First Advantage Corp (FA) Posts Mixed Q3 2023 Results Amidst Strategic Acquisitions and ...
First Advantage Corp (NASDAQ:FA) reports a slight revenue decrease of 2.7% year-over-year in Q3 2023, with revenues of $200.4 million.
Net income fell by 37.4% to $10.8 million, while Adjusted EBITDA increased marginally by 0.9% to $64.8 million.
The company paid a significant one-time special dividend and extended its share repurchase program, reflecting confidence in its financial position.
On November 9, 2023, First Advantage Corp (NASDAQ:FA), a global leader in employment background screening and verification solutions, announced its financial results for the third quarter ended September 30, 2023. The company experienced a slight revenue decline of 2.7% compared to the same period in 2022, with total revenues of $200.4 million. Net income saw a more substantial decrease of 37.4% to $10.8 million, while Adjusted Net Income remained stable at $40.0 million. Adjusted EBITDA saw a marginal increase of 0.9% to $64.8 million, maintaining a strong Adjusted EBITDA Margin of 32.3%.
Financial Performance and Strategic Initiatives
Despite the revenue dip, First Advantage delivered a solid financial performance, with Adjusted Diluted Earnings Per Share increasing by 7.7% to $0.28. The company's disciplined cost management and flexible business model were credited for the industry-leading Adjusted EBITDA Margins. First Advantage's CEO, Scott Staples, commented on the resilience shown in the Americas segment and the company's ability to generate a robust operating cash flow of $34.4 million for the quarter.
First Advantage also highlighted its strategic initiatives, including the acquisition of Infinite ID, which expands its portfolio of digital identity solutions. This $41 million acquisition was funded with cash from the balance sheet and is expected to strengthen the company's core business and digital strategy. Additionally, the Board of Directors approved a one-year extension of the existing share repurchase program, extending it through December 2024.
Capital Allocation and Shareholder Returns
The company's commitment to balanced capital allocation and shareholder value was evident in its payment of a one-time special dividend of $1.50 per share on August 31, 2023, representing a return of capital to shareholders exceeding 10%. First Advantage also continued its share repurchase program, buying back approximately 244,782 shares for an aggregate outlay of $3.6 million during the quarter.
Balance Sheet and Liquidity
As of September 30, 2023, First Advantage had a healthy balance sheet with cash and cash equivalents of $164.9 million, short-term investments of $2.2 million, and total debt of $564.7 million. The net leverage ratio stood at 1.7x, with full availability of $100 million under its revolving credit facility and no principal debt payments due until 2027.
Guidance for Full Year 2023
First Advantage reiterated its full-year 2023 guidance, expecting results at the lower end of the previously communicated ranges. This outlook reflects the current hiring environment and the anticipation that existing macroeconomic conditions and labor market trends will persist through the end of the fiscal year. The guidance ranges have not been adjusted for the impact of the one-time special dividend or the contribution from the Infinite ID acquisition.
The company's investor relations team, led by Vice President Stephanie Gorman, will provide further details and address investor queries in a conference call scheduled for today at 8:30 a.m. ET.
For detailed financial tables and a reconciliation of non-GAAP financial measures, please refer to the full earnings release available on First Advantage's investor relations website.
Investors and value seekers can find more information and stay updated on First Advantage's performance by visiting GuruFocus.com.
Explore the complete 8-K earnings release (here) from First Advantage Corp for further details.
This article first appeared on GuruFocus.
