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): July 27, 2009
FIRST ADVANTAGE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
| Delaware | 001-31666 | 61-1437565 | ||
| (State or Other Jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification Number) |
12395 First American Way
Poway, CA 92064
(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)) |
| Item 2.02 | Results of Operations and Financial Condition. |
On July 27, 2009, First Advantage Corporation, a Delaware corporation, (the “Company”) announced financial results for the second quarter ended June 30, 2009. 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 is presented in the earnings release. EBITDA was determined by adjusting net income for income taxes, interest expense, depreciation and amortization.
Although EBITDA is not a financial measure 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 may or may not be consistent with the calculation of this measure by other companies in the same industry. Investors should not view EBITDA as an alternative 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 does 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 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 July 27, 2009 |
2
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: July 27, 2009 | By: | /s/ John Lamson | ||||||
| Name: | John Lamson | |||||||
| Title: | Executive Vice President and Chief Financial Officer | |||||||
Exhibit 99.1
12395 First American Way, Poway, Calif. 92064
| NEWS FOR IMMEDIATE RELEASE | ||
| Contacts: | ||
| Henri Van Parys | Cindy Williams | |
| Corporate Communications Manager | Director - Investor Relations | |
| 727.214.1072 | 727.214.3438 | |
| henri.vanparys@FADV.com | cindy.williams@FADV.com | |
FIRST ADVANTAGE CORPORATION REPORTS OPERATING
RESULTS FOR THE SECOND QUARTER OF 2009
POWAY, Calif., July 27, 2009—First Advantage Corporation (NASDAQ: FADV) (“the Company”), a global risk mitigation and business solutions provider, today announced operating results for the second quarter ended June 30, 2009.
First Advantage reported income from continuing operations of $12.6 million for the quarter ended June 30, 2009, compared to $13.4 million for the quarter ended June 30, 2008. Net income attributable to First Advantage shareholders was $13 million (22 cents per share) in the quarter ended June 30, 2009, compared to $12.4 million in the quarter ended June 30, 2008 (21 cents per share including a loss on discontinued operations of $1.3 million or 2 cents per share). Results of operations for the quarter ended June 30, 2008 included a restructuring charge of $1.7 million ($1 million after tax or 2 cents per share) primarily related to the consolidation of facilities in the Employer Services and Lender Services segments.
Service revenue for the Company was $164.7 million and $182.4 million for the quarters ended June 30, 2009 and 2008, respectively.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $33.2 million and $35.3 million for the quarters ended June 30, 2009 and 2008, respectively.
“During the second quarter, our Credit Services segment continued to benefit from higher mortgage refinance activity. While our automotive credit business revenue continued to be impacted by weak auto sales, Membership Services demonstrated a significant increase in service revenue,” stated Anand Nallathambi, president and chief executive officer.
“The Employer Services segment continued to track the rising rate of unemployment and the decline of the broader economic environment; however, we are pleased with the positive impact our cost reduction strategies have had on our operating margins.
“Transactional levels remained soft in the Investigative and Litigation Support Services segment. Based on the pipeline of sales activity, we anticipate strengthening demand in the future.”
First Advantage’s second quarter 2009 results will be discussed in more detail on Monday, July 27, 2009, at 5:00 p.m. ET, via teleconference and webcast. The teleconference dial-in number is 888.889.1652 within the U.S. and 210.795.9764 outside the U.S. The teleconference pass code 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 August 10, 2009, by dialing 888.562.2796 within the U.S., or 203.369.3746 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.
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First Advantage Corporation Reports Operating Results for the Second Quarter of 2009
Page 2
Summary Consolidated Income Statement (Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands, except per share amounts) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| Service revenue |
$ | 164,668 | $ | 182,423 | $ | 354,708 | $ | 370,677 | ||||||||
| Reimbursed government fee revenue |
13,341 | 13,122 | 26,319 | 27,147 | ||||||||||||
| Total revenue |
178,009 | 195,545 | 381,027 | 397,824 | ||||||||||||
| Cost of service revenue |
58,261 | 53,487 | 139,601 | 107,203 | ||||||||||||
| Government fees paid |
13,341 | 13,122 | 26,319 | 27,147 | ||||||||||||
| Total cost of sales |
71,602 | 66,609 | 165,920 | 134,350 | ||||||||||||
| Gross margin |
106,407 | 128,936 | 215,107 | 263,474 | ||||||||||||
| Salaries and benefits |
48,130 | 62,927 | 101,297 | 129,376 | ||||||||||||
| Facilities and telecommunications |
6,865 | 8,084 | 13,524 | 16,284 | ||||||||||||
| Other operating expenses |
18,597 | 22,909 | 37,944 | 45,743 | ||||||||||||
| Depreciation and amortization |
10,895 | 10,726 | 21,581 | 20,622 | ||||||||||||
| Impairment loss |
— | 297 | — | 297 | ||||||||||||
| Total operating expenses |
84,487 | 104,943 | 174,346 | 212,322 | ||||||||||||
| Income from operations |
21,920 | 23,993 | 40,761 | 51,152 | ||||||||||||
| Other (expense) income: |
||||||||||||||||
| Interest expense |
(294 | ) | (1,075 | ) | (669 | ) | (1,500 | ) | ||||||||
| Interest income |
71 | 172 | 284 | 591 | ||||||||||||
| Total other (expense), net |
(223 | ) | (903 | ) | (385 | ) | (909 | ) | ||||||||
| Income from continuing operations before income taxes |
21,697 | 23,090 | 40,376 | 50,243 | ||||||||||||
| Provision for income taxes |
9,112 | 9,676 | 16,958 | 20,650 | ||||||||||||
| Income from continuing operations |
12,585 | 13,414 | 23,418 | 29,593 | ||||||||||||
| Loss income from discontinued operations, net of tax |
— | (1,264 | ) | — | (4,241 | ) | ||||||||||
| Net income |
12,585 | 12,150 | 23,418 | 25,352 | ||||||||||||
| Less: Net loss attributable to non-controlling interest |
(386 | ) | (238 | ) | (167 | ) | (325 | ) | ||||||||
| Net income attributable to First Advantage Corporation (“FADV”) |
$ | 12,971 | $ | 12,388 | $ | 23,585 | $ | 25,677 | ||||||||
| Basic income per share: |
||||||||||||||||
| Income from continuing operations attributable to FADV shareholders |
$ | 0.22 | $ | 0.23 | $ | 0.40 | $ | 0.50 | ||||||||
| Loss from discontinued operations attributable to FADV shareholders, net of tax |
— | (0.02 | ) | — | (0.07 | ) | ||||||||||
| Net income attributable to FADV shareholders |
$ | 0.22 | $ | 0.21 | $ | 0.40 | $ | 0.43 | ||||||||
| Diluted income per share: |
||||||||||||||||
| Income from continuing operations attributable to FADV shareholders |
$ | 0.22 | $ | 0.23 | $ | 0.39 | $ | 0.50 | ||||||||
| Loss from discontinued operations attributable to FADV shareholders, net of tax |
— | (0.02 | ) | — | (0.07 | ) | ||||||||||
| Net income attributable to FADV shareholders |
$ | 0.22 | $ | 0.21 | $ | 0.39 | $ | 0.43 | ||||||||
| Weighted-average common shares outstanding: |
||||||||||||||||
| Basic |
59,776 | 59,435 | 59,681 | 59,297 | ||||||||||||
| Diluted |
59,898 | 59,617 | 59,764 | 59,374 | ||||||||||||
| Amounts attributable to FADV shareholders: |
||||||||||||||||
| Income from continuing operations, net of tax |
$ | 12,971 | $ | 13,652 | $ | 23,585 | $ | 29,918 | ||||||||
| Discontinued operations, net of tax |
— | (1,264 | ) | — | (4,241 | ) | ||||||||||
| Net income |
$ | 12,971 | $ | 12,388 | $ | 23,585 | $ | 25,677 | ||||||||
| EBITDA calculation: |
||||||||||||||||
| Net income attributable to First Advantage Corporation |
$ | 12,971 | $ | 12,388 | $ | 23,585 | $ | 25,677 | ||||||||
| Provision for income taxes |
9,112 | 9,676 | 16,958 | 20,650 | ||||||||||||
| Interest expense |
223 | 903 | 385 | 909 | ||||||||||||
| Loss from discontinued operations, net of tax |
— | 1,264 | — | 4,241 | ||||||||||||
| Depreciation and amortization |
10,895 | 10,726 | 21,581 | 20,622 | ||||||||||||
| Impairment loss |
— | 297 | — | 297 | ||||||||||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA)* |
$ | 33,201 | $ | 35,254 | $ | 62,509 | $ | 72,396 | ||||||||
| * | EBITDA is not a measure of financial performance under generally accepted accounting principles. EBITDA is used by certain investors to analyze and compare companies. |
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First Advantage Corporation Reports Operating Results for the Second Quarter of 2009
Page 3
Segment Financial Information (Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands, except percentages) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| Service revenue |
||||||||||||||||
| Credit Services |
$ | 67,705 | $ | 66,984 | $ | 132,124 | $ | 141,886 | ||||||||
| Data Services |
28,842 | 19,533 | 87,942 | 38,500 | ||||||||||||
| Employer Services |
40,168 | 55,511 | 77,619 | 109,198 | ||||||||||||
| Multifamily Services |
19,685 | 19,986 | 37,588 | 38,335 | ||||||||||||
| Investigative & Litigation Support Services |
8,694 | 21,178 | 20,420 | 44,681 | ||||||||||||
| Corporate |
(426 | ) | (769 | ) | (985 | ) | (1,923 | ) | ||||||||
| Consolidated |
$ | 164,668 | $ | 182,423 | $ | 354,708 | $ | 370,677 | ||||||||
| Income (Loss) from operations |
||||||||||||||||
| Credit Services |
$ | 17,584 | $ | 11,961 | $ | 32,331 | $ | 28,308 | ||||||||
| Data Services |
2,153 | 3,764 | 7,799 | 7,534 | ||||||||||||
| Employer Services |
2,681 | 3,004 | 2,181 | 6,475 | ||||||||||||
| Multifamily Services |
7,579 | 6,569 | 13,253 | 11,341 | ||||||||||||
| Investigative & Litigation Support Services |
270 | 7,535 | 1,416 | 17,060 | ||||||||||||
| Corporate |
(8,347 | ) | (8,840 | ) | (16,219 | ) | (19,566 | ) | ||||||||
| Consolidated |
$ | 21,920 | $ | 23,993 | $ | 40,761 | $ | 51,152 | ||||||||
| Operating margin percentage of service revenue |
||||||||||||||||
| Credit Services |
25.97 | % | 17.86 | % | 24.47 | % | 19.95 | % | ||||||||
| Data Services |
7.46 | % | 19.27 | % | 8.87 | % | 19.57 | % | ||||||||
| Employer Services |
6.67 | % | 5.41 | % | 2.81 | % | 5.93 | % | ||||||||
| Multifamily Services |
38.50 | % | 32.87 | % | 35.26 | % | 29.58 | % | ||||||||
| Investigative & Litigation Support Services |
3.11 | % | 35.58 | % | 6.93 | % | 38.18 | % | ||||||||
| Corporate |
N/A | N/A | N/A | N/A | ||||||||||||
| Consolidated |
13.31 | % | 13.15 | % | 11.49 | % | 13.80 | % | ||||||||
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First Advantage Corporation Reports Operating Results for the Second Quarter of 2009
Page 4
About First Advantage Corporation
First Advantage Corporation (NASDAQ: FADV) combines industry expertise with information to create products and services that organizations worldwide use to make smarter business decisions. First Advantage is a leading provider of consumer credit information in the mortgage, automotive and specialty finance markets; business credit information in the transportation industry; lead generation services; motor vehicle record reports; employment background verifications; occupational health services; applicant tracking systems; recruiting solutions; skills and behavioral assessments; business tax consulting services; computer forensics; electronic discovery; data recovery; due diligence reporting; resident screening; property management software and renters insurance. First Advantage ranks among the top companies in all of its major business lines. First Advantage is headquartered in Poway, Calif., and has offices throughout the United States and abroad. More information about First Advantage can be found at www.FADV.com.
First Advantage is a majority-owned subsidiary of The First American Corporation (NYSE: FAF), a FORTUNE 500(R) company that traces its history to 1889. First American is America’s largest provider of business information, supplying businesses and consumers with valuable information products to support the major economic events of people’s lives. Additional information about the First American Family of Companies can be found at www.firstam.com.
Certain statements in this press release, including those related to cost reduction initiatives and impact on improved efficiencies in the future quarters, product expansion and enhanced operational efficiencies, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include: general volatility of the capital markets and the market price of the Company’s Class A common stock; interest rate fluctuations; changes in the real estate market; changes in employment trends; limit on access to public records; the Company’s ability to successfully raise capital; the Company’s ability to identify and complete acquisitions and successfully integrate businesses it acquires; changes in applicable government regulations; heightened regulations and regulatory scrutiny; the degree and nature of the Company’s competition; increases in the Company’s expenses; inability to realize the benefits of offshore strategy; continued consolidation among the Company’s competitors and customers; unanticipated technological changes and requirements; the Company’s ability to identify suppliers of quality and cost-effective data; and other risks identified from time-to-time in the Company’s SEC filings. The forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Investors are advised to consult the Company’s filings with the SEC, including its 2008 Annual Report on Form 10-K and any subsequent amendments, for a further discussion of these and other risks.
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