Form 8-K

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): October 24, 2007

 


FIRST ADVANTAGE CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 


 

Delaware   001-31666   61-1437565

(State or Other Jurisdiction

of incorporation)

  (Commission File Number)  

(IRS Employer

Identification Number)

100 Carillon Parkway

St. Petersburg, Florida 33716

(Address of principal executive offices)

(727) 214-3411

(Registrant’s telephone number)

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 ( see General Instruction A.2 below):

 

¨ 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))

 



LOGO

100 Carillon Parkway • St. Petersburg, FL 33716

 


Item 2.02 Results of Operations and Financial Condition.

On October 24, 2007, First Advantage Corporation, a Delaware corporation, (the “Company”) announced financial results for the third quarter ended September 30, 2007. The full text of the press release issued in connection with the announcement is attached hereto as Exhibit 99.1.

The Company’s earnings release contains non-GAAP financial measures. Pursuant to the requirements of Regulation G, the Company has provided reconciliations within the press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures in the text of the press release.

EBITDA and Adjusted EBITDA are presented in the earnings release. EBITDA was determined by adjusting net income for income taxes, interest expense, minority interest and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for share based compensation expense.

Although EBITDA and Adjusted EBITDA are not financial measures prepared in accordance with generally accepted accounting principles (“GAAP”), they are calculated and communicated by the Company because management believes it is of interest to investors and lenders in relation to its overall capital structure and its ability to borrow additional funds.

The Company’s calculation of EBITDA and Adjusted EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view EBITDA and Adjusted EBITDA as alternatives to the GAAP measures of net income as a measure of performance, or cash flows from operating, investing and financing activities as a measure of liquidity. In addition, EBITDA and Adjusted EBITDA do not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. Management does not intend the presentation of EBITDA and Adjusted EBITDA to be considered in isolation or as a substitute for results prepared in accordance with GAAP.

The information in this current report and the exhibit hereto is being “furnished” pursuant to Item 2.02 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.

 

Item 9.01. Financial Statements and Exhibits

 

  (c) Exhibits

 

99.1   Earnings Press Release dated October 24, 2007

 

2

-more-


LOGO

100 Carillon Parkway • St. Petersburg, FL 33716

 


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: October 24, 2007   By:  

/s/ John Lamson

  Name:   John Lamson
  Title:   Executive Vice President and Chief Financial Officer

 

3

-more-

Earnings Press Release

Exhibit 99.1

LOGO

100 Carillon Parkway • St. Petersburg, FL 33716

NEWS FOR IMMEDIATE RELEASE

 

Contacts:   
Henri Van Parys    Cindy Williams
Corporate Communications Manager    Investor Relations Manager
727.214.3411, ext. 4136    727.214.3411, ext. 4160
henri.vanparys@FADV.com    clwilliams@FADV.com

FIRST ADVANTAGE CORPORATION REPORTS

OPERATING RESULTS FOR THE THIRD QUARTER OF 2007

ST. PETERSBURG, Fla., Oct. 24, 2007—First Advantage Corporation (NASDAQ: FADV), a global risk mitigation and business solutions provider, today announced operating results for the third quarter ended Sept. 30, 2007.

First Advantage reported net income of $19.0 million (32 cents per diluted share) for the quarter ended Sept. 30, 2007, compared with net income of $18.6 million (32 cents per diluted share) for the quarter ended Sept. 30, 2006. The results include a pre-tax charge of $1.7 million ($1 million after tax or 2 cents per diluted share) for costs incurred in connection with continued planned operational consolidations in the Employer Services segment.

Service revenue for the company was $205.3 million and $198.6 million for the quarters ended Sept. 30, 2007 and 2006, respectively.

Earnings before interest, taxes, depreciation and amortization, minority interest and share-based compensation expense (adjusted EBITDA) were $48.6 million and $47.3 million for the quarters ended Sept. 30, 2007 and 2006, respectively.

“We are very pleased with the results for the quarter, which underscores the diversification of our business segments,” said Anand Nallathambi, president and chief executive officer. “Significant growth in our Investigative and Litigation Support Services segment, consistent results in our Multifamily Services segment and continued improvement in our Employer Services segment minimized the impact of the turmoil in the credit markets on our overall operating results.

“The Employer Services segment reported solid revenue growth with improved margins, excluding the costs incurred in connection with continued planned operational consolidations, during the third quarter as a result of international operations, cross-sell initiatives, product expansion and improved operational efficiencies.

“Margins were down in our Lender Services and Data Services segments from the third quarter of last year as these businesses face challenges due to market conditions that have negatively impacted mortgage applications and lead generation services.”

-more-


First Advantage Corporation Reports Operating Results for the Third Quarter of 2007

Page 5

First Advantage’s third quarter 2007 results will be discussed in more detail on Wednesday, October 24, 2007, at 5:00 p.m. EDT, via teleconference and webcast. The teleconference dial-in number is 877.546.1565 within the U.S. and 212.547.0422 outside the U.S., and the passcode is “Advantage”. The live audio webcast of the call will be accessible from the Investor Relations section of First Advantage’s Web site at www.FADV.com. An audio replay of the teleconference call will be available through November 7, 2007, by dialing 800.253.1054 within the U.S., or 203.369.3219 outside the U.S. An audio archive of the webcast will also be available for replay on First Advantage’s Web site following the call.

-more-


First Advantage Corporation Reports Operating Results for the Third Quarter of 2007

Page 6

 

Summary Consolidated Income Statement (Unaudited)

 

     Three Months Ended Sept. 30,     Nine Months Ended Sept. 30,  
(In thousands, except per share amounts)    2007     2006     2007     2006  

Service revenue

   $ 205,306     $ 198,605     $ 614,546     $ 571,564  

Reimbursed government fee revenue

     14,107       13,431       41,926       39,943  
                                

Total revenue

     219,413       212,036       656,472       611,507  

Cost of service revenue

     56,603       62,020       178,621       177,762  

Government fees paid

     14,107       13,431       41,926       39,943  
                                

Total cost of sales

     70,710       75,451       220,547       217,705  

Gross margin

     148,703       136,585       435,925       393,802  
                                

Salaries and benefits

     67,865       60,414       207,685       177,794  

Facilities and telecommunications

     8,670       7,625       24,812       22,205  

Other operating expenses

     26,754       24,799       80,544       70,850  

Depreciation and amortization

     10,862       9,641       32,044       28,369  
                                

Income from operations

     34,552       34,106       90,840       94,584  
                                

Interest (expense) income:

        

Interest expense

     (2,946 )     (3,571 )     (9,269 )     (10,062 )

Interest income

     323       252       975       554  
                                

Interest (expense) income, net

     (2,623 )     (3,319 )     (8,294 )     (9,508 )

Equity in earnings of investee

     865       747       2,315       1,407  
                                

Income before income taxes and minority interest

     32,794       31,534       84,861       86,483  

Provision for income taxes

     13,610       12,151       35,058       36,038  
                                

Income before minority interest

     19,184       19,383       49,803       50,445  

Minority interest

     231       759       1,260       2,439  
                                

Net income

   $ 18,953     $ 18,624     $ 48,543     $ 48,006  
                                

Per share amounts:

        

Basic earnings per share

   $ .32     $ .32     $ .83     $ .84  
                                

Basic weighted-average shares outstanding

     59,064       58,096       58,799       57,282  
                                

Diluted earnings per share

   $ .32     $ .32     $ .82     $ .83  
                                

Diluted weighted-average shares outstanding

     59,222       58,155       59,121       58,035  
                                

EBITDA and adjusted EBITDA calculation:

        

Net income

   $ 18,953     $ 18,624     $ 48,543     $ 48,006  

Provision for income taxes

     13,610       12,151       35,058       36,038  

Minority interest

     231       759       1,260       2,439  

Interest expense

     2,946       3,571       9,269       10,062  

Depreciation and amortization

     10,862       9,641       32,044       28,369  
                                

Earnings before interest, taxes, depreciation and amortization (EBITDA)*

   $ 46,602     $ 44,746     $ 126,174     $ 124,914  

Share based compensation expense

     2,039       2,522       10,942       8,484  
                                

Adjusted EBITDA

   $ 48,641     $ 47,268     $ 137,116     $ 133,398  
                                

* EBITDA and adjusted EBITDA are not measures of financial performance under generally accepted accounting principles. EBITDA and adjusted EBITDA are used by certain investors to analyze and compare companies.

-more-


First Advantage Corporation Reports Operating Results for the Third Quarter of 2007

Page 7

 

Segment Financial Information (Unaudited)

 

     Three Months Ended Sept. 30,     Nine Months Ended Sept. 30,  
(In thousands, except percentages)    2007     2006     2007     2006  

Service revenue

        

Lender Services

   $ 35,110     $ 44,072     $ 123,580     $ 135,023  

Data Services

     35,138       37,153       113,874       108,312  

Dealer Services

     28,720       31,993       88,364       92,790  

Employer Services

     59,013       53,399       171,534       139,901  

Multifamily Services

     19,699       18,616       56,980       54,068  

Investigative & Litigation Support Services

     28,051       14,336       62,289       44,451  

Corporate

     (425 )     (964 )     (2,075 )     (2,981 )
                                

Consolidated

   $ 205,306     $ 198,605     $ 614,546     $ 571,564  
                                

Income (Loss) from operations

        

Lender Services

   $ 6,660     $ 14,603     $ 31,002     $ 42,469  

Data Services

     9,230       10,283       31,946       29,185  

Dealer Services

     4,150       4,913       11,238       13,814  

Employer Services

     6,550       5,960       18,460       13,961  

Multifamily Services

     6,076       4,933       16,256       13,023  

Investigative & Litigation Support Services

     11,056       2,666       17,672       8,822  

Corporate

     (9,170 )     (9,252 )     (35,734 )     (26,690 )
                                

Consolidated

   $ 34,552     $ 34,106     $ 90,840     $ 94,584  
                                

Operating margin percentage of service revenue

        

Lender Services

     18.97 %     33.13 %     25.09 %     31.45 %

Data Services

     26.27 %     27.68 %     28.05 %     26.95 %

Dealer Services

     14.45 %     15.36 %     12.72 %     14.89 %

Employer Services

     11.10 %     11.16 %     10.76 %     9.98 %

Multifamily Services

     30.84 %     26.50 %     28.53 %     24.09 %

Investigative & Litigation Support Services

     39.41 %     18.60 %     28.37 %     19.85 %

Corporate

     N/A       N/A       N/A       N/A  
                                

Consolidated

     16.83 %     17.17 %     14.78 %     16.55 %
                                

-more-


First Advantage Corporation Reports Operating Results for the Third Quarter of 2007

Page 8

 

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; supply chain security consulting; employment background verifications; occupational health services; applicant tracking systems; recruiting solutions; skills and behavioral assessments; business tax consulting services; insurance fraud, corporate and litigation investigations; surveillance; computer forensics; electronic discovery; data recovery; due diligence reporting; resident screening; property management software; renters insurance and consumer location services. First Advantage ranks among the top companies in all of its major business lines. First Advantage is headquartered in St. Petersburg, Fla., and has more than 4,700 employees in 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® 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 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; 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 2006 Annual Report on Form 10-K and subsequent amendments, for a further discussion of these and other risks.

# # #