First Advantage Corporation (NASDAQ: FA), a leading global provider
of employment background screening and verification solutions,
today announced financial results for the first quarter ended
March 31, 2023.
Key Financials (Amounts in
millions, except per share data and percentages)
|
|
Three Months Ended March 31, |
|
|
2023 |
|
2022 |
|
Change |
Revenues |
|
$ |
175.5 |
|
|
$ |
189.9 |
|
|
|
(7.6 |
)% |
Income from operations |
|
$ |
11.3 |
|
|
$ |
17.1 |
|
|
|
(34.0 |
)% |
Net income |
|
$ |
1.9 |
|
|
$ |
13.0 |
|
|
|
(85.2 |
)% |
Net income margin |
|
|
1.1 |
% |
|
|
6.9 |
% |
|
NA |
|
Diluted net income per
share |
|
$ |
0.01 |
|
|
$ |
0.09 |
|
|
|
(88.9 |
)% |
Adjusted EBITDA¹ |
|
$ |
48.6 |
|
|
$ |
53.6 |
|
|
|
(9.4 |
)% |
Adjusted
EBITDA Margin¹ |
|
|
27.7 |
% |
|
|
28.2 |
% |
|
NA |
|
Adjusted Net Income¹ |
|
$ |
28.4 |
|
|
$ |
33.5 |
|
|
|
(15.3 |
)% |
Adjusted Diluted Earnings Per
Share¹ |
|
$ |
0.19 |
|
|
$ |
0.22 |
|
|
|
(13.6 |
)% |
¹ Adjusted EBITDA, Adjusted EBITDA Margin,
Adjusted Net Income, Adjusted Diluted EPS, Constant Currency
Revenues, and Constant Currency Adjusted EBITDA are non-GAAP
measures. Please see the schedules accompanying this earnings
release for a reconciliation of these measures to their most
directly comparable respective GAAP measures.Note: "NA" indicates
not applicable information.
“We reported first quarter results consistent
with our expectations, including revenues of $176 million and
Adjusted EBITDA of $49 million, while also cycling over
exceptionally strong growth in the prior-year quarter. These
results demonstrated the ongoing resilience of our business as we
navigated macroeconomic headwinds across several fronts, including
higher interest rates, inflation, ongoing geopolitical uncertainty,
and challenging labor markets,” said Scott Staples, Chief Executive
Officer.
“Our flexible and efficient cost structure as
well as our differentiated vertical go-to-market strategy and
diverse customer base enabled us to deliver another quarter of
robust operating cash flow. We continue to see long-term tailwinds
in our business driven by the fundamental shifts in how people work
and apply for jobs, despite the moderating level of hiring activity
we observed in the latter part of the fourth quarter of 2022, which
carried into the first quarter of 2023, as we expected.”
“We remain focused on providing our customers
with the innovative products and solutions they need to hire
smarter and onboard faster, enabled by our advanced automation,
differentiated technologies, and proprietary databases. Our 30 new
logo enterprise customer wins and 97% customer retention rate in
the last twelve months are a direct result of our team’s execution,
and we will continue to lean into our strong product innovation to
drive long-term growth,” added Mr. Staples.
Balance Sheet and Liquidity
As of March 31, 2023, First Advantage had
cash and cash equivalents of $400.2 million and total debt of
$564.7 million, resulting in net debt of $164.5 million and a
modest leverage ratio of 0.7x. The Company had estimated liquidity
of approximately $500.2 million, including the full $100 million of
untapped borrowing capacity under its revolving credit facility, as
of March 31, 2023. There are no principal debt payments due
until 2027 and over 70% of the Company’s debt has been hedged.
Cash Flow and Capital
Allocation
During the first quarter of 2023, the Company
generated $38.6 million of cash flow from operations and spent $6.1
million on purchases of property and equipment, including
capitalized software development costs. During the first quarter of
2023, the Company repurchased nearly 1.9 million shares of its
common stock for an aggregate outlay of $25.3 million under its
$200 million share repurchase program. As of May 4, 2023, the
Company has repurchased 7,430,558 shares for an aggregate of $97.4
million since the authorization of the share repurchase program on
August 2, 2022. As of March 31, 2023, the Company had 147,026,264
shares of common stock outstanding.
“In the first quarter, we continued to return
consistent cash to shareholders through our repurchase program,
fueled by another quarter of strong cash flow from operations and
low debt levels. Our cash balance increased since the end of the
fourth quarter, after the share repurchases, and our strong balance
sheet provides significant flexibility to support our capital
allocation priorities. These priorities include repurchasing
shares, acquisitions, maintaining our low leverage, and investing
back into the Company to drive organic growth and maximize value
for our shareholders,” commented David Gamsey, EVP and Chief
Financial Officer.
Full Year 2023 Guidance
The following table summarizes our reaffirmed
full-year 2023 guidance:
|
As of May 10, 2023 |
Revenues |
$770 million – $810 million |
Adjusted EBITDA² |
$240 million – $255 million |
Adjusted Net Income² |
$145 million – $155 million |
Adjusted Diluted Earnings Per Share² |
$1.00 – $1.07 |
² A reconciliation of the foregoing guidance for
the non-GAAP metrics of Adjusted EBITDA and Adjusted Net Income to
GAAP net income and Adjusted Diluted Earnings Per Share to GAAP
diluted net income per share cannot be provided without
unreasonable effort because of the inherent difficulty of
accurately forecasting the occurrence and financial impact of the
various adjusting items necessary for such reconciliation that have
not yet occurred, are out of our control, or cannot be reasonably
predicted. For the same reasons, the Company is unable to assess
the probable significance of the unavailable information, which
could have a material impact on its future GAAP financial
results.
The Company is reaffirming its previous
full-year 2023 guidance ranges, which reflect ongoing expectations
that existing macroeconomic conditions, foreign currency headwinds,
and similar labor market trends will continue through most of 2023.
Due primarily to seasonality, the first quarter is historically the
Company’s lowest revenue quarter of each fiscal year.
Actual results may differ materially from First
Advantage’s full-year 2023 guidance as a result of, among other
things, the factors described under “Forward-Looking Statements”
below.
Conference Call and Webcast
Information
First Advantage will host a conference call to
review its results today, May 10, 2023, at 8:30 a.m. ET.
To participate in the conference call, please
dial (800) 267-6316 (domestic) or (203) 518-9783 (international)
approximately ten minutes before the 8:30 a.m. ET start. Please
mention to the operator that you are dialing in for the First
Advantage first quarter 2023 earnings call or provide the
conference code FAQ123. The call will also be webcast live on the
Company’s investor relations website at
https://investors.fadv.com under the “News & Events” and
then “Events & Presentations” section, where related
presentation materials will be posted prior to the conference
call.
Following the conference call, a replay of the
webcast will be available on the Company’s investor relations
website, https://investors.fadv.com. Alternatively, the live
webcast and subsequent replay will be available at
https://event.on24.com/wcc/r/4166786/A62231E2A539DF5F53710E2DEC97FFEE.
Forward-Looking Statements
This press release contains “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements reflect our
current views with respect to, among other things, our operations
and financial performance. Forward-looking statements include all
statements that are not historical facts. These forward-looking
statements relate to matters such as our industry, business
strategy, goals, and expectations concerning our market position,
future operations, margins, profitability, capital expenditures,
liquidity and capital resources, and other financial and operating
information. In some cases, you can identify these forward-looking
statements by the use of words such as “anticipate,” “assume,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “plan,” “potential,” “predict,” “project,” “future,” “will,”
“seek,” “foreseeable,” "target," “guidance,” the negative version
of these words, or similar terms and phrases.
These forward-looking statements are subject to
various risks, uncertainties, assumptions, or changes in
circumstances that are difficult to predict or quantify. Such risks
and uncertainties include, but are not limited to, the
following:
- negative changes in external events
beyond our control, including our customers’ onboarding volumes,
economic drivers which are sensitive to macroeconomic cycles, such
as interest rate volatility and inflation, geopolitical unrest,
uncertainty in financial markets (including as a result of recent
bank failures and events affecting financial institutions), and the
COVID-19 pandemic;
- our operations in a highly
regulated industry and the fact that we are subject to numerous and
evolving laws and regulations, including with respect to personal
data and data security;
- inability to identify and
successfully implement our growth strategies on a timely basis or
at all;
- potential harm to our business,
brand, and reputation as a result of security breaches,
cyber-attacks, or the mishandling of personal data;
- our reliance on third-party data
providers;
- due to the sensitive and
privacy-driven nature of our products and solutions, we could face
liability and legal or regulatory proceedings, which could be
costly and time-consuming to defend and may not be fully covered by
insurance;
- our international business exposes
us to a number of risks;
- the timing, manner and volume of
repurchases of common stock pursuant to our share repurchase
program;
- the continued integration of our
platforms and solutions with human resource providers such as
applicant tracking systems and human capital management systems as
well as our relationships with such human resource providers;
- our ability to obtain, maintain,
protect and enforce our intellectual property and other proprietary
information;
- disruptions, outages, or other
errors with our technology and network infrastructure, including
our data centers, servers, and third-party cloud and internet
providers and our migration to the cloud;
- our indebtedness could adversely
affect our ability to raise additional capital to fund our
operations, limit our ability to react to changes in the economy or
our industry, and prevent us from meeting our obligations; and
- control by our Sponsor, "Silver
Lake" (Silver Lake Group, L.L.C., together with its affiliates,
successors, and assignees), and its interests may conflict with
ours or those of our stockholders.
For additional information on these and other
factors that could cause First Advantage’s actual results to differ
materially from expected results, please see our Annual Report on
Form 10-K for the year ended December 31, 2022, filed with the
Securities and Exchange Commission (the “SEC”), as such factors may
be updated from time to time in our filings with the SEC, which are
accessible on the SEC’s website at www.sec.gov. The forward-looking
statements included in this press release are made only as of the
date of this press release, and we undertake no obligation to
publicly update or review any forward-looking statement, whether as
a result of new information, future developments, or otherwise,
except as required by law.
Non-GAAP Financial
Information
This press release contains “non-GAAP financial
measures” that are financial measures that either exclude or
include amounts that are not excluded or included in the most
directly comparable measures calculated and presented in accordance
with accounting principles generally accepted in the United States
(“GAAP”). Specifically, we make use of the non-GAAP financial
measures “Adjusted EBITDA,” “Adjusted EBITDA Margin,” “Adjusted Net
Income,” “Adjusted Diluted Earnings Per Share,” “Constant Currency
Revenues,” and “Constant Currency Adjusted EBITDA.”
Adjusted EBITDA, Adjusted EBITDA Margin,
Adjusted Net Income, Adjusted Diluted Earnings Per Share, Constant
Currency Revenues, and Constant Currency Adjusted EBITDA have been
presented in this press release as supplemental measures of
financial performance that are not required by or presented in
accordance with GAAP because we believe they assist investors and
analysts in comparing our operating performance across reporting
periods on a consistent basis by excluding items that we do not
believe are indicative of our core operating performance.
Management believes these non-GAAP measures are useful to investors
in highlighting trends in our operating performance, while other
measures can differ significantly depending on long-term strategic
decisions regarding capital structure, the tax jurisdictions in
which we operate, and capital investments. Management uses Adjusted
EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted
Diluted Earnings Per Share, Constant Currency Revenues, and
Constant Currency Adjusted EBITDA to supplement GAAP measures of
performance in the evaluation of the effectiveness of our business
strategies, to make budgeting decisions, to establish discretionary
annual incentive compensation, and to compare our performance
against that of other peer companies using similar measures.
Management supplements GAAP results with non-GAAP financial
measures to provide a more complete understanding of the factors
and trends affecting the business than GAAP results alone.
Adjusted EBITDA, Adjusted EBITDA Margin,
Adjusted Net Income, Adjusted Diluted Earnings Per Share, Constant
Currency Revenues, and Constant Currency Adjusted EBITDA are not
recognized terms under GAAP and should not be considered as an
alternative to net income (loss) as a measure of financial
performance or cash provided by (used in) operating activities as a
measure of liquidity, or any other performance measure derived in
accordance with GAAP. The presentations of these measures have
limitations as analytical tools and should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. Because not all companies use identical
calculations, the presentations of these measures may not be
comparable to other similarly titled measures of other companies
and can differ significantly from company to company.
We define Adjusted EBITDA as net income before
interest, taxes, depreciation, and amortization, and as further
adjusted for loss on extinguishment of debt, share-based
compensation, transaction and acquisition-related charges,
integration and restructuring charges, and other non-cash charges.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by
total revenues. We define Adjusted Net Income for a particular
period as net income before taxes adjusted for debt-related costs,
acquisition-related depreciation and amortization, share-based
compensation, transaction and acquisition-related charges,
integration and restructuring charges, and other non-cash charges,
to which we then apply the related effective tax rate. We define
Adjusted Diluted Earnings Per Share as Adjusted Net Income divided
by adjusted weighted average number of shares outstanding—diluted.
We define Constant Currency Revenues as current period revenues
translated using prior-year period exchange rates. We define
Constant Currency Adjusted EBITDA as current period Adjusted EBITDA
translated using prior-year period exchange rates. For
reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP measures, see the reconciliations included
at the end of this press release. Numerical figures included in the
reconciliations have been subject to rounding adjustments.
Accordingly, numerical figures shown as totals in various tables
may not be arithmetic aggregations of the figures that precede
them.
About First Advantage
First Advantage (NASDAQ: FA) is a leading global
provider of employment background screening and verification
solutions. The Company delivers innovative services and insights
that help customers manage risk and hire the best talent. Enabled
by its proprietary technology, First Advantage’s products help
companies protect their brands and provide safer environments for
their customers and their most important resources: employees,
contractors, contingent workers, tenants, and drivers.
Headquartered in Atlanta, Georgia, First Advantage performs screens
in over 200 countries and territories on behalf of its
approximately 33,000 customers. For more information about First
Advantage, visit the Company’s website at https://fadv.com/.
Investor Contact
Stephanie Gorman Vice President, Investor
Relations Investors@fadv.com(888) 314-9761
Condensed Financial
Statements
First Advantage CorporationCondensed Consolidated
Balance Sheets(Unaudited) |
(in thousands, except share
and per share amounts) |
|
March 31, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
400,156 |
|
|
$ |
391,655 |
|
Restricted cash |
|
|
140 |
|
|
|
141 |
|
Short-term investments |
|
|
1,954 |
|
|
|
1,956 |
|
Accounts receivable (net of allowance for doubtful accounts of
$1,344 and $1,348 at March 31, 2023 and December 31,
2022, respectively) |
|
|
127,962 |
|
|
|
143,811 |
|
Prepaid expenses and other current assets |
|
|
22,780 |
|
|
|
25,407 |
|
Income tax receivable |
|
|
2,482 |
|
|
|
3,225 |
|
Total current assets |
|
|
555,474 |
|
|
|
566,195 |
|
Property and equipment, net |
|
|
103,301 |
|
|
|
113,529 |
|
Goodwill |
|
|
793,293 |
|
|
|
793,080 |
|
Trade name, net |
|
|
69,387 |
|
|
|
71,162 |
|
Customer lists, net |
|
|
312,568 |
|
|
|
326,014 |
|
Deferred tax asset, net |
|
|
2,405 |
|
|
|
2,422 |
|
Other assets |
|
|
11,235 |
|
|
|
13,423 |
|
TOTAL ASSETS |
|
$ |
1,847,663 |
|
|
$ |
1,885,825 |
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
Accounts payable |
|
$ |
47,484 |
|
|
$ |
54,947 |
|
Accrued compensation |
|
|
12,990 |
|
|
|
22,702 |
|
Accrued liabilities |
|
|
16,782 |
|
|
|
16,400 |
|
Current portion of operating lease liability |
|
|
5,640 |
|
|
|
4,957 |
|
Income tax payable |
|
|
808 |
|
|
|
724 |
|
Deferred revenues |
|
|
1,256 |
|
|
|
1,056 |
|
Total current liabilities |
|
|
84,960 |
|
|
|
100,786 |
|
Long-term debt (net of deferred financing costs of $7,613 and
$8,075 at March 31, 2023 and December 31, 2022,
respectively) |
|
|
557,111 |
|
|
|
556,649 |
|
Deferred tax liability, net |
|
|
88,422 |
|
|
|
90,556 |
|
Operating lease liability, less current portion |
|
|
6,673 |
|
|
|
7,879 |
|
Other liabilities |
|
|
3,170 |
|
|
|
3,337 |
|
Total liabilities |
|
|
740,336 |
|
|
|
759,207 |
|
EQUITY |
|
|
|
|
|
|
Common stock - $0.001 par value; 1,000,000,000 shares authorized,
147,026,264 and 148,732,603 shares issued and outstanding as of
March 31, 2023 and December 31, 2022, respectively |
|
|
147 |
|
|
|
149 |
|
Additional paid-in-capital |
|
|
1,179,595 |
|
|
|
1,176,163 |
|
Accumulated deficit |
|
|
(50,953 |
) |
|
|
(27,363 |
) |
Accumulated other comprehensive loss |
|
|
(21,462 |
) |
|
|
(22,331 |
) |
Total equity |
|
|
1,107,327 |
|
|
|
1,126,618 |
|
TOTAL LIABILITIES AND
EQUITY |
|
$ |
1,847,663 |
|
|
$ |
1,885,825 |
|
First Advantage CorporationCondensed Consolidated
Statements of Operations and Comprehensive Income(Unaudited) |
|
|
Three Months Ended March 31, |
(in thousands, except share
and per share amounts) |
|
2023 |
|
2022 |
REVENUES |
|
$ |
175,520 |
|
|
$ |
189,881 |
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization
below) |
|
|
91,061 |
|
|
|
96,431 |
|
Product and technology expense |
|
|
12,624 |
|
|
|
13,773 |
|
Selling, general, and administrative expense |
|
|
28,682 |
|
|
|
28,545 |
|
Depreciation and amortization |
|
|
31,866 |
|
|
|
34,034 |
|
Total operating expenses |
|
|
164,233 |
|
|
|
172,783 |
|
INCOME FROM
OPERATIONS |
|
|
11,287 |
|
|
|
17,098 |
|
|
|
|
|
|
|
|
OTHER EXPENSE, NET: |
|
|
|
|
|
|
Interest expense, net |
|
|
8,681 |
|
|
|
(850 |
) |
Total other expense, net |
|
|
8,681 |
|
|
|
(850 |
) |
INCOME BEFORE PROVISION FOR
INCOME TAXES |
|
|
2,606 |
|
|
|
17,948 |
|
Provision for income taxes |
|
|
681 |
|
|
|
4,935 |
|
NET
INCOME |
|
$ |
1,925 |
|
|
$ |
13,013 |
|
|
|
|
|
|
|
|
Foreign currency translation
income (loss) |
|
|
869 |
|
|
|
(1,517 |
) |
COMPREHENSIVE
INCOME |
|
$ |
2,794 |
|
|
$ |
11,496 |
|
|
|
|
|
|
|
|
NET
INCOME |
|
$ |
1,925 |
|
|
$ |
13,013 |
|
Basic net income per
share |
|
$ |
0.01 |
|
|
$ |
0.09 |
|
Diluted net income per
share |
|
$ |
0.01 |
|
|
$ |
0.09 |
|
Weighted average number of
shares outstanding - basic |
|
|
145,862,562 |
|
|
|
150,538,700 |
|
Weighted average number of
shares outstanding - diluted |
|
|
147,031,866 |
|
|
|
152,348,806 |
|
First Advantage CorporationCondensed Consolidated
Statements of Cash Flows(Unaudited) |
|
|
Three Months Ended March 31, |
(in thousands) |
|
2023 |
|
2022 |
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
|
|
|
Net income |
|
$ |
1,925 |
|
|
$ |
13,013 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
31,866 |
|
|
|
34,034 |
|
Amortization of deferred financing costs |
|
|
461 |
|
|
|
445 |
|
Bad debt recovery |
|
|
(40 |
) |
|
|
(184 |
) |
Deferred taxes |
|
|
(2,144 |
) |
|
|
1,698 |
|
Share-based compensation |
|
|
2,058 |
|
|
|
1,859 |
|
Gain on foreign currency exchange rates |
|
|
(10 |
) |
|
|
(411 |
) |
Loss on disposal of fixed assets and impairment of ROU assets |
|
|
1,222 |
|
|
|
163 |
|
Change in fair value of interest rate swaps |
|
|
1,879 |
|
|
|
(5,260 |
) |
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
15,980 |
|
|
|
8,862 |
|
Prepaid expenses and other assets |
|
|
2,933 |
|
|
|
1,151 |
|
Accounts payable |
|
|
(7,618 |
) |
|
|
(1,329 |
) |
Accrued compensation and accrued liabilities |
|
|
(11,828 |
) |
|
|
(13,215 |
) |
Deferred revenues |
|
|
209 |
|
|
|
(254 |
) |
Operating lease liabilities |
|
|
(110 |
) |
|
|
(405 |
) |
Other liabilities |
|
|
980 |
|
|
|
(26 |
) |
Income taxes receivable and payable, net |
|
|
836 |
|
|
|
1,442 |
|
Net cash provided by operating activities |
|
|
38,599 |
|
|
|
41,583 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
|
|
Acquisitions of businesses, net of cash acquired |
|
|
— |
|
|
|
(18,920 |
) |
Purchases of property and equipment |
|
|
(42 |
) |
|
|
(2,909 |
) |
Capitalized software development costs |
|
|
(6,056 |
) |
|
|
(4,643 |
) |
Other investing activities |
|
|
15 |
|
|
|
— |
|
Net cash used in investing activities |
|
|
(6,083 |
) |
|
|
(26,472 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
|
|
|
Share repurchases |
|
|
(25,266 |
) |
|
|
— |
|
Payments on finance lease obligations |
|
|
(37 |
) |
|
|
(238 |
) |
Payments on deferred purchase agreements |
|
|
(234 |
) |
|
|
(349 |
) |
Proceeds from issuance of common stock under share-based
compensation plans |
|
|
1,399 |
|
|
|
547 |
|
Net settlement of share-based compensation plan awards |
|
|
(25 |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
(24,163 |
) |
|
|
(40 |
) |
Effect of exchange rate on
cash, cash equivalents, and restricted cash |
|
|
147 |
|
|
|
58 |
|
Increase in cash, cash
equivalents, and restricted cash |
|
|
8,500 |
|
|
|
15,129 |
|
Cash, cash equivalents, and
restricted cash at beginning of period |
|
|
391,796 |
|
|
|
292,790 |
|
Cash, cash equivalents, and
restricted cash at end of period |
|
$ |
400,296 |
|
|
$ |
307,919 |
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
Cash paid for income taxes,
net of refunds received |
|
$ |
2,049 |
|
|
$ |
1,713 |
|
Cash paid for interest |
|
$ |
10,625 |
|
|
$ |
4,774 |
|
NON-CASH INVESTING AND
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Property and equipment
acquired on account |
|
$ |
275 |
|
|
$ |
206 |
|
Excise taxes on share
repurchases incurred but not paid |
|
$ |
252 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Consolidated Non-GAAP
Financial Measures
|
|
Three Months Ended March 31, 2023 |
(in thousands) |
|
Americas |
|
International |
|
Eliminations |
|
Total revenues |
Revenues, as reported (GAAP) |
|
$ |
152,056 |
|
|
$ |
24,848 |
|
|
$ |
(1,384 |
) |
|
$ |
175,520 |
|
Foreign currency translation
impact(a) |
|
|
20 |
|
|
|
2,077 |
|
|
|
53 |
|
|
|
2,150 |
|
Constant currency
revenues |
|
$ |
152,076 |
|
|
$ |
26,925 |
|
|
$ |
(1,331 |
) |
|
$ |
177,670 |
|
(a) Constant currency revenues is calculated by
translating current period amounts using prior-year period exchange
rates.
|
|
Three Months Ended March 31, |
(in thousands, except
percentages) |
|
2023 |
|
2022 |
Net income |
|
$ |
1,925 |
|
|
$ |
13,013 |
|
Interest expense, net |
|
|
8,681 |
|
|
|
(850 |
) |
Provision for income
taxes |
|
|
681 |
|
|
|
4,935 |
|
Depreciation and
amortization |
|
|
31,866 |
|
|
|
34,034 |
|
Share-based compensation |
|
|
2,058 |
|
|
|
1,859 |
|
Transaction and
acquisition-related charges(a) |
|
|
1,071 |
|
|
|
1,498 |
|
Integration, restructuring,
and other charges(b) |
|
|
2,278 |
|
|
|
(889 |
) |
Adjusted
EBITDA |
|
$ |
48,560 |
|
|
$ |
53,600 |
|
Revenues |
|
|
175,520 |
|
|
|
189,881 |
|
Net income
margin |
|
|
1.1 |
% |
|
|
6.9 |
% |
Adjusted EBITDA
Margin |
|
|
27.7 |
% |
|
|
28.2 |
% |
Adjusted EBITDA |
|
$ |
48,560 |
|
|
|
|
Foreign currency translation
impact(c) |
|
|
524 |
|
|
|
|
Constant currency
Adjusted EBITDA |
|
$ |
49,084 |
|
|
|
|
(a) Represents charges incurred related to
acquisitions and similar transactions, primarily consisting of
change in control-related costs, professional service fees, and
other third-party costs. Additionally includes incremental
professional service fees incurred related to the initial public
offering and subsequent one-time compliance efforts. The three
months ended March 31, 2023 and 2022 include a transaction bonus
expense related to one of the Company’s 2021 acquisitions.(b)
Represents charges from organizational restructuring and
integration activities, non-cash, and other charges primarily
related to legal exposures inherited from legacy acquisitions,
foreign currency (gains) losses, and (gains) losses on the sale of
assets.(c) Constant currency Adjusted EBITDA is calculated by
translating current period amounts using prior-year period exchange
rates.
Reconciliation of Consolidated Non-GAAP Financial
Measures (continued)
|
|
Three Months Ended March 31, |
(in thousands) |
|
2023 |
|
2022 |
Net income |
|
$ |
1,925 |
|
|
$ |
13,013 |
|
Provision for income
taxes |
|
|
681 |
|
|
|
4,935 |
|
Income before provision for
income taxes |
|
|
2,606 |
|
|
|
17,948 |
|
Debt-related charges(a) |
|
|
4,468 |
|
|
|
(4,815 |
) |
Acquisition-related
depreciation and amortization(b) |
|
|
25,485 |
|
|
|
29,115 |
|
Share-based compensation |
|
|
2,058 |
|
|
|
1,859 |
|
Transaction and
acquisition-related charges(c) |
|
|
1,071 |
|
|
|
1,498 |
|
Integration, restructuring,
and other charges(d) |
|
|
2,278 |
|
|
|
(889 |
) |
Adjusted Net Income before
income tax effect |
|
|
37,966 |
|
|
|
44,716 |
|
Less: Income tax
effect(e) |
|
|
9,602 |
|
|
|
11,219 |
|
Adjusted Net
Income |
|
$ |
28,364 |
|
|
$ |
33,497 |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
2022 |
Diluted net income per share (GAAP) |
|
$ |
0.01 |
|
|
$ |
0.09 |
|
Adjusted Net Income
adjustments per share |
|
|
|
|
|
|
Income taxes |
|
|
0.00 |
|
|
|
0.03 |
|
Debt-related charges(a) |
|
|
0.03 |
|
|
|
(0.03 |
) |
Acquisition-related depreciation and amortization(b) |
|
|
0.17 |
|
|
|
0.19 |
|
Share-based compensation |
|
|
0.01 |
|
|
|
0.01 |
|
Transaction and acquisition related charges(c) |
|
|
0.01 |
|
|
|
0.01 |
|
Integration, restructuring, and other charges(d) |
|
|
0.02 |
|
|
|
(0.01 |
) |
Adjusted income taxes(e) |
|
|
(0.07 |
) |
|
|
(0.07 |
) |
Adjusted Diluted Earnings Per Share
(Non-GAAP) |
|
$ |
0.19 |
|
|
$ |
0.22 |
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding used in computation of Adjusted Diluted Earnings
Per Share: |
|
|
|
|
|
|
Weighted average number of shares outstanding—diluted (GAAP and
Non-GAAP) |
|
|
147,031,866 |
|
|
|
152,348,806 |
|
(a) Represents non-cash interest expense related
to the amortization of debt issuance costs for the Company’s First
Lien Credit Facility. Beginning in 2022, this adjustment also
includes the impact of the change in fair value of interest rate
swaps. This adjustment, which represents the difference between the
fair value gains or losses and actual cash payments and receipts on
the interest rate swaps, was added as a result of the increased
interest rate volatility observed in 2022.(b) Represents the
depreciation and amortization expense related to intangible assets
and developed technology assets recorded due to the application of
ASC 805, Business Combinations. As a result, the purchase
accounting related depreciation and amortization expense will recur
in future periods until the related assets are fully depreciated or
amortized, and the related purchase accounting assets may
contribute to revenue generation.(c) Represents charges incurred
related to acquisitions and similar transactions, primarily
consisting of change in control-related costs, professional service
fees, and other third-party costs. Additionally includes
incremental professional service fees incurred related to the
initial public offering and subsequent one-time compliance efforts.
The three months ended March 31, 2023 and 2022 include a
transaction bonus expense related to one of the Company’s 2021
acquisitions.(d) Represents charges from organizational
restructuring and integration activities, non-cash, and other
charges primarily related to legal exposures inherited from legacy
acquisitions, foreign currency (gains) losses, and (gains) losses
on the sale of assets.(e) Effective tax rates of approximately
25.3% and 25.1% have been used to compute Adjusted Net Income and
Adjusted Diluted Earnings Per Share for the three months ended
March 31, 2023 and 2022, respectively. As of December 31,
2022, we had net operating loss carryforwards of approximately
$11.0 million for federal income tax purposes available to reduce
future income subject to income taxes. As a result, the amount of
actual cash taxes we may pay for federal income taxes differs
significantly from the effective income tax rate computed in
accordance with GAAP and from the normalized rate shown above.
First Advantage (NASDAQ:FA)
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First Advantage (NASDAQ:FA)
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