Exhibit 99.1
One Progress Plaza, Suite 2400, St. Petersburg, FL 33701
NEWS FOR IMMEDIATE RELEASE
First Advantage Contacts:
| John Lamson | Renee Svec | |
| Chief Financial Officer and Executive Vice President | Director – Corporate Communications | |
| 727.214.3411, ext. 214 | 727.214.3411, ext. 212 | |
| jlamson@fadv.com | rsvec@fadv.com |
FIRST ADVANTAGE CORPORATION REPORTS
OPERATING RESULTS FOR THE FOURTH QUARTER OF 2004
ST. PETERSBURG, Fla., Feb. 15, 2005—First Advantage Corporation (NASDAQ: FADV), a risk mitigation business solutions provider, today announced operating results for the fourth quarter and full year ended Dec. 31, 2004.
First Advantage reported net income of $2.7 million (12 cents per diluted share) and $10.7 million (48 cents per diluted share) for the quarter and year ended Dec. 31, 2004, respectively. The company had a net loss of $1.0 million (5 cents per diluted share) and net income of $2.8 million (14 cents per diluted share) for the quarter and year ended Dec. 31, 2003, respectively.
Revenues for the company were $68.3 million and $266.5 million for the quarter and year ended Dec. 31, 2004, respectively. First Advantage’s revenue was $49.9 million and $166.5 million for the quarter and year ended Dec. 31, 2003, respectively.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $9.0 million and $33.3 million for the quarter and year ended Dec. 31, 2004, respectively. EBITDA was $796,000 and $13.4 million for the quarter and year ended Dec. 31, 2003, respectively.
“In 2004, First Advantage continued the execution of our two-part growth strategy as anticipated,” said John Long, chief executive officer and president. “We made great strides to further build our core offerings while expanding into new complementary business lines. The majority of our scale acquisitions have been successfully consolidated into existing operations or are in the latter stages of completion. The remaining acquisitions — integrated only on a corporate function level — are new stand-alone business lines that represent cross-sell opportunities with First Advantage’s nationwide clientele.
“The highlight of the fourth quarter was our acquisition of CompuNet Credit Services,” said Long. “CompuNet, providing proprietary credit information on trucking industry brokers and shippers, serves thousands of trucking companies nationwide. What makes this deal so exciting is that it has become a vertical marketing vehicle for First Advantage to more effectively reach the transportation industry. The cross sell opportunity is significant – we can now offer trucking clients not only shipping credit data, but also background checks, substance abuse testing, physical exams and other occupational health tests, motor vehicle records, fleet asset management, fuel tax and supply chain security consulting services. With cross selling at the heart of our organic growth strategy, we are enthused with the opportunities this acquisition creates.
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First Advantage Corporation Reports Operating Results for the Fourth Quarter of 2004
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“We were also pleased to have added a chief marketing officer to our executive management team in the quarter,” said Long. “Rick Mansfield has been given the responsibility to develop and coordinate the implementation of our corporate-wide branding efforts, as well as to formalize our cross selling initiatives. The success of these key aspects of our growth strategy will be gauged by improvement in First Advantage’s organic growth numbers at year end and in subsequent years.”
First Advantage did experience an anticipated historical seasonal decline in volumes in the employment and resident screening businesses in the fourth quarter, although the decline was partly offset by growth in the company’s tax incentive business. It is expected that seasonality will continue into the first quarter of 2005 and will be reflected in the quarter’s financial results. Management estimates that diluted earnings per share will be in the range of 12 to 15 cents for the quarter ending March 31, 2005.
Fortified by the progress made in 2004, First Advantage management remains committed to its long-term growth strategy and reinforces its previous projections that estimated diluted earnings per share will be in the range of 85 to 95 cents for the year ending Dec. 31, 2005.
First Advantage’s fourth quarter results will be discussed in more detail on Tuesday, Feb. 15, 2005, at 5 p.m. EST, via teleconference and webcast. The teleconference dial-in number is (888) 560-8501 and the pass code isadvantage. The live audio webcast of the call will be accessible from the Investor Relations pages on First Advantage’s Web site at www.fadv.com. An audio replay of the conference call will be available through Feb. 22, 2005, by dialing (866) 461-2745. An audio archive of the call will also be available for replay on First Advantage’s Web site.
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First Advantage Corporation Reports Operating Results for the Fourth Quarter of 2004
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Summary Income Statement (Unaudited)
| Three Months Ended Dec. 31, | Twelve Months Ended Dec. 31, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
Service revenue | $ | 57,225,000 | $ | 41,027,000 | $ | 221,938,000 | $ | 134,910,000 | ||||||||
Reimbursed government fee revenue | 11,030,000 | 8,862,000 | 44,599,000 | 31,585,000 | ||||||||||||
Total revenue | 68,255,000 | 49,889,000 | 266,537,000 | 166,495,000 | ||||||||||||
Cost of service revenue | 13,677,000 | 13,500,000 | 60,884,000 | 38,154,000 | ||||||||||||
Government fees paid | 11,030,000 | 8,862,000 | 44,599,000 | 31,585,000 | ||||||||||||
Total cost of sales | 24,707,000 | 22,362,000 | 105,483,000 | 69,739,000 | ||||||||||||
Gross margin | 43,548,000 | 27,527,000 | 161,054,000 | 96,756,000 | ||||||||||||
Salaries and benefits | 21,344,000 | 15,080,000 | 81,904,000 | 51,178,000 | ||||||||||||
Other operating expenses | 13,175,000 | 9,923,000 | 45,928,000 | 30,449,000 | ||||||||||||
Depreciation and amortization | 3,474,000 | 2,462,000 | 12,542,000 | 8,428,000 | ||||||||||||
Impairment loss | — | 1,739,000 | — | 1,739,000 | ||||||||||||
Income from operations | 5,555,000 | (1,677,000 | ) | 20,680,000 | 4,962,000 | |||||||||||
Interest (expense) income: | ||||||||||||||||
Interest expense | (945,000 | ) | (87,000 | ) | (2,267,000 | ) | (154,000 | ) | ||||||||
Interest income | 17,000 | 11,000 | 30,000 | 41,000 | ||||||||||||
Total interest expense, net | (928,000 | ) | (76,000 | ) | (2,237,000 | ) | (113,000 | ) | ||||||||
Income (loss) before income taxes | 4,627,000 | (1,753,000 | ) | 18,443,000 | 4,849,000 | |||||||||||
Provision for income taxes | 1,944,000 | (746,000 | ) | 7,762,000 | 2,046,000 | |||||||||||
Net income (loss) | $ | 2,683,000 | $ | (1,007,000 | ) | $ | 10,681,000 | $ | 2,803,000 | |||||||
Per share amounts: | ||||||||||||||||
Basic earnings per share | $ | .12 | $ | (.05 | ) | $ | .49 | $ | .14 | |||||||
Basic weighted-average shares outstanding | 23,090,715 | 20,828,429 | 21,906,507 | 20,260,854 | ||||||||||||
Diluted earnings per share | $ | .12 | $ | (.05 | ) | $ | .48 | $ | .14 | |||||||
Diluted weighted-average shares outstanding | 23,229,991 | 21,020,537 | 22,230,642 | 20,397,587 | ||||||||||||
EBITDA calculation: | ||||||||||||||||
Net income | $ | 2,683,000 | $ | (1,007,000 | ) | $ | 10,681,000 | $ | 2,803,000 | |||||||
Provision for income taxes | 1,944,000 | (746,000 | ) | 7,762,000 | 2,046,000 | |||||||||||
Interest expense | 945,000 | 87,000 | 2,267,000 | 154,000 | ||||||||||||
Depreciation and amortization | 3,474,000 | 2,462,000 | 12,542,000 | 8,428,000 | ||||||||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA)* | $ | 9,046,000 | $ | 796,000 | $ | 33,252,000 | $ | 13,431,000 | ||||||||
| * | 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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Segment Financial Information (Unaudited)
| Three Months Ended Dec. 31, | Twelve Months Ended Dec. 31, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| Service revenue | ||||||||||||||||
Enterprise Screening | $ | 44,118,000 | $ | 29,384,000 | $ | 170,095,000 | $ | 107,580,000 | ||||||||
Risk Mitigation | 11,260,000 | 8,057,000 | 41,419,000 | 18,285,000 | ||||||||||||
Consumer Direct | 2,863,000 | 3,991,000 | 12,874,000 | 10,525,000 | ||||||||||||
Corporate and eliminations | (1,016,000 | ) | (405,000 | ) | (2,450,000 | ) | (1,480,000 | ) | ||||||||
Consolidated | $ | 57,225,000 | $ | 41,027,000 | $ | 221,938,000 | $ | 134,910,000 | ||||||||
| Income (loss) before income taxes | ||||||||||||||||
Enterprise Screening | $ | 6,509,000 | $ | (1,310,000 | ) | $ | 23,296,000 | $ | 4,818,000 | |||||||
Risk Mitigation | 2,178,000 | 1,436,000 | 7,438,000 | 5,714,000 | ||||||||||||
Consumer Direct | (132,000 | ) | (75,000 | ) | (136,000 | ) | 61,000 | |||||||||
Corporate and eliminations | (3,928,000 | ) | (1,804,000 | ) | (12,155,000 | ) | (5,744,000 | ) | ||||||||
Consolidated | $ | 4,627,000 | $ | (1,753,000 | ) | $ | 18,443,000 | $ | 4,849,000 | |||||||
| Operating margin percentage of service revenue | ||||||||||||||||
Enterprise Screening | 14.75 | % | -4.46 | % | 13.70 | % | 4.48 | % | ||||||||
Risk Mitigation | 19.34 | % | 17.82 | % | 17.96 | % | 31.25 | % | ||||||||
Consumer Direct | -4.61 | % | -1.88 | % | -1.06 | % | 0.58 | % | ||||||||
Corporate and eliminations | N/A | N/A | N/A | N/A | ||||||||||||
Consolidated | 8.09 | % | -4.27 | % | 8.31 | % | 3.59 | % | ||||||||
About First Advantage Corporation
First Advantage Corporation (NASDAQ: FADV) provides best-in-class single-source solutions for global risk mitigation and enterprise and consumer screening needs. Incorporating state-of-the-art technology, proprietary systems and data resources, First Advantage is a leading provider of employment background screening, drug-free workplace programs and other occupational health testing, employee assistance programs, corporate tax and incentive services, resident screening, motor vehicle records, transportation business credit services, investigative services, computer forensics and electronic discovery services, supply chain security 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 1,700 employees in offices throughout the United States and abroad. Further information about the company is available atwww.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 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 atwww.firstam.com.
Certain statements in this press release, including those related to forecasts of diluted earnings per share for the quarter ending March 31, 2005 and the year ending Dec. 31. 2005, ability to expand organic growth through cross-selling opportunities, and the impact of anticipated seasonal decline on first quarter financial results 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
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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. Investors are advised to consult the company’s filings with the SEC, including its 2003 Annual Report on Form 10-K, for a further discussion of these and other risks.
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