First Advantage Corporation Reports Operating Results for the Third Quarter of 2007
ST. PETERSBURG, Fla., Oct. 24, 2007 -- First Advantage Corporation , 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 underscore 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."
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.
Summary Consolidated Income Statement (Unaudited)
(In thousands, except per Three Months Ended Nine Months Ended
share amounts) Sept. 30, Sept. 30,
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.
Segment Financial Information (Unaudited)
Three Months Ended Nine Months Ended
(In thousands, except Sept. 30, Sept. 30,
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 %
About First Advantage Corporation
First Advantage Corporation 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 and renters insurance. 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 , 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 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.
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
FCMN Contact: henri.vanparys@FADV.com