SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of report (Date of earliest event reported) April 20, 2004
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FIRST ADVANTAGE CORPORATION
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(Exact Name of the Registrant as Specified in Charter)
Delaware 0-50285 61-1437565
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(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
One Progress Plaza, Suite 2400, St. Petersburg, Florida 33701
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (727) 214-3411
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Not Applicable.
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(Former Name or Former Address, if Changed Since Last Report)
Item 7. Exhibits.
Exhibit No. Description
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99.1 Press Release.
Item 12. Results of Operation and Financial Condition.
On April 20, 2004, First Advantage Corporation, a Delaware
corporation, announced financial results for the quarter ended March 31, 2004.
The full text of the press release issued in connection with the announcement is
attached hereto as Exhibit 99.1.
The information in this current report and the exhibit hereto is being
"furnished" pursuant to Item 12 of Form 8-K. As such, this information is not
deemed to be "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934 and is not incorporated by reference into any filings with the SEC
unless it shall be explicitly so incorporated into such filings.
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 hereunto duly authorized.
FIRST ADVANTAGE CORPORATION
Date: April 21, 2004 By: /s/ John Lamson
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Name: John Lamson
Title: Executive Vice President and
Chief Financial Officer
FIRST ADVANTAGE CORPORATION REPORTS OPERATING
RESULTS FOR THE FIRST QUARTER OF 2004
ST. PETERSBURG, Fla., April 20, 2004--First Advantage Corporation (NASDAQ:
FADV), a global risk management solutions provider, today announced operating
results for the first quarter of 2004 that included total revenue of $57.4
million - representing an increase in revenue of 15 percent over last quarter
and 82 percent over the first quarter of 2003.
First Advantage completed six acquisitions in the first quarter, and it
continues to execute the growth strategy initiated following the company's
formation in June 2003 from the merger of the Screening Technologies division of
The First American Corporation (NYSE: FAF) with US SEARCH.com Inc. Since its
formation, First Advantage has acquired 16 companies--increasing scale in
existing business lines and adding new services to its growing risk management
portfolio. Integration efforts are underway with acquired subsidiaries
transferring corporate functions to First Advantage and methodically
consolidating operations with the core units in the respective business lines.
First Advantage reported net income for the quarter ended March 31, 2004, of
$0.6 million (3 cents per diluted share), as compared with the quarter ended
Dec. 31, 2003, when the company reported a net loss of $1.0 million (5 cents per
diluted share). The results for the fourth quarter of 2003 included an after-tax
charge of $1.1 million (5 cents per diluted share) for the write-down of
capitalized software and severance costs in connection with the continued
integration of operations in the Enterprise Screening segment. For the quarter
ended March 31, 2003, the First American Screening Technologies division's net
income was $0.3 million.
Revenues for the company were $57.4 million and $49.9 million for the quarters
ended March 31, 2004, and December 31, 2003, respectively. The First American
Screening Technologies division's revenue was $31.5 million for the quarter
ended March 31, 2003.
Earnings before interest, taxes, depreciation and amortization were $4 million
and $796,000 for the quarters ended March 31, 2004, and Dec. 31, 2003,
respectively. The first and fourth quarters have historically been the company's
slowest, with decreased volumes in key business lines due to the decline in
hiring and apartment rentals resulting from the holiday season and inclement
weather.
First Advantage Corporation Reports Operating Results for the First Quarter of
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2004
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Page 2
John Long, chief executive officer and president of First Advantage Corporation,
said: "First Advantage kicked off 2004 with a solid performance both
operationally and strategically. Our core business units performed well and
contributed to the quarter's revenue growth of $7.5 million, with $3.7 million
of that in organic sales growth--a 7.5 percent increase over last quarter."
The integration of the subsidiaries in the Enterprise Screening segment is
continuing as planned. The company anticipates the consolidation of its
employment background screening businesses to be substantially complete by
year-end, whereas the consolidation of its occupational health businesses is
more complex and will extend into 2005. In 2003, the operations of First
Advantage's core resident screening businesses were successfully merged.
Currently, the company is in the process of integrating the recently acquired
Landlord Protect and U.D. Registry. It is expected that these consolidations
will be substantially completed before September 30 of this year.
The consolidation effort in the Risk Mitigation segment is also going well, as
the integration of two acquired motor vehicle record reporting companies remains
on schedule.
"Our acquisition strategy for the remainder of 2004 will focus on stand-alone
complementary businesses in the Risk Mitigation and Enterprise Screening
segments," said Long. "This will expand our breadth of products and services,
increase cross-selling opportunities, and allow our existing business units to
concentrate on achieving margin improvement that is expected to result from
their consolidation.
"We are encouraged by the recent positive economic indicators with respect to
employment. A sustained increase in employment, together with our consolidation
efforts and cross-selling activities, will accelerate organic growth and
contribute to increased operating margins."
First Advantage management continues to support their previous estimate that
revenues will exceed $250.0 million in 2004. Year to date, the company has
acquired Quantitative Risk Solutions LLC; Proudfoot Reports Incorporated; MVRs,
Inc.; Background Information Systems, Inc.; Infocheck, Ltd.; Landlord Protect,
Inc. and U.D. Registry, Inc.
- more -
First Advantage Corporation Reports Operating Results for the First Quarter of
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2004
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Page 3
Summary Income Statement (Unaudited)
Three Months Ended
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March 31, 2004 December 31, 2003 March 31, 2003
Service revenues $ 45,959,000 $ 41,027,000 $ 24,184,000
Reimbursed government fee revenues 11,474,000 8,862,000 7,357,000
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Total revenues 57,433,000 49,889,000 31,541,000
Cost of service revenues 13,981,000 13,500,000 6,462,000
Government fees paid 11,474,000 8,862,000 7,357,000
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Total cost of sales 25,455,000 22,362,000 13,819,000
Gross margin 31,978,000 27,527,000 17,722,000
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Salaries and benefits 17,712,000 15,080,000 10,525,000
Other operating expenses 10,304,000 9,923,000 4,716,000
Depreciation and amortization 2,640,000 2,462,000 1,779,000
Impairment loss - 1,739,000 -
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Income (loss) from operations 1,322,000 (1,677,000) 702,000
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Interest (expense) income:
Interest expense (231,000) (87,000) (19,000)
Interest income 11,000 11,000 11,000
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Total interest expense, net (220,000) (76,000) (8,000)
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Income (loss) before income taxes 1,102,000 (1,753,000) 694,000
Provision (benefit) for income taxes 463,000 (746,000) 364,000
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Net income (loss) $ 639,000 $ (1,007,000) $ 330,000
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Per share amounts:
Basic earnings (loss) per share $ 0.03 $ (0.05) N/A
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Basic weighted-average shares outstanding 21,155,223 20,828,429 N/A
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Diluted earnings (loss) per share $ 0.03 $ (0.05) N/A
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Diluted weighted-average shares
outstanding 21,346,133 21,020,537 N/A
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EBITDA calculation:
Net income (loss) $ 639,000 $ (1,007,000) $ 330,000
Provision (benefit) for income taxes 463,000 (746,000) 364,000
Interest expense 231,000 87,000 19,000
Depreciation and amortization 2,640,000 2,462,000 1,779,000
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Earnings before interest, taxes,
depreciation and amortization (EBITDA)* $ 3,973,000 $ 796,000 $ 2,492,000
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*EBITDA is not a measure of financial performance under generally accepted
accounting principles. EBITDA is used by certain investors to analyze and
compare companies.
First Advantage Corporation Reports Operating Results for the First Quarter of
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2004
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Page 4
Segment Financial Information (Unaudited)
Three Months Ended
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March 31, 2004 December 31, 2003 March 31, 2003
Total Revenues
Enterprise Screening $ 36,019,000 $ 30,747,000 $ 22,462,000
Risk Mitigation 17,739,000 15,556,000 9,402,000
Consumer Direct 4,232,000 3,991,000 -
Corporate and Eliminations (557,000) (405,000) (323,000)
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Consolidated $ 57,433,000 $ 49,889,000 $ 31,541,000
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Income (Loss) Before Income Taxes
Enterprise Screening $ 1,883,000 $ (1,310,000) $ 452,000
Risk Mitigation 1,123,000 1,436,000 1,400,000
Consumer Direct (15,000) (75,000) -
Corporate and Eliminations (1,889,000) (1,804,000) (1,158,000)
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Consolidated $ 1,102,000 $ (1,753,000) $ 694,000
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About First Advantage Corporation
First Advantage Corporation (NASDAQ: FADV) provides best-in-class single-source
solutions for global risk mitigation and enterprise and consumer screening
needs. Incorporating state-of-the-art technology, proprietary systems and data
resources, First Advantage is a leading provider of employment background
screening, drug-free workplace programs, physical exams and other occupational
health testing, resident screening, motor vehicle records, insurance fraud
investigations, supply chain security and consumer location services. First
Advantage ranks among the top three companies in all of its business lines.
First Advantage is headquartered in St. Petersburg, Fla., and has nearly 1,500
employees in offices throughout the United States and abroad. Further
information about the company is available at www.FADV.com.
First Advantage is a majority-owned subsidiary of The First American Corporation
(NYSE: FAF), a Fortune 500 company that traces its history to 1889. First
American is the nation's largest data provider, supplying businesses and
consumers with information resources in connection with 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 relating to
integration in the Enterprise Screening Segment, consolidation of the employment
background screening, occupational health and resident screening businesses,
consolidation effort in the Risk Management segment, consolidation of corporate
functions, effects of consolidation on earnings, 2004 acquisition activities,
cross-selling opportunities, margin improvement, acquisition targets,
accelerated organic growth and effects of consolidation on earnings are forward
looking. 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; 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; the degree and nature of the company's
competition; increases in the company's expenses; continued consolidation among
the company's competitors and customers; unanticipated technological changes and
requirements; and the company's ability to identify suppliers of quality and
cost-effective data. 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.
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