UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 25, 2005
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) |
One Progress Plaza, Suite 2400
St. Petersburg, Florida 33701
(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 October 25, 2005, First Advantage Corporation, a Delaware corporation, announced financial results for the quarter ended September 30, 2005. 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 (loss) for income tax, interest expense and depreciation and amortization. Although EBITDA is not a financial measure prepared in accordance with generally accepted accounting principles (“GAAP”), it is 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 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 25, 2005 | |
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 25, 2005 |
By: |
/s/ John Lamson | ||||||
| Name: |
John Lamson | |||||||
| Title: |
Executive Vice President and Chief Financial Officer | |||||||
Exhibit 99.1
100 Carillon Parkway Ÿ St. Petersburg, FL 33701
NEWS FOR IMMEDIATE RELEASE
| First Advantage Contacts: | ||
| Renee Svec |
Cindy Williams | |
| Director of Marketing & Communications |
Investor Relations Manager | |
| 727.214.3411, ext. 212 |
727.214.3411, ext. 260 | |
| rsvec@fadv.com |
clwilliams@fadv.com |
FIRST ADVANTAGE CORPORATION REPORTS
OPERATING RESULTS FOR THE THIRD QUARTER OF 2005
ST. PETERSBURG, Fla., Oct. 25, 2005—First Advantage Corporation (NASDAQ: FADV), a global risk mitigation and business solutions provider, today announced operating results for the third quarter of 2005.
First Advantage reported net income of $16.0 million (30 cents per diluted share) for the quarter ended Sept. 30, 2005. Net income was $13.0 million (26 cents per diluted share) for the quarter ended Sept. 30, 2004.
Revenues for the company were $169.9 million and $134.1 million for the quarters ended Sept. 30, 2005, and Sept. 30, 2004, respectively.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $35.1 million and $28.7 million for the quarters ended Sept. 30, 2005, and Sept. 30, 2004, respectively.
“We are very pleased to report our third quarter operating results, inclusive of the Credit Information Group (CIG) we recently acquired from our parent company, The First American Corporation”, said John Long, chief executive officer of First Advantage Corporation. “The operating results for the quarter demonstrate the earnings and cash flow potential of the combined companies, which we intend to leverage to pursue future opportunities.”
In addition to CIG, First Advantage also acquired Phoenix Research Corporation, Jenark Business Systems, Inc. and Recruiternet, Inc. during the third quarter, and Road Manager Financial Services, Inc. and True Data Partners in October. In September, First Advantage also entered into a $225 million senior secured credit facility with a syndicate of financial institutions led by Banc of America, which will be used to refinance existing debt, support future acquisitions and provide ongoing working capital.
Management estimates that diluted earnings per share will be in the range of 22 cents to 26 cents for the fourth quarter ending Dec. 31, 2005.
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First Advantage Corporation Reports Operating Results for the Third Quarter of 2005
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First Advantage’s third quarter results will be discussed in more detail on Tuesday, Oct. 25, 2005, at 5:00 p.m. ET, via teleconference and webcast. The teleconference dial-in number is 888.566.0007 within the United States and 312.470.0008 outside the U.S. The teleconference pass code is “Advantage”. The live audio webcast of the call will be accessible on the Investor Relations section of First Advantage’s website at www.FADV.com. An audio replay of the teleconference call will be available through Nov. 2, 2005, by dialing 800.645.7417 within the United States, or 402.220.0256 outside the U.S. An audio archive of the webcast will also be available for replay on First Advantage’s website following the call.
First Advantage will host an Investor’s Half-Day at the NASDAQ MarketSite in New York City on Wednesday, Nov. 9, 2005 to provide analysts and investors with the opportunity to hear the company’s continuing growth strategy, operational plans and most recent financial results. Additionally, the company will provide 2006 earnings guidance. Attendance is by registration only; however, the media and general public are welcome to listen via webcast beginning at 8:05 a.m. ET from the Investor Relations section of the company’s website at www.FADV.com. A replay of the webcast will also be made available on the company’s website shortly after the conclusion of the live presentation.
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First Advantage Corporation Reports Operating Results for the Third Quarter of 2005
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Summary Income Statement (Unaudited)
| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||
| 2005 |
2004 |
2005 |
2004 |
|||||||||||||
| Service revenue |
$ | 157,746,000 | $ | 122,865,000 | $ | 437,022,000 | $ | 356,526,000 | ||||||||
| Reimbursed government fee revenue |
12,200,000 | 11,208,000 | 36,669,000 | 33,569,000 | ||||||||||||
| Total revenue |
169,946,000 | 134,073,000 | 473,691,000 | 390,095,000 | ||||||||||||
| Cost of service revenue |
49,881,000 | 37,219,000 | 133,026,000 | 112,901,000 | ||||||||||||
| Government fees paid |
12,200,000 | 11,208,000 | 36,669,000 | 33,569,000 | ||||||||||||
| Total cost of sales |
62,081,000 | 48,427,000 | 169,695,000 | 146,470,000 | ||||||||||||
| Gross margin |
107,865,000 | 85,646,000 | 303,996,000 | 243,625,000 | ||||||||||||
| Salaries and benefits |
46,646,000 | 37,018,000 | 130,308,000 | 105,876,000 | ||||||||||||
| Facilities and telecommunications |
6,205,000 | 5,125,000 | 18,974,000 | 14,991,000 | ||||||||||||
| Other operating expenses |
20,193,000 | 15,323,000 | 57,845,000 | 49,601,000 | ||||||||||||
| Depreciation and amortization |
6,685,000 | 5,878,000 | 19,085,000 | 17,134,000 | ||||||||||||
| Income from operations |
28,136,000 | 22,302,000 | 77,784,000 | 56,023,000 | ||||||||||||
| Interest (expense) income: |
||||||||||||||||
| Interest expense |
(1,580,000 | ) | (714,000 | ) | (4,115,000 | ) | (1,665,000 | ) | ||||||||
| Interest income |
22,000 | 150,000 | 48,000 | 567,000 | ||||||||||||
| Interest (expense) income, net |
(1,558,000 | ) | (564,000 | ) | (4,067,000 | ) | (1,098,000 | ) | ||||||||
| Equity in earnings in investee |
280,000 | 349,000 | 1,232,000 | 986,000 | ||||||||||||
| Income before income taxes |
26,858,000 | 22,087,000 | 74,949,000 | 55,911,000 | ||||||||||||
| Provision for income taxes |
10,835,000 | 9,125,000 | 32,251,000 | 23,067,000 | ||||||||||||
| Net income |
$ | 16,023,000 | $ | 12,962,000 | $ | 42,698,000 | $ | 32,844,000 | ||||||||
| Per share amounts: |
||||||||||||||||
| Basic earnings per share |
$ | .30 | $ | .26 | $ | .82 | $ | .67 | ||||||||
| Basic weighted-average shares outstanding |
53,200,609 | 49,683,345 | 52,132,551 | 49,318,123 | ||||||||||||
| Diluted earnings per share |
$ | .30 | $ | .26 | $ | .81 | $ | .66 | ||||||||
| Diluted weighted-average shares outstanding |
53,964,766 | 50,128,761 | 52,616,858 | 49,646,664 | ||||||||||||
| EBITDA calculation: |
||||||||||||||||
| Net income |
$ | 16,023,000 | $ | 12,962,000 | $ | 42,698,000 | $ | 32,844,000 | ||||||||
| Provision for income taxes |
10,835,000 | 9,125,000 | 32,251,000 | 23,067,000 | ||||||||||||
| Interest expense |
1,580,000 | 714,000 | 4,115,000 | 1,665,000 | ||||||||||||
| Depreciation and amortization |
6,685,000 | 5,878,000 | 19,085,000 | 17,134,000 | ||||||||||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA)* |
$ | 35,123,000 | $ | 28,679,000 | $ | 98,149,000 | $ | 74,710,000 | ||||||||
| * | 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 Third Quarter of 2005
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Segment Financial Information (Unaudited)
| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||
| 2005 |
2004 |
2005 |
2004 |
|||||||||||||
| Service revenue |
||||||||||||||||
| Lender Services |
$ | 43,907,000 | $ | 33,870,000 | $ | 128,963,000 | $ | 103,480,000 | ||||||||
| Data Services |
22,100,000 | 16,678,000 | 61,860,000 | 56,794,000 | ||||||||||||
| Dealer Services |
29,219,000 | 18,355,000 | 72,252,000 | 53,022,000 | ||||||||||||
| Employer Services |
37,673,000 | 31,952,000 | 104,451,000 | 84,664,000 | ||||||||||||
| Multi Family Services |
17,544,000 | 15,711,000 | 49,134,000 | 41,838,000 | ||||||||||||
| Investigative & Litigation Support Services |
8,237,000 | 6,770,000 | 23,142,000 | 18,687,000 | ||||||||||||
| Corporate |
(934,000 | ) | (471,000 | ) | (2,780,000 | ) | (1,959,000 | ) | ||||||||
| Consolidated |
$ | 157,746,000 | $ | 122,865,000 | $ | 437,022,000 | $ | 356,526,000 | ||||||||
| Income (loss) from operations |
||||||||||||||||
| Lender Services |
$ | 12,971,000 | $ | 9,125,000 | $ | 37,596,000 | $ | 31,012,000 | ||||||||
| Data Services |
7,206,000 | 5,102,000 | 20,956,000 | 8,541,000 | ||||||||||||
| Dealer Services |
3,964,000 | 2,125,000 | 10,522,000 | 6,665,000 | ||||||||||||
| Employer Services |
3,560,000 | 3,822,000 | 11,111,000 | 6,838,000 | ||||||||||||
| Multi Family Services |
4,824,000 | 4,498,000 | 13,594,000 | 9,982,000 | ||||||||||||
| Investigative & Litigation Support Services |
353,000 | 612,000 | 1,032,000 | 621,000 | ||||||||||||
| Corporate |
(4,742,000 | ) | (2,982,000 | ) | (17,027,000 | ) | (7,636,000 | ) | ||||||||
| Consolidated |
$ | 28,136,000 | $ | 22,302,000 | $ | 77,784,000 | $ | 56,023,000 | ||||||||
| Operating margin percentage of service revenue |
||||||||||||||||
| Lender Services |
29.54 | % | 26.94 | % | 29.15 | % | 29.97 | % | ||||||||
| Data Services |
32.61 | % | 30.59 | % | 33.88 | % | 15.04 | % | ||||||||
| Dealer Services |
13.57 | % | 11.58 | % | 14.56 | % | 12.57 | % | ||||||||
| Employer Services |
9.45 | % | 11.96 | % | 10.64 | % | 8.08 | % | ||||||||
| Multi Family Services |
27.50 | % | 28.63 | % | 27.67 | % | 23.86 | % | ||||||||
| Investigative & Litigation Support Services |
4.29 | % | 9.04 | % | 4.46 | % | 3.32 | % | ||||||||
| Corporate |
N/A | N/A | N/A | N/A | ||||||||||||
| Consolidated |
17.84 | % | 18.15 | % | 17.80 | % | 15.71 | % | ||||||||
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 business credit information in the transportation industry; consumer credit information in the mortgage, automotive and subprime markets; motor vehicle record reports; supply chain security consulting; employment background verifications; occupational health services; applicant tracking systems; 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 three companies in all of its major business lines. First Advantage is headquartered in St. Petersburg, Fla., and has more than 3,700 employees in offices throughout the United States and abroad. More information about First Advantage can be found at www.FADV.com.
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First Advantage Corporation Reports Operating Results for the Third Quarter of 2005
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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 related to the execution of the company’s growth strategy, product expansion, future cash flow, and fourth quarter earnings per share, 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 2004 Annual Report on Form 10-K, for a further discussion of these and other risks.
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