First Advantage Corporation (Nasdaq: FADV) ("the Company"), a global risk mitigation and business solutions provider, today announced operating results for the third quarter ended Sept. 30, 2009.
First Advantage reported income from continuing operations of $11.4 million for the quarter ended Sept. 30, 2009, compared to $12.3 million for the quarter ended Sept. 30, 2008. Net income attributable to First Advantage shareholders was $11.5 million (19 cents per share) in the quarter ended Sept. 30, 2009, compared to $12.6 million in the quarter ended Sept. 30, 2008 (21 cents per share). Results of operations for the quarter ended Sept. 30, 2008 included a restructuring charge of $2.8 million ($1.6 million after tax or 3 cents per diluted share), primarily relating to consolidation of facilities in the Credit Services segment.
Service revenue for the Company was $156 million and $174.7 million for the quarters ended Sept. 30, 2009 and 2008, respectively.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $29.5 million and $34.7 million for the quarters ended Sept. 30, 2009 and 2008, respectively.
"Despite lackluster auto sales, Credit Services posted improved results compared to a year ago, driven by stronger performance in the Mortgage and Direct to Consumer businesses. Current macro-economic conditions continued to pose challenges for our Employer Services and Investigative and Litigation Support Services segments during the third quarter. Service revenues and operating margins were negatively impacted," stated Anand Nallathambi, president and chief executive officer. "We continue to emphasize operating efficiencies and enhancing market share in our major business lines."
Summary Consolidated Income Statement (Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Service revenue $155,980 $174,664 $510,688 545,341
Reimbursed government
fee revenue 13,586 13,633 39,905 40,780
------ ------ ------ ------
Total revenue 169,566 188,297 550,593 586,121
Cost of service
revenue 51,429 53,520 191,030 160,723
Government fees paid 13,586 13,633 39,905 40,780
------ ------ ------ ------
Total cost of service 65,015 67,153 230,935 201,503
Gross margin 104,551 121,144 319,658 384,618
------- ------- ------- -------
Salaries and benefits 49,920 59,113 151,217 188,489
Facilities and
telecommunications 6,741 7,789 20,265 24,073
Other operating
expenses 18,453 19,899 56,397 65,642
Depreciation and
amortization 10,993 10,898 32,574 31,520
Impairment loss -- 1,720 -- 2,017
----- ----- ----- -----
Total operating
expenses 86,107 99,419 260,453 311,741
------ ------ ------- -------
Income from
operations 18,444 21,725 59,205 72,877
------ ------ ------ ------
Other (expense) income:
Interest expense (234) (640) (903) (2,140)
Interest income 103 155 387 746
--- --- --- ---
Total other (expense),
net (131) (485) (516) (1,394)
---- ---- ---- ------
Income from continuing
operations before
income taxes 18,313 21,240 58,689 71,483
Provision for income
taxes 6,898 8,932 23,856 29,582
----- ----- ------ ------
Income from continuing
operations 11,415 12,308 34,833 41,901
Loss from discontinued
operations, net of tax -- -- -- (4,241)
------ ------ ------ ------
Net income $11,415 $12,308 $34,833 $37,660
------- ------- ------- -------
Less:
Net loss
attributable
to non-controlling
interest (35) (323) (202) (648)
--- ---- ---- ----
Net income
attributable to
First Advantage
Corporation
("FADV") $11,450 $12,631 $35,035 $38,308
------- ------- ------- -------
Basic earnings per
share:
Income from continuing
operations
attributable
to FADV shareholders $0.19 $0.21 $0.59 $0.72
Loss from discontinued
operations,
attributable to
FADV shareholders,
net of tax -- -- -- (0.07)
----- ----- ----- -----
Net income
attributable
to FADV
shareholders $0.19 $0.21 $0.59 $0.65
----- ----- ----- -----
Diluted income per share:
Income from continuing
operations attributable
to FADV shareholders $0.19 $0.21 $0.59 $0.72
Loss from discontinued
operations attributable
to FADV shareholders,
net of tax -- --- -- (0.08)
----- ----- ----- -----
Net income
attributable
to FADV
shareholders $0.19 $0.21 $0.59 $0.64
----- ----- ----- -----
Weighted-average common
shares outstanding:
Basic 59,803 59,478 59,722 59,358
Diluted 60,086 59,529 59,867 59,446
Amounts attributable
to FADV shareholders:
Income from continuing
operations, net of
tax $11,450 $12,631 $35,035 $42,549
Loss from discontinued
operations, net of
tax -- -- -- (4,241)
------ ------ ------ ------
Net income $11,450 $12,631 $35,035 $38,308
------- ------- ------- -------
EBITDA calculation:
Net income attributable
to First Advantage
Corporation $11,450 $12,631 $35,035 $38,308
Provision for income
taxes 6,898 8,932 23,856 29,582
Interest expense 131 485 516 1,394
Loss from discontinued
operations, net of
tax -- -- -- 4,241
Depreciation and
amortization 10,993 10,898 32,574 31,520
Impairment loss -- 1,720 -- 2,017
----- ----- ----- -----
Earnings before interest,
taxes, depreciation and
amortization (EBITDA)* $29,472 $34,666 $91,981 $107,062
------- ------- ------- --------
*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 Nine Months Ended
Sept. 30, Sept. 30,
(In thousands, except
percentages) 2009 2008 2009 2008
Service revenue
Credit Services $59,443 $60,837 $191,567 $202,723
Data Services 25,514 21,922 113,456 60,422
Employer Services 41,731 54,199 119,350 163,397
Multifamily Services 19,879 19,702 57,467 58,037
Investigative &
Litigation Support
Services 9,804 18,600 30,224 63,281
Corporate (391) (596) (1,376) (2,519)
---- ---- ------ ------
Consolidated $155,980 $174,664 $510,688 $545,341
-------- -------- -------- --------
Income (Loss) from
operations
Credit Services $12,489 $7,063 $44,820 $35,371
Data Services 3,590 3,680 11,389 11,214
Employer Services 3,929 6,644 6,110 13,119
Multifamily Services 7,268 6,654 20,521 17,995
Investigative &
Litigation Support
Services 1,337 6,347 2,753 23,407
Corporate (10,169) (8,663) (26,388) (28,229)
------- ------ ------- -------
Consolidated $18,444 $21,725 $59,205 $72,877
------- ------- ------- -------
Operating margin
percentage of service
revenue
Credit Services 21.01% 11.61% 23.40% 17.45%
Data Services 14.07% 16.79% 10.04% 18.56%
Employer Services 9.42% 12.26% 5.12% 8.03%
Multifamily Services 36.56% 33.77% 35.71% 31.01%
Investigative &
Litigation Support
Services 13.64% 34.12% 9.11% 36.99%
Corporate N/A N/A N/A N/A
---------- ---------- ---------- ----------
Consolidated 11.82% 12.44% 11.59% 13.36%
----- ----- ----- -----
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 screening; occupational health services; applicant tracking systems; recruiting solutions; skills and behavioral assessments; business tax consulting services; corporate and litigation investigations; 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 Poway, Calif., and has offices throughout the United States and abroad. More information about First Advantage can be found at www.FADV.com.
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: risks relating to the First American Corporation's ("First American") exchange offer (the "Offer") to acquire all of the outstanding shares of the Company's Class A common stock ("Class A Shares") not owned or controlled by First American at an exchange ratio of 0.58 of a First American common share per Class A Share, including the risks described in the Offer to Exchange and related materials filed by First American on a Registration Statement on Form S-4 with the Securities and Exchange Commission and which may be amended from time to time by First American; 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, 2008 Third Quarter Report on Form 10-Q and any subsequent amendments, for a further discussion of these and other risks.
Notice to Stockholders of Exchange Offer by First American:
On October 8, 2009, The First American Corporation ("First American") commenced an exchange offer (the "Offer") to acquire all of the outstanding shares of the Company's Class A common stock ("Class A Shares") not owned or controlled by First American at an exchange ratio of 0.58 of a First American common share per Class A Share. In connection with the Offer, First American filed an Offer to Exchange and related materials with the Securities and Exchange Commission ("SEC") on a Registration Statement on Form S-4. On October 8, 2009, the Company filed with the SEC a Solicitation/ Recommendation Statement on Schedule 14D-9 pursuant to which the Special Committee of the Board of Directors of the Company (the "Special Committee") recommended, on behalf of the Board of Directors of the Company, that the stockholders of the Company accept the Offer and tender their shares pursuant to the Offer.
Stockholders are urged to read the Offer to Exchange and related materials and the Solicitation/ Recommendation Statement and any amendments thereto filed from time to time, because they will contain important information. Stockholders will be able to obtain a free copy of the Offer to Exchange and related materials and the Solicitation/Recommendation Statement at the SEC's Web site at www.sec.gov . In addition, the Solicitation/Recommendation Statement, as well as the Company's other public SEC filings, can be obtained at www.FADV.com. You may also read and copy any reports, statements and other information filed by First American or the Company with the SEC at the SEC public reference room at 100 F Street N.E., Washington, D.C. 20549. Please call the SEC at 800.732.0330 or visit the SEC's Web site for further information on its public reference room.
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
http://www.fadv.com
