0001627014-19-000036.txt : 20190806 0001627014-19-000036.hdr.sgml : 20190806 20190806160803 ACCESSION NUMBER: 0001627014-19-000036 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 82 CONFORMED PERIOD OF REPORT: 20190630 FILED AS OF DATE: 20190806 DATE AS OF CHANGE: 20190806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Black Knight, Inc. CENTRAL INDEX KEY: 0001627014 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37394 FILM NUMBER: 191002128 BUSINESS ADDRESS: STREET 1: 601 RIVERSIDE AVENUE CITY: JACKSONVILLE STATE: FL ZIP: 32204 BUSINESS PHONE: (904) 854-5100 MAIL ADDRESS: STREET 1: 601 RIVERSIDE AVENUE CITY: JACKSONVILLE STATE: FL ZIP: 32204 FORMER COMPANY: FORMER CONFORMED NAME: Black Knight Financial Services, Inc. DATE OF NAME CHANGE: 20141204 10-Q 1 bki2019q2form10-q.htm 10-Q Document
false--12-31Q2201900016270140.00010.00015500000005500000001532418511530851161493589731496748140.0150.0021000000.00010.00012500000025000000000038828783410302 0001627014 2019-01-01 2019-06-30 0001627014 2019-08-05 0001627014 2019-06-30 0001627014 2018-12-31 0001627014 2019-04-01 2019-06-30 0001627014 2018-01-01 2018-06-30 0001627014 2018-04-01 2018-06-30 0001627014 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0001627014 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001627014 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0001627014 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001627014 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0001627014 2018-03-31 0001627014 us-gaap:TreasuryStockMember 2018-04-01 2018-06-30 0001627014 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0001627014 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0001627014 2018-06-30 0001627014 us-gaap:RetainedEarningsMember 2018-06-30 0001627014 us-gaap:TreasuryStockMember 2018-03-31 0001627014 us-gaap:RetainedEarningsMember 2018-03-31 0001627014 us-gaap:TreasuryStockMember 2018-06-30 0001627014 us-gaap:CommonStockMember 2018-06-30 0001627014 us-gaap:CommonStockMember 2018-03-31 0001627014 us-gaap:TreasuryStockMember 2019-06-30 0001627014 bkfs:AccountingStandardsUpdated201802Member us-gaap:RetainedEarningsMember 2018-12-31 0001627014 us-gaap:TreasuryStockMember 2019-01-01 2019-06-30 0001627014 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-06-30 0001627014 us-gaap:RetainedEarningsMember 2018-12-31 0001627014 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001627014 us-gaap:RetainedEarningsMember 2019-06-30 0001627014 bkfs:AccountingStandardsUpdated201802Member 2018-12-31 0001627014 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0001627014 us-gaap:CommonStockMember 2018-12-31 0001627014 us-gaap:TreasuryStockMember 2018-12-31 0001627014 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001627014 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001627014 us-gaap:CommonStockMember 2019-06-30 0001627014 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001627014 bkfs:AccountingStandardsUpdated201802Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001627014 us-gaap:RetainedEarningsMember 2019-01-01 2019-06-30 0001627014 us-gaap:TreasuryStockMember 2019-04-01 2019-06-30 0001627014 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0001627014 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0001627014 us-gaap:RetainedEarningsMember 2019-03-31 0001627014 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001627014 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0001627014 us-gaap:TreasuryStockMember 2019-03-31 0001627014 us-gaap:CommonStockMember 2019-03-31 0001627014 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001627014 2019-03-31 0001627014 us-gaap:RetainedEarningsMember 2017-12-31 0001627014 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0001627014 us-gaap:TreasuryStockMember 2018-01-01 2018-06-30 0001627014 2017-12-31 0001627014 us-gaap:RetainedEarningsMember 2018-01-01 2018-06-30 0001627014 us-gaap:CommonStockMember 2017-12-31 0001627014 us-gaap:TreasuryStockMember 2017-12-31 0001627014 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-06-30 0001627014 us-gaap:AccountingStandardsUpdate201409Member us-gaap:RetainedEarningsMember 2017-12-31 0001627014 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-06-30 0001627014 us-gaap:CommonStockMember 2018-01-01 2018-06-30 0001627014 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001627014 us-gaap:AccountingStandardsUpdate201409Member 2017-12-31 0001627014 us-gaap:UnbilledRevenuesMember 2018-12-31 0001627014 us-gaap:BilledRevenuesMember 2019-06-30 0001627014 us-gaap:BilledRevenuesMember 2018-12-31 0001627014 us-gaap:UnbilledRevenuesMember 2019-06-30 0001627014 us-gaap:OtherIntangibleAssetsMember 2019-01-01 2019-06-30 0001627014 us-gaap:ComputerSoftwareIntangibleAssetMember 2018-01-01 2018-06-30 0001627014 us-gaap:PropertyPlantAndEquipmentMember 2019-01-01 2019-06-30 0001627014 us-gaap:PropertyPlantAndEquipmentMember 2018-01-01 2018-06-30 0001627014 us-gaap:OtherIntangibleAssetsMember 2018-04-01 2018-06-30 0001627014 us-gaap:OtherIntangibleAssetsMember 2019-04-01 2019-06-30 0001627014 us-gaap:ComputerSoftwareIntangibleAssetMember 2018-04-01 2018-06-30 0001627014 us-gaap:ComputerSoftwareIntangibleAssetMember 2019-04-01 2019-06-30 0001627014 us-gaap:PropertyPlantAndEquipmentMember 2019-04-01 2019-06-30 0001627014 us-gaap:ComputerSoftwareIntangibleAssetMember 2019-01-01 2019-06-30 0001627014 us-gaap:OtherIntangibleAssetsMember 2018-01-01 2018-06-30 0001627014 us-gaap:PropertyPlantAndEquipmentMember 2018-04-01 2018-06-30 0001627014 us-gaap:SubsequentEventMember 2019-07-01 2019-07-01 0001627014 2019-01-24 2019-01-24 0001627014 bkfs:DBInvestmentMember 2019-01-01 2019-06-30 0001627014 2019-02-08 0001627014 us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2019-02-08 2019-03-31 0001627014 us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2019-03-31 0001627014 us-gaap:CommonClassAMember 2019-04-01 2019-06-30 0001627014 us-gaap:CommonClassAMember 2018-01-01 2018-06-30 0001627014 us-gaap:CommonClassAMember 2019-01-01 2019-06-30 0001627014 us-gaap:CommonClassAMember 2018-04-01 2018-06-30 0001627014 srt:AffiliatedEntityMember 2019-06-30 0001627014 srt:AffiliatedEntityMember 2018-12-31 0001627014 bkfs:OperatingExpensesMember bkfs:FidelityNationalFinancialInc.Member 2018-04-01 2018-06-30 0001627014 bkfs:FidelityNationalFinancialInc.Member 2018-01-01 2018-06-30 0001627014 bkfs:FidelityNationalFinancialInc.Member 2018-04-01 2018-06-30 0001627014 bkfs:OperatingExpensesMember bkfs:FidelityNationalFinancialInc.Member 2019-01-01 2019-06-30 0001627014 bkfs:FidelityNationalFinancialInc.Member 2019-04-01 2019-06-30 0001627014 bkfs:OperatingExpensesMember bkfs:FidelityNationalFinancialInc.Member 2019-04-01 2019-06-30 0001627014 bkfs:OperatingExpensesMember bkfs:FidelityNationalFinancialInc.Member 2018-01-01 2018-06-30 0001627014 bkfs:FidelityNationalFinancialInc.Member 2019-01-01 2019-06-30 0001627014 bkfs:ServicingSoftwareMember 2019-04-01 2019-06-30 0001627014 bkfs:DataandAnalyticServicesMember 2018-01-01 2018-06-30 0001627014 bkfs:ServicingSoftwareMember 2018-01-01 2018-06-30 0001627014 bkfs:ServicingSoftwareMember 2018-04-01 2018-06-30 0001627014 bkfs:DataandAnalyticServicesMember 2019-04-01 2019-06-30 0001627014 bkfs:ServicingSoftwareMember 2019-01-01 2019-06-30 0001627014 bkfs:DataandAnalyticServicesMember 2018-04-01 2018-06-30 0001627014 bkfs:DataandAnalyticServicesMember 2019-01-01 2019-06-30 0001627014 bkfs:DataEntryIndexingServicesandOtherOperatingExpensesMember 2018-04-01 2018-06-30 0001627014 bkfs:DataEntryIndexingServicesandOtherOperatingExpensesMember 2019-04-01 2019-06-30 0001627014 bkfs:CorporateServicesMember 2018-01-01 2018-06-30 0001627014 bkfs:CorporateServicesMember 2019-01-01 2019-06-30 0001627014 bkfs:DataEntryIndexingServicesandOtherOperatingExpensesMember 2018-01-01 2018-06-30 0001627014 bkfs:TechnologyandCorporateServicesMember 2019-04-01 2019-06-30 0001627014 bkfs:TechnologyandCorporateServicesMember 2019-01-01 2019-06-30 0001627014 bkfs:TechnologyandCorporateServicesMember 2018-04-01 2018-06-30 0001627014 bkfs:CorporateServicesMember 2019-04-01 2019-06-30 0001627014 bkfs:TechnologyandCorporateServicesMember 2018-01-01 2018-06-30 0001627014 bkfs:CorporateServicesMember 2018-04-01 2018-06-30 0001627014 bkfs:DataEntryIndexingServicesandOtherOperatingExpensesMember 2019-01-01 2019-06-30 0001627014 2018-02-15 2018-02-15 0001627014 bkfs:THLAndAffiliatesMember 2018-03-15 0001627014 2018-03-15 2018-03-15 0001627014 bkfs:THLAndAffiliatesMember 2018-02-15 0001627014 bkfs:THLAndAffiliatesMember 2018-05-11 0001627014 2018-05-11 2018-05-11 0001627014 us-gaap:InterestRateSwapMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-04-01 2019-06-30 0001627014 us-gaap:InterestRateSwapMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-04-01 2018-06-30 0001627014 us-gaap:InterestRateSwapMember us-gaap:LondonInterbankOfferedRateLIBORMember 2017-03-31 0001627014 us-gaap:InterestRateSwapMember us-gaap:LondonInterbankOfferedRateLIBORMember 2017-09-29 0001627014 us-gaap:InterestRateSwapMember 2018-04-30 0001627014 us-gaap:InterestRateSwapMember 2019-01-31 0001627014 us-gaap:InterestRateSwapMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-31 0001627014 us-gaap:InterestRateSwapMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-04-30 0001627014 us-gaap:InterestRateSwapMember 2017-09-29 0001627014 bkfs:TermLoanAMember us-gaap:MediumTermNotesMember 2019-06-30 0001627014 bkfs:SeniorNotesdue2023Member us-gaap:SeniorNotesMember 2019-06-30 0001627014 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2018-12-31 0001627014 bkfs:TermLoanAMember us-gaap:MediumTermNotesMember 2018-12-31 0001627014 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2019-06-30 0001627014 bkfs:SeniorNotesdue2023Member us-gaap:SeniorNotesMember 2018-12-31 0001627014 us-gaap:InterestRateSwapMember 2018-01-01 2018-12-31 0001627014 us-gaap:InterestRateSwapMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-06-30 0001627014 2018-04-01 2018-04-01 0001627014 us-gaap:InterestRateSwapMember 2019-01-01 2019-06-30 0001627014 us-gaap:RevolvingCreditFacilityMember bkfs:AmendedAndRestatedCreditAgreementMember 2018-04-30 0001627014 us-gaap:RevolvingCreditFacilityMember 2019-06-30 0001627014 bkfs:OtherDebtMember 2018-04-01 2018-04-01 0001627014 bkfs:TermLoanAMember bkfs:AmendedAndRestatedCreditAgreementMember 2018-04-30 0001627014 bkfs:OtherDebtMember 2019-06-30 0001627014 bkfs:ContractOneMember 2016-02-01 0001627014 bkfs:ContractOneMember us-gaap:LondonInterbankOfferedRateLIBORMember 2016-02-01 0001627014 bkfs:ContractTwoMember us-gaap:LondonInterbankOfferedRateLIBORMember 2016-02-01 0001627014 bkfs:ContractTwoMember 2016-02-01 0001627014 us-gaap:InterestRateSwapMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-01-01 2018-06-30 0001627014 us-gaap:InterestRateSwapMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-01-01 2019-06-30 0001627014 us-gaap:OtherNoncurrentAssetsMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0001627014 us-gaap:OtherNoncurrentAssetsMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0001627014 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0001627014 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0001627014 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-06-30 0001627014 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0001627014 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2018-04-30 2018-04-30 0001627014 bkfs:AmendedAndRestatedCreditAgreementMember us-gaap:EurodollarMember 2018-04-30 2018-04-30 0001627014 us-gaap:FairValueInputsLevel2Member 2019-06-30 0001627014 us-gaap:FairValueInputsLevel1Member 2019-06-30 0001627014 us-gaap:FairValueInputsLevel3Member 2018-12-31 0001627014 us-gaap:FairValueInputsLevel1Member 2018-12-31 0001627014 us-gaap:FairValueInputsLevel3Member 2019-06-30 0001627014 us-gaap:FairValueInputsLevel2Member 2018-12-31 0001627014 srt:MaximumMember 2019-06-30 0001627014 srt:MinimumMember 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:ProfessionalServicesMember 2018-01-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OtherServicesMember bkfs:OriginationSoftwareMember 2018-01-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:DataSolutionsMember bkfs:ServicingSoftwareMember 2018-01-01 2018-06-30 0001627014 bkfs:OtherServicesMember 2018-01-01 2018-06-30 0001627014 bkfs:SoftwareAndHostingSolutionsMember 2018-01-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareAndHostingSolutionsMember bkfs:SoftwareSolutionsMember 2018-01-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:ProfessionalServicesMember bkfs:DataandAnalyticsSegmentMember 2018-01-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:ProfessionalServicesMember bkfs:SoftwareSolutionsMember 2018-01-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ProfessionalServicesMember bkfs:ServicingSoftwareMember 2018-01-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:OtherServicesMember bkfs:SoftwareSolutionsMember 2018-01-01 2018-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:OtherServicesMember 2018-01-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OtherServicesMember bkfs:ServicingSoftwareMember 2018-01-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataandAnalyticsSegmentMember 2018-01-01 2018-06-30 0001627014 us-gaap:CorporateNonSegmentMember 2018-01-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ProfessionalServicesMember bkfs:OriginationSoftwareMember 2018-01-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareSolutionsMember 2018-01-01 2018-06-30 0001627014 bkfs:DataSolutionsMember 2018-01-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataSolutionsMember bkfs:DataandAnalyticsSegmentMember 2018-01-01 2018-06-30 0001627014 bkfs:ProfessionalServicesMember 2018-01-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:SoftwareAndHostingSolutionsMember bkfs:ServicingSoftwareMember 2018-01-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OriginationSoftwareMember 2018-01-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareAndHostingSolutionsMember bkfs:DataandAnalyticsSegmentMember 2018-01-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:OtherServicesMember bkfs:DataandAnalyticsSegmentMember 2018-01-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:DataSolutionsMember bkfs:OriginationSoftwareMember 2018-01-01 2018-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:SoftwareAndHostingSolutionsMember 2018-01-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataSolutionsMember bkfs:SoftwareSolutionsMember 2018-01-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ServicingSoftwareMember 2018-01-01 2018-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:DataSolutionsMember 2018-01-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:SoftwareAndHostingSolutionsMember bkfs:OriginationSoftwareMember 2018-01-01 2018-06-30 0001627014 bkfs:DataSolutionsMember 2018-04-01 2018-06-30 0001627014 bkfs:SoftwareAndHostingSolutionsMember 2018-04-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataSolutionsMember bkfs:DataandAnalyticsSegmentMember 2018-04-01 2018-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:SoftwareAndHostingSolutionsMember 2018-04-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:SoftwareAndHostingSolutionsMember bkfs:ServicingSoftwareMember 2018-04-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OtherServicesMember bkfs:OriginationSoftwareMember 2018-04-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareAndHostingSolutionsMember bkfs:SoftwareSolutionsMember 2018-04-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:ProfessionalServicesMember bkfs:SoftwareSolutionsMember 2018-04-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareAndHostingSolutionsMember bkfs:DataandAnalyticsSegmentMember 2018-04-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:OtherServicesMember bkfs:DataandAnalyticsSegmentMember 2018-04-01 2018-06-30 0001627014 bkfs:OtherServicesMember 2018-04-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:OtherServicesMember bkfs:SoftwareSolutionsMember 2018-04-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ProfessionalServicesMember bkfs:OriginationSoftwareMember 2018-04-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataandAnalyticsSegmentMember 2018-04-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OtherServicesMember bkfs:ServicingSoftwareMember 2018-04-01 2018-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:OtherServicesMember 2018-04-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ServicingSoftwareMember 2018-04-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:DataSolutionsMember bkfs:OriginationSoftwareMember 2018-04-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ProfessionalServicesMember bkfs:ServicingSoftwareMember 2018-04-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataSolutionsMember bkfs:SoftwareSolutionsMember 2018-04-01 2018-06-30 0001627014 bkfs:ProfessionalServicesMember 2018-04-01 2018-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:DataSolutionsMember 2018-04-01 2018-06-30 0001627014 us-gaap:CorporateNonSegmentMember 2018-04-01 2018-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:ProfessionalServicesMember 2018-04-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:DataSolutionsMember bkfs:ServicingSoftwareMember 2018-04-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:ProfessionalServicesMember bkfs:DataandAnalyticsSegmentMember 2018-04-01 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareSolutionsMember 2018-04-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OriginationSoftwareMember 2018-04-01 2018-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:SoftwareAndHostingSolutionsMember bkfs:OriginationSoftwareMember 2018-04-01 2018-06-30 0001627014 2021-01-01 2019-06-30 0001627014 2019-06-30 0001627014 2020-01-01 2019-06-30 0001627014 2019-07-01 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:DataSolutionsMember 2019-04-01 2019-06-30 0001627014 bkfs:DataSolutionsMember 2019-04-01 2019-06-30 0001627014 bkfs:ProfessionalServicesMember 2019-04-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareAndHostingSolutionsMember bkfs:SoftwareSolutionsMember 2019-04-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareAndHostingSolutionsMember bkfs:DataandAnalyticsSegmentMember 2019-04-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataSolutionsMember bkfs:SoftwareSolutionsMember 2019-04-01 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:SoftwareAndHostingSolutionsMember 2019-04-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OtherServicesMember bkfs:OriginationSoftwareMember 2019-04-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OriginationSoftwareMember 2019-04-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataSolutionsMember bkfs:DataandAnalyticsSegmentMember 2019-04-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareSolutionsMember 2019-04-01 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember 2019-04-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ServicingSoftwareMember 2019-04-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:OtherServicesMember bkfs:SoftwareSolutionsMember 2019-04-01 2019-06-30 0001627014 bkfs:OtherServicesMember 2019-04-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:SoftwareAndHostingSolutionsMember bkfs:ServicingSoftwareMember 2019-04-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:ProfessionalServicesMember bkfs:SoftwareSolutionsMember 2019-04-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:DataSolutionsMember bkfs:ServicingSoftwareMember 2019-04-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:ProfessionalServicesMember bkfs:DataandAnalyticsSegmentMember 2019-04-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:OtherServicesMember bkfs:DataandAnalyticsSegmentMember 2019-04-01 2019-06-30 0001627014 bkfs:SoftwareAndHostingSolutionsMember 2019-04-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:SoftwareAndHostingSolutionsMember bkfs:OriginationSoftwareMember 2019-04-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ProfessionalServicesMember bkfs:OriginationSoftwareMember 2019-04-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:DataSolutionsMember bkfs:OriginationSoftwareMember 2019-04-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataandAnalyticsSegmentMember 2019-04-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ProfessionalServicesMember bkfs:ServicingSoftwareMember 2019-04-01 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:OtherServicesMember 2019-04-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OtherServicesMember bkfs:ServicingSoftwareMember 2019-04-01 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:ProfessionalServicesMember 2019-04-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:OtherServicesMember bkfs:SoftwareSolutionsMember 2019-01-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:SoftwareAndHostingSolutionsMember bkfs:OriginationSoftwareMember 2019-01-01 2019-06-30 0001627014 bkfs:OtherServicesMember 2019-01-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OtherServicesMember bkfs:OriginationSoftwareMember 2019-01-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:OtherServicesMember bkfs:DataandAnalyticsSegmentMember 2019-01-01 2019-06-30 0001627014 bkfs:DataSolutionsMember 2019-01-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareAndHostingSolutionsMember bkfs:DataandAnalyticsSegmentMember 2019-01-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataandAnalyticsSegmentMember 2019-01-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareSolutionsMember 2019-01-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OriginationSoftwareMember 2019-01-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareAndHostingSolutionsMember bkfs:SoftwareSolutionsMember 2019-01-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:ProfessionalServicesMember bkfs:SoftwareSolutionsMember 2019-01-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataSolutionsMember bkfs:DataandAnalyticsSegmentMember 2019-01-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:SoftwareAndHostingSolutionsMember bkfs:ServicingSoftwareMember 2019-01-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:DataSolutionsMember bkfs:OriginationSoftwareMember 2019-01-01 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ProfessionalServicesMember bkfs:ServicingSoftwareMember 2019-01-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:DataSolutionsMember bkfs:ServicingSoftwareMember 2019-01-01 2019-06-30 0001627014 bkfs:SoftwareAndHostingSolutionsMember 2019-01-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:OtherServicesMember bkfs:ServicingSoftwareMember 2019-01-01 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:DataSolutionsMember 2019-01-01 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:SoftwareAndHostingSolutionsMember 2019-01-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataSolutionsMember bkfs:SoftwareSolutionsMember 2019-01-01 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:ProfessionalServicesMember bkfs:DataandAnalyticsSegmentMember 2019-01-01 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:ProfessionalServicesMember 2019-01-01 2019-06-30 0001627014 bkfs:ProfessionalServicesMember 2019-01-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ProfessionalServicesMember bkfs:OriginationSoftwareMember 2019-01-01 2019-06-30 0001627014 srt:ReportableLegalEntitiesMember bkfs:ServicingSoftwareMember 2019-01-01 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember bkfs:OtherServicesMember 2019-01-01 2019-06-30 0001627014 us-gaap:RestrictedStockMember 2019-02-28 2019-02-28 0001627014 us-gaap:RestrictedStockMember 2019-04-08 2019-04-08 0001627014 us-gaap:RestrictedStockMember 2019-02-15 2019-02-15 0001627014 us-gaap:RestrictedStockMember us-gaap:CommonClassAMember 2019-01-01 2019-06-30 0001627014 us-gaap:RestrictedStockMember us-gaap:CommonClassAMember 2018-12-31 0001627014 us-gaap:RestrictedStockMember us-gaap:CommonClassAMember 2019-06-30 0001627014 us-gaap:SubsequentEventMember 2019-07-01 2019-07-31 0001627014 us-gaap:CorporateNonSegmentMember 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataandAnalyticsSegmentMember 2019-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareSolutionsMember 2019-06-30 0001627014 us-gaap:CorporateNonSegmentMember 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:DataandAnalyticsSegmentMember 2018-06-30 0001627014 us-gaap:OperatingSegmentsMember bkfs:SoftwareSolutionsMember 2018-06-30 iso4217:USD xbrli:shares xbrli:pure iso4217:USD xbrli:shares bkfs:segment
 
 
 
 
 
 
 
 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-37394
Black Knight, Inc.
______________________________________________________________________________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware
 
81-5265638
(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)
(904) 854-5100
___________________________________________________________________
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.0001 par value
BKI
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
 
Accelerated filer
 
Non-accelerated filer
 
Smaller reporting company
 
 
 
 
 
 
 
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
There were 149,572,030 shares outstanding of the Registrant's common stock as of August 5, 2019.
 
 
 
 
 
 
 
 
 
 



FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 2019
TABLE OF CONTENTS

 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


i


Part I: FINANCIAL INFORMATION
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
BLACK KNIGHT, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In millions, except share data)
 
June 30, 2019
 
December 31, 2018
ASSETS
 
 
 
Current assets:
 

 
 

Cash and cash equivalents
$
9.3

 
$
20.3

Trade receivables, net
171.9

 
172.3

Prepaid expenses and other current assets
81.1

 
67.3

Receivables from related parties
9.1

 
6.2

Total current assets
271.4

 
266.1

Property and equipment, net
164.1

 
177.1

Computer software, net
399.4

 
405.6

Other intangible assets, net
158.9

 
188.0

Goodwill
2,329.7

 
2,329.7

Investments in unconsolidated affiliates
360.4

 
3.8

Deferred contract costs, net
161.5

 
161.3

Other non-current assets
139.9

 
121.8

Total assets
$
3,985.3

 
$
3,653.4

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 

 
 

Trade accounts payable and other accrued liabilities
$
54.8

 
$
67.8

Accrued compensation and benefits
48.3

 
65.8

Current portion of long-term debt
60.4

 
52.5

Deferred revenues
45.2

 
52.9

Total current liabilities
208.7

 
239.0

Deferred revenues
103.2

 
106.8

Deferred income taxes
210.5

 
220.9

Long-term debt, net of current portion
1,572.6

 
1,284.2

Other non-current liabilities
50.5

 
16.0

Total liabilities
2,145.5

 
1,866.9

Commitments and contingencies (Note 9)


 


Equity:
 

 
 
Common stock; $0.0001 par value; 550,000,000 shares authorized; 153,085,116 shares issued and 149,674,814 shares outstanding as of June 30, 2019, and 153,241,851 shares issued and 149,358,973 shares outstanding as of December 31, 2018

 

Preferred stock; $0.0001 par value; 25,000,000 shares authorized; issued and outstanding, none as of June 30, 2019 and December 31, 2018

 

Additional paid-in capital
1,567.3

 
1,585.8

Retained earnings
451.3

 
381.1

Accumulated other comprehensive (loss) earnings
(17.9
)
 
0.3

Treasury stock, at cost, 3,410,302 shares as of June 30, 2019 and 3,882,878 shares as of December 31, 2018
(160.9
)
 
(180.7
)
Total equity
1,839.8

 
1,786.5

Total liabilities and equity
$
3,985.3

 
$
3,653.4

See Notes to Condensed Consolidated Financial Statements (Unaudited).

1


BLACK KNIGHT, INC.
Condensed Consolidated Statements of Earnings and Comprehensive Earnings
(Unaudited)
(In millions, except per share data)
 
Three months ended June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
Revenues
$
294.9

 
$
276.6

 
$
578.0

 
$
546.9

Expenses:
 
 
 
 
 
 
 
Operating expenses
159.4

 
155.4

 
319.4

 
304.8

Depreciation and amortization
57.5

 
53.6

 
114.4

 
105.0

Transition and integration costs
1.0

 
1.2

 
1.9

 
2.5

Total expenses
217.9

 
210.2

 
435.7

 
412.3

Operating income
77.0

 
66.4

 
142.3

 
134.6

Other income and expense:
 
 
 
 
 
 
 
Interest expense, net
(16.7
)
 
(13.1
)
 
(31.7
)
 
(25.9
)
Other expense, net
(0.5
)
 
(6.2
)
 
(0.8
)
 
(6.4
)
Total other expense, net
(17.2
)
 
(19.3
)
 
(32.5
)
 
(32.3
)
Earnings before income taxes and equity in losses of unconsolidated affiliates
59.8

 
47.1

 
109.8

 
102.3

Income tax expense
14.5

 
7.1

 
25.2

 
19.6

Earnings before equity in losses of unconsolidated affiliates
45.3

 
40.0

 
84.6

 
82.7

Equity in losses of unconsolidated affiliates, net of tax
(13.4
)
 

 
(13.4
)
 

Net earnings
$
31.9

 
$
40.0

 
$
71.2

 
$
82.7

Other comprehensive (loss) earnings:
 
 
 
 
 
 
 
Unrealized holding (losses) gains, net of tax(1)
(11.8
)
 
3.4

 
(18.0
)
 
8.1

Reclassification adjustments for gains included in net earnings, net of tax(2)
(0.3
)
 
(0.5
)
 
(1.0
)
 
(0.8
)
Total unrealized (losses) gains on interest rate swaps, net of tax
(12.1
)
 
2.9

 
(19.0
)
 
7.3

Foreign currency translation adjustment(3)

 
(0.3
)
 

 
(0.3
)
Unrealized loss on investments in unconsolidated affiliates
(0.2
)
 

 
(0.2
)
 

Other comprehensive (loss) earnings
(12.3
)
 
2.6

 
(19.2
)
 
7.0

Comprehensive earnings
$
19.6

 
$
42.6

 
$
52.0

 
$
89.7

 
 
 
 
 
 
 
 
Net earnings per share:
 
 
 
 
 
 
 
Basic
$
0.22

 
$
0.27

 
$
0.48

 
$
0.56

Diluted
$
0.21

 
$
0.27

 
$
0.48

 
$
0.56

Weighted average shares of common stock outstanding (Note 3):
 
 
 
 
 
 
 
Basic
147.7

 
147.1

 
147.6

 
148.0

Diluted
148.5

 
147.7

 
148.4

 
148.4

______________________________
(1)
Net of income tax benefit of $4.1 million and $6.3 million for the three and six months ended June 30, 2019, respectively, and income tax expense of $1.0 million and $2.6 million for the three and six months ended June 30, 2018, respectively.
(2)
Amounts reclassified to net earnings relate to gains on interest rate swaps and are included in Interest expense, net above. Amounts are net of income tax expense of $0.1 million and $0.4 million for the three and six months ended June 30, 2019, respectively, and $0.2 million and $0.3 million for the three and six months ended June 30, 2018, respectively.
(3)
Net of income tax benefit of $0.1 million for the three and six months ended June 30, 2018.


See Notes to Condensed Consolidated Financial Statements (Unaudited).

2


BLACK KNIGHT, INC.
Condensed Consolidated Statements of Equity
(Unaudited)
(In millions)


 
Three months ended June 30, 2019
 
Common stock
 
Additional paid-in capital
 
Retained earnings
 
Accumulated other comprehensive loss
 
Treasury stock
 
 
 
Shares
 
$
 
 
 
 
Shares
 
$
 
Total equity
Balance, March 31, 2019
153.1

 
$

 
$
1,554.6

 
$
419.4

 
$
(5.6
)
 
3.2

 
$
(147.1
)
 
$
1,821.3

Grant of restricted shares of common stock

 

 
(0.1
)
 

 

 

 
0.1

 

Forfeitures of restricted shares of common stock

 

 
1.0

 

 

 

 
(1.0
)
 

Tax withholding payments for restricted share vesting

 

 
(1.3
)
 

 

 

 

 
(1.3
)
Vesting of restricted shares granted from treasury stock

 

 
1.0

 

 

 

 
(1.0
)
 

Purchases of treasury stock

 

 

 

 

 
0.2

 
(11.9
)
 
(11.9
)
Equity-based compensation expense

 

 
12.1

 

 

 

 

 
12.1

Net earnings

 

 

 
31.9

 

 

 

 
31.9

Unrealized losses on interest rate swaps, net

 

 

 

 
(12.1
)
 

 

 
(12.1
)
Other comprehensive loss on investments in unconsolidated affiliates

 

 

 

 
(0.2
)
 

 

 
(0.2
)
Balance, June 30, 2019
153.1

 
$

 
$
1,567.3

 
$
451.3

 
$
(17.9
)
 
3.4

 
$
(160.9
)
 
$
1,839.8


 
Three months ended June 30, 2018
 
Common stock
 
Additional paid-in capital
 
Retained earnings
 
Accumulated other comprehensive earnings
 
Treasury stock
 
 
 
Shares
 
$
 
 
 
 
Shares
 
$
 
Total equity
Balance March 31, 2018
153.3

 
$

 
$
1,560.1

 
$
255.3

 
$
8.3

 
4.2

 
$
(197.1
)
 
$
1,626.6

Grant of restricted shares of common stock

 

 
(16.9
)
 

 

 
(0.3
)
 
16.9

 

Forfeitures of restricted shares of common stock

 

 
0.3

 

 

 

 
(0.3
)
 

Tax withholding payments for restricted share vesting

 

 
(0.1
)
 

 

 

 

 
(0.1
)
Equity-based compensation expense

 

 
12.1

 

 

 

 

 
12.1

Net earnings

 

 

 
40.0

 

 

 

 
40.0

Foreign currency translation adjustment

 

 

 

 
(0.3
)
 

 

 
(0.3
)
Unrealized gains on interest rate swaps, net

 

 

 

 
2.9

 

 

 
2.9

Balance, June 30, 2018
153.3

 
$

 
$
1,555.5

 
$
295.3

 
$
10.9

 
3.9

 
$
(180.5
)
 
$
1,681.2




See Notes to Condensed Consolidated Financial Statements (Unaudited).

















3



BLACK KNIGHT, INC.
Condensed Consolidated Statements of Equity (Continued)
(Unaudited)
(In millions)
 
Six months ended June 30, 2019
 
Common stock
 
Additional paid-in capital
 
Retained earnings
 
Accumulated other comprehensive earnings (loss)
 
Treasury stock
 
 
 
Shares
 
$
 
 
 
 
Shares
 
$
 
Total equity
Balance, December 31, 2018
153.2

 
$

 
$
1,585.8

 
$
381.1

 
$
0.3

 
3.9

 
$
(180.7
)
 
$
1,786.5

Effect of ASU 2018-02 adoption (Note 1)

 

 

 
(1.0
)
 
1.0

 

 

 

Adjusted balance at January 1, 2019
153.2

 

 
1,585.8

 
380.1

 
1.3

 
3.9

 
(180.7
)
 
1,786.5

Grant of restricted shares of common stock

 

 
(37.3
)
 

 

 
(0.8
)
 
37.3

 

Forfeitures of restricted shares of common stock

 

 
1.0

 

 

 

 
(1.0
)
 

Tax withholding payments for restricted share vesting
(0.1
)
 

 
(12.2
)
 

 

 

 

 
(12.2
)
Vesting of restricted shares granted from treasury stock

 

 
4.6

 

 

 
0.1

 
(4.6
)
 

Purchases of treasury stock

 

 

 

 

 
0.2

 
(11.9
)
 
(11.9
)
Equity-based compensation expense

 

 
25.4

 

 

 

 

 
25.4

Net earnings

 

 

 
71.2

 

 

 

 
71.2

Unrealized losses on interest rate swaps, net

 

 

 

 
(19.0
)
 

 

 
(19.0
)
Other comprehensive loss on investments in unconsolidated affiliates

 

 

 

 
(0.2
)
 

 

 
(0.2
)
Balance, June 30, 2019
153.1

 
$

 
$
1,567.3

 
$
451.3

 
$
(17.9
)
 
3.4

 
$
(160.9
)
 
$
1,839.8


 
Six months ended June 30, 2018
 
Common stock
 
Additional paid-in capital
 
Retained earnings
 
Accumulated other comprehensive earnings
 
Treasury stock
 
 
 
Shares
 
$
 
 
 
 
Shares
 
$
 
Total equity
Balance, December 31, 2017
153.4

 
$

 
$
1,593.6

 
$
201.4

 
$
3.9

 
2.0

 
$
(90.1
)
 
$
1,708.8

Cumulative effect of ASC 606 adoption

 

 

 
11.2

 

 

 

 
11.2

Adjusted balance at January 1, 2018
153.4

 

 
1,593.6

 
212.6

 
3.9

 
2.0

 
(90.1
)
 
1,720.0

Grant of restricted shares of common stock

 

 
(51.7
)
 

 

 
(1.1
)
 
51.7

 

Forfeitures of restricted shares of common stock

 

 
0.6

 

 

 

 
(0.6
)
 

Tax withholding payments for restricted share vesting
(0.1
)
 

 
(6.7
)
 

 

 

 

 
(6.7
)
Purchases of treasury stock

 

 

 

 

 
3.0

 
(141.5
)
 
(141.5
)
Equity-based compensation expense

 

 
19.7

 

 

 

 

 
19.7

Net earnings

 

 

 
82.7

 

 

 

 
82.7

Foreign currency translation adjustment

 

 

 

 
(0.3
)
 

 

 
(0.3
)
Unrealized gains on interest rate swaps, net

 

 

 

 
7.3

 

 

 
7.3

Balance, June 30, 2018
153.3

 
$

 
$
1,555.5

 
$
295.3

 
$
10.9

 
3.9

 
$
(180.5
)
 
$
1,681.2



See Notes to Condensed Consolidated Financial Statements (Unaudited).

4


BLACK KNIGHT, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In millions)
 
Six months ended June 30,
 
2019

2018
Cash flows from operating activities:
 
 
 

Net earnings
$
71.2

 
$
82.7

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
114.4

 
105.0

Amortization of debt issuance costs and original issue discount
1.4

 
1.6

Loss on extinguishment of debt, net

 
5.8

Deferred income taxes, net
1.0

 
3.6

Equity in losses of unconsolidated affiliates, net of tax
13.4

 

Equity-based compensation
25.4

 
19.9

Changes in assets and liabilities, net of acquired assets and liabilities:
 
 
 
Trade and other receivables, including receivables from related parties
0.7

 
44.3

Prepaid expenses and other assets
(10.5
)
 
(44.9
)
Deferred contract costs
(20.9
)
 
(23.5
)
Deferred revenues
(11.3
)
 
(1.5
)
Trade accounts payable and other liabilities
(56.7
)
 
17.0

Net cash provided by operating activities
128.1

 
210.0

Cash flows from investing activities:
 
 
 

Additions to property and equipment
(4.8
)
 
(14.5
)
Additions to computer software
(40.6
)
 
(37.5
)
Business acquisition, net of cash acquired

 
(6.0
)
Investment in unconsolidated affiliate
(375.0
)
 

Net cash used in investing activities
(420.4
)
 
(58.0
)
Cash flows from financing activities:
 
 
 

Revolver borrowings
611.8

 
481.5

Revolver payments
(290.8
)
 
(340.0
)
Term loan borrowings

 
258.6

Term loan payments
(15.6
)
 
(402.9
)
Purchases of treasury stock
(11.9
)
 
(141.5
)
Tax withholding payments for restricted share vesting
(12.2
)
 
(6.7
)
Debt issuance costs

 
(5.8
)
Net cash provided by (used in) financing activities
281.3

 
(156.8
)
Net decrease in cash and cash equivalents
(11.0
)
 
(4.8
)
Cash and cash equivalents, beginning of period
20.3

 
16.2

Cash and cash equivalents, end of period
$
9.3

 
$
11.4

 
 
 
 
Supplemental cash flow information:
 
 
 

Interest paid, net
$
(29.4
)
 
$
(24.5
)
Income taxes paid, net
$
(27.7
)
 
$
(10.0
)


See Notes to Condensed Consolidated Financial Statements (Unaudited).


5


BLACK KNIGHT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


(1)
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements (Unaudited) of Black Knight, Inc. and its subsidiaries ("Black Knight," the "Company," "we," "us" or "our") 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, 2018 filed with the Securities and Exchange Commission ("SEC") on February 22, 2019 and other filings with the SEC.
Description of Business
We are a leading provider of integrated software, data and analytics solutions to the mortgage and consumer loan, real estate and capital markets verticals. Our solutions facilitate and automate many of the mission-critical business processes across the homeownership 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) Software Solutions and (2) Data and Analytics. See further discussion in Note 12Segment Information.
Share Repurchase Program
For the six months ended June 30, 2019, a summary of share repurchases under our share repurchase program is as follows (in millions, except per share amounts):
Total number of shares repurchased
 
Aggregate purchase price
 
Average price paid per share
 
Shares remaining under repurchase authorization as of
June 30, 2019
0.2

 
$
11.9

 
$
57.94

 
3.6


Reclassifications
Certain reclassifications have been made to the prior year amounts to conform to the classifications used in 2019. Investments in unconsolidated affiliates and Deferred contract costs, net were previously included in Other non-current assets in our Condensed Consolidated Balance Sheets (Unaudited). Revolver payments and Term loan payments were previously combined in Debt repayments in our Condensed Consolidated Statements of Cash Flows (Unaudited). Revolver borrowings and Term loan borrowings were previously combined in Borrowings in our Condensed Consolidated Statements of Cash Flows (Unaudited).
Cash and Cash Equivalents
Cash and cash equivalents include the following (in millions):
 
June 30, 2019
 
December 31, 2018
Cash
$
6.4

 
$
9.5

Cash equivalents
2.9

 
10.8

Cash and cash equivalents
$
9.3

 
$
20.3


As of June 30, 2019 and December 31, 2018, we did not have any restricted cash and cash equivalents.

6

BLACK KNIGHT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

Trade Receivables, Net
A summary of Trade receivables, net of allowance for doubtful accounts is as follows (in millions):

 
June 30, 2019
 
December 31, 2018
Trade receivables — billed
$
128.5

 
$
136.6

Trade receivables — unbilled
45.1

 
37.0

Trade receivables
173.6

 
173.6

Allowance for doubtful accounts
(1.7
)
 
(1.3
)
Trade receivables, net
$
171.9

 
$
172.3



In addition to the amounts above, we have unbilled receivables that we do not expect to collect within the next year included in Other non-current assets in our Condensed Consolidated Balance Sheets (Unaudited). Billings for these receivables are based on contractual terms. Refer to Note 5 Other Non-Current Assets.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consists of the following (in millions):
 
June 30, 2019
 
December 31, 2018
Prepaid expenses
$
55.5

 
$
43.9

Contract assets
16.7

 
14.8

Other current assets
8.9

 
8.6

Prepaid expenses and other current assets
$
81.1

 
$
67.3


Contract Assets
Our short-term contract assets, including related party contract assets, are included in Prepaid expenses and other current assets in our Condensed Consolidated Balance Sheets (Unaudited). Refer to Note 4 Related Party Transactions. Our long-term contract assets are included in Other non-current assets in our Condensed Consolidated Balance Sheets (Unaudited). Refer to Note 5 Other Non-Current Assets. There were no impairment charges related to contract assets for the three and six months ended June 30, 2019 and 2018.
Investments in Unconsolidated Affiliates
We account for our investments in unconsolidated affiliates using the equity method of accounting. We have elected to record our share of equity in earnings (losses) of unconsolidated affiliates on a one-quarter lag based on the most recently available financial statements. Refer to Note 2— Investments in Unconsolidated Affiliates.
Deferred Revenues
Deferred revenues represent our obligation to transfer products or services to our client for which we have received consideration, or an amount of consideration is due, from the client. During the six months ended June 30, 2019 and 2018, revenues recognized related to the amount included in the Deferred revenues balance at the beginning of each period were $32.6 million and $28.8 million, respectively.
Depreciation and Amortization
Depreciation and amortization includes the following (in millions):
 
Three months ended June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
Computer software
$
23.4

 
$
23.4

 
47.1

 
45.4

Other intangible assets
14.6

 
14.2

 
29.1

 
28.3

Deferred contract costs
10.5

 
8.1

 
20.7

 
15.9

Property and equipment
9.0

 
7.9

 
17.5

 
15.4

Total
$
57.5

 
$
53.6

 
$
114.4

 
$
105.0



7

BLACK KNIGHT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

Computer software amortization for the three months ended June 30, 2018 includes accelerated amortization of $1.0 million related to certain internally developed software. Deferred contract costs amortization for the three months ended June 30, 2019 and 2018 includes accelerated amortization of $1.9 million and $1.0 million, respectively. Deferred contract costs amortization for the six months ended June 30, 2019 and 2018 includes accelerated amortization of $3.6 million and $2.5 million, respectively.
Transition and Integration Costs
Transition and integration costs during the three and six months ended June 30, 2019 primarily consisted of acquisition-related costs. Transition and integration costs during the three months and six ended June 30, 2018 primarily consisted of transition-related costs as we transferred certain corporate functions from Fidelity National Financial, Inc. ("FNF"), legal and professional fees related to secondary offerings by certain affiliates of Thomas H. Lee Partners, L.P. ("THL") and acquisition-related costs.
Recent Accounting Pronouncements
Leases (ASC Topic 842, Leases ("ASC 842"))
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) as well as several other related updates, which were codified as ASC 842. On January 1, 2019, we adopted this update using the effective date transition method. The reported results for the three and six months ended June 30, 2019 reflect the application of ASC 842, while the comparative information has not been restated and continues to be reported under the related lease accounting standards in effect for those periods. The adoption of this update represents a change in accounting principle and resulted in the recognition of right-of-use assets and lease liabilities of $28.9 million on January 1, 2019. We elected the package of practical expedients, which permits us to leverage our prior conclusions about lease identification, lease classification and initial direct costs incurred. We also elected the practical expedient to combine lease and non-lease components when determining the value of right-of-use assets and lease liabilities, as well as the practical expedient to exclude leases with an initial term of 12 months or less. The primary effect of adopting this update relates to the recognition of our operating leases on our Condensed Consolidated Balance Sheets (Unaudited) and providing additional disclosures about our leasing activities. As of January 1, 2019 and June 30, 2019, we did not have any finance leases. Refer to Note 5 Other Non-Current Assets and Note 9 Commitments and Contingencies for additional disclosures related to our leasing activities.
Other Accounting Pronouncements
In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815). This update expands the permissible benchmark interest rates to include the Secured Overnight Financing Rate and the Overnight Index Swap Rate as benchmark interest rates for hedge accounting purposes. For entities that have not already adopted ASU 2017-12, the guidance in this update is required to be adopted concurrently with ASU 2017-12. This update is required to be applied prospectively to qualifying new or redesignated hedging relationships entered into on and after the date of adoption. We continue to monitor developments related to the London Interbank Offered Rate ("LIBOR") transition date and effects it may have on our strategy, systems and processes. Interest rates related to our credit agreement are based on the Eurodollar rate, which is based on LIBOR. The terms of our interest rate swap agreements are also based on LIBOR. We do not expect the adoption of this update to have a material effect on our consolidated financial statements and related disclosures.
In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This update more closely aligns the accounting treatment of implementation costs for cloud solutions to the treatment of costs to develop or obtain internal-use software. Costs incurred during the planning and post-implementation stages are typically expensed, while costs incurred during the development stage are typically capitalized. The capitalized implementation costs are to be expensed over the term of the hosting arrangement including renewal options to the extent those options are expected to be utilized.  This update also requires the capitalized implementation costs to be presented in the consolidated financial statements consistent with the presentation of the ongoing fees and payments associated with the cloud arrangement. We adopted this update on January 1, 2019 and applied its amendments prospectively. This update did not have a material effect on our Condensed Consolidated Financial Statements (Unaudited) and related disclosures.
In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This update allows for a reclassification from accumulated other comprehensive earnings to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 ("Tax Reform Act"). We adopted this update on January 1, 2019 and reclassified $1.0 million from Accumulated other comprehensive (loss) earnings to Retained earnings.

8

BLACK KNIGHT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

(2)    Investments in Unconsolidated Affiliates
On August 8, 2018, an investment consortium (the “Consortium”) including Cannae Holdings, Inc. (“Cannae”), CC Capital Partners LLC, Bilcar, LLC and funds associated with THL along with other investors entered into equity commitments in connection with the acquisition of The Dun & Bradstreet Corporation, a Delaware corporation ("Dun & Bradstreet" or "D&B"). Contemporaneously, Dun & Bradstreet entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among Dun & Bradstreet, Star Parent, L.P., a Delaware limited partnership ("Star Parent"), and Star Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Star Parent ("Merger Sub"), pursuant to which, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub would merge with and into Dun & Bradstreet (the "Merger"), with Dun & Bradstreet surviving the Merger as a wholly-owned subsidiary of Star Parent (the "D&B Acquisition").
On January 24, 2019, we entered into an Assignment and Investment Agreement with QIA FIG Holding LLC, Cannae, and Star Parent in connection with our $375.0 million investment as part of the Consortium.
On February 8, 2019, the Consortium completed the previously announced D&B Acquisition for $145.00 in cash for each share of D&B common stock then outstanding, which included our $375.0 million investment in Star Parent (the "D&B Investment") funded through a borrowing on our revolving credit facility. In connection with the closing, we were issued certain limited partner interests in Star Parent, representing approximately 18.1% of the outstanding common equity of Star Parent.
On July 1, 2019, we invested an additional $17.6 million in Star Parent in exchange for our pro-rata share of additional limited partner interests issued by Star Parent related to D&B's acquisition of Lattice Engines, Inc.
D&B is a global leader in commercial data and analytics that provides various services helping companies improve their operational performance.
Variable Interest Entities
Variable interest entities ("VIEs") are legal entities in which the equity investors as a group lack any of the characteristics of a controlling interest. The primary beneficiary of a VIE is generally the entity with the power to direct the activities that most significantly affect the VIE's economic performance and the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE.
We have variable interests in Star Parent, but we are not the primary beneficiary of Star Parent. We are a limited partner and do not have the power to direct the activities that most significantly affect Star Parent's economic performance. We do not provide any implicit or explicit liquidity guarantees or principal value guarantees to Star Parent. Our maximum exposure related to our variable interests in Star Parent is limited to our investment and commitments we may enter into from time to time to maintain our pro-rata share of limited partner interests.
The table below summarizes the carrying amount of our D&B Investment and our maximum exposure related to our variable interests in Star Parent (in millions):
 
June 30, 2019
 
Total assets
 
Maximum exposure(1)
Investment in Star Parent
$
356.8

 
$
374.4

_______________________________________________________
(1) Our maximum exposure includes our commitment entered into on June 26, 2019 for an additional investment of $17.6 million made on July 1, 2019.
We do not consolidate Star Parent because we are not the primary beneficiary. We account for our D&B Investment as an equity method investment, which results in our initial investment being recorded within Investments in unconsolidated affiliates on our Condensed Consolidated Balance Sheets (Unaudited). We record our equity in earnings (losses) of Star Parent on a one-quarter lag, based on the most recently available consolidated financial statements of Star Parent. Accordingly, our Net earnings for the three and six months ended June 30, 2019 in our Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) include our equity in losses of Star Parent for the period from February 8, 2019 through March 31, 2019.

9

BLACK KNIGHT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

Summarized consolidated financial information for Star Parent is presented below for the period subsequent to our D&B Investment (in millions):
 
 
March 31, 2019
Current assets
 
$
420.7

Non-current assets
 
8,740.3

Total assets
 
$
9,161.0

 
 
 
Current liabilities, including short-term debt
 
$
778.0

Non-current liabilities
 
5,457.5

Total liabilities
 
6,235.5

Cumulative preferred series A stock
 
1,028.4

Total capital
 
1,897.1

Total liabilities and partners' capital
 
$
9,161.0

 
 
For the period February 8 to March 31, 2019
Revenues
 
$
174.1

Loss before provision for income taxes and equity in net income of affiliates
 
(111.6
)
Net loss
 
(81.1
)
Net loss attributable to Star Parent
 
(99.4
)
The summarized consolidated financial information for Star Parent was derived from the unaudited consolidated financial information of Star Parent as of March 31, 2019 and for the period February 8, 2019 to March 31, 2019.
During the three and six months ended June 30, 2019, we recorded equity in losses related to our D&B Investment of $13.3 million, net of income tax benefit of $4.7 million.
(3)    Earnings Per Share
Diluted net earnings per share includes the effect of unvested restricted stock awards. The following table sets forth the computation of basic and diluted net earnings per share (in millions, except per share amounts):
 
Three months ended June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
Basic:
 
 
 
 
 
 
 
Net earnings
$
31.9

 
$
40.0

 
$
71.2

 
$
82.7

Shares used for basic net earnings per share:
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding
147.7

 
147.1

 
147.6

 
148.0

Basic net earnings per share
$
0.22

 
$
0.27

 
$
0.48

 
$
0.56

 
 
 
 
 
 
 
 
Diluted:
 
 
 
 
 
 
 
Net earnings
$
31.9

 
$
40.0

 
$
71.2

 
$
82.7

Shares used for diluted net earnings per share:
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding
147.7

 
147.1

 
147.6

 
148.0

Dilutive effect of unvested restricted shares of common stock
0.8

 
0.6