ATLANTA - First Advantage Corporation (NASDAQ: FA), a global leader in employment background screening and verification services, reported a significant beat on its fourth-quarter earnings per share (EPS), surpassing analyst expectations.
The company announced a Q4 EPS of $1.00, which was $0.70 higher than the analyst estimate of $0.30. Revenue for the quarter was also above the consensus estimate, coming in at $763.8 million compared to the expected $211.07 million.
The company's fourth-quarter performance demonstrated a robust financial position, with revenues showing a decrease of 4.7% from the same quarter last year, from $212.6 million to $202.6 million.
Despite this decline, the company's net income for the quarter was $14.8 million, with an adjusted net income of $42.6 million. The adjusted EBITDA stood at $68.2 million, and the company achieved a record adjusted EBITDA margin of nearly 34%.
Scott Staples, Chief Executive Officer of First Advantage, expressed satisfaction with the company's 2023 performance, attributing the success to strategic upsell and cross-sell initiatives, new customer additions, and disciplined cost management. "The fourth quarter exemplified the continued strength of our flexible business model and investments in technology and automation," said Mr. Staples.
Looking ahead, First Advantage has introduced its full-year 2024 guidance, projecting revenues between $750 million and $800 million, adjusted EBITDA between $228 million and $248 million, adjusted net income between $127 million and $142 million, and adjusted diluted EPS between $0.88 and $0.98. The mid-point of the guidance for adjusted diluted EPS is $0.93, which will be a key figure to compare against future analyst consensus.
Additionally, First Advantage announced a definitive agreement to acquire Sterling Check Corp. in a cash and stock transaction valued at approximately $2.2 billion. The acquisition is expected to create significant shareholder value, drive earnings growth, and deliver at least $50 million in synergies.
David Gamsey, EVP and Chief Financial Officer, highlighted the company's balanced approach to capital allocation and the strong foundation established for future growth, particularly with the planned acquisition of Sterling.
"Our healthy balance sheet and robust cash flow generation have been key enablers to our announced acquisition of Sterling," commented Mr. Gamsey.
First Advantage ended the year with $213.8 million in cash and cash equivalents after significant capital allocation activities, including a one-time special dividend payment, share repurchases, and the acquisition of Infinite ID.
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