First Advantage Corporation Reports Operating Results for the First Quarter of 2009
First Advantage reported income from continuing operations of
Service revenue for the Company was
Earnings before interest, taxes, depreciation and amortization (EBITDA) were
Effective with the first quarter 2009, First Advantage has five reportable business segments: Credit Services, Data Services, Employer Services, Multifamily Services and Investigative and Litigation Support Services. The new reporting structure reflects the strategic consolidation of the former Lender Services and Dealer Services segments and consumer credit reporting, which was formerly part of Data Services.
“We are pleased with the results of our first quarter as we began to see an easing of the credit markets as evidenced by increased mortgage refinance activity in our Credit Services segment,” stated
Employer Services, despite the negative impact of the economic downturn and increasing levels of unemployment, continues to benefit from strategic cost reduction initiatives implemented in early 2008. Going forward, company management is taking a cautiously optimistic view that, while they see the housing markets improving, the broad-scale economic recovery in hiring and employment-related services is still awhile away.
In the Investigative and Litigation Support Services segment, the pipeline and overall demand is still healthy, but the transactional levels are lower than they have been historically. Project assignments are being delayed and process milestones are being stretched out as First Advantage customers manage through the economic pressures.
“Company-wide we have reduced operating expenses by 16 percent from the first quarter of 2008. Across the enterprise, we continue to manage down costs, placing emphasis on both improving our cost structure and focusing on business and product development initiatives to position us for growth when the markets stabilize,” stated Mr. Nallathambi.
First Advantage’s first quarter 2009 results will be discussed in more detail on
Summary Income Statement (Unaudited) (In thousands, except per share amounts) Three Months Ended March 31, 2009 2008 Service revenue $190,040 $188,254 Reimbursed government fee revenue 12,978 14,025 Total revenue 203,018 202,279 Cost of service revenue 81,340 53,716 Government fees paid 12,978 14,025 Total cost of sales 94,318 67,741 Gross margin 108,700 134,538 Salaries and benefits 53,167 66,449 Facilities and telecommunications 6,659 8,200 Other operating expenses 19,347 22,834 Depreciation and amortization 10,686 9,896 Total operating expenses 89,859 107,379 Income from operations 18,841 27,159 Other (expense) income: Interest expense (375) (425) Interest income 213 419 Total other (expense), net (162) (6) Income from continuing operations before income taxes 18,679 27,153 Provision for income taxes 7,846 10,974 Income from continuing operations 10,833 16,179 Loss from discontinued operations, net of tax ---- (2,977) Net income 10,833 13,202 Less: Net income (loss) attributable to non-controlling interest 219 (87) Net income attributable to First Advantage Corporation (FADV) $10,614 $13,289 Basic income per share: Income from continuing operations attributable to FADV shareholders $0.18 $0.27 Loss from discontinued operations attributable to FADV shareholders, net of tax ---- (0.05) Net income attributable to FADV shareholders $0.18 $0.22 Diluted income per share Income from continuing operations attributable to FADV shareholders $0.18 $0.27 Loss from discontinued operations attributable to FADV shareholders, net of tax ---- (0.05) Net income attributable to FADV shareholders $0.18 $0.22 Weighted-average common shares outstanding: Basic 59,585 59,159 Diluted 59,612 59,234 Amounts attributable to FADV shareholders Income from continuing operations, net of tax $10,614 $16,266 Loss from discontinued operations, net of tax ---- (2,977) Net income $10,614 $13,289 EBITDA calculation: Net income attributable to FADV shareholders $10,614 $13,289 Provision for income taxes 7,846 10,974 Interest expense 162 6 Loss from discontinued operations, net of tax --- 2,977 Depreciation and amortization 10,686 9,896 Earnings before interest, taxes, Depreciation and amortization (EBITDA)* $29,308 $37,142 *EBITDA is not a measure of financial performance under generally accepted accounting principles. EBITDA is used by certain investors to analyze and compare companies. Segment Financial Information (Unaudited) Three Months Ended March 31, (In thousands, except percentages) 2009 2008 Service revenue Credit Services $64,419 $74,902 Data Services 59,100 18,967 Employer Services 37,451 53,687 Multifamily Services 17,903 18,349 Investigative & Litigation Support Services 11,726 23,503 Corporate (559) (1,154) Consolidated $190,040 $188,254 Income (Loss) from operations Credit Services $14,747 $16,347 Data Services 5,646 3,770 Employer Services (500) 3,471 Multifamily Services 5,674 4,772 Investigative & Litigation Support Services 1,146 9,525 Corporate (7,872) (10,726) Consolidated $18,841 $27,159 Operating margin percentage of service revenue Credit Services 22.89% 21.82% Data Services 9.55% 19.88% Employer Services -1.34% 6.47% Multifamily Services 31.69% 26.01% Investigative & Litigation Support Services 9.77% 40.53% Corporate N/A N/A Consolidated 9.91% 14.43%
About First Advantage Corporation
First Advantage Corporation (Nasdaq: FADV) combines industry expertise with information to create products and services that organizations worldwide use to make smarter business decisions. First Advantage is a leading provider of consumer credit information in the mortgage, automotive and specialty finance markets; business credit information in the transportation industry; lead generation services; motor vehicle record reports; employment background verifications; occupational health services; applicant tracking systems; recruiting solutions; skills and behavioral assessments; business tax consulting services; computer forensics; electronic discovery; data recovery; due diligence reporting; resident screening; property management software and renters insurance. First Advantage ranks among the top companies in all of its major business lines. First Advantage is headquartered in
First Advantage is a majority-owned subsidiary of The First American Corporation (NYSE: FAF), a FORTUNE 500(R) company that traces its history to 1889. First American is America’s largest provider of business information, supplying businesses and consumers with valuable information products to support the major economic events of people’s lives. Additional information about the First American Family of Companies can be found at www.firstam.com.
Certain statements in this press release, including those related to cost reduction initiatives and impact on improved efficiencies in the future quarters, product expansion and enhanced operational efficiencies, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include: general volatility of the capital markets and the market price of the Company’s Class A common stock; interest rate fluctuations; changes in the real estate market; changes in employment trends; limit on access to public records; the Company’s ability to successfully raise capital; the Company’s ability to identify and complete acquisitions and successfully integrate businesses it acquires; changes in applicable government regulations; heightened regulations and regulatory scrutiny; the degree and nature of the Company’s competition; increases in the Company’s expenses; inability to realize the benefits of offshore strategy; continued consolidation among the Company’s competitors and customers; unanticipated technological changes and requirements; the Company’s ability to identify suppliers of quality and cost-effective data; and other risks identified from time-to-time in the Company’s SEC filings. The forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Investors are advised to consult the Company’s filings with the SEC, including its 2008 Annual Report on Form 10-K and any subsequent amendments, for a further discussion of these and other risks.
Contacts: Henri Van Parys Cindy Williams Corporate Communications Manager Director - Investor Relations 727.214.1072 727.214.3438 henri.vanparys@FADV.com cindy.williams@FADV.com
SOURCE First Advantage Corporation