [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain Recognized in OCE | 1.4 | (0.6) | 0.6 | (1.3) |
Amount of Loss Reclassified from Accumulated OCE into Net earnings | $ 0.1 | $ 0.2 | $ 0.2 | $ 0.3 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate (as a percent) | 23.80% | 16.80% | 19.30% | 16.30% |
Distributions to members | $ (38.3) | $ (48.5) |
Segment Information - Additional Disclosures (Details) |
6 Months Ended |
---|---|
Jun. 30, 2017
segment
| |
Segment Reporting [Abstract] | |
Number of segments | 2 |
Segment Information - Summarized Financial Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Segment Reporting Information [Line Items] | |||||
Revenues | $ 262.2 | $ 255.5 | $ 520.3 | $ 497.4 | |
Expenses: | |||||
Operating expenses | 142.0 | 144.4 | 287.5 | 281.2 | |
Transition and integration costs | 3.3 | 1.1 | 4.5 | 1.1 | |
EBITDA | 116.9 | 110.0 | 228.3 | 215.1 | |
Depreciation and amortization | 50.1 | 49.2 | 102.9 | 97.4 | |
Operating income (loss) | 66.8 | 60.8 | 125.4 | 117.7 | |
Interest expense | (14.0) | (16.9) | (30.7) | (33.7) | |
Other expense, net | (14.5) | (4.0) | (16.5) | (4.8) | |
Earnings before income taxes | 38.3 | 39.9 | 78.2 | 79.2 | |
Income tax expense | 9.1 | 6.7 | 15.1 | 12.9 | |
Net earnings from continuing operations | 29.2 | 33.2 | 63.1 | 66.3 | |
Balance sheet data: | |||||
Total assets | 3,719.2 | 3,703.8 | 3,719.2 | 3,703.8 | $ 3,762.0 |
Goodwill | 2,306.8 | 2,297.6 | 2,306.8 | 2,297.6 | $ 2,303.8 |
Operating Segments [Member] | Technology Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 220.5 | 213.2 | 441.1 | 415.6 | |
Expenses: | |||||
Operating expenses | 91.0 | 90.3 | 184.7 | 177.3 | |
Transition and integration costs | 0.0 | 0.0 | 0.0 | 0.0 | |
EBITDA | 129.5 | 122.9 | 256.4 | 238.3 | |
Depreciation and amortization | 23.5 | 25.8 | 50.6 | 51.2 | |
Operating income (loss) | 106.0 | 97.1 | 205.8 | 187.1 | |
Balance sheet data: | |||||
Total assets | 3,182.2 | 3,240.8 | 3,182.2 | 3,240.8 | |
Goodwill | 2,115.0 | 2,106.1 | 2,115.0 | 2,106.1 | |
Operating Segments [Member] | Data and Analytics Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 42.9 | 44.3 | 81.8 | 86.1 | |
Expenses: | |||||
Operating expenses | 33.0 | 37.5 | 66.5 | 72.5 | |
Transition and integration costs | 0.0 | 0.0 | 0.0 | 0.0 | |
EBITDA | 9.9 | 6.8 | 15.3 | 13.6 | |
Depreciation and amortization | 3.8 | 2.3 | 7.3 | 4.4 | |
Operating income (loss) | 6.1 | 4.5 | 8.0 | 9.2 | |
Balance sheet data: | |||||
Total assets | 352.6 | 352.9 | 352.6 | 352.9 | |
Goodwill | 191.8 | 191.5 | 191.8 | 191.5 | |
Corporate and Other [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | (1.2) | (2.0) | (2.6) | (4.3) | |
Expenses: | |||||
Operating expenses | 18.0 | 16.6 | 36.3 | 31.4 | |
Transition and integration costs | 3.3 | 1.1 | 4.5 | 1.1 | |
EBITDA | (22.5) | (19.7) | (43.4) | (36.8) | |
Depreciation and amortization | 22.8 | 21.1 | 45.0 | 41.8 | |
Operating income (loss) | (45.3) | (40.8) | (88.4) | (78.6) | |
Balance sheet data: | |||||
Total assets | 184.4 | 110.1 | 184.4 | 110.1 | |
Goodwill | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 |
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