First Advantage Reports Third Quarter 2024 Results
First Advantage (NASDAQ: FA) reported Q3 2024 results with revenues of $199.1 million, down 0.6% year-over-year. The company posted a net loss of $(8.9) million, including $13.2 million of expenses related to the Sterling acquisition. Adjusted EBITDA was $64.0 million with a 32.2% margin. The company completed the Sterling acquisition on October 31, 2024.
First Advantage maintains its standalone 2024 guidance with revenues of $750-800 million and Adjusted EBITDA of $228-248 million. The combined company guidance including Sterling for November-December 2024 projects revenues of $858-918 million and Adjusted EBITDA of $250-274 million. The company has already actioned over $10 million in run-rate cost synergies.
First Advantage (NASDAQ: FA) ha riportato i risultati del terzo trimestre 2024 con ricavi di 199,1 milioni di dollari, in diminuzione dello 0,6% rispetto all'anno precedente. L'azienda ha registrato una perdita netta di 8,9 milioni di dollari, inclusi 13,2 milioni di dollari di spese relative all'acquisizione di Sterling. L'EBITDA rettificato è stato di 64,0 milioni di dollari con un margine del 32,2%. L'azienda ha completato l'acquisizione di Sterling il 31 ottobre 2024.
First Advantage mantiene la sua previsione per il 2024, stimando ricavi tra 750 e 800 milioni di dollari e un EBITDA rettificato tra 228 e 248 milioni di dollari. La guida della società combinata, inclusa Sterling, per novembre-dicembre 2024 prevede ricavi tra 858 e 918 milioni di dollari e un EBITDA rettificato tra 250 e 274 milioni di dollari. L'azienda ha già avviato sinergie di costo per oltre 10 milioni di dollari.
First Advantage (NASDAQ: FA) reportó los resultados del tercer trimestre de 2024 con ingresos de 199.1 millones de dólares, una disminución del 0.6% en comparación con el año anterior. La compañía registró una pérdida neta de 8.9 millones de dólares, incluidos 13.2 millones de dólares en gastos relacionados con la adquisición de Sterling. El EBITDA ajustado fue de 64.0 millones de dólares, con un margen del 32.2%. La empresa completó la adquisición de Sterling el 31 de octubre de 2024.
First Advantage mantiene su guía independiente para 2024 con ingresos entre 750 y 800 millones de dólares y un EBITDA ajustado entre 228 y 248 millones de dólares. La guía de la compañía combinada, incluyendo Sterling, para noviembre-diciembre de 2024 proyecta ingresos entre 858 y 918 millones de dólares y un EBITDA ajustado entre 250 y 274 millones de dólares. La empresa ya ha implementado sinergias de costo por más de 10 millones de dólares.
퍼스트 어드밴티지 (NASDAQ: FA)는 2024년 3분기 결과를 보고하며, 수익은 1억 9,910만 달러로 작년 대비 0.6% 감소했습니다. 회사는 890만 달러의 순손실을 기록했으며, 이는 스털링 인수 관련 비용이 1,320만 달러 포함되어 있습니다. 조정 EBITDA는 6,400만 달러로, 32.2%의 마진을 보였습니다. 회사는 2024년 10월 31일 스털링 인수를 완료했습니다.
퍼스트 어드밴티지는 2024년 독립 가이던스를 유지하며 수익 목표를 7억 5천만에서 8억 달러, 조정 EBITDA는 2억 2800만에서 2억 4800만 달러로 설정했습니다. 스털링을 포함한 결합된 회사의 11-12월 가이던스는 수익을 8억 5800만에서 9억 1800만 달러로, 조정 EBITDA는 2억 5000만에서 2억 7400만 달러로 예상하고 있습니다. 회사는 이미 1천만 달러 이상의 비용 시너지를 실행했습니다.
First Advantage (NASDAQ: FA) a publié ses résultats pour le troisième trimestre 2024, avec des revenus de 199,1 millions de dollars, en baisse de 0,6 % par rapport à l'année précédente. L'entreprise a affiché une perte nette de 8,9 millions de dollars, incluant 13,2 millions de dollars de dépenses liées à l'acquisition de Sterling. L'EBITDA ajusté s'est élevé à 64,0 millions de dollars, avec une marge de 32,2 %. L'acquisition de Sterling a été finalisée le 31 octobre 2024.
First Advantage maintient ses prévisions pour 2024, avec des revenus estimés entre 750 et 800 millions de dollars et un EBITDA ajusté entre 228 et 248 millions de dollars. Les prévisions de l'entreprise combinée, y compris Sterling, pour novembre-décembre 2024 prévoient des revenus de 858 à 918 millions de dollars et un EBITDA ajusté de 250 à 274 millions de dollars. L'entreprise a déjà mis en œuvre plus de 10 millions de dollars en synergies de coûts.
First Advantage (NASDAQ: FA) berichtete für das dritte Quartal 2024 von Einnahmen in Höhe von 199,1 Millionen Dollar, was einem Rückgang von 0,6 % im Jahresvergleich entspricht. Das Unternehmen verzeichnete einen Nettoverlust von 8,9 Millionen Dollar, einschließlich 13,2 Millionen Dollar an Kosten im Zusammenhang mit der Übernahme von Sterling. Das bereinigte EBITDA betrug 64,0 Millionen Dollar bei einer Marge von 32,2 %. Das Unternehmen schloss die Übernahme von Sterling am 31. Oktober 2024 ab.
First Advantage bestätigt seine eigenständige Prognose für 2024, die Einnahmen zwischen 750 und 800 Millionen Dollar sowie ein bereinigtes EBITDA zwischen 228 und 248 Millionen Dollar umfasst. Die kombinierte Unternehmensprognose einschließlich Sterling für November-Dezember 2024 rechnet mit Einnahmen zwischen 858 und 918 Millionen Dollar und einem bereinigten EBITDA zwischen 250 und 274 Millionen Dollar. Das Unternehmen hat bereits Kostensynergien von über 10 Millionen Dollar realisiert.
- Maintained strong Adjusted EBITDA margin of 32.2%
- Generated robust operating cash flow of $43.5 million
- Actioned over $10 million in run-rate cost synergies post Sterling acquisition
- Expects $50-70 million in run-rate synergies within 2 years post-close
- Revenue declined 0.6% year-over-year to $199.1 million
- Net loss of $8.9 million compared to $10.8 million profit last year
- Operating income decreased 60.7% to $9.1 million
- Adjusted EPS declined 7.1% to $0.26
Insights
This Q3 earnings report reveals significant developments for First Advantage. The company reported
The completed Sterling acquisition marks a transformative move, with projected synergies of
Most notably, despite macroeconomic pressures, the core business maintains healthy margins and cash flow generation, with
The strategic positioning of this merger creates a stronger competitive entity in the background screening market. The integration focus on technology and AI initiatives signals a forward-thinking approach to market differentiation. Customer retention and upsell metrics remain strong, with the company reporting successful new logo acquisitions and cross-sell opportunities.
The sequential growth in revenues and margins demonstrates resilient demand for employment screening services despite broader market uncertainties. The emphasis on maintaining product focus while executing integration suggests a balanced approach to growth and operational efficiency.
Completed Acquisition of Sterling on October 31; Maintains Standalone Full-Year 2024 Guidance and Issues Combined Company Guidance including Sterling
Third Quarter 2024 Highlights1
- Revenues of
$199.1 million - Net Loss of
$(8.9) million , a net loss margin of (4.4)%, includes$13.2 million of expenses incurred related to the acquisition of Sterling Check Corp. (“Sterling”) - Adjusted Net Income of
$38.0 million - Adjusted EBITDA of
$64.0 million ; Adjusted EBITDA Margin of32.2% - GAAP Diluted Net Loss Per Share of
$(0.06) , includes$0.07 per share of expenses incurred related to the Sterling acquisition - Adjusted Diluted Earnings Per Share of
$0.26 - Cash Flows from Operations of
$43.5 million ; Cash Flows from Operations would have been$45.3 million after adjusting for$1.8 million of cash costs directly associated with the Sterling acquisition - Announced organizational updates, including promotion of Joelle Smith to President
- On October 31, 2024, subsequent to the quarter end, closed the Sterling acquisition, which was first announced on February 29, 2024
Maintaining First Advantage Standalone Full-Year 2024 Guidance and Issuing Combined Company Guidance including Sterling
- Maintaining standalone full-year 2024 guidance ranges for Revenues of
$750 million to$800 million , Adjusted EBITDA of$228 million to$248 million , Adjusted Net Income of$127 million to$142 million , and Adjusted Diluted Earnings Per Share of$0.88 t o$0.98 2 - Issuing combined company full-year 2024 guidance, including the impacts of Sterling results for November and December 2024, including the benefits of actioned synergies and the estimated capital structure impacts of the transaction, with ranges for Revenues of
$858 million to$918 million , Adjusted EBITDA of$250 million to$274 million , Adjusted Net Income of$122 million to$140 million , and Adjusted Diluted Earnings Per Share of$0.83 t o$0.95 2
ATLANTA, Nov. 12, 2024 (GLOBE NEWSWIRE) -- First Advantage Corporation (NASDAQ: FA), a leading global provider of employment background screening, identity, and verification solutions, today announced financial results for the third quarter ended September 30, 2024.
Key Financials
(Amounts in millions, except per share data and percentages)
| Three Months Ended September 30, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| Revenues | $ | 199.1 | $ | 200.4 | (0.6 | )% | ||||||
| Income from operations | $ | 9.1 | $ | 23.2 | (60.7 | )% | ||||||
| Net (loss) income | $ | (8.9 | ) | $ | 10.8 | (182.2 | )% | |||||
| Net (loss) income margin | (4.4 | )% | 5.4 | % | NA | |||||||
| Diluted net (loss) income per share | $ | (0.06 | ) | $ | 0.07 | (185.7 | )% | |||||
| Adjusted EBITDA1 | $ | 64.0 | $ | 64.8 | (1.1 | )% | ||||||
| Adjusted EBITDA Margin1 | 32.2 | % | 32.3 | % | NA | |||||||
| Adjusted Net Income1 | $ | 38.0 | $ | 40.0 | (5.1 | )% | ||||||
| Adjusted Diluted Earnings Per Share1 | $ | 0.26 | $ | 0.28 | (7.1 | )% | ||||||
1 Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share 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 were thrilled to have closed on the acquisition of Sterling on October 31,” said Scott Staples, Chief Executive Officer. “We officially welcomed the Sterling team on day 1 and are moving forward expeditiously to execute our integration plans, action our synergy targets, and accelerate our strategic execution, all while ensuring a seamless experience for all customers. We have already actioned over
“In the third quarter, we again delivered solid financial results, with robust Adjusted EBITDA margins over
Full-Year 2024 Guidance
“We are maintaining our full-year 2024 standalone guidance and issuing new guidance to include Sterling for November and December, including the benefits of actioned synergies and the estimated capital structure impacts of the transaction,” commented Steven Marks, Chief Financial Officer. “We are pleased to have delivered sequential quarter-over-quarter growth in revenues, Adjusted EBITDA, and Adjusted EBITDA Margin, with margins of
The following table summarizes our full-year 2024 guidance.
| First Advantage Standalone As of November 12, 2024 | Combined Company3 As of November 12, 2024 | |
| Revenues | ||
| Adjusted EBITDA2 | ||
| Adjusted Net Income2 | ||
| Adjusted Diluted Earnings Per Share2 |
2 A reconciliation of the foregoing guidance for the non-GAAP metrics of Adjusted EBITDA and Adjusted Net Income to GAAP net (loss) income and Adjusted Diluted Earnings Per Share to GAAP diluted net (loss) 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.
3 “Combined Company” guidance represents “First Advantage Standalone” guidance adjusted for the impacts of Sterling results for November and December 2024, including the benefits of actioned synergies and the estimated capital structure impacts of the transaction.
Actual results may differ materially from First Advantage’s full-year 2024 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 third quarter 2024 results today, November 12, 2024, at 8:30 a.m. ET.
To participate in the conference call, please dial 800-445-7795 (domestic) or 785-424-1699 (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 third quarter 2024 earnings call or provide the conference code FA3Q24. 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/4698641/CBB927EE7939B018AE38DEBC57EF3185.
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, and uncertainty in financial markets;
- 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, data security, and artificial intelligence;
- 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;
- the failure to realize the expected benefits of our acquisition of Sterling; 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, 2023, 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 or will be 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 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 (loss) income as a measure of financial performance or cash provided by 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 (loss) 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 (loss) 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, identity, and verification solutions. Enabled by its proprietary technology, First Advantage delivers innovative services and insights that help customers mitigate risk and hire the best talent: employees, contractors, contingent workers, tenants, and drivers. Headquartered in Atlanta, Georgia, First Advantage performs screens in over 200 countries and territories. For more information about how to hire smarter and onboard faster with 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 Corporation Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
| (in thousands, except share and per share amounts) | September 30, 2024 | December 31, 2023 | ||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 307,392 | $ | 213,774 | ||||
| Restricted cash | 88 | 138 | ||||||
| Accounts receivable (net of allowance for doubtful accounts of | 143,020 | 142,690 | ||||||
| Prepaid expenses and other current assets | 13,667 | 13,426 | ||||||
| Income tax receivable | 2,808 | 3,710 | ||||||
| Total current assets | 466,975 | 373,738 | ||||||
| Property and equipment, net | 55,403 | 79,441 | ||||||
| Goodwill | 822,277 | 820,654 | ||||||
| Trade names, net | 60,990 | 66,229 | ||||||
| Customer lists, net | 238,821 | 275,528 | ||||||
| Other intangible assets, net | 1,898 | 2,257 | ||||||
| Deferred tax asset, net | 3,172 | 2,786 | ||||||
| Other assets | 7,598 | 10,021 | ||||||
| TOTAL ASSETS | $ | 1,657,134 | $ | 1,630,654 | ||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 71,108 | $ | 47,024 | ||||
| Accrued compensation | 18,687 | 16,379 | ||||||
| Accrued liabilities | 22,962 | 16,162 | ||||||
| Current portion of operating lease liability | 2,566 | 3,354 | ||||||
| Income tax payable | 3,534 | 264 | ||||||
| Deferred revenues | 2,495 | 1,856 | ||||||
| Total current liabilities | 121,352 | 85,039 | ||||||
| Long-term debt (net of deferred financing costs of | 559,844 | 558,456 | ||||||
| Deferred tax liability, net | 48,181 | 71,274 | ||||||
| Operating lease liability, less current portion | 4,340 | 5,931 | ||||||
| Other liabilities | 2,703 | 3,221 | ||||||
| Total liabilities | 736,420 | 723,921 | ||||||
| EQUITY | ||||||||
| Common stock - | 146 | 145 | ||||||
| Additional paid-in-capital | 998,707 | 977,290 | ||||||
| Accumulated deficit | (59,442 | ) | (49,545 | ) | ||||
| Accumulated other comprehensive loss | (18,697 | ) | (21,157 | ) | ||||
| Total equity | 920,714 | 906,733 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 1,657,134 | $ | 1,630,654 | ||||
| First Advantage Corporation Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) | ||||||||
| Three Months Ended September 30, | ||||||||
| (in thousands, except share and per share amounts) | 2024 | 2023 | ||||||
| REVENUES | $ | 199,119 | $ | 200,364 | ||||
| OPERATING EXPENSES: | ||||||||
| Cost of services (exclusive of depreciation and amortization below) | 100,879 | 101,410 | ||||||
| Product and technology expense | 12,909 | 13,107 | ||||||
| Selling, general, and administrative expense | 46,050 | 30,217 | ||||||
| Depreciation and amortization | 30,168 | 32,419 | ||||||
| Total operating expenses | 190,006 | 177,153 | ||||||
| INCOME FROM OPERATIONS | 9,113 | 23,211 | ||||||
| OTHER EXPENSE, NET: | ||||||||
| Interest expense, net | 17,191 | 7,557 | ||||||
| Total other expense, net | 17,191 | 7,557 | ||||||
| (LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES | (8,078 | ) | 15,654 | |||||
| Provision for income taxes | 782 | 4,881 | ||||||
| NET (LOSS) INCOME | $ | (8,860 | ) | $ | 10,773 | |||
| Foreign currency translation income (loss) | 5,531 | (1,610 | ) | |||||
| COMPREHENSIVE (LOSS) INCOME | $ | (3,329 | ) | $ | 9,163 | |||
| NET (LOSS) INCOME | $ | (8,860 | ) | $ | 10,773 | |||
| Basic net (loss) income per share | $ | (0.06 | ) | $ | 0.08 | |||
| Diluted net (loss) income per share | $ | (0.06 | ) | $ | 0.07 | |||
| Weighted average number of shares outstanding - basic | 144,096,312 | 143,231,707 | ||||||
| Weighted average number of shares outstanding - diluted | 144,096,312 | 144,733,357 | ||||||
| First Advantage Corporation Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
| Nine Months Ended September 30, | ||||||||
| (in thousands) | 2024 | 2023 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net (loss) income | $ | (9,907 | ) | $ | 22,480 | |||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 89,968 | 96,341 | ||||||
| Amortization of deferred financing costs | 1,388 | 1,362 | ||||||
| Bad debt expense | 92 | 134 | ||||||
| Deferred taxes | (23,115 | ) | (8,723 | ) | ||||
| Share-based compensation | 19,303 | 10,449 | ||||||
| Loss on foreign currency exchange rates | — | 26 | ||||||
| (Gain) loss on disposal of fixed assets and impairment of ROU assets | (272 | ) | 1,724 | |||||
| Change in fair value of interest rate swaps | (1,006 | ) | (2,201 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (151 | ) | (12,162 | ) | ||||
| Prepaid expenses and other assets | 1,184 | 8,661 | ||||||
| Accounts payable | 23,115 | 531 | ||||||
| Accrued compensation and accrued liabilities | 9,917 | (8,389 | ) | |||||
| Deferred revenues | 591 | 87 | ||||||
| Operating lease liabilities | (722 | ) | (1,134 | ) | ||||
| Other liabilities | (673 | ) | (198 | ) | ||||
| Income taxes receivable and payable, net | 4,150 | (2,908 | ) | |||||
| Net cash provided by operating activities | 113,862 | 106,080 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Capitalized software development costs | (20,384 | ) | (18,781 | ) | ||||
| Purchases of property and equipment | (1,386 | ) | (1,798 | ) | ||||
| Other investing activities | 29 | (231 | ) | |||||
| Acquisitions of businesses, net of cash acquired | 25 | (41,122 | ) | |||||
| Net cash used in investing activities | (21,716 | ) | (61,932 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from issuance of common stock under share-based compensation plans | 5,862 | 4,089 | ||||||
| Net settlement of share-based compensation plan awards | (3,790 | ) | (254 | ) | ||||
| Payments on deferred purchase agreements | (703 | ) | (703 | ) | ||||
| Cash dividends paid | (211 | ) | (217,683 | ) | ||||
| Payments on finance lease obligations | (3 | ) | (97 | ) | ||||
| Share repurchases | — | (55,917 | ) | |||||
| Net cash provided by (used in) financing activities | 1,155 | (270,565 | ) | |||||
| Effect of exchange rate on cash, cash equivalents, and restricted cash | 267 | (372 | ) | |||||
| Increase (decrease) in cash, cash equivalents, and restricted cash | 93,568 | (226,789 | ) | |||||
| Cash, cash equivalents, and restricted cash at beginning of period | 213,912 | 391,796 | ||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 307,480 | $ | 165,007 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for income taxes, net of refunds received | $ | 19,168 | $ | 21,006 | ||||
| Cash paid for interest | $ | 36,174 | $ | 33,787 | ||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Property and equipment acquired on account | $ | 926 | $ | 25 | ||||
| Non-cash property and equipment additions | $ | 540 | $ | — | ||||
| Excise taxes on share repurchases incurred but not paid | $ | (10 | ) | $ | 558 | |||
| Dividends declared but not paid | $ | — | $ | 701 | ||||
Reconciliation of Consolidated Non-GAAP Financial Measures
| Three Months Ended September 30, 2024 | ||||||||||||||||
| (in thousands) | Americas | International | Eliminations | Total revenues | ||||||||||||
| Revenues, as reported (GAAP) | $ | 174,905 | $ | 26,624 | $ | (2,410 | ) | $ | 199,119 | |||||||
| Foreign currency translation impact(a) | 89 | (216 | ) | 11 | (116 | ) | ||||||||||
| Constant currency revenues | $ | 174,994 | $ | 26,408 | $ | (2,399 | ) | $ | 199,003 | |||||||
(a) Constant currency revenues is calculated by translating current period amounts using prior-year period exchange rates.
| Three Months Ended September 30, | ||||||||
| (in thousands, except percentages) | 2024 | 2023 | ||||||
| Net (loss) income | $ | (8,860 | ) | $ | 10,773 | |||
| Interest expense, net | 17,191 | 7,557 | ||||||
| Provision for income taxes | 782 | 4,881 | ||||||
| Depreciation and amortization | 30,168 | 32,419 | ||||||
| Share-based compensation(a) | 9,504 | 4,790 | ||||||
| Transaction and acquisition-related charges(b) | 13,218 | 1,571 | ||||||
| Integration, restructuring, and other charges(c) | 2,043 | 2,800 | ||||||
| Adjusted EBITDA | $ | 64,046 | $ | 64,791 | ||||
| Revenues | 199,119 | 200,364 | ||||||
| Net (loss) income margin | (4.4 | )% | 5.4 | % | ||||
| Adjusted EBITDA Margin | 32.2 | % | 32.3 | % | ||||
| Adjusted EBITDA | $ | 64,046 | ||||||
| Foreign currency translation impact(d) | 11 | |||||||
| Constant currency Adjusted EBITDA | $ | 64,057 | ||||||
- Share-based compensation for the three months ended September 30, 2024 and 2023, includes approximately
$6.6 million and$2.5 million , respectively, of incrementally recognized expense associated with the May 2023 vesting modification and retirements of the Company's Chief Financial Officer and President, Americas. - 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. Transaction and acquisition related charges for the three months ended September 30, 2024 include approximately
$13.2 million of expense associated with the acquisition of Sterling, primarily consisting of legal, regulatory, and diligence professional service fees. The three months ended September 30, 2024 and 2023 also include insurance costs incurred related to the initial public offering. - Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to nonrecurring legal exposures, foreign currency (gains) losses, (gains) losses on the sale of assets, and other non-recurring items.
- 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 September 30, | ||||||||
| (in thousands) | 2024 | 2023 | ||||||
| Net (loss) income | $ | (8,860 | ) | $ | 10,773 | |||
| Provision for income taxes | 782 | 4,881 | ||||||
| (Loss) income before provision for income taxes | (8,078 | ) | 15,654 | |||||
| Debt-related charges(a) | 10,057 | 2,532 | ||||||
| Acquisition-related depreciation and amortization(b) | 22,646 | 25,660 | ||||||
| Share-based compensation(c) | 9,504 | 4,790 | ||||||
| Transaction and acquisition-related charges(d) | 13,218 | 1,571 | ||||||
| Integration, restructuring, and other charges(e) | 2,043 | 2,800 | ||||||
| Adjusted Net Income before income tax effect | 49,390 | 53,007 | ||||||
| Less: Adjusted income taxes(f) | 11,400 | 12,972 | ||||||
| Adjusted Net Income | $ | 37,990 | $ | 40,035 | ||||
| Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Diluted net (loss) income per share (GAAP) | $ | (0.06 | ) | $ | 0.07 | |||
| Adjusted Net Income adjustments per share | ||||||||
| Provision for income taxes | 0.01 | 0.03 | ||||||
| Debt-related charges(a) | 0.07 | 0.02 | ||||||
| Acquisition-related depreciation and amortization(b) | 0.15 | 0.18 | ||||||
| Share-based compensation(c) | 0.06 | 0.03 | ||||||
| Transaction and acquisition related charges(d) | 0.09 | 0.01 | ||||||
| Integration, restructuring, and other charges(e) | 0.01 | 0.02 | ||||||
| Adjusted income taxes(f) | (0.08 | ) | (0.09 | ) | ||||
| Adjusted Diluted Earnings Per Share (Non-GAAP) | $ | 0.26 | $ | 0.28 | ||||
| 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) | 144,096,312 | 144,733,357 | ||||||
| Options and restricted stock not included in weighted average number of shares outstanding—diluted (GAAP) (using treasury stock method) | 2,492,320 | — | ||||||
| Adjusted weighted average number of shares outstanding—diluted (Non-GAAP) | 146,588,632 | 144,733,357 | ||||||
- Represents the non-cash interest expense related to the amortization of debt issuance costs for the 2021 February refinancing of the Company’s First Lien Credit Facility. This adjustment also includes the impact of the change in fair value of interest rate swaps, which represents the difference between the fair value gains or losses and actual cash payments and receipts on the interest rate swaps.
- 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.
- Share-based compensation for the three months ended September 30, 2024 and 2023, includes approximately
$6.6 million and$2.5 million , respectively, of incrementally recognized expense associated with the May 2023 vesting modification and retirements of the Company's Chief Financial Officer and President, Americas. - Represents charges related to acquisitions and similar transactions, primarily consisting of change in control-related costs, professional service fees, and other third-party costs. Transaction and acquisition related charges for the three months ended September 30, 2024 include approximately
$13.2 million of expense associated with the acquisition of Sterling, primarily consisting of legal, regulatory, and diligence professional service fees. The three months ended September 30, 2024 and 2023 also include insurance costs incurred related to the initial public offering. - Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to nonrecurring legal exposures, foreign currency (gains) losses, (gains) losses on the sale of assets, and other non-recurring items.
- Effective tax rates of approximately
23.1% and24.5% have been used to compute Adjusted Net Income and Adjusted Diluted Earnings Per Share for the three months ended September 30, 2024 and 2023, respectively.
FAQ
What was First Advantage (FA) revenue in Q3 2024?
When did First Advantage (FA) complete the Sterling acquisition?
What is First Advantage's (FA) combined revenue guidance for 2024 after Sterling acquisition?
What synergies does First Advantage (FA) expect from the Sterling acquisition?
