First Advantage CorporationIssues Operating Results For the Fourth Quarter and Full Year 2003
February 11, 2004
ST. PETERSBURG, Fla., /PRNewswire-FirstCall/ -- First Advantage Corporation (Nasdaq: FADV ) announced operating results for the fourth quarter and year ended Dec. 31, 2003. The company was formed by the June 2003 merger of The First American Corporation (NYSE: FAF ) screening information operations with US SEARCH.com Inc. Therefore, First Advantage operating results for the year ended Dec. 31, 2003, include results for the First American Screening Technologies division from Jan. 1, 2003, and the results for US SEARCH.com from June 1, 2003.
The company reported a net loss for the quarter ended Dec. 31, 2003, of $1.0 million, or 5 cents per diluted share. For the year ended Dec. 31, 2003, the company reported net income of $2.8 million, or 14 cents per diluted share. The results for the fourth quarter and the full year include an after-tax charge of $1.1 million (5 cents per diluted share) for the write-down of capitalized software and severance costs in connection with the continued integration of operations. The First American Screening Technologies division's net loss was $547 thousand for the quarter ended Dec. 31, 2002, and net income was $2.7 million for the year ended Dec. 31, 2002.
Revenue for the company was $49.9 million and $166.5 million for the quarter and year ended Dec. 31, 2003, respectively. The First American Screening Technologies division's revenue was $26.6 million for the quarter and $100.9 million for the year ended Dec. 31, 2002.
Earnings before interest, taxes, depreciation and amortization was $796,000 and $13.4 million for the quarter and the year ended Dec. 31, 2003. The fourth quarter has historically been the company's slowest. Volumes decreased as a result of reductions in hiring and resident screening activities due to the holiday season.
John Long, chief executive officer and president of First Advantage Corporation, said: "In our first seven months, First Advantage made significant progress toward our long-term growth goals by successfully executing on our acquisition strategy. Since August, we have acquired five employment screening companies, four occupational health services companies and two motor vehicle record companies. These companies will add to top line revenue growth in 2004 and beyond. Margin improvement will take longer as the cost of integration largely offsets the interim benefits of the acquisitions. Consequently, we expect little contribution to earnings from these acquisitions during the first quarter of 2004, with steady improvement throughout the year. The full benefit of these acquisitions is anticipated in 2005.
"During the first quarter of 2004, we will continue with acquisitions in our employment screening, occupational health services and resident screening businesses, as evidenced by our activities to date. Looking beyond first quarter, we will primarily target companies that offer First Advantage an opportunity to expand our service lines or reach new geographic markets. From an operational standpoint, these acquisitions will be less likely to be merged into existing units but rather form new business units, creating additional cross-sell opportunities to our existing and prospective customers. 2004 will also be a year for organic growth as we act on the cross-sell potential between our business units and develop products and sales initiatives to support new markets."
Fourth quarter 2003 acquisitions included Greystone Health Sciences, Inc.; Agency Records, Inc.; MedTech Diagnostics, Inc.; and Credential Check& Personnel Services, Inc. To date in 2004, First Advantage has acquired Quantitative Risk Solutions LLC; Proudfoot Reports Incorporated; MVRS, Inc.; and Background Information Systems, Inc.
The company estimates that revenue will exceed $250 million in 2004.
| Three Months Ended December 31, | Year Ended December 31, | |||
| 2003 | 2002 | 2003 | 2002 |
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Service revenues | $41,027,000 | $19,964,000 | $134,910,000 | $73,040,000 |
Reimbursed government fee revenue | 8,862,000 | 6,685,000 | 31,585,000 | 27,885,000 |
Total revenue | 49,889,000 | 26,649,000 | 166,495,000 | 100,925,000 |
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Cost of service revenues | 13,500,000 | 5,721,000 | 38,154,000 | 17,534,000 |
Government fees paid | 8,862,000 | 6,685,000 | 31,585,000 | 27,885,000 |
Total cost ofsales | 22,362,000 | 12,406,000 | 69,739,000 | 45,419,000 |
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Gross margin | 27,527,000 | 14,243,000 | 96,756,000 | 55,506,000 |
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Salaries and benefits | 15,080,000 | 9,595,00 | 051,178,000 | 31,863,000 |
Other operating expenses | 9,923,000 | 3,991,000 | 30,449,000 | 15,046,000 |
Depreciation and amortization | 2,462,000 | 1,452,000 | 8,428,000 | 4,096,000 |
Impairment loss | 1,739,000 | -- | 1,739,000 | -- |
Income (loss)from operations | (1,677,000) | (795,000) | 4,962,000 | 4,501,000 |
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Interest (expense) income: Interest expense | (87,000) | (94,000) | (154,000) | (229,000) |
Interest income | 11,000 | 12,000 | 41,000 | 59,000 |
Total interest expense, net | (76,000) | (82,000) | (113,000) | (170,000) |
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Income (loss) before income taxes | (1,753,000) | (877,000) | 4,849,000 | 4,331,000 |
Provision (benefit) for income taxes | (746,000) | (330,000) | 2,046,000 | 1,629,000 |
Net income(loss) | $(1,007,000) | $(547,000) | $2,803,000 | $2,702,000 |
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| Three Months Ended December 31, | Years Ended December 31, | ||
| 2003 | 2002 | 2003 | 2002 |
Per share amounts: Basic earnings (loss) per share | $(0.05) | N/A | $0.14 | N/A |
Basic weighted-average shares outstanding | 20,828,429 | 20,260,854 | ||
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Diluted earnings (loss) per share | $(0.05) | N/A | ||
weighted-average shares outstanding | 21,020,537 | 20,397,587 | ||
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EBITDA calculation:Net income (loss) | $(1,007,000) | $(547,000) | $2,803,000 | $2,702,000 |
Provision (benefit) for income taxes | (746,000) | (330,000) | 2,046,000 | 1,629,000 |
Interest expense | 87,000 | 94,000 | 154,000 | 229,000 |
Depreciation and amortization | 2,462,000 | 1,452,000 | 8,428,000 | 4,096,000 |
Earnings before interest, taxes, depreciation and amortization (EBITDA)* | $796,000 | $669,000 | $13,431,000 | $8,656,000 |
*EBITDA is not a measure of financial performance under generally accepted accounting principles.EBITDA is used by certain investors to analyze and compare companies.
Source: First Advantage Corporation
Contact ALTA at 202-296-3671 or [email protected].