10-Q
Q3--12-31P13Y1.00false0001210677P4Y0001210677us-gaap:AdditionalPaidInCapitalMember2022-06-300001210677fa:FirstAdvantageCorporationMember2022-09-300001210677us-gaap:CommonStockMember2022-06-300001210677fa:NoCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2021-01-012021-09-300001210677us-gaap:TradeNamesMember2021-12-310001210677us-gaap:OtherComprehensiveIncomeMember2021-07-012021-09-300001210677srt:AmericasMemberus-gaap:AllOtherSegmentsMember2022-01-012022-09-300001210677us-gaap:GoodwillMember2021-01-012021-12-310001210677fa:OperatingLeaseMember2022-01-012022-09-300001210677us-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2021-01-012021-09-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001210677fa:UnitedStatesCountryOfDomicileMember2021-12-310001210677us-gaap:NonUsMember2021-12-310001210677srt:AmericasMember2022-01-012022-09-300001210677fa:TermLoanDueJanuaryThirtyOneTwoThousandTwentySevenMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MaximumMember2020-02-012020-02-280001210677fa:SuccessorPeriodMemberfa:CapitalizedSoftwareAcquiredByBusinessCombinationMember2022-09-300001210677fa:March2021UKAcquisitionMember2021-01-012021-03-310001210677us-gaap:AllOtherSegmentsMemberfa:InternationalExceptUnitedStatesCanadaAndLatinAmericaMember2021-01-012021-09-300001210677us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-07-012021-09-300001210677us-gaap:RetainedEarningsMember2021-01-012021-03-310001210677us-gaap:SubsequentEventMemberfa:ShareRepurchaseProgramMember2022-11-080001210677us-gaap:CustomerListsMember2022-01-012022-09-300001210677us-gaap:RestrictedStockMemberfa:TwoThousandTwentyOneEquityPlanMember2022-01-012022-09-300001210677us-gaap:GeographicConcentrationRiskMemberus-gaap:NonUsMemberus-gaap:SalesRevenueNetMember2022-01-012022-09-300001210677fa:FinanceLeaseMember2022-01-012022-09-300001210677us-gaap:AdditionalPaidInCapitalMember2022-09-300001210677us-gaap:TradeNamesMember2021-01-012021-09-300001210677fa:SuccessorFirstLienCreditFacilityMember2022-09-300001210677us-gaap:AdditionalPaidInCapitalMember2021-09-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001210677us-gaap:RetainedEarningsMember2022-07-012022-09-300001210677us-gaap:RetainedEarningsMember2022-06-300001210677srt:AmericasMember2021-12-310001210677us-gaap:OtherComprehensiveIncomeMember2022-01-012022-09-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001210677us-gaap:CommonStockMember2021-12-310001210677srt:MaximumMember2022-09-300001210677srt:AmericasMemberus-gaap:AllOtherSegmentsMember2022-07-012022-09-300001210677us-gaap:CommonStockMember2022-01-012022-09-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001210677us-gaap:CustomerListsMember2022-09-300001210677us-gaap:OperatingSegmentsMember2021-12-310001210677us-gaap:CommonStockMember2022-03-310001210677fa:March2021UKAcquisitionMember2021-03-3100012106772020-12-310001210677us-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2022-01-012022-09-300001210677fa:SuccessorPeriodMemberus-gaap:FurnitureAndFixturesMember2022-09-300001210677us-gaap:CustomerListsMembersrt:MaximumMember2022-01-012022-09-300001210677us-gaap:TradeNamesMember2021-07-012021-09-300001210677fa:ProductAndTechnologyExpenseMember2022-07-012022-09-300001210677us-gaap:AllOtherSegmentsMemberfa:InternationalExceptUnitedStatesCanadaAndLatinAmericaMember2022-07-012022-09-300001210677fa:SuccessorPeriodMemberus-gaap:FurnitureAndFixturesMember2021-12-310001210677us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2022-09-300001210677us-gaap:SubsequentEventMemberfa:ShareRepurchaseProgramMember2022-11-042022-11-040001210677fa:ProductAndTechnologyExpenseMember2022-01-012022-09-300001210677us-gaap:TradeNamesMember2021-01-012021-12-310001210677fa:SuccessorPlanMember2022-01-012022-09-300001210677us-gaap:AdditionalPaidInCapitalMember2021-03-310001210677us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2022-09-300001210677us-gaap:CustomerListsMember2021-12-310001210677us-gaap:TradeNamesMember2022-09-300001210677fa:TwoThousandTwentyOneEquityPlanMember2022-09-300001210677fa:CorporateScreeningServicesLlcMember2021-11-300001210677fa:TermLoanDueJanuaryThirtyOneTwoThousandTwentyEightMember2020-02-012020-02-280001210677us-gaap:CommonStockMember2022-07-012022-09-3000012106772021-04-012021-06-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001210677us-gaap:RetainedEarningsMember2021-12-310001210677us-gaap:TradeNamesMember2022-07-012022-09-300001210677us-gaap:AllOtherSegmentsMember2021-01-012021-09-300001210677fa:SuccessorSecondLienMember2022-01-012022-09-300001210677srt:MaximumMember2020-02-280001210677fa:TermLoanDueJanuaryThirtyOneTwoThousandTwentySevenMember2021-02-2800012106772022-09-300001210677srt:AmericasMember2021-01-012021-09-300001210677fa:SuccessorPeriodMemberfa:CapitalizedSoftwareAcquiredByBusinessCombinationMember2021-12-310001210677us-gaap:CustomerListsMemberus-gaap:TradeNamesMember2021-01-012021-12-310001210677fa:NoCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2022-07-012022-09-300001210677fa:SuccessorRevolverMember2021-06-302021-06-300001210677us-gaap:AdditionalPaidInCapitalMember2020-12-310001210677us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001210677fa:UnitedStatesCountryOfDomicileMember2022-09-3000012106772022-02-2800012106772022-07-012022-09-300001210677us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001210677us-gaap:CommonStockMember2021-09-300001210677fa:SuccessorFirstLienMember2021-01-012021-09-3000012106772021-12-310001210677us-gaap:CommonStockMember2022-04-012022-06-300001210677fa:SuccessorPeriodMember2021-12-310001210677srt:AmericasMember2021-07-012021-09-300001210677us-gaap:LondonInterbankOfferedRateLIBORMemberfa:TermLoanDueJanuaryThirtyOneTwoThousandTwentySevenMembersrt:MinimumMember2021-06-302021-06-3000012106772020-01-012020-12-310001210677us-gaap:SalesRevenueNetMemberfa:OneCustomerMemberus-gaap:CustomerConcentrationRiskMember2022-07-012022-09-300001210677us-gaap:LondonInterbankOfferedRateLIBORMemberfa:TermLoanDueJanuaryThirtyOneTwoThousandTwentySevenMembersrt:MaximumMember2021-06-302021-06-300001210677us-gaap:AllOtherSegmentsMember2022-07-012022-09-300001210677us-gaap:AllOtherSegmentsMember2022-01-012022-09-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001210677us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001210677us-gaap:IntersegmentEliminationMember2021-01-012021-09-300001210677us-gaap:GeographicConcentrationRiskMemberus-gaap:NonUsMemberus-gaap:SalesRevenueNetMember2021-07-012021-09-300001210677fa:InternationalExceptUnitedStatesCanadaAndLatinAmericaMember2021-01-012021-09-300001210677us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2022-09-300001210677us-gaap:CommonStockMember2022-09-300001210677srt:MinimumMember2020-02-280001210677fa:FastballHoldcoLPMember2021-06-302021-06-300001210677srt:MaximumMember2022-01-012022-09-300001210677fa:SuccessorFirstLienMember2022-01-012022-09-300001210677us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-09-300001210677fa:CorporateScreeningServicesLlcMember2021-11-012021-11-300001210677fa:SuccessorRevolverMember2022-09-300001210677fa:CapitalizedSoftwareDevelopedInternallyOrOtherwisePurchasedMemberfa:SuccessorPeriodMember2022-09-300001210677us-gaap:CommonStockMember2021-03-310001210677us-gaap:AdditionalPaidInCapitalMember2021-06-300001210677srt:AmericasMember2022-09-300001210677fa:TwoThousandTwentyOneEquityPlanMemberus-gaap:RestrictedStockUnitsRSUMember2022-09-3000012106772022-03-310001210677fa:SuccessorPeriodMember2022-09-300001210677us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001210677us-gaap:CustomerListsMember2021-07-012021-09-300001210677us-gaap:CommonStockMember2022-01-012022-03-310001210677us-gaap:RetainedEarningsMember2021-04-012021-06-300001210677us-gaap:AllOtherSegmentsMember2021-07-012021-09-300001210677us-gaap:OtherComprehensiveIncomeMember2022-07-012022-09-300001210677us-gaap:RetainedEarningsMember2022-09-300001210677fa:TermLoanDueJanuaryThirtyOneTwoThousandTwentySevenMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MinimumMember2021-02-012021-02-280001210677fa:NoCustomersMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-09-300001210677fa:TwoThousandTwentyOneEquityPlanMemberus-gaap:RestrictedStockMember2022-09-300001210677us-gaap:GeographicConcentrationRiskMemberus-gaap:NonUsMemberus-gaap:SalesRevenueNetMember2022-07-012022-09-300001210677fa:CorporateScreeningServicesLlcMemberus-gaap:DevelopedTechnologyRightsMember2021-11-300001210677fa:OperatingLeaseMember2022-07-012022-09-300001210677fa:InternationalExceptUnitedStatesCanadaAndLatinAmericaMember2022-07-012022-09-3000012106772021-06-100001210677us-gaap:GeographicConcentrationRiskMemberus-gaap:NonUsMember2022-07-012022-09-300001210677us-gaap:RetainedEarningsMember2022-04-012022-06-300001210677us-gaap:GoodwillMember2020-02-012020-12-3100012106772021-06-302021-06-3000012106772022-06-300001210677us-gaap:RetainedEarningsMember2021-03-310001210677us-gaap:CommonStockMember2021-06-300001210677us-gaap:CommonStockMember2021-04-012021-06-300001210677fa:TwoThousandTwentyOneEquityPlanMember2022-09-3000012106772021-06-110001210677fa:InternationalExceptUnitedStatesCanadaAndLatinAmericaMember2022-01-012022-09-300001210677fa:CapitalizedSoftwareDevelopedInternallyOrOtherwisePurchasedMemberfa:SuccessorPeriodMember2021-12-310001210677us-gaap:AllOtherSegmentsMemberfa:InternationalExceptUnitedStatesCanadaAndLatinAmericaMember2021-07-012021-09-300001210677srt:MaximumMemberus-gaap:IPOMember2022-01-012022-09-300001210677us-gaap:GeographicConcentrationRiskMemberus-gaap:NonUsMember2022-01-012022-09-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001210677us-gaap:EmployeeStockOptionMemberfa:SuccessorPlanMember2022-01-012022-09-300001210677us-gaap:CustomerListsMembersrt:MinimumMember2022-01-012022-09-3000012106772020-02-012020-02-280001210677fa:FormINineComplianceMember2022-01-012022-09-3000012106772021-01-012021-03-310001210677fa:ProductAndTechnologyExpenseMember2021-01-012021-09-300001210677us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001210677srt:AmericasMember2022-07-012022-09-300001210677us-gaap:RetainedEarningsMember2020-12-310001210677us-gaap:CustomerListsMember2021-01-012021-12-310001210677us-gaap:LondonInterbankOfferedRateLIBORMemberfa:TermLoanDueJanuaryThirtyOneTwoThousandTwentyEightMember2020-02-012020-02-280001210677fa:TwoThousandTwentyOneEquityPlanMember2022-01-012022-09-300001210677fa:OperationsAndComprehensiveIncomeLossMember2021-07-012021-09-300001210677fa:TwoThousandTwentyOneEquityPlanMemberus-gaap:RestrictedStockUnitsRSUMember2021-12-310001210677fa:TermLoanDueJanuaryThirtyOneTwoThousandTwentySevenMember2021-06-302021-06-300001210677us-gaap:OtherComprehensiveIncomeMember2021-01-012021-09-300001210677fa:FirstAdvantageCorporationMember2021-12-3100012106772022-01-012022-03-310001210677us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-09-300001210677fa:InternationalExceptUnitedStatesCanadaAndLatinAmericaMember2021-07-012021-09-300001210677fa:TwoThousandTwentyOneEquityPlanMember2021-09-300001210677us-gaap:EmployeeStockOptionMember2022-09-300001210677srt:MinimumMember2022-09-300001210677fa:SuccessorPlanMember2021-01-012021-09-300001210677us-gaap:AdditionalPaidInCapitalMember2022-03-310001210677us-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2021-07-012021-09-3000012106772020-02-290001210677us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateSwapMember2022-09-300001210677fa:InternationalMember2021-12-310001210677fa:TwoThousandTwentyOneEquityPlanMember2022-01-012022-09-300001210677fa:CostOfServicesMember2021-07-012021-09-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001210677us-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2022-07-012022-09-3000012106772021-09-3000012106772022-11-040001210677fa:TermLoanDueJanuaryThirtyOneTwoThousandTwentyEightMember2020-02-280001210677fa:FinanceLeaseMember2022-09-300001210677us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-07-012022-09-300001210677fa:TwoThousandTwentyOneEquityPlanMember2021-12-310001210677us-gaap:CommonStockMember2022-08-022022-08-020001210677fa:TermLoanDueJanuaryThirtyOneTwoThousandTwentySevenMember2020-02-012020-02-280001210677us-gaap:IntersegmentEliminationMember2021-07-012021-09-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001210677fa:FormINineComplianceMember2022-09-300001210677us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheOneMemberfa:TwoThousandTwentyOneEquityPlanMember2022-01-012022-09-300001210677fa:SuccessorFirstLienCreditFacilityMember2021-12-310001210677us-gaap:RestrictedStockMemberfa:TwoThousandTwentyOneEquityPlanMember2021-12-310001210677fa:SuccessorSecondLienMember2021-01-012021-09-300001210677us-gaap:IntersegmentEliminationMember2022-07-012022-09-300001210677us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001210677us-gaap:CommonStockMember2020-12-310001210677fa:SuccessorFirstLienMember2020-09-302020-09-300001210677fa:SuccessorPeriodMemberus-gaap:LeaseholdImprovementsMember2021-12-310001210677us-gaap:RestrictedStockUnitsRSUMember2022-09-300001210677us-gaap:AllOtherSegmentsMemberfa:InternationalExceptUnitedStatesCanadaAndLatinAmericaMember2022-01-012022-09-300001210677fa:NoCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2021-07-012021-09-300001210677us-gaap:NonUsMember2022-09-3000012106772021-01-012021-12-310001210677fa:NoCustomersMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-09-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001210677fa:NoCustomersMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-07-012021-09-300001210677fa:CostOfServicesMember2022-01-012022-09-300001210677fa:OperationsAndComprehensiveIncomeLossMember2022-01-012022-09-300001210677srt:AmericasMemberus-gaap:AllOtherSegmentsMember2021-01-012021-09-300001210677fa:CostOfServicesMember2022-07-012022-09-300001210677fa:OperationsAndComprehensiveIncomeLossMember2022-07-012022-09-300001210677fa:TermLoanDueJanuaryThirtyOneTwoThousandTwentySevenMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MinimumMember2020-02-012020-02-2800012106772022-01-012022-09-300001210677us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2021-12-310001210677fa:CostOfServicesMember2021-01-012021-09-300001210677us-gaap:RetainedEarningsMember2022-01-012022-03-310001210677fa:SuccessorRevolverMember2020-02-012020-02-2800012106772021-02-012021-02-280001210677fa:ProductAndTechnologyExpenseMember2021-07-012021-09-300001210677fa:SuccessorRevolverMember2020-02-280001210677fa:NoCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2022-01-012022-09-300001210677us-gaap:GeographicConcentrationRiskMemberus-gaap:NonUsMember2021-01-012021-09-300001210677us-gaap:GeographicConcentrationRiskMemberus-gaap:NonUsMember2021-07-012021-09-3000012106772021-07-012021-09-3000012106772021-01-012021-09-300001210677us-gaap:IntersegmentEliminationMember2022-01-012022-09-300001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-3100012106772022-04-012022-06-300001210677us-gaap:LondonInterbankOfferedRateLIBORMemberfa:TermLoanDueJanuaryThirtyOneTwoThousandTwentySevenMembersrt:MaximumMember2021-02-012021-02-280001210677us-gaap:RetainedEarningsMember2022-03-310001210677us-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:EmployeeStockOptionMemberfa:SuccessorPlanMember2022-01-012022-09-300001210677us-gaap:TradeNamesMember2022-01-012022-09-300001210677us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001210677us-gaap:RetainedEarningsMember2021-06-300001210677us-gaap:RetainedEarningsMember2021-09-3000012106772022-01-0100012106772021-06-300001210677fa:TermLoanDueJanuaryThirtyOneTwoThousandTwentySevenMember2021-02-012021-02-280001210677fa:CorporateScreeningServicesLlcMemberus-gaap:DevelopedTechnologyRightsMember2021-11-012021-11-300001210677us-gaap:RestrictedStockMember2022-09-300001210677fa:FinanceLeaseMember2022-07-012022-09-300001210677fa:TwoThousandTwentyOneEquityPlanMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001210677us-gaap:CustomerListsMember2022-07-012022-09-300001210677us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheOneMemberfa:SuccessorPlanMember2022-01-012022-09-300001210677fa:TermLoanDueJanuaryThirtyOneTwoThousandTwentySevenMember2020-02-280001210677us-gaap:GeographicConcentrationRiskMemberus-gaap:NonUsMemberus-gaap:SalesRevenueNetMember2021-01-012021-09-300001210677us-gaap:RetainedEarningsMember2021-07-012021-09-3000012106772021-03-310001210677us-gaap:CustomerListsMember2021-01-012021-09-300001210677us-gaap:TradeNamesMember2022-01-012022-09-300001210677fa:SuccessorPeriodMemberus-gaap:LeaseholdImprovementsMember2022-09-300001210677srt:MinimumMemberus-gaap:IPOMember2022-01-012022-09-300001210677fa:InternationalMember2022-09-300001210677fa:FirstAdvantageCorporationMember2022-01-012022-09-3000012106772021-06-112021-06-110001210677us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001210677srt:AmericasMemberus-gaap:AllOtherSegmentsMember2021-07-012021-09-3000012106772024-02-290001210677us-gaap:OperatingSegmentsMember2022-09-300001210677fa:OperationsAndComprehensiveIncomeLossMember2021-01-012021-09-300001210677us-gaap:AdditionalPaidInCapitalMember2021-12-310001210677fa:InternationalMember2022-01-012022-09-30xbrli:purexbrli:sharesfa:Customerfa:Unitiso4217:USDxbrli:sharesfa:Segmentiso4217:USD

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-31666

 

First Advantage Corporation

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

84-3884690

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

1 Concourse Parkway NE, Suite 200

Atlanta, GA

30328

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (888) 314-9761

 

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of November 4, 2022, the registrant had 151,929,522 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

2

 

 

 

Item 1.

Financial Statements (Unaudited)

2

 

Condensed Consolidated Balance Sheets

2

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

44

Item 4.

Controls and Procedures

44

 

 

 

PART II.

OTHER INFORMATION

45

 

 

 

Item 1.

Legal Proceedings

45

Item 1A.

Risk Factors

45

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

45

Item 3.

Defaults Upon Senior Securities

46

Item 4.

Mine Safety Disclosures

46

Item 5.

Other Information

46

Item 6.

Exhibits

47

Signatures

48

 

1


 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

First Advantage Corporation

Condensed Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except share and per share amounts)

 

September 30, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

390,262

 

 

$

292,642

 

Restricted cash

 

 

138

 

 

 

148

 

Short-term investments

 

 

 

 

 

941

 

Accounts receivable (net of allowance for doubtful accounts of $1,126 and $1,258 at September 30, 2022 and December 31, 2021, respectively)

 

 

151,197

 

 

 

155,772

 

Prepaid expenses and other current assets

 

 

27,318

 

 

 

14,365

 

Income tax receivable

 

 

2,556

 

 

 

2,292

 

Total current assets

 

 

571,471

 

 

 

466,160

 

Property and equipment, net

 

 

125,623

 

 

 

154,309

 

Goodwill

 

 

791,574

 

 

 

793,892

 

Trade name, net

 

 

72,928

 

 

 

79,585

 

Customer lists, net

 

 

340,556

 

 

 

384,766

 

Deferred tax asset, net

 

 

1,744

 

 

 

1,413

 

Other assets

 

 

18,020

 

 

 

6,456

 

TOTAL ASSETS

 

$

1,921,916

 

 

$

1,886,581

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

 

$

52,285

 

 

$

53,977

 

Accrued compensation

 

 

23,470

 

 

 

30,054

 

Accrued liabilities

 

 

17,873

 

 

 

21,829

 

Current portion of operating lease liability

 

 

5,500

 

 

 

 

Income tax payable

 

 

1,661

 

 

 

2,573

 

Deferred revenues

 

 

847

 

 

 

873

 

Total current liabilities

 

 

101,636

 

 

 

109,306

 

Long-term debt (net of deferred financing costs of $8,532 and $9,879 at September 30, 2022 and December 31, 2021, respectively)

 

 

556,192

 

 

 

554,845

 

Deferred tax liability, net

 

 

90,842

 

 

 

84,653

 

Operating lease liability, less current portion

 

 

9,947

 

 

 

 

Other liabilities

 

 

3,316

 

 

 

5,539

 

Total liabilities

 

 

761,933

 

 

 

754,343

 

COMMITMENTS AND CONTINGENCIES (Note 12)

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

Common stock - $0.001 par value; 1,000,000,000 shares authorized, 153,169,055 and 152,901,040 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

 

153

 

 

 

153

 

Additional paid-in-capital

 

 

1,173,787

 

 

 

1,165,163

 

Accumulated earnings (deficit)

 

 

10,769

 

 

 

(31,441

)

Accumulated other comprehensive (loss)

 

 

(24,726

)

 

 

(1,637

)

Total equity

 

 

1,159,983

 

 

 

1,132,238

 

TOTAL LIABILITIES AND EQUITY

 

$

1,921,916

 

 

$

1,886,581

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


 

First Advantage Corporation

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands, except share and per share amounts)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

REVENUES

 

$

205,986

 

 

$

192,867

 

 

$

597,428

 

 

$

499,763

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services (exclusive of depreciation and amortization below)

 

 

104,300

 

 

 

94,151

 

 

 

301,023

 

 

 

244,964

 

Product and technology expense

 

 

13,250

 

 

 

11,313

 

 

 

39,969

 

 

 

33,546

 

Selling, general, and administrative expense

 

 

28,034

 

 

 

27,203

 

 

 

87,715

 

 

 

76,256

 

Depreciation and amortization

 

 

34,744

 

 

 

35,812

 

 

 

103,185

 

 

 

106,493

 

Total operating expenses

 

 

180,328

 

 

 

168,479

 

 

 

531,892

 

 

 

461,259

 

INCOME FROM OPERATIONS

 

 

25,658

 

 

 

24,388

 

 

 

65,536

 

 

 

38,504

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER EXPENSE, NET:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

1,740

 

 

 

4,706

 

 

 

4,002

 

 

 

21,875

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

13,938

 

Total other expense, net

 

 

1,740

 

 

 

4,706

 

 

 

4,002

 

 

 

35,813

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

 

23,918

 

 

 

19,682

 

 

 

61,534

 

 

 

2,691

 

Provision for income taxes

 

 

6,709

 

 

 

3,397

 

 

 

17,076

 

 

 

2,025

 

NET INCOME

 

$

17,209

 

 

$

16,285

 

 

$

44,458

 

 

$

666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation (loss)

 

 

(10,253

)

 

 

(3,059

)

 

 

(23,089

)

 

 

(1,594

)

COMPREHENSIVE INCOME (LOSS)

 

$

6,956

 

 

$

13,226

 

 

$

21,369

 

 

$

(928

)

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

17,209

 

 

$

16,285

 

 

$

44,458

 

 

$

666

 

Basic net income per share

 

$

0.11

 

 

$

0.11

 

 

$

0.29

 

 

$

0.00

 

Diluted net income per share

 

$

0.11

 

 

$

0.11

 

 

$

0.29

 

 

$

0.00

 

Weighted average number of shares outstanding - basic

 

 

150,930,340

 

 

 

149,943,998

 

 

 

150,740,518

 



 

137,232,289

 

Weighted average number of shares outstanding - diluted

 

 

152,357,307

 

 

 

152,400,419

 

 

 

152,375,212

 

 

 

138,170,488

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

First Advantage Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

(in thousands)

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income

 

$

44,458

 

 

$

666

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

103,185

 

 

 

106,493

 

Loss on extinguishment of debt

 

 

 

 

 

13,938

 

Amortization of deferred financing costs

 

 

1,347

 

 

 

5,496

 

Bad debt (recovery)

 

 

(6

)

 

 

(163

)

Deferred taxes

 

 

5,536

 

 

 

(4,465

)

Share-based compensation

 

 

5,824

 

 

 

4,569

 

Loss (gain) on foreign currency exchange rates

 

 

115

 

 

 

(281

)

Loss on disposal of property and equipment

 

 

197

 

 

 

80

 

Change in fair value of interest rate swaps

 

 

(11,376

)

 

 

(845

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

3,063

 

 

 

(35,815

)

Prepaid expenses and other assets

 

 

700

 

 

 

(14,096

)

Accounts payable

 

 

165

 

 

 

1,547

 

Accrued compensation and accrued liabilities

 

 

(9,337

)

 

 

5,898

 

Deferred revenues

 

 

(116

)

 

 

73

 

Operating lease liabilities

 

 

(773

)

 

 

 

Other liabilities

 

 

1,055

 

 

 

509

 

Income taxes receivable and payable, net

 

 

(1,195

)

 

 

256

 

Net cash provided by operating activities

 

 

142,842

 

 

 

83,860

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Changes in short-term investments

 

 

826

 

 

 

305

 

Acquisitions of businesses, net of cash acquired

 

 

(19,044

)

 

 

(7,588

)

Purchases of property and equipment

 

 

(6,034

)

 

 

(5,743

)

Capitalized software development costs

 

 

(16,320

)

 

 

(11,966

)

Proceeds from disposal of property and equipment

 

 

46

 

 

 

 

Net cash used in investing activities

 

 

(40,526

)

 

 

(24,992

)

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

 

 

 

 

 

(3,848

)

Shareholder distribution

 

 

 

 

 

(313

)

Capital contributions

 

 

 

 

 

241

 

Share repurchases

 

 

(2,248

)

 

 

 

Borrowings from Successor First Lien Credit Facility

 

 

 

 

 

261,413

 

Repayments of Successor First Lien Credit Facility

 

 

 

 

 

(363,875

)

Repayment of Successor Second Lien Credit Facility

 

 

 

 

 

(146,584

)

Payments of debt issuance costs

 

 

 

 

 

(1,257

)

Payments on capital and finance lease obligations

 

 

(673

)

 

 

(1,286

)

Payments on deferred purchase agreements

 

 

(704

)

 

 

(533

)

Proceeds from issuance of common stock under share-based compensation plans

 

 

3,090

 

 

 

187

 

Net settlement of share-based compensation plan awards

 

 

(292

)

 

 

(332

)

Net cash (used in) provided by financing activities

 

 

(827

)

 

 

64,372

 

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

 

 

(3,879

)

 

 

(522

)

Increase in cash, cash equivalents, and restricted cash

 

 

97,610

 

 

 

122,718

 

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

 

 

292,790

 

 

 

152,970

 

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

 

$

390,400

 

 

$

275,688

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

Cash paid for income taxes, net of refunds received

 

$

11,321

 

 

$

6,069

 

Cash paid for interest

 

$

17,640

 

 

$

18,362

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

Offering costs included in accounts payable and accrued liabilities

 

$

 

 

$

187

 

Property and equipment acquired on account

 

$

105

 

 

$

2,796

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

First Advantage Corporation

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

 

(in thousands)

 

Common Stock

 

 

Additional
Paid-In-Capital

 

 

Accumulated Earnings
(Deficit)

 

 

Accumulated Other
Comprehensive
(Loss)

 

 

Total Stockholders’
Equity

 

BALANCE – December 31, 2021

 

$

153

 

 

$

1,165,163

 

 

$

(31,441

)

 

$

(1,637

)

 

$

1,132,238

 

Share-based compensation

 

 

 

 

 

1,859

 

 

 

 

 

 

 

 

 

1,859

 

Proceeds from issuance of common stock under share-based compensation plans

 

 

0

 

 

 

547

 

 

 

 

 

 

 

 

 

547

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

(1,517

)

 

 

(1,517

)

Net income

 

 

 

 

 

 

 

 

13,013

 

 

 

 

 

 

13,013

 

BALANCE – March 31, 2022

 

$

153

 

 

$

1,167,569

 

 

$

(18,428

)

 

$

(3,154

)

 

$

1,146,140

 

Share-based compensation

 

 

 

 

 

1,943

 

 

 

 

 

 

 

 

 

1,943

 

Proceeds from issuance of common stock under share-based compensation plans

 

 

0

 

 

 

723

 

 

 

 

 

 

 

 

 

723

 

Common stock withheld for tax obligations on restricted stock unit settlement

 

 

 

 

 

(98

)

 

 

 

 

 

 

 

 

(98

)

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

(11,319

)

 

 

(11,319

)

Net income

 

 

 

 

 

 

 

 

14,236

 

 

 

 

 

 

14,236