First Advantage Corporation (NASDAQ: FA), a leading provider of
employment background screening, identity, and verification
solutions, today announced financial results for the first quarter
ended March 31, 2024.
Key Financials (Amounts in
millions, except per share data and percentages)
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
Change |
|
Revenues |
|
$ |
169.4 |
|
|
$ |
175.5 |
|
|
|
(3.5 |
)% |
(Loss) income from
operations |
|
$ |
(0.7 |
) |
|
$ |
11.3 |
|
|
NM |
|
Net (loss) income |
|
$ |
(2.9 |
) |
|
$ |
1.9 |
|
|
NM |
|
Net (loss) income margin |
|
|
(1.7 |
)% |
|
|
1.1 |
% |
|
NA |
|
Diluted net (loss) income per
share |
|
$ |
(0.02 |
) |
|
$ |
0.01 |
|
|
NM |
|
Adjusted EBITDA¹ |
|
$ |
46.6 |
|
|
$ |
48.6 |
|
|
|
(4.1 |
)% |
Adjusted
EBITDA Margin¹ |
|
|
27.5 |
% |
|
|
27.7 |
% |
|
NA |
|
Adjusted Net Income¹ |
|
$ |
24.8 |
|
|
$ |
28.4 |
|
|
|
(12.6 |
)% |
Adjusted Diluted Earnings Per
Share¹ |
|
$ |
0.17 |
|
|
$ |
0.19 |
|
|
|
(10.5 |
)% |
|
¹ Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and
Adjusted Diluted Earnings Per Share are non-GAAP measures. Please
see the schedules accompanying this earnings release for a
reconciliation of these measures to their most directly comparable
respective GAAP measures.Note: "NA" indicates not applicable
information; "NM" indicates not meaningful information. |
|
“We delivered first quarter financial results
at-or-above what we communicated on our fourth quarter earnings
call. Additionally, upsell, cross-sell, new logos, and retention
rates continued to perform in line with our historical revenue
growth algorithm. I am proud that our team continues to deliver on
our commitments and is dedicated to creating value across the
company,” said Scott Staples, Chief Executive Officer.
“We continue to make significant progress
against our strategic initiatives as we leverage generative AI and
machine learning across our organization. In March, we announced
the next generation of our proprietary RightID™ identity fraud
solution in the U.S. This tool helps to flag potential job
applicant fraud in the pre-hire process, thus moving our products
upstream in the applicant onboarding cycle. Additionally, we
continue to enhance our customer value proposition with our next
generation, AI-enabled, Profile Advantage® platform, our SmartHub™
verifications router, within operations, and in our Customer Care
department,” added Staples.
“It has been an exciting and productive few
months since announcing our agreement to acquire Sterling and the
transaction process is progressing. We have formed an integration
management committee and are currently progressing through the
required regulatory reviews. This acquisition will extend our
high-quality and cost-effective background screening, identity, and
verification technology solutions for the benefit of both
companies' customers. The acquisition of Sterling will be a
significant step forward in our value creation playbook and we
expect it will accelerate and advance our strategic priorities,”
Staples concluded.
Liquidity, Cash Flow, and Capital
Allocation
As of March 31, 2024, First Advantage had
cash and cash equivalents of $245.4 million, short-term investments
of $0.6 million, and total debt of $564.7 million.
During the first quarter of 2024, the Company
generated $38.3 million of cash flow from operations and invested
$6.5 million in purchases of property and equipment, including
capitalized software development costs.
“Today, we are reaffirming our full-year 2024
guidance after having performed at-or-above what we communicated
for the first quarter,” commented David Gamsey, EVP and Chief
Financial Officer. “Upon closing the Sterling transaction, our
priorities will focus on our customers, a successful integration,
achieving synergies, and reducing net leverage. We remain committed
to driving long-term value creation for First Advantage’s
customers, employees, partners, and shareholders.”
Standalone First Advantage Full-Year
2024 Guidance
The following table summarizes our full-year
2024 guidance, which excludes contributions from the pending
Sterling acquisition and will be adjusted accordingly upon
closing:
|
As of May 9, 2024 |
Revenues |
$750 million – $800 million |
Adjusted EBITDA² |
$228 million – $248 million |
Adjusted Net Income² |
$127 million – $142 million |
Adjusted Diluted Earnings Per
Share² |
$0.88 – $0.98 |
|
² A reconciliation of the foregoing guidance for the non-GAAP
metrics of Adjusted EBITDA and Adjusted Net Income to GAAP net
(loss) income and Adjusted Diluted Earnings Per Share to GAAP
diluted net (loss) income per share cannot be provided without
unreasonable effort because of the inherent difficulty of
accurately forecasting the occurrence and financial impact of the
various adjusting items necessary for such reconciliation that have
not yet occurred, are out of our control, or cannot be reasonably
predicted. For the same reasons, the Company is unable to assess
the probable significance of the unavailable information, which
could have a material impact on its future GAAP financial
results. |
|
The Company’s full-year 2024 guidance ranges
reflect the current hiring environment and expectations that
existing macroeconomic conditions and similar labor market trends
will continue throughout 2024, with the high-end of the guidance
ranges reflecting some macroeconomic recovery towards year end.
Adjusted Net Income and Adjusted Diluted Earnings Per Share
guidance ranges include the impacts from the 2023 one-time special
dividend, expired interest rate swaps, and share buybacks.
Actual results may differ materially from First
Advantage’s full-year 2024 guidance as a result of, among other
things, the factors described under “Forward-Looking Statements”
below.
Conference Call and Webcast
Information
First Advantage will host a conference call to
review its first quarter 2024 results today, May 9, 2024, at 8:30
a.m. ET.
To participate in the conference call, please
dial 800-343-4136 (domestic) or 203-518-9843 (international)
approximately ten minutes before the 8:30 a.m. ET start. Please
mention to the operator that you are dialing in for the First
Advantage first quarter 2024 earnings call or provide the
conference code FA1Q24. The call will also be webcast live on the
Company’s investor relations website at
https://investors.fadv.com under the “News & Events” and
then “Events & Presentations” section, where related
presentation materials will be posted prior to the conference
call.
Following the conference call, a replay of the
webcast will be available on the Company’s investor relations
website, https://investors.fadv.com. Alternatively, the live
webcast and subsequent replay will be available at
https://event.on24.com/wcc/r/4554792/B404AD9649736455ED42ABD3D2A662F3.
Forward-Looking Statements
This press release contains “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements reflect our
current views with respect to, among other things, our operations
and financial performance. Forward-looking statements include all
statements that are not historical facts. These forward-looking
statements relate to matters such as our industry, business
strategy, goals, and expectations concerning our market position,
future operations, margins, profitability, capital expenditures,
liquidity and capital resources, and other financial and operating
information. In some cases, you can identify these forward-looking
statements by the use of words such as “anticipate,” “assume,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “plan,” “potential,” “predict,” “project,” “future,” “will,”
“seek,” “foreseeable,” "target," “guidance,” the negative version
of these words, or similar terms and phrases.
These forward-looking statements are subject to
various risks, uncertainties, assumptions, or changes in
circumstances that are difficult to predict or quantify. Such risks
and uncertainties include, but are not limited to, the
following:
- negative changes in external events
beyond our control, including our customers’ onboarding volumes,
economic drivers which are sensitive to macroeconomic cycles, such
as interest rate volatility and inflation, geopolitical unrest, and
uncertainty in financial markets;
- our operations in a highly
regulated industry and the fact that we are subject to numerous and
evolving laws and regulations, including with respect to personal
data, data security, and artificial intelligence;
- inability to identify and
successfully implement our growth strategies on a timely basis or
at all;
- potential harm to our business,
brand, and reputation as a result of security breaches,
cyber-attacks, or the mishandling of personal data;
- our reliance on third-party data
providers;
- due to the sensitive and
privacy-driven nature of our products and solutions, we could face
liability and legal or regulatory proceedings, which could be
costly and time-consuming to defend and may not be fully covered by
insurance;
- our international business exposes
us to a number of risks;
- the timing, manner and volume of
repurchases of common stock pursuant to our share repurchase
program;
- the continued integration of our
platforms and solutions with human resource providers such as
applicant tracking systems and human capital management systems as
well as our relationships with such human resource providers;
- our ability to obtain, maintain,
protect and enforce our intellectual property and other proprietary
information;
- disruptions, outages, or other
errors with our technology and network infrastructure, including
our data centers, servers, and third-party cloud and internet
providers and our migration to the cloud;
- our indebtedness could adversely
affect our ability to raise additional capital to fund our
operations, limit our ability to react to changes in the economy or
our industry, and prevent us from meeting our obligations;
- the failure to complete or realize
the expected benefits of our acquisition of Sterling Check Corp.;
and
- control by our Sponsor, "Silver
Lake", (Silver Lake Group, L.L.C., together with its affiliates,
successors, and assignees) and its interests may conflict with ours
or those of our stockholders.
For additional information on these and other
factors that could cause First Advantage’s actual results to differ
materially from expected results, please see our Annual Report on
Form 10-K for the year ended December 31, 2023, filed with the
Securities and Exchange Commission (the “SEC”), as such factors may
be updated from time to time in our filings with the SEC, which are
or will be accessible on the SEC’s website at www.sec.gov. The
forward-looking statements included in this press release are made
only as of the date of this press release, and we undertake no
obligation to publicly update or review any forward-looking
statement, whether as a result of new information, future
developments, or otherwise, except as required by law.
Non-GAAP Financial
Information
This press release contains “non-GAAP financial
measures” that are financial measures that either exclude or
include amounts that are not excluded or included in the most
directly comparable measures calculated and presented in accordance
with accounting principles generally accepted in the United States
(“GAAP”). Specifically, we make use of the non-GAAP financial
measures “Adjusted EBITDA,” “Adjusted EBITDA Margin,” “Adjusted Net
Income,” “Adjusted Diluted Earnings Per Share,” “Constant Currency
Revenues,” and “Constant Currency Adjusted EBITDA.”
Adjusted EBITDA, Adjusted EBITDA Margin,
Adjusted Net Income, Adjusted Diluted Earnings Per Share, Constant
Currency Revenues, and Constant Currency Adjusted EBITDA have been
presented in this press release as supplemental measures of
financial performance that are not required by or presented in
accordance with GAAP because we believe they assist investors and
analysts in comparing our operating performance across reporting
periods on a consistent basis by excluding items that we do not
believe are indicative of our core operating performance.
Management believes these non-GAAP measures are useful to investors
in highlighting trends in our operating performance, while other
measures can differ significantly depending on long-term strategic
decisions regarding capital structure, the tax jurisdictions in
which we operate, and capital investments. Management uses Adjusted
EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted
Diluted Earnings Per Share, Constant Currency Revenues, and
Constant Currency Adjusted EBITDA to supplement GAAP measures of
performance in the evaluation of the effectiveness of our business
strategies, to make budgeting decisions, to establish discretionary
annual incentive compensation, and to compare our performance
against that of other peer companies using similar measures.
Management supplements GAAP results with non-GAAP financial
measures to provide a more complete understanding of the factors
and trends affecting the business than GAAP results alone.
Adjusted EBITDA, Adjusted EBITDA Margin,
Adjusted Net Income, Adjusted Diluted Earnings Per Share, Constant
Currency Revenues, and Constant Currency Adjusted EBITDA are not
recognized terms under GAAP and should not be considered as an
alternative to net (loss) income as a measure of financial
performance or cash provided by operating activities as a measure
of liquidity, or any other performance measure derived in
accordance with GAAP. The presentations of these measures have
limitations as analytical tools and should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. Because not all companies use identical
calculations, the presentations of these measures may not be
comparable to other similarly titled measures of other companies
and can differ significantly from company to company.
We define Adjusted EBITDA as net (loss) income
before interest, taxes, depreciation, and amortization, and as
further adjusted for loss on extinguishment of debt, share-based
compensation, transaction and acquisition-related charges,
integration and restructuring charges, and other non-cash charges.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by
total revenues. We define Adjusted Net Income for a particular
period as net (loss) income before taxes adjusted for debt-related
costs, acquisition-related depreciation and amortization,
share-based compensation, transaction and acquisition-related
charges, integration and restructuring charges, and other non-cash
charges, to which we then apply the related effective tax rate. We
define Adjusted Diluted Earnings Per Share as Adjusted Net Income
divided by adjusted weighted average number of shares
outstanding—diluted. We define Constant Currency Revenues as
current period revenues translated using prior-year period exchange
rates. We define Constant Currency Adjusted EBITDA as current
period Adjusted EBITDA translated using prior-year period exchange
rates. For reconciliations of these non-GAAP financial measures to
the most directly comparable GAAP measures, see the reconciliations
included at the end of this press release. Numerical figures
included in the reconciliations have been subject to rounding
adjustments. Accordingly, numerical figures shown as totals in
various tables may not be arithmetic aggregations of the figures
that precede them.
About First Advantage
First Advantage (NASDAQ: FA) is a leading
provider of employment background screening, identity, and
verification solutions. The Company delivers innovative services
and insights that help customers manage risk and hire the best
talent. Enabled by its proprietary technology, First Advantage
helps companies protect their brands and provide safer environments
for their customers and their most important resources: employees,
contractors, contingent workers, tenants, and drivers.
Headquartered in Atlanta, Georgia, First Advantage performs screens
in over 200 countries and territories on behalf of its more than
30,000 customers. For more information about First Advantage, visit
the Company’s website at https://fadv.com/.
Investor Contact
Stephanie Gorman Vice President, Investor
Relations Investors@fadv.com(888) 314-9761
Condensed Financial
Statements
First Advantage CorporationCondensed Consolidated Balance
Sheets(Unaudited) |
(in thousands, except share
and per share amounts) |
|
March 31, 2024 |
|
|
December 31, 2023 |
|
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
245,436 |
|
|
$ |
213,774 |
|
Restricted cash |
|
|
135 |
|
|
|
138 |
|
Short-term investments |
|
|
600 |
|
|
|
— |
|
Accounts receivable (net of allowance for doubtful accounts of $893
and $1,036 at March 31, 2024 and December 31, 2023,
respectively) |
|
|
129,011 |
|
|
|
142,690 |
|
Prepaid expenses and other current assets |
|
|
21,795 |
|
|
|
13,426 |
|
Income tax receivable |
|
|
2,568 |
|
|
|
3,710 |
|
Total current assets |
|
|
399,545 |
|
|
|
373,738 |
|
Property and equipment, net |
|
|
71,352 |
|
|
|
79,441 |
|
Goodwill |
|
|
819,633 |
|
|
|
820,654 |
|
Trade names, net |
|
|
64,370 |
|
|
|
66,229 |
|
Customer lists, net |
|
|
262,876 |
|
|
|
275,528 |
|
Other intangible assets, net |
|
|
2,138 |
|
|
|
2,257 |
|
Deferred tax asset, net |
|
|
2,797 |
|
|
|
2,786 |
|
Other assets |
|
|
9,202 |
|
|
|
10,021 |
|
TOTAL ASSETS |
|
$ |
1,631,913 |
|
|
$ |
1,630,654 |
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
Accounts payable |
|
$ |
47,956 |
|
|
$ |
47,024 |
|
Accrued compensation |
|
|
12,742 |
|
|
|
16,379 |
|
Accrued liabilities |
|
|
24,102 |
|
|
|
16,162 |
|
Current portion of operating lease liability |
|
|
3,367 |
|
|
|
3,354 |
|
Income tax payable |
|
|
2,988 |
|
|
|
264 |
|
Deferred revenues |
|
|
2,043 |
|
|
|
1,856 |
|
Total current liabilities |
|
|
93,198 |
|
|
|
85,039 |
|
Long-term debt (net of deferred financing costs of $5,815 and
$6,268 at March 31, 2024 and December 31, 2023,
respectively) |
|
|
558,909 |
|
|
|
558,456 |
|
Deferred tax liability, net |
|
|
63,604 |
|
|
|
71,274 |
|
Operating lease liability, less current portion |
|
|
5,632 |
|
|
|
5,931 |
|
Other liabilities |
|
|
2,826 |
|
|
|
3,221 |
|
Total liabilities |
|
|
724,169 |
|
|
|
723,921 |
|
EQUITY |
|
|
|
|
|
|
Common stock – $0.001 par value; 1,000,000,000 shares
authorized, 145,195,030 and 145,074,802 shares issued and
outstanding as of March 31, 2024 and December 31, 2023,
respectively |
|
|
145 |
|
|
|
145 |
|
Additional paid-in-capital |
|
|
982,982 |
|
|
|
977,290 |
|
Accumulated deficit |
|
|
(52,453 |
) |
|
|
(49,545 |
) |
Accumulated other comprehensive loss |
|
|
(22,930 |
) |
|
|
(21,157 |
) |
Total equity |
|
|
907,744 |
|
|
|
906,733 |
|
TOTAL LIABILITIES AND
EQUITY |
|
$ |
1,631,913 |
|
|
$ |
1,630,654 |
|
First Advantage CorporationCondensed Consolidated
Statements of Operations and Comprehensive (Loss)
Income(Unaudited) |
|
|
Three Months Ended March 31, |
|
(in thousands, except share
and per share amounts) |
|
2024 |
|
|
2023 |
|
REVENUES |
|
$ |
169,416 |
|
|
$ |
175,520 |
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization
below) |
|
|
87,192 |
|
|
|
91,061 |
|
Product and technology expense |
|
|
12,466 |
|
|
|
12,624 |
|
Selling, general, and administrative expense |
|
|
40,662 |
|
|
|
28,682 |
|
Depreciation and amortization |
|
|
29,822 |
|
|
|
31,866 |
|
Total operating expenses |
|
|
170,142 |
|
|
|
164,233 |
|
(LOSS) INCOME FROM
OPERATIONS |
|
|
(726 |
) |
|
|
11,287 |
|
|
|
|
|
|
|
|
OTHER EXPENSE, NET: |
|
|
|
|
|
|
Interest expense, net |
|
|
3,570 |
|
|
|
8,681 |
|
Total other expense, net |
|
|
3,570 |
|
|
|
8,681 |
|
(LOSS) INCOME BEFORE PROVISION
FOR INCOME TAXES |
|
|
(4,296 |
) |
|
|
2,606 |
|
(Benefit) provision for income taxes |
|
|
(1,388 |
) |
|
|
681 |
|
NET (LOSS)
INCOME |
|
$ |
(2,908 |
) |
|
$ |
1,925 |
|
|
|
|
|
|
|
|
Foreign currency translation
(loss) income |
|
|
(1,773 |
) |
|
|
869 |
|
COMPREHENSIVE (LOSS)
INCOME |
|
$ |
(4,681 |
) |
|
$ |
2,794 |
|
|
|
|
|
|
|
|
NET (LOSS)
INCOME |
|
$ |
(2,908 |
) |
|
$ |
1,925 |
|
Basic net (loss) income per
share |
|
$ |
(0.02 |
) |
|
$ |
0.01 |
|
Diluted net (loss) income per
share |
|
$ |
(0.02 |
) |
|
$ |
0.01 |
|
Weighted average number of
shares outstanding – basic |
|
|
143,591,713 |
|
|
|
145,862,562 |
|
Weighted average number of
shares outstanding – diluted |
|
|
143,591,713 |
|
|
|
147,031,866 |
|
First Advantage CorporationCondensed Consolidated
Statements of Cash Flows(Unaudited) |
|
|
Three Months Ended March 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2,908 |
) |
|
$ |
1,925 |
|
Adjustments to reconcile net
(loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
29,822 |
|
|
|
31,866 |
|
Amortization of deferred financing costs |
|
|
453 |
|
|
|
461 |
|
Bad debt recovery |
|
|
(112 |
) |
|
|
(40 |
) |
Deferred taxes |
|
|
(7,808 |
) |
|
|
(2,144 |
) |
Share-based compensation |
|
|
4,751 |
|
|
|
2,058 |
|
Gain on foreign currency exchange rates |
|
(0 |
) |
|
|
(10 |
) |
Loss on disposal of fixed assets and impairment of ROU assets |
|
0 |
|
|
|
1,222 |
|
Change in fair value of interest rate swaps |
|
|
(7,045 |
) |
|
|
1,879 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
13,736 |
|
|
|
15,980 |
|
Prepaid expenses and other assets |
|
|
(3,345 |
) |
|
|
2,933 |
|
Accounts payable |
|
|
468 |
|
|
|
(7,618 |
) |
Accrued compensation and accrued liabilities |
|
|
6,608 |
|
|
|
(11,828 |
) |
Deferred revenues |
|
|
185 |
|
|
|
209 |
|
Operating lease liabilities |
|
|
(328 |
) |
|
|
(110 |
) |
Other liabilities |
|
|
(11 |
) |
|
|
980 |
|
Income taxes receivable and payable, net |
|
|
3,863 |
|
|
|
836 |
|
Net cash provided by operating activities |
|
|
38,329 |
|
|
|
38,599 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(321 |
) |
|
|
(42 |
) |
Capitalized software development costs |
|
|
(6,135 |
) |
|
|
(6,056 |
) |
Other investing activities |
|
|
(575 |
) |
|
|
15 |
|
Net cash used in investing activities |
|
|
(7,031 |
) |
|
|
(6,083 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
|
|
|
Cash dividends paid |
|
|
(12 |
) |
|
|
— |
|
Share repurchases |
|
|
— |
|
|
|
(25,266 |
) |
Proceeds from issuance of common stock under share-based
compensation plans |
|
|
976 |
|
|
|
1,399 |
|
Payments on deferred purchase agreements |
|
|
(234 |
) |
|
|
(234 |
) |
Payments on finance lease obligations |
|
|
— |
|
|
|
(37 |
) |
Net settlement of share-based compensation plan awards |
|
|
(41 |
) |
|
|
(25 |
) |
Net cash provided by (used in) financing activities |
|
|
689 |
|
|
|
(24,163 |
) |
Effect of exchange rate on
cash, cash equivalents, and restricted cash |
|
|
(328 |
) |
|
|
147 |
|
Increase in cash, cash
equivalents, and restricted cash |
|
|
31,659 |
|
|
|
8,500 |
|
Cash, cash equivalents, and
restricted cash at beginning of period |
|
|
213,912 |
|
|
|
391,796 |
|
Cash, cash equivalents, and
restricted cash at end of period |
|
$ |
245,571 |
|
|
$ |
400,296 |
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
Cash paid for income taxes,
net of refunds received |
|
$ |
2,510 |
|
|
$ |
2,049 |
|
Cash paid for interest |
|
$ |
11,954 |
|
|
$ |
10,625 |
|
NON-CASH INVESTING AND
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Property and equipment
acquired on account |
|
$ |
585 |
|
|
$ |
275 |
|
Non-cash property and
equipment additions |
|
$ |
540 |
|
|
$ |
— |
|
Excise taxes on share
repurchases incurred but not paid |
|
$ |
— |
|
|
$ |
252 |
|
Reconciliation of Consolidated Non-GAAP Financial
Measures |
|
|
|
Three Months Ended March 31, 2024 |
|
(in thousands) |
|
Americas |
|
|
International |
|
|
Eliminations |
|
|
Total revenues |
|
Revenues, as reported (GAAP) |
|
$ |
149,127 |
|
|
$ |
22,023 |
|
|
$ |
(1,734 |
) |
|
$ |
169,416 |
|
Foreign currency translation
impact(a) |
|
|
(46 |
) |
|
|
(73 |
) |
|
|
10 |
|
|
|
(109 |
) |
Constant currency
revenues |
|
$ |
149,081 |
|
|
$ |
21,950 |
|
|
$ |
(1,724 |
) |
|
$ |
169,307 |
|
|
(a) Constant currency revenues is calculated by translating current
period amounts using prior-year period exchange rates. |
|
|
Three Months Ended March 31, |
|
(in thousands, except
percentages) |
|
2024 |
|
|
2023 |
|
Net (loss) income |
|
$ |
(2,908 |
) |
|
$ |
1,925 |
|
Interest expense, net |
|
|
3,570 |
|
|
|
8,681 |
|
(Benefit) provision for income
taxes |
|
|
(1,388 |
) |
|
|
681 |
|
Depreciation and
amortization |
|
|
29,822 |
|
|
|
31,866 |
|
Share-based
compensation(a) |
|
|
4,751 |
|
|
|
2,058 |
|
Transaction and
acquisition-related charges(b) |
|
|
11,992 |
|
|
|
1,071 |
|
Integration, restructuring,
and other charges(c) |
|
|
719 |
|
|
|
2,278 |
|
Adjusted
EBITDA |
|
$ |
46,558 |
|
|
$ |
48,560 |
|
Revenues |
|
|
169,416 |
|
|
|
175,520 |
|
Net (loss) income
margin |
|
|
(1.7 |
)% |
|
|
1.1 |
% |
Adjusted EBITDA
Margin |
|
|
27.5 |
% |
|
|
27.7 |
% |
Adjusted EBITDA |
|
$ |
46,558 |
|
|
|
|
Foreign currency translation
impact(d) |
|
|
4 |
|
|
|
|
Constant currency
Adjusted EBITDA |
|
$ |
46,562 |
|
|
|
|
|
(a) Share-based compensation for the three months ended March 31,
2024, includes approximately $2.6 million of incrementally
recognized expense associated with the May 2023 vesting
modification.(b) Represents charges incurred related to
acquisitions and similar transactions, primarily consisting of
change in control-related costs, professional service fees, and
other third-party costs. Transaction and acquisition related
charges for the three months ended March 31, 2024 includes
approximately $11.1 million of expense associated with the pending
acquisition of Sterling, primarily consisting of legal, regulatory,
and diligence professional service fees. The three months ended
March 31, 2024 and 2023 also include insurance costs incurred
related to the initial public offering.(c) Represents charges from
organizational restructuring and integration activities, non-cash,
and other charges primarily related to nonrecurring legal
exposures, foreign currency (gains) losses, and (gains) losses on
the sale of assets.(d) Constant currency Adjusted EBITDA is
calculated by translating current period amounts using prior-year
period exchange rates. |
Reconciliation of Consolidated Non-GAAP Financial Measures
(continued) |
|
|
|
Three Months Ended March 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
Net (loss) income |
|
$ |
(2,908 |
) |
|
$ |
1,925 |
|
(Benefit) provision for income
taxes |
|
|
(1,388 |
) |
|
|
681 |
|
(Loss) income before provision
for income taxes |
|
|
(4,296 |
) |
|
|
2,606 |
|
Debt-related charges(a) |
|
|
(3,014 |
) |
|
|
4,468 |
|
Acquisition-related
depreciation and amortization(b) |
|
|
22,625 |
|
|
|
25,485 |
|
Share-based
compensation(c) |
|
|
4,751 |
|
|
|
2,058 |
|
Transaction and
acquisition-related charges(d) |
|
|
11,992 |
|
|
|
1,071 |
|
Integration, restructuring,
and other charges(e) |
|
|
719 |
|
|
|
2,278 |
|
Adjusted Net Income before
income tax effect |
|
|
32,777 |
|
|
|
37,966 |
|
Less: Adjusted income
taxes(f) |
|
|
7,991 |
|
|
|
9,602 |
|
Adjusted Net
Income |
|
$ |
24,786 |
|
|
$ |
28,364 |
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
Diluted net (loss) income per share (GAAP) |
|
$ |
(0.02 |
) |
|
$ |
0.01 |
|
Adjusted Net Income
adjustments per share |
|
|
|
|
|
|
(Benefit) provision for income taxes |
|
|
(0.01 |
) |
|
|
0.00 |
|
Debt-related charges(a) |
|
|
(0.02 |
) |
|
|
0.03 |
|
Acquisition-related depreciation and amortization(b) |
|
|
0.16 |
|
|
|
0.17 |
|
Share-based compensation(c) |
|
|
0.03 |
|
|
|
0.01 |
|
Transaction and acquisition related charges(d) |
|
|
0.08 |
|
|
|
0.01 |
|
Integration, restructuring, and other charges(e) |
|
|
0.00 |
|
|
|
0.02 |
|
Adjusted income taxes(f) |
|
|
(0.05 |
) |
|
|
(0.07 |
) |
Adjusted Diluted Earnings Per Share
(Non-GAAP) |
|
$ |
0.17 |
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding used in computation of Adjusted Diluted Earnings
Per Share: |
|
|
|
|
|
|
Weighted average number of shares outstanding—diluted (GAAP) |
|
|
143,591,713 |
|
|
|
147,031,866 |
|
Options and restricted stock not included in weighted average
number of shares outstanding—diluted (GAAP) (using treasury stock
method) |
|
|
2,110,928 |
|
|
|
— |
|
Adjusted weighted average number of shares outstanding—diluted
(Non-GAAP) |
|
|
145,702,641 |
|
|
|
147,031,866 |
|
|
(a) Represents the non-cash interest expense related to the
amortization of debt issuance costs for the 2021 February
refinancing of the Company’s First Lien Credit Facility. This
adjustment also includes the impact of the change in fair value of
interest rate swaps, which represents the difference between the
fair value gains or losses and actual cash payments and receipts on
the interest rate swaps.(b) Represents the depreciation and
amortization expense related to intangible assets and developed
technology assets recorded due to the application of ASC
805,Business Combinations. As a result, the purchase accounting
related depreciation and amortization expense will recur in future
periods until the related assets are fully depreciated or
amortized, and the related purchase accounting assets may
contribute to revenue generation.(c) Share-based compensation for
the three months ended March 31, 2024, includes approximately $2.6
million of incrementally recognized expense associated with the May
2023 vesting modification.(d) Represents charges incurred related
to acquisitions and similar transactions, primarily consisting of
change in control-related costs, professional service fees, and
other third-party costs. Transaction and acquisition related
charges for the three months ended March 31, 2024 includes
approximately $11.1 million of expense associated with the pending
acquisition of Sterling, primarily consisting of legal, regulatory,
and diligence professional service fees. The three months ended
March 31, 2024 and 2023 also include insurance costs incurred
related to the initial public offering.(e) Represents charges from
organizational restructuring and integration activities, non-cash,
and other charges primarily related to nonrecurring legal
exposures, foreign currency (gains) losses, and (gains) losses on
the sale of assets.(f) Effective tax rates of approximately 24.4%
and 25.3% have been used to compute Adjusted Net Income and
Adjusted Diluted Earnings Per Share for the three months ended
March 31, 2024 and 2023, respectively. |
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