THE STRENGTH BEHIND YOUR DECISIONS
description
Transcript of THE STRENGTH BEHIND YOUR DECISIONS
THE STRENGTH BEHIND YOUR DECISIONS
Stephens Information Technology & Services ConferenceJune 9, 2005
Safe Harbor Statement
Certain statements made in this presentation, including those related to accretion to First Advantage, the market capitalization of First Advantage, revenue and earnings growth of First Advantage, the closing of the transaction, expansion into new markets, ability to pursue larger acquisitions, and ability to execute growth strategy 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: interest rate fluctuations; changes in the performance of the real estate markets; limitations on access to public records and other data; general volatility in the capital markets; changes in applicable government regulations; consolidation among both companies’ significant customers and competitors; the companies’ continued abilities to identify and complete acquisitions and successfully integrate acquired businesses; the market price of First Advantage’s Class A common stock; First Advantage’s ability to successfully raise capital; increases in First Advantage’s expenses; unanticipated technological changes and requirements; First Advantage’s ability to identify suppliers of quality and cost-effective data, and other factors described in both companies’ Annual Reports on Form 10-K for the year ended December 31, 2004, as filed with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made. Neither First American nor First Advantage undertakes to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
2
Business Overview
Reporting Segments
Marketplace Fundamentals
Growth Acceleration Initiatives
Strategic Positioning
Financial Performance
Summary
Agenda
3
Business Overview
A leading provider of risk mitigation and business process solutions
Formed via reverse merger and publicly listed in June 2003 (NASDAQ: FADV)
67% owned by The First American Corporation (NYSE: FAF) As of March 31, 2005
TSO: 23.8 million shares- Class A Common (tradable): 7.8 million shares- Class B Common (non-tradable; owned by FAF):
16 million shares
Ranked among top three in major business lines
Offices across the United States and abroad; corporate headquarters inSt. Petersburg, Florida
Approximately 2,300 employees
Serve 45,000+ clients in a variety of markets
4
Reporting Segments
EmploymentScreening
Tax Credits & Incentives
ResidentScreening
• #3 Verifications Provider – 4.5M / year• #2 Drug Testing Provider – 2M / year• 10,000+ Clients; 240 of the Fortune 1000
• #2 Provider; 3M Employment Credit Screens/Year• Location-Based & Sales and Use Incentives• 1,000 Clients Nationwide
• #1 Provider; 5M Apartment Units Served• Proprietary Evictions and National Criminal Databases (Wholesale Services)• Sell Property-Management Software and Renters’ Insurance
EnterpriseScreening
5
Reporting Segments
RiskMitigation
TransportationServices
InvestigativeServices
• #2 Provider; 13M MVRs Reported/Year 7,500+ Clients• Top 5 Provider of Transportation Credit Services; 3,700 Clients
• #2 Provider; 20 of the Nation’s Top Law Firms Served; 500+ Clients Nationwide• Services Include Computer Forensics, Electronic Discovery, Corporate Investigations, Due Diligence and Surveillance to Detect Insurance Fraud Involving Workmen’s Comp., Disability and Liability Cases
6
Reporting Segments
ConsumerDirect
ConsumerServices
• Leading Web Directory; US SEARCH.com• 4M Unique Visitors Monthly
7
Marketplace Fundamentals
HumanResources
HomelandSecurity
Multi-FamilyHousing
Other Markets
Transportation
Finance/Accounting
Litigation
Insurance
Consumer
8
Growth Acceleration Initiatives
En
terp
rise
Scr
een
ing
Ris
k M
itig
atio
nC
on
sum
er D
irec
t
HireCheck
Employee Health Programs
SafeRent
Substance Abuse Mgt.
American Driving Records
2003
Liberatore Services
Total Information Source
Continental Compliance
Employee Info. Services
Omega Insurance Services
Greystone Health Sciences
MedTech Diagnostics Inc.
Agency Records, Inc.
Credential Check &Personnel Services, Inc.
Quantitative Risk Solutions
2004
ProudFoot Reports, Inc.
MVR’s Inc.
Background Info. Systems
Infocheck Ltd.
Landlord Protect, Inc.
U.D. Registry, Inc.
CoreFacts, Inc.
CIC Enterprises, Inc.
BackTrack Reports, Inc.
Nat’l Background Data
Alameda Company
Compunet Credit Services
2005
Credit Information Group
PENDING
Data Recovery Services
Itax Group, Inc.
Priderock Holding Co.
Quest Research Ltd.
Reverse MergerJune 5, 2003
27 ACQUISITIONS TO DATE
First American Registry
Realeum, Inc.
9
Strategic Positioning
ACQUIRE forProductExpansion
CROSS-S
ELL
Servi
ces
ACQUIRE forScale / Margin
EXPAND
Overseas
PUR
SUE
Vertic
al
Mar
kets
FIVEPOINT
GROWTHSTRATEGY
Improvement in Existing Business Lines
Employment Background Screening
Resident Screening
Tax Credits and Incentives
Surveillance
Computer Forensics
10
Strategic Positioning
ACQUIRE forProduct
Expansion
CROSS-SELLServices
ACQUIRE for
Scale / MarginEX
PAN
D
Ove
rsea
sPURSUE
Vertic
al
Mar
kets
FIVEPOINT
GROWTHSTRATEGY
Applicant Tracking
Skills Assessment
Psychological Testing
Payroll Benefits Administration Biometrics
Electronic Discovery Boutique Databases
11
Strategic Positioning
ACQUIRE for
Product
Expansion
CROSS-SELLServices
AC
QU
IRE
for
Scal
e / M
argi
nEXPAND
Ove
rsea
sPURSUEVerticalMarkets
FIVEPOINT
GROWTHSTRATEGY
Implement and Build First Advantage Brand
Formalize and Initiate Cross Sell Programs
12
Strategic Positioning
AC
QU
IRE
for
Prod
uct
Expa
nsio
n
CROSS-SELL
Services
ACQUIR
E for
Scale
/ M
argi
nEXPANDOverseas
PURSUEVerticalMarkets
FIVEPOINT
GROWTHSTRATEGY
Government Multi-Family Retail Hospitality Transporation
Healthcare Insurance
13
Strategic PositioningACQ
UIRE fo
r
Produ
ct
Expan
sion
CR
OSS
-SEL
L
Serv
ices
ACQUIRE forScale / Margin
EXPANDOverseas
PURSUE
Vertical
Markets
FIVEPOINT
GROWTHSTRATEGY
Asia and Europe
Maintain/Enhance Client Service Experience
14
Strategic Positioning – Recent Acquisitions
Expanding the Foundation
Global Expansion
Purchased Quest Research Ltd.leading employment screening services in India and East Asia
BiometricsMajority ownership in PriderockHolding Company, Inc. a leadingbiometrics provider of fingerprint anddata management technology
15
March 22, 2005, FADV announced intent to acquire the Credit Information Goup of First American
Credit Information
Group
Mortgage Automotive Direct to Consumer
• 3 Million Transactions / Month
• > 37% Market Share
• Largest Provider to GSE Portals
• Help Underwrite 1 in 3 Loans in the U.S.
• Do Business with 10 of Top 10 Lenders
• 1.5 Million Transactions / Month
• 30 of the Top 35 Auto Lenders
• DealerTrack Partnership
• Parntership with Reynolds & Reynolds
Sub Prime
• Credit Monitoring / Fraud Prevention
• One-Stop Customer Service
• Proprietary Alternative Credit Program
• 1.7 Million Transactions/Month
• >112 Million Records
• Dominant Market Share in U.S.
Strategic Positioning – Recent Acquisitions
16
Strategic Positioning
• Strong Balance Sheet
• $1 Billion + Market Cap
• Additional Debt Capacity
• Pro Forma 2005 Revenue of Approximately $600 Million and Nearly $100 Million in Pre-Tax Earnings
• Pro Forma 2005 EBITDA Per Share of $2.25 - $2.35
• Pro Forma 2005 EPS of $0.91 - $1.01 (including $0.04 per share of acquisition costs related to this transaction)
Includes Additional Acquisitions
Impact of Strategic Growth
17
$11.4
$46.0
$12.2
$60.2
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
1Q 2004 1Q 2005
$ Millions
Financial Performance
Total Revenue
Service Revenue $45,959,000 $60,148,000Reimb. Government Fee Revenue $11,474,000 $12,216,000TOTAL REVENUE $57,433,000 $72,364,000
1Q ’04 1Q’05
$0.6
$3.2
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
1Q 2004 1Q 2005
Net Income$ Millions
FIRST QUARTER 2005
26.0% Increase
18
$0.03
$0.14
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
1Q 2004 1Q 2005
$4.0
$10.0
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
1Q 2004 1Q 2005
In Millions
EBITDA EPS
Financial Performance
Fully Diluted
0.0
2.0
4.0
6.0
8.0
10.0
1Q 2004 1Q 2005
OperatingMargin
2.4%
9.2%
FIRST QUARTER 2005
19
Financial Performance – Segment Data
($ 000’s) Service
Revenue
Income (Loss)
Before Taxes
Operating
Margin
Enterprise Screening $ 45,266 $ 6,629 14.64%
Risk Mitigation 12,173 2,421 19.89%
Consumer Direct 3,340 307 9.19%
Corporate &
Eliminations (631) (3,800) N/A
Total $ 60,148 $ 5,557 9.24%
FIRST QUARTER 2005
20
$27.9
$73.0
$31.6
$134.9
$44.6
$221.9
-$25.0
$25.0
$75.0
$125.0
$175.0
$225.0
$275.0
2002 2003 2004
$ Millions
Financial Performance
Total Revenue
Service Revenue $73,040,000 $134,910,000 $221,938,000Reimb. Government Fee Revenue $ 27,885,000 $ 31,585,000 $ 44,599,000TOTAL REVENUE $100,925,000 $166,495,000 $266,537,000
2002 2003 2004
$2.7 $2.8
$10.7
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
2002 2003 2004
Net Income$ Millions
FULL YEAR 2004
21
$0.14
$0.48
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
2003 2004
$13.4
$33.3
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
2003 2004
In Millions
EBITDA EPS
Financial Performance
Fully Diluted
0.0
2.0
4.0
6.0
8.0
10.0
2003 2004
OperatingMargin
3.6%
8.3%
FULL YEAR 2004
22
Enterprise Screening
Risk MitigationConsumer Direct
Financial Performance – Segment Data($ 000’s) Service
Revenue
Income (Loss)
Before Taxes
Operating
Margin
Enterprise Screening $ 170,095 $ 23,296 13.70%
Risk Mitigation 41,419 7,438 17.96%
Consumer Direct 12,874 ( 136) -1.06%
Corporate &
Eliminations (2,450) (12,155) N/A
Total $ 221,938 $ 18,443 8.31%
2004Service Revenue By
Segment
76%
19%5%
FULL YEAR 2004
23
Summary
Significant future opportunities for growth and expansion of the industryContinued security concernsAnticipated improvement in employmentNumerous acquisition prospects
Leader in all business lines
Improving operational efficiency as consolidation process matures
Cross-sell opportunities within and between business lines
Seasoned management with proven expertise in consolidation strategies
24
THE STRENGTH BEHIND YOUR DECISIONS
Stephens Information Technology & Services ConferenceJune 9, 2005