Slide 1: Q3 2024 Earnings Presentation
Q3 2024 Earnings Presentation November 12, 2024
Slide 2: Forward-Looking Statements and Non-GAAP Financial Information Note
FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, our operations and financial performance. For
Slide 3: Sterling Acquisition & Q3 2024 Highlights
Sterling Acquisition & Q3 2024 Highlights Scott Staples Chief Executive Officer
Slide 4: Q3 2024 Key Messages
Q3 2024 Key Messages 1 Completed $2.2B Sterling acquisition on October 31 Focusing efforts on our products and customers while conducting 2 a smooth integration, maintaining customer continuity, actioning synergies, and reducing net leverage Strong standalone Q3 2024 results, with robust AEBITDA Mar
Slide 5: Combined Company At A Glance
1 Combined Company At A Glance O U R C O M B I N E D S C A L E O U R C O M B I N E D V E R T I C A L S Healthcare $1.5B $467M 8% 6% 18% Retail & E-Commerce Combined Synergized Transportation Combined Revenue1 8% Adjusted EBITDA1 Manufacturing & Industrials 8% 15% Financial Services TMT & Hospitality
Slide 6: Post-Close Strategic Priorities
2 Post-Close Strategic Priorities Executing Integration Playbook. Seamless integration process focused on customer retention, synergy realization, and operational efficiency led by a dedicated team and supported by all functional areas Actioning Synergies. Target run rate cost synergy range of $50M
Slide 7: The First Advantage Management Team
2 The First Advantage Management Team Scott Staples Joelle Smith Douglas Nairne Beyond the senior management team, the Chief Executive Officer President Global Chief Operating Officer general manager and go-to-market teams 7 Years 7 Years 3 Years represent a blend of First Advantage’s and Sterling’s
Slide 8: Unveiling the New First Advantage Brand
2 Unveiling the New First Advantage Brand 8
Slide 9: Compelling Cost Synergies
2 Compelling Cost Synergies Day 1 Next 180 Days Year 1 Year 2 Corporate Costs Internal Operations Fulfillment Operations Product and Commercial Executive teams Harmonization of go-to-market Reduce cost of serving customers Leverage automation capabilities Public company costs strategy Ful
Slide 10: Strong First Advantage Standalone Q3 2024 Results
3 Strong First Advantage Standalone Q3 2024 Results, with Robust AEBITDA Margins1 Over 32% and Adj. Operating Cash Flow2 of $45M Revenues $199.1M Adjusted $64.0M (0.6%) EBITDA1 32.2% YoY Change Adj. EBITDA Margin1 Adjusted $38.0M Adjusted Cash Flow from $45.3M Net Income1 $0.26 +31.9% Adj. Diluted E
Slide 11: Financial Results
Financial Results David Gamsey Outgoing Chief Financial Officer
Slide 12: Q3 2024 Financial Results: First Advantage Standalone
Q3 2024 Financial Results: First Advantage Standalone ($ in millions, except per share data and percentages) REVENUES ADJUSTED EBITDA AND MARGIN1 ADJUSTED DILUTED EARNINGS PER SHARE1 Includes ~($0.02) impact from capital $200.4 (0.6%) $64.8 $64.0 allocation actions described on slide 24 $199.1 (1.1%
Slide 13: Q3 2024 Financial Results: Legacy Sterling
Q3 2024 Financial Results: Legacy Sterling ($ in millions, except per share data and percentages) REVENUES ADJUSTED EBITDA AND MARGIN1 ADJUSTED NET INCOME1 $195.5 $24.7 $180.6 +8.3% $47.6 (8.4%) $22.7 $45.3 (4.8%) +1.5% Organic CC Basis 1 26.3% 23.2% Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 2023 Q3 2024
Slide 14: Combined LTM Q3 2024 Financial Results
Combined LTM Q3 2024 Financial Results ($ in millions, except percentages) REVENUES ADJUSTED EBITDA AND MARGIN1 Combined Combined Combined (With Target Synergies) $751 $1,507 $457 – $477 $407 $50 – $70 30-31% Margin $172 27.0% Margin 22.9% $756 Margin $235 31.0% Margin First Advantage Sterling Total
Slide 15: Organic Revenue Growth Breakdown
Organic Revenue Growth Breakdown First Advantage 2021 2022 Q1 ’23 Q2 ’23 Q3 ’23 Q4 ’23 2023 Q1 ’24 Q2 ’24 Q3 ’24 Upsell / Cross Sell 4% 4% 5% 4% 4% 6% 5% 4% 5% 7% New Logos 8% 5% 4% 5% 5% 4% 4% 5% 4% 3% Gross Retention 97% 97% 97% 97% 97% 97% 97% 97% 96% 96% Base 26% 2% (13%) (13%) (9%) (13%) (12%)
Slide 16: Cash Flow & Outlook
Cash Flow & Outlook Steven Marks Chief Financial Officer
Slide 17: Robust Cash Flow Will Enable De-Leveraging of Business
Robust Cash Flow Will Enable De-Leveraging of Business First Advantage Standalone Legacy Sterling Q3 Cash Flow Q3 Cash Flow Cash balance of $307.4M at 9/30/2024 Cash balance of $75.1M at 9/30/2024 Q3 2024 adjusted cash flow from operations of $45.3M1 Q3 2024 adjusted cash flow from operation
Slide 18: Pro Forma Synergized Combined Capitalization & Net Leverage
Pro Forma Synergized Combined Capitalization & Net Leverage NET LEVERAGE • Secured fully committed financing: 7-year term loan, ~$2.185B 4.4x • Targeted minimum cash: $125M Target: • Revolver capacity: $250M (undrawn) ~3x Target: ~2-3x • Pro forma synergized net leverage includes mid-point of targete
Slide 19: Maintaining Standalone Full-Year 2024 Guidance and Updating to Include Sterling
Maintaining First Advantage Standalone Full-Year 2024 Guidance and Updating to Include Sterling Full Year 2024 Guidance First Advantage Sterling Estimated Transaction Combined Company Standalone Contribution Capital Structure Guidance ($ in millions, except per share data) (Maintaining) (Nov & Dec)
Slide 20: Combined Company FY2024 Guidance: Adjusted Diluted EPS Bridge
Combined Company Full-Year 2024 Guidance Details: Adjusted Diluted Earnings Per Share Bridge $0.05 to $0.07 ($0.03) $0.88 to ($0.07) $0.98 $0.83 to $0.95 Midpoint $0.93 Total Estimated Transaction Midpoint Capital Structure Impacts of ($0.10) $0.89 FA Standalone FY24 FY24 November & December Dilutio
Slide 21: Synergized Pro Forma Combined LTM Adjusted Diluted EPS Bridge
Synergized Pro Forma Combined Company LTM 9/30/24: Adjusted Diluted Earnings Per Share Bridge $0.54 $0.22 to $1.06 to $0.30 $1.14 ($0.23) $0.93 Issued ~27.15M shares Midpoint Midpoint as part of transaction $0.84 $0.26 $1.10 ($0.40) Range represents estimated run rate target synergies of Raise
Slide 22: Closing Remarks
Closing Remarks Scott Staples Chief Executive Officer
Slide 23: Appendix
Appendix Supplemental Materials and Reconciliations to GAAP Measures
Slide 24: First Advantage Standalone FY2024 Guidance: Adjusted Diluted EPS Bridge
First Advantage Standalone Full-Year 2024 Guidance Details: Adjusted Diluted Earnings Per Share Bridge • 2024 Adjusted Diluted EPS guidance of $0.88 to $0.98 represents a decline of ($0.02) to ($0.12) compared to 2023 results • Excluding the ($0.08) combined impact of the share repurchases in 2023,
Slide 25: Dedicated to our Sustainability Efforts
Dedicated to our Sustainability Efforts 2023 Sustainability Report Highlights Supported and expanded ERGs Achieved 79% favorability rating on Global Employee Engagement Survey Employee In annual DE&I Survey, sense of belonging saw 79% category favorability Engagement Completed inclusivity an
Slide 26: First Advantage Standalone Adjusted EBITDA
First Advantage Standalone Adjusted EBITDA For the Quarters Ended LTM Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Mar 31, 2024 Jun 30, 2024 Sep 30, 2024 Sep 30, 2024 (in thousands, except percentages) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Net income (loss) $ 1,925 $ 9,782 $ 10,773 $ 14,813 $ (2,908) $ 1,861
Slide 27: Constant Currency Revenues and LTM Adjusted Operating Cash Flow
First Advantage Standalone Constant Currency Revenues (1) Constant currency revenue is calculated by translating current period amounts using prior-year period exchange rates. First Advantage Standalone LTM Adjusted Operating Cash Flow LTM (in thousands, except percentages) Sep 30, 2023 Sep 30, 2024
Slide 28: First Advantage Standalone Adjusted Net Income and Adjusted Diluted EPS
First Advantage Standalone First Advantage Standalone Adjusted Net Income Adjusted Diluted Earnings Per Share For the Quarters Ended For the Quarters Ended Sep 30, 2023 Sep 30, 2024 Sep 30, 2023 Sep 30, 2024 (in thousands) Q3 Q3 Q3 Q3 Net income (loss) $ 10,773 $ (8,860) Diluted net income (loss) pe
Slide 29: Sterling Check Corp. Adjusted EBITDA
Sterling Check Corp. Adjusted EBITDA For the Quarters Ended LTM Sep 30, 2023 Dec 31, 2023 Mar 31, 2024 Jun 30, 2024 Sep 30, 2024 Sep 30, 2024 (in thousands, except percentages) Q3 Q4 Q1 Q2 Q3 Net income (loss) $ 2,354 $ (3,384) $ (7,955) $ (6,232) $ (20,178) $ (37,749) Income tax provision (benefit)
Slide 30: Sterling Check Corp. Adjusted Net Income, EPS and Organic Constant Currency Revenues
Sterling Check Corp. Sterling Check Corp. Adjusted Net Income and Adjusted Earnings Per Share Organic Constant Currency Revenues For the Quarters Ended Sep 30, 2024 Sep 30, 2023 Sep 30, 2024 (in thousands) Q3 (in thousands, except share and per share amounts) Q3 Q3 Revenues, as reported (GAAP) $ 195