BLACK KNIGHT FINANCIAL SERVICES, INC., 10-Q filed on 5/5/2017
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2017
May 4, 2017
Common Class A [Member]
May 4, 2017
Common Class B [Member]
Document Information [Line Items]
 
 
 
Document Type
10-Q 
 
 
Document Period End Date
Mar. 31, 2017 
 
 
Amendment Flag
false 
 
 
Document Fiscal Year Focus
2017 
 
 
Document Fiscal Period Focus
Q1 
 
 
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 
 
 
Entity Common Stock, Shares Outstanding
 
69,851,596 
84,826,282 
Condensed Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Current assets:
 
 
Cash and cash equivalents
$ 107.5 
$ 133.9 
Trade receivables, net
160.3 
155.8 
Prepaid expenses and other current assets
53.2 
45.4 
Receivables from related parties
1.3 
4.1 
Total current assets
322.3 
339.2 
Property and equipment, net
177.8 
173.0 
Computer software, net
439.4 
450.0 
Other intangible assets, net
282.4 
299.5 
Goodwill
2,306.8 
2,303.8 
Other non-current assets
203.2 
196.5 
Total assets
3,731.9 
3,762.0 
Current liabilities:
 
 
Trade accounts payable and other accrued liabilities
63.1 
55.2 
Accrued compensation and benefits
27.3 
61.1 
Current portion of long-term debt
73.4 
63.4 
Deferred revenues
51.3 
47.4 
Total current liabilities
215.1 
227.1 
Deferred revenues
81.9 
77.3 
Deferred income taxes
7.9 
7.9 
Long-term debt, net of current portion
1,486.9 
1,506.8 
Other non-current liabilities
5.6 
3.5 
Total liabilities
1,797.4 
1,822.6 
Commitments and contingencies
   
   
Equity:
 
 
Preferred stock; $0.0001 par value; 25,000,000 shares authorized; issued and outstanding, none
0 
0 
Additional paid-in capital
811.9 
810.8 
Retained earnings
77.9 
65.7 
Accumulated other comprehensive loss
(1.4)
(0.8)
Total shareholders' equity
888.4 
875.7 
Noncontrolling interests
1,046.1 
1,063.7 
Total equity
1,934.5 
1,939.4 
Total liabilities and equity
3,731.9 
3,762.0 
Common Class A [Member]
 
 
Equity:
 
 
Common stock
0 
0 
Common Class B [Member]
 
 
Equity:
 
 
Common stock
$ 0 
$ 0 
Condensed Consolidated Balance Sheets (Parentheticals) (USD $)
In Millions, except Share data, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Related party prepaid fees
$ 53.2 
$ 45.4 
Long-term debt, net of current portion
$ 1,486.9 
$ 1,506.8 
Common stock, shares outstanding
154,700,000 
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 
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
69,851,479 
69,091,008 
Common stock, shares outstanding
69,851,479 
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
84,826,282 
84,826,282 
Common stock, shares outstanding
84,800,000 
84,826,282 
Condensed Consolidated Statements of Operations and Comprehensive Earnings (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Revenues
$ 258.1 
$ 241.9 
Expenses:
 
 
Operating expenses
145.5 
136.8 
Depreciation and amortization
52.8 
48.2 
Transition and integration costs
1.2 
0 
Total expenses
199.5 
185.0 
Operating income (loss)
58.6 
56.9 
Other income and expense:
 
 
Interest expense
(16.7)
(16.8)
Other expense, net
(2.0)
(0.8)
Total other expense, net
(18.7)
(17.6)
Earnings before income taxes
39.9 
39.3 
Income tax expense
6.0 
6.2 
Net earnings from continuing operations
33.9 
33.1 
Net earnings
33.9 
33.1 
Less: Net earnings attributable to noncontrolling interests
21.7 
21.7 
Net earnings attributable to Black Knight Financial Services, Inc.
12.2 
11.4 
Unrealized holding losses, net of tax
(0.8)
(0.7)
Reclassification adjustments for losses included in net earnings, net of tax
0.1 1
0.1 1
Total unrealized gains (losses) on interest rate swaps, net of tax
(0.7)2
(0.6)2
Foreign currency translation adjustment
0.1 
0 
Other comprehensive loss
(0.6)
(0.6)
Comprehensive earnings attributable to noncontrolling interests
20.4 
20.6 
Comprehensive earnings
32.0 
31.4 
Weighted average shares of Class A common stock outstanding (Note 2):
 
 
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax
0.1 
0.1 
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax
$ 0.5 
$ 0.3 
Common Class A [Member]
 
 
Net earnings per share attributable to Black Knight Financial Services, Inc., Class A common shareholders:
 
 
Basic (in dollars per share)
$ 0.18 
$ 0.17 
Diluted (in dollars per share)
$ 0.18 
$ 0.17 
Weighted average shares of Class A common stock outstanding (Note 2):
 
 
Basic (in shares)
67.6 
65.8 
Weighted average shares of common stock, diluted (in shares)
152.9 
152.6 
Condensed Consolidated Statement of Equity (USD $)
In Millions, unless otherwise specified
Total
USD ($)
Common Stock [Member]
Common Class A [Member]
Common Stock [Member]
Common Class B [Member]
Additional Paid-in Capital [Member]
USD ($)
Accumulated Deficit/Retained Earnings [Member]
USD ($)
Accumulated Other Comprehensive Loss [Member]
USD ($)
Noncontrolling Interest [Member]
USD ($)
Beginning balance at Dec. 31, 2016
$ 1,939.4 
 
 
$ 810.8 
$ 65.7 
$ (0.8)
$ 1,063.7 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Beginning balance, shares
 
69.9 
84.8 
 
 
 
 
Issuance of common stock
0 
 
 
0 
 
 
 
Tax withholding payments for restricted share vesting (in shares)
 
(0.1)
 
 
 
 
 
Tax withholding payments for restricted share vesting
(4.1)
 
 
(4.1)
 
 
 
Issuance of common stock, shares
 
0.9 
 
 
 
 
 
Equity based compensation expense
5.2 
 
 
5.2 
 
 
 
Net earnings
33.9 
 
 
 
12.2 
 
21.7 
Foreign currency translation adjustment
0.2 
 
 
 
 
0.1 
0.1 
Unrealized loss on interest rate swaps
(2.1)
 
 
 
 
(0.7)
(1.4)
Tax distributions to members
(38.0)
 
 
 
0 
 
(38.0)
Ending balance at Mar. 31, 2017
$ 1,934.5 
 
 
$ 811.9 
$ 77.9 
$ (1.4)
$ 1,046.1 
Ending balance, shares at Mar. 31, 2017
 
69.9 
84.8 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Cash flows from operating activities:
 
 
Net earnings
$ 33.9 
$ 33.1 
Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
Depreciation and amortization
52.8 
48.2 
Amortization of debt issuance costs, bond premium and original issue discount
0.7 
0.7 
Loss on extinguishment of debt, net
0.4 
0 
Deferred income taxes, net
0 
(0.2)
Equity-based compensation
5.2 
2.7 
Changes in assets and liabilities, net of acquired assets and liabilities:
 
 
Trade and other receivables, including receivables from related parties
(3.9)
(4.0)
Prepaid expenses and other assets
(9.4)
(11.9)
Deferred revenues
(12.4)
(13.4)
Deferred contract costs
8.5 
3.6 
Trade accounts payable and other accrued liabilities, including accrued compensation and benefits
(26.9)
(0.9)
Net cash provided by operating activities
48.9 
57.9 
Cash flows from investing activities:
 
 
Additions to property and equipment
(3.7)
(6.8)
Additions to computer software
(12.5)
(9.8)
Net cash used in investing activities
(16.2)
(16.6)
Cash flows from financing activities:
 
 
Debt service payments
(11.0)
(61.0)
Distributions to members
(38.0)
(48.0)
Capital lease payments
(4.3)
0 
Tax withholding payments for restricted share vesting
(4.1)
0 
Debt issuance costs
(1.7)
0 
Net cash used in financing activities
(59.1)
(109.0)
Net decrease in cash and cash equivalents
(26.4)
(67.7)
Cash and cash equivalents, beginning of period
133.9 
186.0 
Cash and cash equivalents, end of period
107.5 
118.3 
Supplemental cash flow information:
 
 
Interest paid
(9.4)
(9.4)
Income taxes refunded (paid), net
$ 0.1 
$ (1.1)
Basis of Presentation
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:
•
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 its units of BKFS LLC to New BKH in exchange for 100% of the shares of New BKH common stock;
•
Following which BKHI will 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.
•
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 common stock (other than shares owned by Black Knight and New BKH) will be exchanged for one share of New Black Knight common stock.
•
New Black Knight will be the public company following the completion of the distribution and mergers.
The Distribution Plan is subject to the receipt of private letter rulings from the Internal Revenue Service ("IRS"), approving certain aspects relating to the tax-free spin-off of the Black Knight shares; filing and acceptance of a registration statement for the Black Knight spin-off with the SEC; Black Knight shareholder approval; and other customary closing conditions. The closing of the Distribution Plan is expected by the end of the third quarter of 2017.
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 retain sales responsibility for third parties, other than FNF. As a result of the realignment, Black Knight no longer recognizes revenues or expense 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.
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):
 
March 31, 2017
 
December 31, 2016
Unrestricted:
 
 
 
Cash
$
76.8

 
$
129.8

Cash equivalents
28.5

 
1.8

Total unrestricted cash and cash equivalents
105.3

 
131.6

Restricted cash equivalents (1)
2.2

 
2.3

Total cash and cash equivalents
$
107.5

 
$
133.9

_______________
(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 March 31, 2017 and December 31, 2016 is as follows (in millions):

 
March 31, 2017
 
December 31, 2016
Trade receivables — billed
$
119.1

 
$
115.4

Trade receivables — unbilled
43.4

 
42.6

Total trade receivables
162.5

 
158.0

Allowance for doubtful accounts
(2.2
)
 
(2.2
)
Total trade receivables, net
$
160.3

 
$
155.8



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 $18.4 million (net of imputed interest of $0.2 million) and $10.0 million (net of imputed interest of $0.1 million) as of March 31, 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 $9.1 million and $5.0 million as of March 31, 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 three months ended March 31, 2017 was $6.7 million and relates to the unpaid portion of the capital lease that commenced on January 1, 2017. We did not have any capital leases during the three months ended March 31, 2016.
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):
 
Three months ended March 31,
 
2017
 
2016
Property and equipment
$
7.1

 
$
6.9

Computer software
20.5

 
18.3

Other intangible assets
17.0

 
17.8

Deferred contract costs
8.2

 
5.2

Total
$
52.8

 
$
48.2


Deferred contract costs amortization for the three months ended March 31, 2017 includes accelerated amortization of $3.3 million related to certain deferred implementation costs.
Transition and Integration Costs
Transition and integration costs during the three months ended March 31, 2017 represent legal and professional fees related to the planned distribution of FNF's ownership interest in Black Knight.
2016 eLynx Acquisition
On May 16, 2016, Black Knight completed the acquisition of eLynx Holdings, Inc. ("eLynx"). The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair value at the acquisition date. The fair value of the acquired Computer software and Other intangible assets was determined using a third-party valuation based on significant estimates and assumptions, including level 3 inputs, which are judgmental in nature. These estimates and assumptions include the projected timing and amount of future cash flows, discount rates reflecting the risk inherent in the future cash flows and future market prices. These estimates for the eLynx acquisition were finalized in the first quarter of 2017. Measurement period adjustments to provisional purchase price allocations are recognized in the period in which they are determined, with the effect on earnings of changes in depreciation, amortization or other income resulting from such changes calculated as if the accounting had been completed on the acquisition date.
During the three months ended March 31, 2017, adjustments were recorded to the following (in millions):
Goodwill
$
3.0

Computer software
(2.6
)
Accrued compensation and benefits
(0.3
)
Other intangible assets
(0.1
)

The goodwill adjustment of $3.0 million is included in the Technology segment. An adjustment of $0.5 million to Depreciation and amortization was recorded in the three months ended March 31, 2017 related to the changes in provisional values.
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.
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 from over the period the services are performed compared to deferring and recognizing over the contract term. 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, including related amortization periods. 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. However, the assessment of whether the term license is distinct in certain instances based on the nature of the contract is still ongoing.
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 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
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 months ended March 31, 2017 and 2016 was 32.8% and 35.4%, respectively. The denominator includes approximately 84.8 million shares of Class B common stock outstanding for the three months ended March 31, 2017 and 2016. The denominator also includes the dilutive effect of approximately 0.5 million and 2.0 million shares of unvested restricted shares of Class A common stock for the three months ended March 31, 2017 and 2016, respectively.

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):
 
Three months ended March 31,
 
2017
 
2016
Basic:
 
 
 
Net earnings attributable to Black Knight
$
12.2

 
$
11.4

Shares used for basic net earnings per share:
 
 
 
Weighted average shares of Class A common stock outstanding
67.6

 
65.8

Basic net earnings per share
$
0.18

 
$
0.17

 
 
 
 
Diluted:
 
 
 
Earnings before income taxes
$
39.9

 
$
39.3

Income tax expense excluding the effect of noncontrolling interests
13.1

 
13.9

Net earnings
$
26.8

 
$
25.4

Shares used for diluted net earnings per share:
 
 
 
Weighted average shares of Class A common stock outstanding
67.6

 
65.8

Dilutive effect of unvested restricted shares of Class A common stock
0.5

 
2.0

Weighted average shares of Class B common stock outstanding
84.8

 
84.8

Weighted average shares of common stock, diluted
152.9

 
152.6

Diluted net earnings per share
$
0.18

 
$
0.17

Related Party Transactions
Related Party Transactions
Related Party Transactions
We are party to certain related party agreements, including those with FNF and Thomas H. Lee Partners, L.P. ("THL"). The following table sets forth the ownership interests of FNF, THL and other holders of Black Knight common stock (shares in millions):
 
March 31, 2017
 
December 31, 2016
 
Shares
 
Ownership
Percentage
 
Shares
 
Ownership
Percentage
Class A common stock:
 
 
 
 
 
 
 
THL and its affiliates
39.3

 
25.4
%
 
39.3

 
25.5
%
Restricted shares
1.9

 
1.2
%
 
2.9

 
1.9
%
Other, including those publicly traded
28.7

 
18.6
%
 
26.9

 
17.5
%
Total shares of Class A common stock
69.9

 
45.2
%
 
69.1

 
44.9
%
Class B common stock:
 
 
 
 
 
 
 
FNF subsidiary
83.3

 
53.8
%
 
83.3

 
54.1
%
THL and its affiliates
1.5

 
1.0
%
 
1.5

 
1.0
%
Total shares of Class B common stock
84.8

 
54.8
%
 
84.8

 
55.1
%
Total common stock outstanding
154.7

 
100.0
%
 
153.9

 
100.0
%

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.
 
Three months ended March 31,
 
2017
 
2016
Revenues
$
12.2

 
$
16.4

Operating expenses
3.3

 
3.4

Interest expense (1)
1.0

 
1.0

_______________
(1)
Amounts represent a guarantee fee (see below).
We pay 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. During the three months ended March 31, 2017 and 2016, we recognized $1.0 million in Interest expense related to the guarantee fee. 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 $49.1 million and $49.3 million as of March 31, 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.
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):
 
Three months ended March 31,
 
2017
 
2016
Operating expenses
$
0.1

 
$
0.4

Software and software-related purchases
—

 
0.9


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 March 31, 2017.
Revenues and Expenses
A detail of related party items included in Revenues is as follows (in millions):
 
Three months ended March 31,
 
2017
 
2016
Data and analytics services
$
4.4

 
$
10.4

Servicing, origination and default technology services
7.8

 
6.0

Total related party revenues
$
12.2

 
$
16.4

A detail of related party items included in Operating expenses (net of expense reimbursements) is as follows (in millions):
 
Three months ended March 31,
 
2017
 
2016
Data entry, indexing services and other operating expenses
$
1.4

 
$
2.3

Corporate services
2.5

 
2.3

Technology and corporate services
(0.5
)
 
(0.8
)
     Total related party expenses, net
$
3.4

 
$
3.8


Additionally, related party prepaid fees were less than $0.1 million and $0.1 million as of March 31, 2017 and December 31, 2016, respectively, which are included in Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets (Unaudited). Finally, related party deferred revenues were $2.8 million as of March 31, 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
Long-Term Debt
Long-Term Debt
Long-term debt consisted of the following (in millions):
 
March 31, 2017
 
December 31, 2016
 
Principal
 
Debt Issuance Costs
 
Premium (Discount)
 
Total
 
Principal
 
Debt Issuance Costs
 
Premium (Discount)
 
Total
Term A Loan
$
730.0

 
$
(6.4
)
 
$
—

 
$
723.6

 
$
740.0

 
$
(7.0
)
 
$
—

 
$
733.0

Term B Loan
393.0

 
(2.9
)
 
(0.7
)
 
389.4

 
394.0

 
(3.4
)
 
(0.8
)
 
389.8

Revolving Credit Facility
50.0

 
(3.4
)
 
—

 
46.6

 
50.0

 
(3.7
)
 
—

 
46.3

Senior Notes, issued at par
390.0

 
—

 
10.7

 
400.7

 
390.0

 
—

 
11.1

 
401.1

   Total long-term debt
1,563.0

 
(12.7
)
 
10.0

 
1,560.3

 
1,574.0

 
(14.1
)
 
10.3

 
1,570.2

Less: Current portion of long-term debt
74.0

 
(0.6
)
 
—

 
73.4

 
64.0

 
(0.6
)
 
—

 
63.4

Long-term debt, net of current portion
$
1,489.0

 
$
(12.1
)
 
$
10.0

 
$
1,486.9

 
$
1,510.0

 
$
(13.5
)
 
$
10.3

 
$
1,506.8


Principal maturities as of March 31, 2017 for each of the next five years and thereafter are as follows (in millions):
2017 (remaining)
$
53.0

2018
84.0

2019
104.0

2020
554.0

2021
4.0

Thereafter
764.0

Total
$
1,563.0


Scheduled maturities noted above exclude the effect of the debt issuance costs of $12.7 million as well as $10.0 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.
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.
As of March 31, 2017, the Term A Loan and the Revolving Credit Facility bear interest at the Eurodollar rate plus a margin of 200 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 March 31, 2017, we have $350.0 million capacity on the Revolving Credit Facility and pay an unused commitment fee of 30 basis points. During the three months ended March 31, 2017, there were no incremental borrowings or payments on our Revolving Credit Facility. As of March 31, 2017, the interest rates on the Term A Loan, Term B Loan and Revolving Credit Facility were 3.00%, 3.25% and 3.00%, respectively.
Debt 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 Facility 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.
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.
Fair Value of Long-Term Debt
The fair value of the Senior Notes as of March 31, 2017 was $408.5 million (104.75% of par value), based upon established market prices for the securities using level 2 inputs. The fair value of our Facilities approximates their carrying value at March 31, 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 1.00% as of March 31, 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 1.00% as of March 31, 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 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):    
Balance Sheet Account
 
March 31, 2017
 
December 31, 2016
Other non-current liabilities
 
$
4.8

 
$
2.2

As of March 31, 2017, a cumulative loss of $2.2 million ($1.3 million net of tax) is reflected in Accumulated other comprehensive loss, and a cumulative loss of $2.6 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 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 ("OCE") on the accompanying Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) for the three months ended March 31, 2017 and 2016 (in millions):
 
Three months ended March 31, 2017
 
Three months ended March 31, 2016
 
Amount of Loss
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
$
(1.6
)
 
$
0.2

 
$
(1.3
)
 
$
0.2

Attributable to Black Knight Financial Services, Inc.
(0.8
)
 
0.1

 
(0.7
)
 
0.1

Total
$
(2.4
)
 
$
0.3

 
$
(2.0
)
 
$
0.3

Approximately $0.7 million ($0.6 million net of tax) of the balance in Accumulated other comprehensive loss and Noncontrolling interests as of March 31, 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 March 31, 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
Income Taxes
Income Taxes
As of March 31, 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 March 31, 2017 and 2016 was 15.0% and 15.8%, respectively. These rates are lower than the typical federal and state statutory rate because of the effect of our noncontrolling interests. The effect on adoption of ASU 2016-09 was a benefit of $0.5 million for the three months ended March 31, 2017 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 $38.0 million and $48.0 million during the three months ended March 31, 2017 and 2016, respectively.
Commitments and Contingencies
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
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:
 
Shares
 
Weighted Averaged Grant Date Fair Value
Balance, December 31, 2016
2,908,374

 
*

Granted
884,570

 
$
37.90

Forfeited
(14,581
)
 
$
28.29

Vested
(1,831,024
)
 
*

Balance, March 31, 2017
1,947,339

 
*

______________________________
*
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.
Equity-based compensation expense was $5.2 million and $2.7 million for the three months ended March 31, 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 $52.8 million as of March 31, 2017 and is expected to be recognized over a weighted average period of approximately 3.1 years.
Segment Information
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 president and 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:
•
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.
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 the Depreciation and amortization of Property and equipment, Computer software, Other intangible assets and deferred contract costs. 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). Prior period results have been reclassified to conform to the current segment presentation. We have reclassified purchase accounting adjustments from the Technology and Data and Analytics segments to Corporate and Other to provide a better indication of ongoing segment performance.

 
Three months ended March 31, 2017
 
Technology
 
Data and Analytics
 
Corporate and Other
 
Total
Revenues
$
220.6

 
$
38.9

 
$
(1.4
)
(1)
$
258.1

Expenses:
 
 
 
 
 
 
 
Operating expenses
93.7

 
33.5

 
18.3

 
145.5

Transition and integration costs
—

 
—

 
1.2

 
1.2

EBITDA
126.9

 
5.4

 
(20.9
)
 
111.4

Depreciation and amortization
27.1

 
3.5

 
22.2

(2)
52.8

Operating income (loss)
99.8

 
1.9

 
(43.1
)
 
58.6

Interest expense
 
 
 
 
 
 
(16.7
)
Other expense, net
 
 
 
 
 
 
(2.0
)
Earnings before income taxes
 
 
 
 
 
 
39.9

Income tax expense
 
 
 
 
 
 
6.0

Net earnings
 
 
 
 
 
 
$
33.9

 
 
 
 
 
 
 
 
Balance sheet data:
 
 
 
 
 
 
 
Total assets
$
3,193.7

 
$
356.0

 
$
182.2

 
$
3,731.9

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.
 
Three months ended March 31, 2016
 
Technology
 
Data and Analytics
 
Corporate and Other
 
Total
Revenues
$
202.4

 
$
41.8

 
$
(2.3
)
(1)
$
241.9

Expenses:
 
 
 
 
 
 
 
Operating expenses
87.0

 
35.0

 
14.8

 
136.8

Transition and integration costs
—

 
—

 
—

 
—

EBITDA
115.4

 
6.8

 
(17.1
)
 
105.1

Depreciation and amortization
25.4

 
2.1

 
20.7

(2)
48.2

Operating income (loss)
90.0

 
4.7

 
(37.8
)
 
56.9

Interest expense
 
 
 
 
 
 
(16.8
)
Other expense, net
 
 
 
 
 
 
(0.8
)
Earnings before income taxes
 
 
 
 
 
 
39.3

Income tax expense
 
 
 
 
 
 
6.2

Net earnings
 
 
 
 
 
 
$
33.1

 
 
 
 
 
 
 
 
Balance sheet data:
 
 
 
 
 
 
 
Total assets
$
3,115.7

 
$
314.2

 
$
203.6

 
$
3,633.5

Goodwill
$
2,048.0

 
$
172.1

 
$
—

 
$
2,220.1

_______________________________________________________
(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.
Basis of Presentation (Policies)
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 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)
Schedule of Cash and Cash Equivalents 
Cash and cash equivalents include the following (in millions):
 
March 31, 2017
 
December 31, 2016
Unrestricted:
 
 
 
Cash
$
76.8

 
$
129.8

Cash equivalents
28.5

 
1.8

Total unrestricted cash and cash equivalents
105.3

 
131.6

Restricted cash equivalents (1)
2.2

 
2.3

Total cash and cash equivalents
$
107.5

 
$
133.9

_______________
(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 March 31, 2017 and December 31, 2016 is as follows (in millions):

 
March 31, 2017
 
December 31, 2016
Trade receivables — billed
$
119.1

 
$
115.4

Trade receivables — unbilled
43.4

 
42.6

Total trade receivables
162.5

 
158.0

Allowance for doubtful accounts
(2.2
)
 
(2.2
)
Total trade receivables, net
$
160.3

 
$
155.8

Schedule of Depreciation and Amortization 
Depreciation and amortization on the Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) include the following (in millions):
 
Three months ended March 31,
 
2017
 
2016
Property and equipment
$
7.1

 
$
6.9

Computer software
20.5

 
18.3

Other intangible assets
17.0

 
17.8

Deferred contract costs
8.2

 
5.2

Total
$
52.8

 
$
48.2

Acquisition-related Adjustments 
During the three months ended March 31, 2017, adjustments were recorded to the following (in millions):
Goodwill
$
3.0

Computer software
(2.6
)
Accrued compensation and benefits
(0.3
)
Other intangible assets
(0.1
)
Earnings Per Share (Tables)
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):
 
Three months ended March 31,
 
2017
 
2016
Basic:
 
 
 
Net earnings attributable to Black Knight
$
12.2

 
$
11.4

Shares used for basic net earnings per share:
 
 
 
Weighted average shares of Class A common stock outstanding
67.6

 
65.8

Basic net earnings per share
$
0.18

 
$
0.17

 
 
 
 
Diluted:
 
 
 
Earnings before income taxes
$
39.9

 
$
39.3

Income tax expense excluding the effect of noncontrolling interests
13.1

 
13.9

Net earnings
$
26.8

 
$
25.4

Shares used for diluted net earnings per share:
 
 
 
Weighted average shares of Class A common stock outstanding
67.6

 
65.8

Dilutive effect of unvested restricted shares of Class A common stock
0.5

 
2.0

Weighted average shares of Class B common stock outstanding
84.8

 
84.8

Weighted average shares of common stock, diluted
152.9

 
152.6

Diluted net earnings per share
$
0.18

 
$
0.17

Related Party Transactions (Tables)
Schedule of related party items 
A detail of related party items included in Revenues is as follows (in millions):
 
Three months ended March 31,
 
2017
 
2016
Data and analytics services
$
4.4

 
$
10.4

Servicing, origination and default technology services
7.8

 
6.0

Total related party revenues
$
12.2

 
$
16.4

A detail of related party items included in Operating expenses (net of expense reimbursements) is as follows (in millions):
 
Three months ended March 31,
 
2017
 
2016
Data entry, indexing services and other operating expenses
$
1.4

 
$
2.3

Corporate services
2.5

 
2.3

Technology and corporate services
(0.5
)
 
(0.8
)
     Total related party expenses, net
$
3.4

 
$
3.8

We are party to certain related party agreements, including those with FNF and Thomas H. Lee Partners, L.P. ("THL"). The following table sets forth the ownership interests of FNF, THL and other holders of Black Knight common stock (shares in millions):
 
March 31, 2017
 
December 31, 2016
 
Shares
 
Ownership
Percentage
 
Shares
 
Ownership
Percentage
Class A common stock:
 
 
 
 
 
 
 
THL and its affiliates
39.3

 
25.4
%
 
39.3

 
25.5
%
Restricted shares
1.9

 
1.2
%
 
2.9

 
1.9
%
Other, including those publicly traded
28.7

 
18.6
%
 
26.9

 
17.5
%
Total shares of Class A common stock
69.9

 
45.2
%
 
69.1

 
44.9
%
Class B common stock:
 
 
 
 
 
 
 
FNF subsidiary
83.3

 
53.8
%
 
83.3

 
54.1
%
THL and its affiliates
1.5

 
1.0
%
 
1.5

 
1.0
%
Total shares of Class B common stock
84.8

 
54.8
%
 
84.8

 
55.1
%
Total common stock outstanding
154.7

 
100.0
%
 
153.9

 
100.0
%
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.
 
Three months ended March 31,
 
2017
 
2016
Revenues
$
12.2

 
$
16.4

Operating expenses
3.3

 
3.4

Interest expense (1)
1.0

 
1.0

_______________
(1)
Amounts represent a guarantee fee (see below).
Schedule of related party items 
A detail of the expenses, net from THL is set forth in the table below (in millions):
 
Three months ended March 31,
 
2017
 
2016
Operating expenses
$
0.1

 
$
0.4

Software and software-related purchases
—

 
0.9

Long-Term Debt Long-Term Debt (Tables)
Schedule of Long-term Debt 
Long-term debt consisted of the following (in millions):
 
March 31, 2017
 
December 31, 2016
 
Principal
 
Debt Issuance Costs
 
Premium (Discount)
 
Total
 
Principal
 
Debt Issuance Costs
 
Premium (Discount)
 
Total
Term A Loan
$
730.0

 
$
(6.4
)
 
$
—

 
$
723.6

 
$
740.0

 
$
(7.0
)
 
$
—

 
$
733.0

Term B Loan
393.0

 
(2.9
)
 
(0.7
)
 
389.4

 
394.0

 
(3.4
)
 
(0.8
)
 
389.8

Revolving Credit Facility
50.0

 
(3.4
)
 
—

 
46.6

 
50.0

 
(3.7
)
 
—

 
46.3

Senior Notes, issued at par
390.0

 
—

 
10.7

 
400.7

 
390.0

 
—

 
11.1

 
401.1

   Total long-term debt
1,563.0

 
(12.7
)
 
10.0

 
1,560.3

 
1,574.0

 
(14.1
)
 
10.3

 
1,570.2

Less: Current portion of long-term debt
74.0

 
(0.6
)
 
—

 
73.4

 
64.0

 
(0.6
)
 
—

 
63.4

Long-term debt, net of current portion
$
1,489.0

 
$
(12.1
)
 
$
10.0

 
$
1,486.9

 
$
1,510.0

 
$
(13.5
)
 
$
10.3

 
$
1,506.8

Schedule of Maturities of Long-term Debt 
Principal maturities as of March 31, 2017 for each of the next five years and thereafter are as follows (in millions):
2017 (remaining)
$
53.0

2018
84.0

2019
104.0

2020
554.0

2021
4.0

Thereafter
764.0

Total
$
1,563.0

Equity-Based Compensation (Tables)
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity
Restricted stock transactions in 2017 are as follows:
 
Shares
 
Weighted Averaged Grant Date Fair Value
Balance, December 31, 2016
2,908,374

 
*

Granted
884,570

 
$
37.90

Forfeited
(14,581
)
 
$
28.29

Vested
(1,831,024
)
 
*

Balance, March 31, 2017
1,947,339

 
*

______________________________
*
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.
Segment Information (Tables)
Schedule of Summarized Segment Financial Information

 
Three months ended March 31, 2017
 
Technology
 
Data and Analytics
 
Corporate and Other
 
Total
Revenues
$
220.6

 
$
38.9

 
$
(1.4
)
(1)
$
258.1

Expenses:
 
 
 
 
 
 
 
Operating expenses
93.7

 
33.5

 
18.3

 
145.5

Transition and integration costs
—

 
—

 
1.2

 
1.2

EBITDA
126.9

 
5.4

 
(20.9
)
 
111.4

Depreciation and amortization
27.1

 
3.5

 
22.2

(2)
52.8

Operating income (loss)
99.8

 
1.9

 
(43.1
)
 
58.6

Interest expense
 
 
 
 
 
 
(16.7
)
Other expense, net
 
 
 
 
 
 
(2.0
)
Earnings before income taxes
 
 
 
 
 
 
39.9

Income tax expense
 
 
 
 
 
 
6.0

Net earnings
 
 
 
 
 
 
$
33.9

 
 
 
 
 
 
 
 
Balance sheet data:
 
 
 
 
 
 
 
Total assets
$
3,193.7

 
$
356.0

 
$
182.2

 
$
3,731.9

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.
 
Three months ended March 31, 2016
 
Technology
 
Data and Analytics
 
Corporate and Other
 
Total
Revenues
$
202.4

 
$
41.8

 
$
(2.3
)
(1)
$
241.9

Expenses:
 
 
 
 
 
 
 
Operating expenses
87.0

 
35.0

 
14.8

 
136.8

Transition and integration costs
—

 
—

 
—

 
—

EBITDA
115.4

 
6.8

 
(17.1
)
 
105.1

Depreciation and amortization
25.4

 
2.1

 
20.7

(2)
48.2

Operating income (loss)
90.0

 
4.7

 
(37.8
)
 
56.9

Interest expense
 
 
 
 
 
 
(16.8
)
Other expense, net
 
 
 
 
 
 
(0.8
)
Earnings before income taxes
 
 
 
 
 
 
39.3

Income tax expense
 
 
 
 
 
 
6.2

Net earnings
 
 
 
 
 
 
$
33.1

 
 
 
 
 
 
 
 
Balance sheet data:
 
 
 
 
 
 
 
Total assets
$
3,115.7

 
$
314.2

 
$
203.6

 
$
3,633.5

Goodwill
$
2,048.0

 
$
172.1

 
$
—

 
$
2,220.1

_______________________________________________________
(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.
Basis of Presentation - Narrative (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
segment
Mar. 31, 2016
Dec. 31, 2016
Dec. 31, 2015
Schedule of Depreciation and Amortization Expense [Line Items]
 
 
 
 
Goodwill
$ 3.0 
 
 
 
Number of reporting segments
2 
 
 
 
Cash
76.8 
 
129.8 
 
Cash equivalents
28.5 
 
1.8 
 
Total unrestricted cash and cash equivalents
105.3 
 
131.6 
 
Restricted cash equivalents
2.2 
 
2.3 
 
Total cash and cash equivalents
107.5 
118.3 
133.9 
186.0 
Allowance for Doubtful Accounts
 
 
 
 
Allowance for doubtful accounts
2.2 
 
2.2 
 
Depreciation and Amortization
 
 
 
 
Deferred contract costs
8.2 
5.2 
 
 
Total
52.8 
48.2 
 
 
Accelerated amortization of deferred charges
3.3 
 
 
 
Property, Plant and Equipment [Member]
 
 
 
 
Depreciation and Amortization
 
 
 
 
Total
7.1 
6.9 
 
 
Computer Software, Intangible Asset [Member]
 
 
 
 
Depreciation and Amortization
 
 
 
 
Total
20.5 
18.3 
 
 
Other Intangible Assets [Member]
 
 
 
 
Depreciation and Amortization
 
 
 
 
Total
17.0 
17.8 
 
 
Acquisition adjustments [Member]
 
 
 
 
Depreciation and Amortization
 
 
 
 
Total
0.5 
 
 
 
Technology Segment [Member]
 
 
 
 
Schedule of Depreciation and Amortization Expense [Line Items]
 
 
 
 
Goodwill
$ 3.0 
 
 
 
Common Class B [Member] |
FNF subsidiaries [Member]
 
 
 
 
Schedule of Depreciation and Amortization Expense [Line Items]
 
 
 
 
Noncontrolling interest, shares owned by noncontrolling owners
83.3 
 
83.3 
 
Basis of Presentation - Capital Lease (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Property, Plant and Equipment [Line Items]
 
 
Interest included in payments
$ 0.2 
$ 0.1 
Capital lease obligations
18.4 
10.0 
Capital lease obligations, current
9.1 
5.0 
Unpaid portion of capital lease
6.7 
 
Assets Held under Capital Leases [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Leased equipment useful life
5 years 0 months 0 days 
 
Interest included in payments
0.1 
 
Capital lease obligations
$ 8.4 
 
Basis of Presentation - Trade Receivable, Net (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total trade receivables
$ 162.5 
$ 158.0 
Allowance for doubtful accounts
(2.2)
(2.2)
Total trade receivables, net
160.3 
155.8 
Trade receivables — billed
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total trade receivables
119.1 
115.4 
Trade receivables — unbilled
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Total trade receivables
$ 43.4 
$ 42.6 
Basis of Presentation - Acquisition-related Adjustments (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Goodwill
$ 3.0 
Computer software
(2.6)
Accrued compensation and benefits
(0.3)
Other intangible assets
$ (0.1)
Earnings Per Share - Additional Disclosures (Details)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Class of Stock [Line Items]
 
 
Conversion of shares
1 
 
Expected effective tax rate
32.77% 
35.40% 
Common Class A [Member]
 
 
Class of Stock [Line Items]
 
 
Weighted average shares of common stock outstanding (in shares)
67.6 
65.8 
Dilutive effect of unvested restricted shares of Class A common stock (in share)
0.5 
2.0 
Common Class B [Member]
 
 
Class of Stock [Line Items]
 
 
Weighted average shares of common stock outstanding (in shares)
84.8 
84.8 
Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Basic:
 
 
Net earnings attributable to Black Knight
$ 12.2 
$ 11.4 
Diluted:
 
 
Earnings before income taxes
39.9 
39.3 
Income tax expense excluding the effect of noncontrolling interests
13.1 
13.9 
Net earnings
$ 26.8 
$ 25.4 
Common Class A [Member]
 
 
Basic:
 
 
Weighted average shares of common stock outstanding (in shares)
67.6 
65.8 
Basic net earnings per share (in dollars per share)
$ 0.18 
$ 0.17 
Shares used for diluted net earnings per share:
 
 
Weighted average shares of common stock outstanding (in shares)
67.6 
65.8 
Dilutive effect of unvested restricted shares of Class A common stock (in share)
0.5 
2.0 
Weighted average shares of common stock, diluted (in shares)
152.9 
152.6 
Diluted net earnings per share (in dollars per share)
$ 0.18 
$ 0.17 
Common Class B [Member]
 
 
Basic:
 
 
Weighted average shares of common stock outstanding (in shares)
84.8 
84.8 
Shares used for diluted net earnings per share:
 
 
Weighted average shares of common stock outstanding (in shares)
84.8 
84.8 
Related Party Transactions - Ownership Interests in Black Knight (Details)
Mar. 31, 2017
Dec. 31, 2016
Class of Stock [Line Items]
 
 
Common Stock, Percent Of Total Common Stock, Outstanding
100.00% 
100.00% 
Common stock, shares outstanding
154,700,000 
153,900,000 
Common Class A [Member]
 
 
Class of Stock [Line Items]
 
 
Common Stock, Percent Of Total Common Stock, Outstanding
45.20% 
44.90% 
Common stock, shares outstanding
69,851,479 
69,091,008 
Common Class A [Member] |
THL and its affiliates [Member]
 
 
Class of Stock [Line Items]
 
 
Noncontrolling interest, shares owned by noncontrolling owners
39,300,000 
39,300,000 
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners
25.40% 
25.50% 
Common Class A [Member] |
Restricted Stock [Member]
 
 
Class of Stock [Line Items]
 
 
Noncontrolling interest, shares owned by noncontrolling owners
1,900,000 
2,900,000 
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners
1.20% 
1.90% 
Common Class A [Member] |
Other owners of class A common stock [Member]
 
 
Class of Stock [Line Items]
 
 
Noncontrolling interest, shares owned by noncontrolling owners
28,700,000 
26,900,000 
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners
18.60% 
17.50% 
Common Class B [Member]
 
 
Class of Stock [Line Items]
 
 
Common Stock, Percent Of Total Common Stock, Outstanding
54.80% 
55.10% 
Common stock, shares outstanding
84,800,000 
84,826,282 
Common Class B [Member] |
THL and its affiliates [Member]
 
 
Class of Stock [Line Items]
 
 
Noncontrolling interest, shares owned by noncontrolling owners
1,500,000 
1,500,000 
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners
1.00% 
1.00% 
Common Class B [Member] |
FNF subsidiaries [Member]
 
 
Class of Stock [Line Items]
 
 
Noncontrolling interest, shares owned by noncontrolling owners
83,300,000 
83,300,000 
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners
53.80% 
54.10% 
Related Party Transactions - FNF (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
FNF [Member]
Mar. 31, 2016
FNF [Member]
Mar. 31, 2017
FNF [Member]
Medium-term Notes [Member]
Term Loan B [Member]
Dec. 31, 2016
FNF [Member]
Medium-term Notes [Member]
Term Loan B [Member]
Mar. 31, 2017
FNF [Member]
Senior Notes [Member]
5.75% Senior Notes [Member]
Mar. 31, 2017
FNF [Member]
Senior Notes [Member]
5.75% Senior Notes [Member]
Guarantee Fee from May 26, 2015 - October 2017 [Member]
Mar. 31, 2017
FNF [Member]
Operating Expenses [Member]
Mar. 31, 2016
FNF [Member]
Operating Expenses [Member]
Related Party Transaction [Line Items]
 
 
 
 
 
 
 
 
 
 
Related party revenues
$ 12.2 
$ 16.4 
$ 12.2 
$ 16.4 
 
 
 
 
 
 
Related party expenses, net
3.4 
3.8 
 
 
 
 
 
 
3.3 
3.4 
Related party interest expense
 
 
1.0 
1.0 
 
 
1.0 
 
 
 
Related party notes
 
 
 
 
$ 49.1 
$ 49.3 
 
 
 
 
Guarantee fee, percent of outstanding principal
 
 
 
 
 
 
 
1.00% 
 
 
Related Party Transactions - THL (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
THL [Member]
director
Mar. 31, 2016
THL [Member]
Dec. 31, 2016
THL [Member]
Medium-term Notes [Member]
Term Loan B [Member]
Mar. 31, 2017
THL [Member]
Operating Expenses [Member]
Mar. 31, 2016
THL [Member]
Operating Expenses [Member]
Related Party Transaction [Line Items]
 
 
 
 
 
 
 
Number of related party directors serving on Board of Managers
 
 
2 
 
 
 
 
Related party expenses, net
$ 3.4 
$ 3.8 
 
 
 
$ 0.1 
$ 0.4 
Purchases from related party
 
 
0 
0.9 
 
 
 
Related party notes
 
 
 
 
$ 39.4 
 
 
Related Party Transactions - Related Party Revenues (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Related Party Transaction [Line Items]
 
 
Related party revenues
$ 12.2 
$ 16.4 
Data and Analytics Services [Member]
 
 
Related Party Transaction [Line Items]
 
 
Related party revenues
4.4 
10.4 
Servicing, Origination and Default Technology [Member]
 
 
Related Party Transaction [Line Items]
 
 
Related party revenues
$ 7.8 
$ 6.0 
Related Party Transactions - Related Party Expenses (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Related Party Transaction [Line Items]
 
 
 
Related party expenses, net
$ 3.4 
$ 3.8 
 
Prepaid expense, current
0.1 
 
0.1 
Related party, deferred revenue
2.8 
 
 
Data Entry, Indexing Services, and Other Operating Expenses [Member]
 
 
 
Related Party Transaction [Line Items]
 
 
 
Related party expenses, net
1.4 
2.3 
 
Corporate Services [Member]
 
 
 
Related Party Transaction [Line Items]
 
 
 
Related party expenses, net
2.5 
2.3 
 
Technology and Corporate Services [Member]
 
 
 
Related Party Transaction [Line Items]
 
 
 
Related party transaction, reimbursements from transactions with related party
$ (0.5)
$ (0.8)
 
Long-Term Debt - Long-term Debt Components (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Debt Instrument [Line Items]
 
 
Total long-term debt
$ 1,563.0 
$ 1,574.0 
Less: Current portion of long-term debt, net of debt issuance costs of $0.6 as of June 30, 2015
74.0 
64.0 
Long-term debt, net of current portion
1,489.0 
1,510.0 
Issuance costs
(12.7)
(14.1)
Issuance costs, current
(0.6)
(0.6)
Debt Instrument, Unamortized Discount (Premium), Net
10.0 
10.3 
Total
1,560.3 
1,570.2 
Current portion of long-term debt
73.4 
63.4 
Deferred Finance Costs, Noncurrent, Net
(12.1)
(13.5)
Long-term debt, net of current portion
1,486.9 
1,506.8 
Medium-term Notes [Member] |
Term Loan A [Member]
 
 
Debt Instrument [Line Items]
 
 
Total long-term debt
730.0 
740.0 
Issuance costs
(6.4)
(7.0)
Debt Instrument, Unamortized Discount (Premium), Net
0 
0 
Total
723.6 
733.0 
Medium-term Notes [Member] |
Term Loan B [Member]
 
 
Debt Instrument [Line Items]
 
 
Total long-term debt
393.0 
394.0 
Issuance costs
(2.9)
(3.4)
Debt Instrument, Unamortized Discount (Premium), Net
(0.7)
(0.8)
Total
389.4 
389.8 
Line of Credit [Member] |
Revolving Credit Facility [Member]
 
 
Debt Instrument [Line Items]
 
 
Total long-term debt
50.0 
50.0 
Issuance costs
(3.4)
(3.7)
Debt Instrument, Unamortized Discount (Premium), Net
0 
0 
Total
46.6 
46.3 
Senior Notes [Member] |
5.75% Senior Notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Total long-term debt
390.0 
390.0 
Issuance costs
0 
0 
Debt Instrument, Unamortized Discount (Premium), Net
10.7 
11.1 
Total
$ 400.7 
$ 401.1 
Long-Term Debt - Schedule of Maturities (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Debt Disclosure [Abstract]
 
 
2017 (remaining)
$ 53.0 
 
2017
84.0 
 
2018
104.0 
 
2019
554.0 
 
2020
4.0 
 
Thereafter
764.0 
 
Total long-term debt
1,563.0 
1,574.0 
Issuance costs
12.7 
14.1 
Unamortized discount (premium), net
$ (10.0)
$ (10.3)
Long-Term Debt - Credit Agreement (Details) (USD $)
0 Months Ended 3 Months Ended
Feb. 27, 2017
Credit Agreement First Amendment [Member]
Base Rate [Member]
Feb. 27, 2017
Credit Agreement First Amendment [Member]
Eurodollar [Member]
Mar. 31, 2017
Medium-term Notes [Member]
Term Loan A [Member]
May 27, 2015
Medium-term Notes [Member]
Term Loan A [Member]
Mar. 31, 2017
Medium-term Notes [Member]
Term Loan B [Member]
May 27, 2015
Medium-term Notes [Member]
Term Loan B [Member]
Mar. 31, 2017
Medium-term Notes [Member]
Term Loan B [Member]
Eurodollar [Member]
Mar. 31, 2017
Term Loan and Revolving Credit Facility [Member]
Term Loan A [Member]
Eurodollar [Member]
Mar. 31, 2017
Revolving Credit Facility [Member]
Line of Credit [Member]
May 27, 2015
Revolving Credit Facility [Member]
Line of Credit [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
Interest rate at period end
 
 
3.00% 
 
3.25% 
 
 
 
 
 
Principal amount of debt
 
 
 
$ 800,000,000.0 
 
$ 400,000,000.0 
 
 
 
 
Maximum borrowing capacity
 
 
 
 
 
 
 
 
 
400,000,000.0 
Basis spread on variable rate
1.25% 
2.25% 
 
 
 
 
2.25% 
2.00% 
 
 
Variable rate, floor
 
0.75% 
 
 
 
 
0.75% 
 
 
 
Amount unused on the Revolving Credit Facility
 
 
 
 
 
 
 
 
$ 350,000,000 
 
Unused commitment fee
 
 
 
 
 
 
 
 
0.30% 
 
Interest rate at period end
 
 
 
 
 
 
 
 
3.00% 
 
Long-Term Debt - Senior Notes (Details) (Senior Notes [Member], 5.75% Senior Notes [Member], USD $)
In Millions, unless otherwise specified
0 Months Ended
Mar. 31, 2017
Apr. 26, 2017
Subsequent Event [Member]
Debt Instrument [Line Items]
 
 
Redemption price
 
104.825% 
Stated interest rate
5.75% 
 
Interest expense
 
$ 0.7 
Long-Term Debt - Fair Value of Long-Term Debt (Details) (Senior Notes [Member], 5.75% Senior Notes [Member], Level 2 [Member], USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Senior Notes [Member] |
5.75% Senior Notes [Member] |
Level 2 [Member]
 
Debt Instrument [Line Items]
 
Fair value of debt
$ 408.5 
Fair value of debt, percent over carrying value
104.75% 
Long-Term Debt - Interest Rate Swaps Additional Information (Details) (USD $)
3 Months Ended 12 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Jan. 20, 2016
Derivative [Line Items]
 
 
 
Cumulative loss reflected in Noncontrolling interests
$ 2,600,000 
$ 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
(2,200,000)
(1,000,000)
 
Loss recognized in other comprehensive income (loss), net of tax
1,300,000 
600,000 
 
Reclassification in next 12 months, gross
700,000 
 
 
Reclassification in next 12 months, net
600,000 
 
 
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
1.00% 
 
 
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], Other Noncurrent Liabilities [Member], USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Interest Rate Swap [Member] |
Designated as Hedging Instrument [Member] |
Other Noncurrent Liabilities [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability, Fair Value, Gross Liability
$ 4.8 
$ 2.2 
Long-Term Debt - Derivative Instruments Recognized in AOCI (Details) (Interest Rate Swap [Member], USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Derivative Instruments, Gain (Loss) [Line Items]
 
 
Amount of Loss Recognized in OCE
$ (2.4)
$ (2.0)
Amount of Loss Reclassified from Accumulated OCE into Net earnings
0.3 
0.3 
Attributable to noncontrolling interests [Member]
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
Amount of Loss Recognized in OCE
(1.6)
(1.3)
Amount of Loss Reclassified from Accumulated OCE into Net earnings
0.2 
0.2 
Attributable to Black Knight Financial Services, Inc. [Member]
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
Amount of Loss Recognized in OCE
(0.8)
(0.7)
Amount of Loss Reclassified from Accumulated OCE into Net earnings
$ 0.1 
$ 0.1 
Long-Term Debt - Debt Refinancing (Details) (USD $)
3 Months Ended 3 Months Ended 3 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Mar. 31, 2017
Term Loan and Revolving Credit Facility [Member]
Term Loan A [Member]
Eurodollar [Member]
May 27, 2015
Medium-term Notes [Member]
Term Loan B [Member]
Mar. 31, 2017
Medium-term Notes [Member]
Term Loan B [Member]
Eurodollar [Member]
May 27, 2015
Medium-term Notes [Member]
Term Loan A [Member]
Mar. 31, 2017
Revolving Credit Facility [Member]
Line of Credit [Member]
May 27, 2015
Revolving Credit Facility [Member]
Line of Credit [Member]
Apr. 26, 2017
Subsequent Event [Member]
Apr. 26, 2017
Subsequent Event [Member]
Term Loan and Revolving Credit Facility [Member]
Base Rate [Member]
Apr. 26, 2017
Subsequent Event [Member]
Term Loan and Revolving Credit Facility [Member]
Base Rate [Member]
Minimum [Member]
Apr. 26, 2017
Subsequent Event [Member]
Term Loan and Revolving Credit Facility [Member]
Base Rate [Member]
Maximum [Member]
Apr. 26, 2017
Subsequent Event [Member]
Term Loan and Revolving Credit Facility [Member]
Eurodollar [Member]
Minimum [Member]
Apr. 26, 2017
Subsequent Event [Member]
Term Loan and Revolving Credit Facility [Member]
Eurodollar [Member]
Maximum [Member]
Apr. 26, 2017
Subsequent Event [Member]
Medium-term Notes [Member]
Term Loan A [Member]
Apr. 26, 2017
Subsequent Event [Member]
Revolving Credit Facility [Member]
Line of Credit [Member]
Apr. 26, 2017
Subsequent Event [Member]
Revolving Credit Facility [Member]
Line of Credit [Member]
Apr. 26, 2017
Subsequent Event [Member]
Revolving Credit Facility [Member]
Line of Credit [Member]
Minimum [Member]
Apr. 26, 2017
Subsequent Event [Member]
Revolving Credit Facility [Member]
Line of Credit [Member]
Maximum [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase in borrowing capacity
 
 
 
 
 
 
 
 
 
 
 
 
$ 300,000,000 
 
 
 
 
Principal amount of debt
 
400,000,000.0 
 
800,000,000.0 
 
 
 
 
 
 
 
 
1,030,000,000.0 
 
 
 
 
Increase in borrowing capacity
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity
 
 
 
 
 
$ 400,000,000.0 
 
 
 
 
 
 
 
 
$ 500,000,000.0 
 
 
Reduction in basis spread
 
 
 
 
 
 
 
0.25% 
 
 
 
 
 
 
 
 
 
Reduction in commitment fee
 
 
 
 
 
 
 
 
 
 
 
 
 
0.05% 
 
 
 
Basis spread on variable rate
2.00% 
 
2.25% 
 
 
 
 
 
0.25% 
1.00% 
1.25% 
2.00% 
 
 
 
 
 
Variable rate, floor
 
 
0.75% 
 
 
 
 
 
 
 
 
0.00% 
 
 
 
 
 
Unused commitment fee
 
 
 
 
0.30% 
 
 
 
 
 
 
 
 
 
 
0.15% 
0.30% 
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Income Tax Disclosure [Abstract]
 
 
Effective tax rate (as a percent)
15.00% 
15.80% 
Tax benefit
$ 0.5 
 
Distributions to members
$ (38.0)
$ (48.0)
Equity-Based Compensation - Additional Information (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 0 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
Restricted Stock [Member]
Common Class A [Member]
Feb. 3, 2017
Share-based Compensation Award, Tranche One [Member]
Restricted Stock [Member]
Common Class A [Member]
Feb. 3, 2017
Share-based Compensation Award, Tranche Two [Member]
Restricted Stock [Member]
Common Class A [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
Granted (in shares)
 
 
884,570 
 
 
Weighted Averaged Grant Date Fair Value (in dollars per share)
$ 2.10 
 
$ 37.90 
 
 
Vesting period
 
 
 
4 years 
3 years 
Share-based compensation expense
$ 5.2 
$ 2.7 
 
 
 
Compensation costs not yet recognized
$ 52.8 
 
 
 
 
Recognition period
3 years 1 month 0 days 
 
 
 
 
Shares expected to vest (shares)
 
 
 
681,410 
203,160 
Equity-Based Compensation - Restricted Stock Transactions (Details) (USD $)
0 Months Ended 3 Months Ended
May 20, 2015
Mar. 31, 2017
Shares
 
 
Forfeited (in shares)
 
(14,581)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
 
Weighted Averaged Grant Date Fair Value (in dollars per share)
 
$ 2.10 
Restricted Stock [Member] |
Common Class A [Member]
 
 
Shares
 
 
Beginning balance (in shares)
 
2,908,374 
Granted (in shares)
 
884,570 
Vested (in shares)
 
(1,831,024)
Ending balance (in shares)
 
1,947,339 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
 
Weighted Averaged Grant Date Fair Value (in dollars per share)
 
$ 37.90 
Weighted Averaged Grant Date Fair Value (in dollars per share)
 
$ 28.29 
Fair value of restricted shares at date of conversion (in dollars per share)
$ 24.50 
 
BKLS LLC Profit Interests Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
 
Weighted Averaged Grant Date Fair Value (in dollars per share)
 
$ 2.01 
Segment Information - Additional Disclosures (Details)
3 Months Ended
Mar. 31, 2017
segment
Segment Reporting [Abstract]
 
Number of segments
2 
Segment Information - Summarized Financial Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Jun. 30, 2015
Segment Reporting Information [Line Items]
 
 
 
 
Revenues
$ 258.1 
$ 241.9 
 
 
Operating expenses
145.5 
136.8 
 
 
Transition and integration costs
1.2 
0 
 
 
EBITDA
111.4 
105.1 
 
 
Depreciation and amortization
52.8 
48.2 
 
 
Operating income (loss)
58.6 
56.9 
 
 
Interest expense
(16.7)
(16.8)
 
 
Other expense, net
(2.0)
(0.8)
 
 
Earnings from continuing operations before income taxes
39.9 
39.3 
 
 
Income tax expense
6.0 
6.2 
 
 
Net earnings from continuing operations
33.9 
33.1 
 
 
Balance sheet data:
 
 
 
 
Total assets
3,731.9 
 
3,762.0 
3,633.5 
Goodwill
2,306.8 
 
2,303.8 
2,220.1 
Operating Segments [Member] |
Technology Segment [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenues
220.6 
202.4 
 
 
Operating expenses
93.7 
87.0 
 
 
Transition and integration costs
0 
0 
 
 
EBITDA
126.9 
115.4 
 
 
Depreciation and amortization
27.1 
25.4 
 
 
Operating income (loss)
99.8 
90.0 
 
 
Balance sheet data:
 
 
 
 
Total assets
3,193.7 
 
 
3,115.7 
Goodwill
2,115.0 
 
 
2,048.0 
Operating Segments [Member] |
Data and Analytics Segment [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenues
38.9 
41.8 
 
 
Operating expenses
33.5 
35.0 
 
 
Transition and integration costs
0 
0 
 
 
EBITDA
5.4 
6.8 
 
 
Depreciation and amortization
3.5 
2.1 
 
 
Operating income (loss)
1.9 
4.7 
 
 
Balance sheet data:
 
 
 
 
Total assets
356.0 
 
 
314.2 
Goodwill
191.8 
 
 
172.1 
Corporate and Other [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenues
(1.4)
(2.3)
 
 
Operating expenses
18.3 
14.8 
 
 
Transition and integration costs
1.2 
0 
 
 
EBITDA
(20.9)
(17.1)
 
 
Depreciation and amortization
22.2 
20.7 
 
 
Operating income (loss)
(43.1)
(37.8)
 
 
Balance sheet data:
 
 
 
 
Total assets
182.2 
 
 
203.6 
Goodwill
$ 0 
 
 
$ 0