8-K
0001210677False00012106772022-03-232022-03-23

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 23, 2022

 

 

First Advantage Corporation

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-31666

84-3884690

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

1 Concourse Parkway NE

Suite 200

 

Atlanta, Georgia

 

30328

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 888 314-9761

 

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common Stock, $0.001 par value per share

 

FA

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 


Item 2.02 Results of Operations and Financial Condition.

On March 23, 2022, First Advantage Corporation issued a press release announcing its financial results for the quarter and year ended December 31, 2021. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated by specific reference in any such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.

 

Description

99.1

 

Press Release of First Advantage Corporation dated March 23, 2022.

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

FIRST ADVANTAGE CORPORATION

 

 

 

 

Date:

March 23, 2022

By:

/s/ David L. Gamsey

 

 

 

David L. Gamsey
Executive Vice President & Chief Financial Officer

 

 


EX-99.1

 

Exhibit 99.1

https://cdn.kscope.io/b03b238aa320f7f424f51c07a9ee1144-img219211210_0.jpg
 

First Advantage Delivers Record Fourth Quarter and Full Year Financial Results

Reports Sixth Consecutive Quarter of Double-Digit Revenue Growth

Fourth Quarter 2021 Financial Highlights

(All results compared to prior year period)

 

Revenues were $212.5 million, an increase of 35.8%, compared to $156.5 million in the prior year period
Net income was $15.4 million, compared to a net loss of $(5.9) million in the prior year period
Adjusted EBITDA1 was $69.4 million, compared to $44.6 million in the prior year period
Adjusted Net Income1 was $46.5 million, compared to $24.7 million in the prior year period

 

Full Year 2021 Financial Highlights

(All results compared to prior year periods; Successor period is defined as the period from February 1, 2020 through December 31, 2020; Predecessor period is defined as the period from January 1, 2020 through January 31, 2020)

 

Revenues were $712.3 million, compared to $472.4 million and $36.8 million for the Successor and Predecessor periods, respectively
Net income was $16.1 million, compared to a net loss of $(47.5) million and $(36.5) million for the Successor and Predecessor periods, respectively
Adjusted EBITDA1 was $226.3 million, compared to $139.8 million and $7.0 million for the Successor and Predecessor periods, respectively
Adjusted Net Income1 was $142.4 million, compared to $63.9 million and $1.4 million for the Successor and Predecessor periods, respectively

 

2022 Full Year Guidance

 

Introducing full year 2022 guidance ranges for revenues of $813 to $828 million, Adjusted EBITDA of $250 to $257 million, and Adjusted Net Income of $156 to $161 million2

 

ATLANTA, March 23, 2022 – First Advantage Corporation (NASDAQ: FA), a leading global provider of technology solutions for screening, verifications, safety, and compliance related to human capital, today announced financial results for the fourth quarter and full year ended December 31, 2021.

Key Financials

(Amounts in millions, except per share data and percentages)

 

Three months ended December 31,

 

 

2021

 

 

2020

 

 

Change

 

Revenues

$

212.5

 

 

$

156.5

 

 

 

35.8

%

Income from operations

$

25.3

 

 

$

3.4

 

 

 

654.9

%

Net income (loss)

$

15.4

 

 

$

(5.9

)

 

NM

 

Net income (loss) margin

 

7.2

%

 

 

(3.7

)%

 

 

 

Diluted earnings (loss) per share

$

0.10

 

 

$

(0.05

)

 

NM

 

Adjusted EBITDA1

$

69.4

 

 

$

44.6

 

 

 

55.5

%

Adjusted EBITDA Margin1

 

32.7

%

 

 

28.5

%

 

 

 

Adjusted Net Income1

$

46.5

 

 

$

24.7

 

 

 

88.0

%

Adjusted Diluted Earnings Per Share1

$

0.31

 

 

$

0.19

 

 

 

63.2

%

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: "NM" indicates not meaningful information.

 


 

“We are very pleased with our impressive fourth quarter financial performance, with revenues increasing 36% year-over-year, including broad-based strength across all of our key verticals and geographies. We delivered these results through a combination of existing customer base growth, upsell and cross-sell wins, new customer additions, and robust international growth. Additionally, macroeconomic and jobs market trends continued to provide tailwinds for hiring and screening globally,” said Scott Staples, Chief Executive Officer. “We also continued to advance our automation initiatives, proprietary databases, and operating efficiencies, resulting in a 56% increase in Adjusted EBITDA and a 415-basis-point increase in Adjusted EBITDA Margin for the quarter.”

Mr. Staples continued, “During the fourth quarter, we completed the previously announced acquisitions of Corporate Screening and MultiLatin, and, in early 2022, we acquired Form I-9 Compliance, which adds new Form I-9 and E-Verify compliance solutions to our product suite. Looking towards 2022, we remain focused on executing our vertical strategy and product innovation roadmap globally, which we expect will drive strong new customer, existing customer, and upsell and cross-sell performance. We expect to deliver continued impressive growth throughout 2022, fueled by the increasing power of our technology, robust automation, and exceptional customer experience, which helps our customers compete for talent and manage their human capital related risk in this dynamic jobs market.”

 

 

Balance Sheet and Cash Flow

During the fourth quarter of 2021, the Company generated $64.8 million of cash flow from operating activities and spent $6.1 million in purchases of property and equipment and capitalized software development costs. First Advantage ended the fourth quarter of 2021 with cash and cash equivalents of $292.6 million and total debt of $564.7 million, resulting in net debt of $272.1 million.

Full Year 2022 Guidance

The following table summarizes our full year 2022 guidance:

 

As of March 23, 2022

Revenues

$813 million – $828 million

Adjusted EBITDA2

$250 million – $257 million

Adjusted Net Income2

$156 million – $161 million

Capital expenditures (consisting of purchases of property and equipment and capitalized software development costs)

$28 million – $30 million

2 A reconciliation of the foregoing guidance for the non-GAAP metrics of Adjusted EBITDA and Adjusted Net Income to GAAP net income (loss) 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.

 

Actual results may differ materially from First Advantage’s full year 2022 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, March 23, 2022, at 8:30 a.m. ET. To participate in the conference call, please dial (877) 313-2269 (domestic) or (470) 495-9550 (international) approximately ten minutes before the start. Please mention to the operator that you are dialing in for the First Advantage fourth quarter 2021 earnings call or provide conference code 2278043. The call also will 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 at https://investors.fadv.com.

 


 

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:

the impact of COVID-19 and related risks on our results of operations, financial position, and/or liquidity;
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;
our reliance on third-party data providers;
negative changes in external events beyond our control, including our customers’ onboarding volumes, economic drivers which are sensitive to macroeconomic cycles, and the COVID-19 pandemic;
potential harm to our business, brand, and reputation as a result of security breaches, cyber-attacks, or the mishandling of personal data;
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;
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 ability to obtain, maintain, protect and enforce our intellectual property and other proprietary information;
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
our Sponsor (Silver Lake Group, L.L.C., together with its affiliates, successors, and assignees) controls us and may have interests that 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 prospectus, dated November 10, 2021, filed with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b)(4) of the Securities Act of 1933, 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,” and “Adjusted Diluted Earnings Per Share.”

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share 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, and Adjusted Diluted Earnings Per Share 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, and Adjusted Diluted Earnings Per Share 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. 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 technology solutions for screening, verifications, safety, and compliance related to human capital. The Company delivers innovative solutions and insights that help customers manage risk and hire the best talent. Enabled by its proprietary technology, First Advantage’s products and solutions 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 more than 33,000 customers. For more information about First Advantage, visit the Company’s website at https://fadv.com/.

 


 

Contacts

Investors:

Stephanie D. Gorman

Vice President, Investor Relations

Stephanie.Gorman@fadv.com

(888) 314-9761

 

 


 

Consolidated Financial Statements

First Advantage Corporation

Condensed Consolidated Balance Sheets

(Unaudited)

 

 

 

Successor

 

 

Successor

 

 

 

December 31,

 

 

December 31,

 

(in thousands, except share and per share amounts)

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

292,642

 

 

$

152,818

 

Restricted cash

 

 

148

 

 

 

152

 

Short-term investments

 

 

941

 

 

 

1,267

 

Accounts receivable (net of allowance for doubtful accounts of $1,258 and $967 at December 31, 2021 and December 31, 2020, respectively)

 

 

155,772

 

 

 

111,363

 

Prepaid expenses and other current assets

 

 

14,365

 

 

 

8,699

 

Income tax receivable

 

 

2,292

 

 

 

3,479

 

Total current assets

 

 

466,160

 

 

 

277,778

 

Property and equipment, net

 

 

154,309

 

 

 

190,282

 

Goodwill

 

 

793,892

 

 

 

770,089

 

Trade name, net

 

 

79,585

 

 

 

87,702

 

Customer lists, net

 

 

384,766

 

 

 

435,661

 

Deferred tax asset, net

 

 

1,413

 

 

 

807

 

Other assets

 

 

6,456

 

 

 

1,372

 

TOTAL ASSETS

 

$

1,886,581

 

 

$

1,763,691

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

 

$

53,977

 

 

$

44,117

 

Accrued compensation

 

 

30,054

 

 

 

18,939

 

Accrued liabilities

 

 

21,829

 

 

 

25,200

 

Current portion of long-term debt

 

 

 

 

 

6,700

 

Income tax payable

 

 

2,573

 

 

 

2,451

 

Deferred revenue

 

 

873

 

 

 

431

 

Total current liabilities

 

 

109,306

 

 

 

97,838

 

Long-term debt (net of deferred financing costs of $9,879 and $26,345 at December 31, 2021 and December 31, 2020, respectively)

 

 

554,845

 

 

 

778,605

 

Deferred tax liability, net

 

 

84,653

 

 

 

86,770

 

Other liabilities

 

 

5,539

 

 

 

6,208

 

Total liabilities

 

 

754,343

 

 

 

969,421

 

EQUITY

 

 

 

 

 

 

Common stock - $0.001 par value; 1,000,000,000 shares authorized, 152,901,040 and 130,000,000 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

 

 

153

 

 

 

130

 

Additional paid-in-capital

 

 

1,165,163

 

 

 

839,148

 

Accumulated deficit

 

 

(31,441

)

 

 

(47,492

)

Accumulated other comprehensive (loss) income

 

 

(1,637

)

 

 

2,484

 

Total equity

 

 

1,132,238

 

 

 

794,270

 

TOTAL LIABILITIES AND EQUITY

 

$

1,886,581

 

 

$

1,763,691

 

 

 


 

First Advantage Corporation

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

 

 

 

Interim Periods

 

 

Annual Periods

 

 

 

Successor

 

 

Successor

 

 

 

Predecessor

 

(in thousands, except share and per share amounts)

 

Three Months
Ended
December 31, 2021

 

 

Three Months
Ended
December 31, 2020

 

 

Year Ended
December 31, 2021

 

 

Period from
February 1, 2020
through
December 31, 2020

 

 

 

Period from
January 1, 2020
through
January 31, 2020

 

REVENUES

 

$

212,532

 

 

$

156,544

 

 

$

712,295

 

 

$

472,369

 

 

 

$

36,785

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services (exclusive of depreciation and amortization below)

 

 

107,206

 

 

 

83,584

 

 

 

352,170

 

 

 

240,287

 

 

 

 

20,265

 

Product and technology expense

 

 

11,961

 

 

 

11,706

 

 

 

45,507

 

 

 

32,201

 

 

 

 

3,189

 

Selling, general, and administrative expense

 

 

31,724

 

 

 

20,658

 

 

 

107,980

 

 

 

66,864

 

 

 

 

11,235

 

Depreciation and amortization

 

 

36,322

 

 

 

37,242

 

 

 

142,815

 

 

 

135,057

 

 

 

 

2,105

 

Total operating expenses

 

 

187,213

 

 

 

153,190

 

 

 

648,472

 

 

 

474,409

 

 

 

 

36,794

 

INCOME (LOSS) FROM OPERATIONS

 

 

25,319

 

 

 

3,354

 

 

 

63,823

 

 

 

(2,040

)

 

 

 

(9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER EXPENSE (INCOME):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

3,107

 

 

 

9,509

 

 

 

25,122

 

 

 

47,914

 

 

 

 

4,514

 

Interest income

 

 

(10

)

 

 

(248

)

 

 

(150

)

 

 

(530

)

 

 

 

(25

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

13,938

 

 

 

 

 

 

 

10,533

 

Transaction expenses, change in control

 

 

 

 

 

 

 

 

 

 

 

9,423

 

 

 

 

22,370

 

Total other expense

 

 

3,097

 

 

 

9,261

 

 

 

38,910

 

 

 

56,807

 

 

 

 

37,392

 

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES

 

 

22,222

 

 

 

(5,907

)

 

 

24,913

 

 

 

(58,847

)

 

 

 

(37,401

)

Provision (benefit) for income taxes

 

 

6,837

 

 

 

(47

)

 

 

8,862

 

 

 

(11,355

)

 

 

 

(871

)

NET INCOME (LOSS)

 

$

15,385

 

 

$

(5,860

)

 

$

16,051

 

 

$

(47,492

)

 

 

$

(36,530

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation (loss) income

 

 

(2,527

)

 

 

3,648

 

 

 

(4,121

)

 

 

2,484

 

 

 

 

(31

)

COMPREHENSIVE INCOME

 

$

12,858

 

 

$

(2,212

)

 

$

11,930

 

 

$

(45,008

)

 

 

$

(36,561

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

15,385

 

 

$

(5,860

)

 

$

16,051

 

 

$

(47,492

)

 

 

$

(36,530

)

Basic net income (loss) per share

 

$

0.10

 

 

$

(0.05

)

 

$

0.11

 

 

$

(0.37

)

 

 

n/a

 

Diluted net income (loss) per share

 

$

0.10

 

 

$

(0.05

)

 

$

0.11

 

 

$

(0.37

)

 

 

n/a

 

Weighted average number of shares outstanding - basic

 

 

150,119,568

 

 

 

130,000,000

 

 

 

140,480,590

 

 

 

130,000,000

 

 

 

n/a

 

Weighted average number of shares outstanding - diluted

 

 

152,284,628

 

 

 

130,000,000

 

 

 

141,687,384

 

 

 

130,000,000

 

 

 

n/a

 

Basic net (loss) income per unit

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

 

 

$

(0.24

)

Diluted net (loss) income per unit

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

 

 

$

(0.24

)

Weighted average units outstanding - basic

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

 

 

 

149,686,460

 

Weighted average units outstanding - diluted

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

 

 

 

149,686,460

 

 

 


 

First Advantage Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Successor

 

 

 

Predecessor

 

(in thousands)

 

Year Ended
December 31, 2021

 

 

Period from
February 1, 2020
through
December 31, 2020

 

 

 

Period from
January 1, 2020
through
January 31, 2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

16,051

 

 

$

(47,492

)

 

 

$

(36,530

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

142,815

 

 

 

135,057

 

 

 

 

2,105

 

Loss on extinguishment of debt

 

 

13,938

 

 

 

 

 

 

 

10,533

 

Amortization of deferred financing costs

 

 

5,936

 

 

 

3,242

 

 

 

 

569

 

Bad debt (recovery) expense

 

 

(17

)

 

 

350

 

 

 

 

102

 

Deferred taxes

 

 

(2,924

)

 

 

(16,747

)

 

 

 

(997

)

Share-based compensation

 

 

9,530

 

 

 

1,876

 

 

 

 

3,976

 

(Gain) on foreign currency exchange rates

 

 

(575

)

 

 

(31

)

 

 

 

(82

)

Loss on disposal of fixed assets

 

 

76

 

 

 

19

 

 

 

 

8

 

Change in fair value of interest rate swaps

 

 

(2,284

)

 

 

3,616

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(40,842

)

 

 

(28,541

)

 

 

 

9,384

 

Prepaid expenses and other current assets

 

 

(5,430

)

 

 

3,561

 

 

 

 

(4,604

)

Other assets

 

 

(5,072

)

 

 

55

 

 

 

 

(62

)

Accounts payable

 

 

7,516

 

 

 

16,530

 

 

 

 

(8,871

)

Accrued compensation and accrued liabilities

 

 

8,541

 

 

 

880

 

 

 

 

4,102

 

Deferred revenue

 

 

196

 

 

 

(271

)

 

 

 

11

 

Other liabilities

 

 

(87

)

 

 

826

 

 

 

 

767

 

Income taxes receivable and payable, net

 

 

1,309

 

 

 

(79

)

 

 

 

373

 

Net cash provided by (used in) operating activities

 

 

148,677

 

 

 

72,851

 

 

 

 

(19,216

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

Changes in short-term investments

 

 

305

 

 

 

257

 

 

 

 

(163

)

Acquisitions of businesses, net of cash acquired

 

 

(48,934

)

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(7,313

)

 

 

(5,304

)

 

 

 

(951

)

Capitalized software development costs

 

 

(16,485

)

 

 

(10,522

)

 

 

 

(929

)

Net cash used in investing activities

 

 

(72,427

)

 

 

(15,569

)

 

 

 

(2,043

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock in initial public offering, net of underwriting discounts and commissions

 

 

320,559

 

 

 

 

 

 

 

 

Payments of initial public offering issuance costs

 

 

(4,034

)

 

 

 

 

 

 

 

Shareholder distribution

 

 

(313

)

 

 

 

 

 

 

 

Capital contributions

 

 

241

 

 

 

59,423

 

 

 

 

41,143

 

Distributions to Predecessor Members and Optionholders

 

 

 

 

 

(5,834

)

 

 

 

(17,991

)

Borrowings from Successor First Lien Credit Facility

 

 

261,413

 

 

 

 

 

 

 

 

Repayments of Successor First Lien Credit Facility

 

 

(363,875

)

 

 

(3,350

)

 

 

 

 

Repayment of Successor Second Lien Credit Facility

 

 

(146,584

)

 

 

 

 

 

 

 

Borrowings on Successor Revolver

 

 

 

 

 

25,000

 

 

 

 

 

Repayments on Successor Revolver

 

 

 

 

 

(25,000

)

 

 

 

 

Repayment of Predecessor First Lien Credit Facility

 

 

 

 

 

 

 

 

 

(34,000

)

Payments of debt issuance costs

 

 

(1,257

)

 

 

(1,397

)

 

 

 

 

Payments on capital lease obligations

 

 

(1,652

)

 

 

(2,438

)

 

 

 

(274

)

Payments on deferred purchase agreements

 

 

(705

)

 

 

 

 

 

 

 

Proceeds from stock option exercises

 

 

387

 

 

 

 

 

 

 

 

Net settlement of stock option exercises

 

 

(332

)

 

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

 

63,848

 

 

 

46,404

 

 

 

 

(11,122

)

Effect of exchange rate on cash, cash equivalents, and restricted cash

 

 

(278

)

 

 

1,021

 

 

 

 

(102

)

Increase (decrease) in cash, cash equivalents, and restricted cash

 

 

139,820

 

 

 

104,707

 

 

 

 

(32,483

)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

152,970

 

 

 

48,263

 

 

 

 

80,746

 

Cash, cash equivalents, and restricted cash at end of period

 

$

292,790

 

 

$

152,970

 

 

 

$

48,263

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

 

 

Cash paid for income taxes, net of refunds received

 

$

10,361

 

 

$

4,786

 

 

 

$

279

 

Cash paid for interest

 

$

23,029

 

 

$

41,145

 

 

 

$

224

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Non-cash property and equipment additions

 

$

3,643

 

 

$

88

 

 

 

$

289

 

Distributions declared to Optionholders but not paid

 

$

 

 

$

 

 

 

$

781

 

 

 


 

Reconciliation of Consolidated Non-GAAP Financial Measures

 

 

Interim Periods

 

 

Annual Periods

 

 

 

Successor

 

 

Successor

 

 

 

Predecessor

 

(in thousands)

 

Three Months
Ended
December 31, 2021

 

 

Three Months
Ended
December 31, 2020

 

 

Year Ended
December 31, 2021

 

 

Period from
February 1, 2020
through
December 31, 2020

 

 

 

Period from
January 1, 2020
through
January 31, 2020

 

Net income (loss)

 

$

15,385

 

 

$

(5,860

)

 

$

16,051

 

 

$

(47,492

)

 

 

$

(36,530

)

Interest expense, net

 

 

3,097

 

 

 

9,261

 

 

 

24,972

 

 

 

47,384

 

 

 

 

4,489

 

Provision (benefit) for income taxes

 

 

6,837

 

 

 

(47

)

 

 

8,862

 

 

 

(11,355

)

 

 

 

(871

)

Depreciation and amortization

 

 

36,322

 

 

 

37,242

 

 

 

142,815

 

 

 

135,057

 

 

 

 

2,105

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

13,938

 

 

 

 

 

 

 

10,533

 

Share-based compensation

 

 

4,961

 

 

 

545

 

 

 

9,530

 

 

 

1,876

 

 

 

 

3,976

 

Transaction and acquisition-related charges(a)

 

 

2,804

 

 

 

568

 

 

 

9,314

 

 

 

10,146

 

 

 

 

22,840

 

Integration and restructuring charges(b)

 

 

 

 

 

3,125

 

 

 

584

 

 

 

3,413

 

 

 

 

327

 

Other(c)

 

 

32

 

 

 

(189

)

 

 

228

 

 

 

747

 

 

 

 

153

 

Adjusted EBITDA

 

$

69,438

 

 

$

44,645

 

 

$

226,294

 

 

$

139,776

 

 

 

$

7,022

 

Revenues

 

 

212,532

 

 

 

156,544

 

 

 

712,295

 

 

 

472,369

 

 

 

 

36,785

 

Adjusted EBITDA Margin

 

 

32.7

%

 

 

28.5

%

 

 

31.8

%

 

 

29.6

%

 

 

 

19.1

%

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, the three months and year ended December 31, 2021 (Successor) include incremental professional service fees incurred related to the initial public offering, the registered common stock offering by certain selling stockholders in November 2021, and a transaction bonus program related to one of the Company’s 2021 acquisitions.
b)
Represents charges from organizational restructuring and integration activities outside of the ordinary course of business.
c)
Represents 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.

 


 

Reconciliation of Consolidated Non-GAAP Financial Measures (continued)

 

 

Interim Periods

 

 

Annual Periods

 

 

 

Successor

 

 

Successor

 

 

 

Predecessor

 

(in thousands)

 

Three Months
Ended
December 31, 2021

 

 

Three Months
Ended
December 31, 2020

 

 

Year Ended
December 31, 2021

 

 

Period from
February 1, 2020
through
December 31, 2020

 

 

 

Period from
January 1, 2020
through
January 31, 2020

 

Net income (loss)

 

$

15,385

 

 

$

(5,860

)

 

$

16,051

 

 

$

(47,492

)

 

 

$

(36,530

)

Provision (benefit) for income taxes

 

 

6,837

 

 

 

(47

)

 

 

8,862

 

 

 

(11,355

)

 

 

 

(871

)

Income (loss) before provision for income taxes

 

 

22,222

 </