Attached files

file filename
8-K - FORM 8-K - FIRST ADVANTAGE CORPd8k.htm

Exhibit 99.1

LOGO

12395 First American Way Ÿ Poway, CA 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 THIRD QUARTER OF 2009

POWAY, Calif., Oct. 28, 2009—First Advantage Corporation (NASDAQ: FADV) (“the Company”), a global risk mitigation and business solutions provider, today announced operating results for the third quarter ended Sept. 30, 2009.

First Advantage reported income from continuing operations of $11.4 million for the quarter ended Sept. 30, 2009, compared to $12.3 million for the quarter ended Sept. 30, 2008. Net income attributable to First Advantage shareholders was $11.5 million (19 cents per share) in the quarter ended Sept. 30, 2009, compared to $12.6 million in the quarter ended Sept. 30, 2008 (21 cents per share). Results of operations for the quarter ended Sept. 30, 2008 included a restructuring charge of $2.8 million ($1.6 million after tax or 3 cents per diluted share), primarily relating to consolidation of facilities in the Credit Services segment.

Service revenue for the Company was $156 million and $174.7 million for the quarters ended Sept. 30, 2009 and 2008, respectively.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $29.5 million and $34.7 million for the quarters ended Sept. 30, 2009 and 2008, respectively.

“Despite lackluster auto sales, Credit Services posted improved results compared to a year ago, driven by stronger performance in the Mortgage and Direct to Consumer businesses. Current macro-economic conditions continued to pose challenges for our Employer Services and Investigative and Litigation Support Services segments during the third quarter. Service revenues and operating margins were negatively impacted,” stated Anand Nallathambi, president and chief executive officer. “We continue to emphasize operating efficiencies and enhancing market share in our major business lines.”

 

-more-


First Advantage Corporation Reports Operating Results for the Third Quarter of 2009

Page 2

 

Summary Consolidated Income Statement (Unaudited)

 

(In thousands, except per share amounts)    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2009     2008     2009     2008  

Service revenue

   $ 155,980      $ 174,664      $ 510,688      $ 545,341   

Reimbursed government fee revenue

     13,586        13,633        39,905        40,780   
                                

Total revenue

     169,566        188,297        550,593        586,121   

Cost of service revenue

     51,429        53,520        191,030        160,723   

Government fees paid

     13,586        13,633        39,905        40,780   
                                

Total cost of service

     65,015        67,153        230,935        201,503   

Gross margin

     104,551        121,144        319,658        384,618   
                                

Salaries and benefits

     49,920        59,113        151,217        188,489   

Facilities and telecommunications

     6,741        7,789        20,265        24,073   

Other operating expenses

     18,453        19,899        56,397        65,642   

Depreciation and amortization

     10,993        10,898        32,574        31,520   

Impairment loss

     —          1,720        —          2,017   
                                

Total operating expenses

     86,107        99,419        260,453        311,741   
                                

Income from operations

     18,444        21,725        59,205        72,877   
                                

Other (expense) income:

        

Interest expense

     (234     (640     (903     (2,140

Interest income

     103        155        387        746   
                                

Total other (expense), net

     (131     (485     (516     (1,394
                                

Income from continuing operations before income taxes

     18,313        21,240        58,689        71,483   

Provision for income taxes

     6,898        8,932        23,856        29,582   
                                

Income from continuing operations

     11,415        12,308        34,833        41,901   

Loss from discontinued operations, net of tax

     —          —          —          (4,241
                                

Net income

   $ 11,415      $ 12,308      $ 34,833      $ 37,660   
                                

Less: Net loss attributable to non-controlling interest

     (35     (323     (202     (648
                                

Net income attributable to First Advantage Corporation (“FADV”)

   $ 11,450      $ 12,631      $ 35,035      $ 38,308   
                                

Basic earnings per share:

        

Income from continuing operations attributable to FADV shareholders

   $ 0.19      $ 0.21      $ 0.59      $ 0.72   

Loss from discontinued operations, attributable to FADV shareholders, net of tax

     —          —          —          (0.07
                                

Net income attributable to FADV shareholders

   $ 0.19      $ 0.21      $ 0.59      $ 0.65   
                                

Diluted income per share:

        

Income from continuing operations attributable to FADV shareholders

   $ 0.19      $ 0.21      $ 0.59      $ 0.72   

Loss from discontinued operations attributable to FADV shareholders, net of tax

     —          —          —          (0.08
                                

Net income attributable to FADV shareholders

   $ 0.19      $ 0.21      $ 0.59      $ 0.64   
                                

Weighted-average common shares outstanding:

        

Basic

     59,803        59,478        59,722        59,358   

Diluted

     60,086        59,529        59,867        59,446   

Amounts attributable to FADV shareholders:

        

Income from continuing operations, net of tax

   $ 11,450      $ 12,631      $ 35,035      $ 42,549   

Loss from discontinued operations, net of tax

     —          —          —          (4,241
                                

Net income

   $ 11,450      $ 12,631      $ 35,035      $ 38,308   
                                

EBITDA calculation:

        

Net income attributable to First Advantage Corporation

   $ 11,450      $ 12,631      $ 35,035      $ 38,308   

Provision for income taxes

     6,898        8,932        23,856        29,582   

Interest expense

     131        485        516        1,394   

Loss from discontinued operations, net of tax

     —          —          —          4,241   

Depreciation and amortization

     10,993        10,898        32,574        31,520   

Impairment loss

     —          1,720        —          2,017   
                                

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

   $ 29,472      $ 34,666      $ 91,981      $ 107,062   
                                

 

* EBITDA is not a measure of financial performance under generally accepted accounting principles. EBITDA is used by certain investors to analyze and compare companies.

 

-more-


First Advantage Corporation Reports Operating Results for the Third Quarter of 2009

Page 3

 

Segment Financial Information (Unaudited)

 

     Three Months Ended
Sept. 30,
    Nine Months Ended
Sept. 30,
 

(In thousands, except percentages)

   2009     2008     2009     2008  

Service revenue

        

Credit Services

   $ 59,443      $ 60,837      $ 191,567      $ 202,723   

Data Services

     25,514        21,922        113,456        60,422   

Employer Services

     41,731        54,199        119,350        163,397   

Multifamily Services

     19,879        19,702        57,467        58,037   

Investigative & Litigation Support Services

     9,804        18,600        30,224        63,281   

Corporate

     (391     (596     (1,376     (2,519
                                

Consolidated

   $ 155,980      $ 174,664      $ 510,688      $ 545,341   
                                

Income (Loss) from operations

        

Credit Services

   $ 12,489      $ 7,063      $ 44,820      $ 35,371   

Data Services

     3,590        3,680        11,389        11,214   

Employer Services

     3,929        6,644        6,110        13,119   

Multifamily Services

     7,268        6,654        20,521        17,995   

Investigative & Litigation Support Services

     1,337        6,347        2,753        23,407   

Corporate

     (10,169     (8,663     (26,388     (28,229
                                

Consolidated

   $ 18,444      $ 21,725      $ 59,205      $ 72,877   
                                

Operating margin percentage of service revenue

        

Credit Services

     21.01     11.61     23.40     17.45

Data Services

     14.07     16.79     10.04     18.56

Employer Services

     9.42     12.26     5.12     8.03

Multifamily Services

     36.56     33.77     35.71     31.01

Investigative & Litigation Support Services

     13.64     34.12     9.11     36.99

Corporate

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

Consolidated

     11.82     12.44     11.59     13.36
                                

 

-more-


First Advantage Corporation Reports Operating Results for the Third 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 screening; occupational health services; applicant tracking systems; recruiting solutions; skills and behavioral assessments; business tax consulting services; corporate and litigation investigations; 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® 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: risks relating to the First American Corporation’s (“First American”) exchange offer (the “Offer”) to acquire all of the outstanding shares of the Company’s Class A common stock (“Class A Shares”) not owned or controlled by First American at an exchange ratio of 0.58 of a First American common share per Class A Share, including the risks described in the Offer to Exchange and related materials filed by First American on a Registration Statement on Form S-4 with the Securities and Exchange Commission and which may be amended from time to time by First American; 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, 2008 Third Quarter Report on Form 10-Q and any subsequent amendments, for a further discussion of these and other risks.

 

-more-


First Advantage Corporation Reports Operating Results for the Third Quarter of 2009

Page 5

 

Notice to Stockholders of Exchange Offer by First American:

On October 8, 2009, The First American Corporation (“First American”) commenced an exchange offer (the “Offer”) to acquire all of the outstanding shares of the Company’s Class A common stock (“Class A Shares”) not owned or controlled by First American at an exchange ratio of 0.58 of a First American common share per Class A Share. In connection with the Offer, First American filed an Offer to Exchange and related materials with the Securities and Exchange Commission (“SEC”) on a Registration Statement on Form S-4. On October 8, 2009, the Company filed with the SEC a Solicitation/ Recommendation Statement on Schedule 14D-9 pursuant to which the Special Committee of the Board of Directors of the Company (the “Special Committee”) recommended, on behalf of the Board of Directors of the Company, that the stockholders of the Company accept the Offer and tender their shares pursuant to the Offer.

Stockholders are urged to read the Offer to Exchange and related materials and the Solicitation/ Recommendation Statement and any amendments thereto filed from time to time, because they will contain important information. Stockholders will be able to obtain a free copy of the Offer to Exchange and related materials and the Solicitation/Recommendation Statement at the SEC’s Web site at www.sec.gov . In addition, the Solicitation/Recommendation Statement, as well as the Company’s other public SEC filings, can be obtained at www.FADV.com. You may also read and copy any reports, statements and other information filed by First American or the Company with the SEC at the SEC public reference room at 100 F Street N.E., Washington, D.C. 20549. Please call the SEC at 800.732.0330 or visit the SEC’s Web site for further information on its public reference room.

# # #