First Advantage Corp (FA) 2005 Q1 法說會逐字稿

Thank you all for holding and welcome to First Advantage Corporation's first quarter conference call.

[Operator instructions]

A copy of today's press release is also available at the company's Website at www.fadv.com. We will now turn the call over to Ms. Cindy Williams, investor relations manager to make a brief introductory statement.

Thank you, ma'am, you may begin.

Thank you and good morning everyone. At this time we would like to remind listeners that management's commentary and responses to your questions may contain forward looking statements, including statements regarding future earnings per share guidance, sales revenue for the second quarter, annual revenue growth, impact of consolidation on future earnings, the development of a cross-selling strategy, execution of future acquisitions and other statements that do not relate strictly to historical or current facts.

The forward-looking statements speak only as to the date they are made and 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 made. 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 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.

Investors are advised to consult the company's filings with the SEC, including its 2004 annual report on form 10-K for further discussion of these and other risks. We will now being our conference call this morning with our chief financial officer and executive vice president, John Lamson, who will provide an overview of our financial performance for the first quarter of 2004. Following John, we will here from John Long, chief executive officer and president who will briefly update us on First Advantage's strategy and operations. At this time it is my pleasure to turn the call over to John Lamson.

Thank you, Cindy and good morning, everyone. First Advantage recorded net income of $3.2 million for the quarter ended March 31, 2005. This compares favorably to net income of $639,000 in the first quarter of 2004 and net income of $2.7 million in the fourth quarter of 2004. Both primary and diluted earnings per share were $0.14 in the current quarter compared to $0.03 in the quarter ended March 31st, 2004 and $0.12 in the fourth quarter of 2004.

Total revenue was $72.3 million in the current quarter, compared to $57.4 million in the first quarter of 2004 and $68.3 million in the fourth quarter of 2004.

Service fee revenue, which excludes reimbursed government fees was $60.2 million in the current quarter compared to $46 million in the first quarter of 2004 and $57.2 million in the quarter ended December 31st, 2004. Our operating margin, which we define as income before taxes divided by service fee revenue was 9.24% in the current quarter compared to 2.4% in the first quarter of 2004. We exclude reimbursed government fees in calculating our operating margins since they are costs which are passed on to our customers on a dollar for dollar basis.

Earnings before interest, taxes, depreciation and amortization, EBITDA, was $10 million for the current quarter, $9 million in the fourth quarter of 2004 and $4 million for the quarter ending March 31st 2004.

A reconciliation of EBITDA to net income is included in our earnings release.

Let's spend a few minutes going over our segment results. As most of you know, we report our financial results in three segments. The first segment, enterprise screening, includes residence screening, employment screening, occupational health services and tax consulting services. The risk mitigation segment includes transportation and investigative services. Our third segment is consumer direct, which is our people search business known as U.S. Search.

Our largest segment is enterprise screening and it reported service revenue of $45.3 million for the first quarter compared to $33.7 million for the first quarter of 2004 and $44.1 million for the fourth quarter of 2004. This is an organic growth rate of 7.8% over last year. The enterprise screening segment reported operating income of $6.6 million for the first quarter of 2005 compared to $1.9 million for the first quarter of 2004 and $6.5 million for the fourth quarter of 2004. The operating margin for the enterprise screening segment was 14.6% from the first quarter of 2005, 5.6% for the first quarter of 2004 and 14.8% for the fourth quarter of 2004.

When you compare the first quarter of 2005 to the first quarter of 2004, service revenue increased by 34%, earnings increased by 252% and margins increased by 162%. These growth rates are a result of the successful implementation of the company's growth strategy to acquire businesses for scale, product expansion and cross-sell opportunities. Revenue, earnings and margins were consistent went compared to first quarter of 2005 to the fourth quarter of 2004.

Our risk mitigation segment reported service revenue of $12.2 million for the current quarter, compared to $8.6 million for the first quarter of 2004 and $11.3 million for the fourth quarter of 2004. Risk mitigation segment reported operating income of $2.4 million for the current quarter compared to $1.1 million for the first quarter of 2004 and $2.2 million for the fourth quarter of 2004. The operating margin for the risk mitigation segment was 19.9% for the current quarter, compared to 13.1% in the first quarter of 2004 and 19.3% for the fourth quarter of 2004.

The acquisition of CoreFacts, Backtrack and Compunet enabled us to expand our products and services in the risk mitigation segment and created cross sell opportunities with existing businesses. This resulted in an increase in service revenues of 42%, an increase in earnings of 116% and an increase in margin of 52% when comparing first quarter of 2005 to the first quarter of 2004.

Our last segment, consumer direct, reported service revenue of $3.3 million for the current quarter, compared to $4.2 million for the first quarter of 2004 and $2.9 million for the fourth quarter of 2004. The decrease in revenue from the first quarter of 2004 is due to a planned reduction of distribution channels that occurred in May of 2004.

This reduction in revenue was offset by a corresponding decrease in expenditures for channel advertising and operational improvements in the segment. Consumer direct segment reported earnings of $307,000 for the first quarter of 2005 compared to a loss of $15,000 for the first quarter of 2004 and a loss of $75,000 in the fourth quarter of 2004.

Service revenue increased by 16.7% from the fourth quarter. Revenue growth is primarily due to new product expansion together with increased operating efficiencies, resulting in an increase of earnings of $382,000 from the fourth quarter of 2004.

Corporate expenses were $3.8 million in the current quarter compared to $1.9 million in the first quarter of 2004 and $3.9 million in the fourth quarter of 2004. The primary increase in corporate costs in the first quarter of 3004 are related to interest expense, compensation and benefits and professional fees.

At March 31st, 2005, total debt outstanding was $111.5 million and shareholder's equity $294.3 million. With that I will turn it over to John Long, our President and CEO to further discuss the status of our current operations. John?

Thank you, John. The first quarter turned out as expected with a seasonably slow January for many of our screening businesses. As the quarter evolved we saw a rapid improvement in all of our business lines, particularly in the tenant and background screening businesses. We also had a good quarter in our tax incentive and transportation businesses. The biggest news of the quarter was the announcement of our letter of intent to acquire the credit information group from our credit company First American.

This business, which had an extremely strong first quarter, will blend nicely with our employment screening and risk mitigation businesses. It will open up new vertical markets and bring us additional strong management to balance out our team.

We're nearing completion of a definitive agreement and hope to close on this acquisition in the third quarter. During the quarter we acquired Data Recovery Services in Dallas, which adds to our computer forensics business CoreFacts. Earlier this month we announced the acquisition of Ipax, a strategically important deal in the tax incentive space. This business has proven to be especially strong for us since we entered it last year.

On the sales front we are starting to see some very good cross sell successes between our tax incentive and background screening businesses. We have established a very formal structure here and we are pleased with our early results. On the management front we added Alan Nisson(ph) as our new Chief Information Officer. Alan is charged with developing a core corporate technology team and plot forms to help facilitate our cross sell initiatives.

Moving to the subject of branding, Rick Mansfield of the marketing team will launch our long - awaited initiative on June 20th. This effort would help bring together the various names and cultures into one unified brand that we can move forward with. There will be a new corporate look including a new logo that we are all excited about.

This morning we announced the purchase of majority ownership of Pride Rock Holding Company, a leading biometrics provider of enhanced fingerprint and data management technology. This is an important purchase for us as we believe that biometrics will become increasingly important in our screening business. We are betting on fingerprints on the identifier of choice. We've worked this company since November and are excited about the enhancement this business brings to our screening offerings.

Looking to the second quarter we expect improved year over year results in all of our business lines. Business is strong, especially for are employment-based products. The second and third quarters have historically been our strongest quarter and this year should be the same. For the second quarter we are looking for sales from $78 to $82 million and earnings per share of between $0.22 and $0.26. On that I would like to open it up to questions.

Thank you.

[Operator Instructions]

Brad Eichler, you may ask your question and please state your company name.

Good morning, John and John. Brad Eichler with Stephens.

Could you first touch on the organic growth for the enterprise and risk management business in the quarter?

Sure. Brad. This is John Lamson. Yeah, the growth rate from the first quarter of '04 to the first quarter of '05 and the enterprise screening was, as I mentioned in my presentation, 7.8%. That includes, employment (inaudible) and the tax incentive businesses. The risk mitigation which is much less transactional if you will and businesses are - again, our growth rate was down about six percent. And that's year over year.

Sequentially, from the fourth quarter of last year to the first quarter of this year, the risk mitigation segment was actually up four percent - pardon me, four percent organically and enterprise screening was up close to two percent. As you know those are - fourth and first quarter are typically the volume wise fairly low quarters especially in the enterprise screening segment.

Can you look at the risk management business? I believe in the fourth quarter the organic growth was negative five percent and it was negative six percent this quarter. Anything particularly - What's driving that lack of growth and what are you doing to try to improve it.

Brad. It's John. We have had some weakness on the revenue side with Omega, our surveillance business has really been the slow grower of the bunch and I would also say the computer forensics business has not grown as much as we would like. The segments - the investigative segment is the one part of our business that we have struggled with since we got into it and we have been focusing now on increasing top line revenue going forward. We still remain very optimistic on those businesses but they really haven't given us the list that we would have liked for the segment.

Actually motor vehicles, the motor vehicles portion of our risk mitigation segment had a great quarter and great year over year growth but we have struggled with the investigative piece of our business so far and there's lots more to do and I think also we may need to do another deal or two to give us some more lift and some more boost in sales and management.

I would suspect that that is a lower margin business than some of the other businesses in that division?

Historically, the surveillance business has been, yes. The computer forensics business traditionally can be a pretty high margin business. It's just less predictable. Also the revenue doesn't sell like a lot of our transactional businesses. A number of our transactional businesses we pretty much know before the quarter starts almost to the penny what we are going to do and make.

On these computer forensics which are more deal to deal there's a lot of - it's very hard to predict the revenue and earnings quarter to quarter so we struggled with the given guidance on that.

Okay. I'm assuming that since you didn't mention anything about your annual guidance that you are reaffirming that?

Absolutely. We - It's early in the year, second and third quarter should be strong quarters for us. The fourth quarter should be better than last year and I see no reason to change the guidance at this point.

When you look at kind of the margin trends that you are seeing right now, I know that your goal is to have a 20% operating margin by, I guess, the end of 2006. Does it still look like you're on that same path and can you talk maybe just a few seconds about integration and how that's progressing?

Yeah, Brad, I think business remains on track. You know, it will always depend on what the ultimate mix of business is and - but I don't see any deviation from the original plan at all at this point. We - are integration has gone well and most of our businesses have really not been many major problems as we've dealt with - we've had problems, we've dealt with them. I think there is still plenty of opportunity to take out costs. As I like to say, the integration is really never done on some of these businesses. It takes sometimes several years to get it all out but - so we have numerous opportunities this year to continue to take out costs in some of the businesses that have had a number of acquisitions so I think that will help with margin growth, I think you'll see good margin improvement in the second and third quarter year over year and again, I like, from a target standpoint for next year we've targeted the third quarter on a run rate basis.

We don't, on service revenue we don't see any reason, again, to change that at this point. Business is pretty much on track as we've said.

Okay. Thanks. And then the final thing is on the consumer business, it looks like that business actually had a pretty decent quarter. Anything specific driving that?

You know, we have had some new products. We are working on a project with our parent company to sell different types of services than the traditional people search business that people have known that business for. We are actually getting very excited about the business and maybe for the first time ever really glad we own it. I think it's got some great upside potential and it's always been the wild card of all of the companies we've had. So we're very optimistic. We have got new management that we put in last year and done a great job in turning the business around and the business is just doing better and it has a much brighter future than we thought.

Okay. Thank you.

Thank you. David Koning, you may ask your question and please state your company name.

Yeah. Good morning. Dave Koning with Robert W. Baird.

Hey, David.

Good morning, David.

Good. Thanks. Just a couple question on Q2 guidance first of all. I was wondering how much revenue within Q2 guidance should be coming from the three most recent acquisitions, the ITech, DRS and PrideRock .

You know, I had a feeling you'd ask that question. I would say somewhere between a million to two, a million, 1.5 million. It depends - I'm going to say PrideRock is not material on the revenue side, a million, 1.5 million.

Okay. So all three are relatively small.

Right.

And then secondly and I think you partially answered this already but Q2 EPS guidance, it seems to imply pretty high incremental margins, I figure maybe 60 to 70% incremental margins during Q2 and I'm wondering if that's driven mainly by just high incremental margins from the new revenue that you're adding or that you're taking costs out of the current base?

Yeah. Dave. Hey, this is John Lamson. I think what you're going to find is it's probably both. As John Long just mentioned, we're constantly - the integration process doesn't seem to end in terms of being efficient so I think you're going to see further developments in that and then the new revenue, the combination of that and the new revenue with the incremental margins on that, you know, should get you to that number.

You know, Dave, a number of our businesses -- focusing on tenant screening, I would focus on our background screening, not that drug screening portion but the background screening portion of it. I would also focus on tax incentive portion of our business and in the motor vehicle portion of our business. On a transactional basis these have very high incremental margins so when we start increasing our sales and we do have stronger sales quarters in those spaces in the second and third quarter.

And awful lot of that business fell to the bottom line so I mean that does drive a lot of our earnings growth for the next couple of quarters. Efficiencies I think where the efficiencies, continued efficiencies that we're gaining from the consolidations will help us more so as we get closer to the fourth quarter because the fourth quarter has traditionally been weak and I think we'll do better this year and I think a lot of that will have to do with cost takeouts that continue to happen across the organization but we do have a lot of our businesses do have really strong incremental margins and I think you'll start to really see that this quarter.

Okay, thanks. And then just one other thing. Just maybe a little update on the acquisition strategy in terms of what business lines you might be focusing on for the rest of the year and how much is possible and what your appetite is for the rest of the year, I know you have CIG coming on over the next few months here and then what you expect to pay in rough terms for your acquisitions.

CIG is doubling the size of the company and it is materially impacted our ability to do any deal of any size until we close it and so depending on when the deal closes really will drive to some extent what the activity is the rest of the year, I mean, we are looking at more deals and there are some more deals to announce. They are not what I would call - no one deal is large but if we do enough of them they start to add up so we'll continue to do some of these smaller deals the rest of the year but CIG really drives that schedule.

I mean we just - We're not going to be able to do much of anything material until after that closes and to some extent the closing date on that transaction is somewhat out of our control. We don't know if it's going to be reviewed by the FCC or not and we've still had to work through some internal - through the internal documents and so I don't think I really want to predict what we're going to do for the rest of the year but I think if we get the opportunity we will do more and I think next year probably you'll see more deals once we get past CIG.

Okay. Very helpful. Thanks a lot.

Thank you.

Brian Ruttenbur (ph), you may ask your question and please state your company name.

Brian Ruttenbur, Morgan Keenan. Very good quarter. Question, first of all is a simple one. Shareholders' equity. Can you repeat that?

Sure. Shareholders' equity was $294.3 million.

Great. That would be the easy one. Guidance in '06, can you give us some kind of long term guidance, what you think this company is going to grow, is it a 30% top line grower? What is the - we talked about margins some but over the next couple years what do you guys see growing top and bottom line?

Brian, it's early for '06 guidance. We certainly will get it. I think, again, timing on CIG closings will impact our ability to do other deals. I think we're established pretty well as an aggressive acquirer and we do have kind of an eight to 10% organic growth model so you can try to draw some stuff from that but until we can actually get a handle on the timing of the CIG closing, it'll be tough to actually predict what '06 is going to be like but again we're aggressive and I think - but we will give guidance when we can.

Okay. And then can you talk about competition that you see when you are out there acquiring. Are you the only - or the big acquirer out there right now in this segment or do you see any competition from some of the other big guys that are present out there like Choicepoint and others?

You know, I would - the answer is I would say most of the deals that we go after today it seems like we're the only ones negotiating and I know that's not entirely true. Deals are shopped to some extent but if you look at our public peers, a number of our public peer companies like Choicepoint, EDT, some of the different ones you guys follow, they have a number of other different business lines.

Choicepoint's tended to focus on data companies and there's been other businesses that focus on different things. We seem to be out there mostly on our own. There's no absence of deals, it just seems like we're always in the blackout periods for doing large deals because of big transactions like CIG but when we're ready to go I don't see much getting in the way of what we want to accomplish. We have a pretty defined business plan.

We plan on continuing to acquire in all of our businesses to help grow those businesses when the opportunity arises and I think those opportunities will be there when we are ready.

Last question, on the capital plans. You have $111 million of debt. How much can you take that up to? Is it 200? Is it unlimited? Just give us some kind of perspective on how high you can take that debt and I assume that's backed up some by your parent corporations.

Yeah. Brian, this is John Lamson. Obviously it certainly isn't unlimited and First American does guarantee a small piece of our debt. A lot of our entire capital structure issues are obviously predicated on the closing of the CIG transactions, which gives us a lot more, if you recall on our call when we announced that transaction, one of the many benefits of that transaction is that it gives us much more financial strength and increased borrowing capacity so I think you could - when that deal is closed that gives us a lot more room in terms of leverage on our balance sheet and certainly we're at debt levels of $111 million now and we could easily double that certainly.

Great. Thank you very much.

Okay.

Thank you. Jeff Kessler (ph) you may ask your question and please state your company name.

Thank you. My company name is Lehman Brothers.

Hey Jeff, how are you.

Jeff, good morning.

Hi. How are you doing?

The integration of your businesses, and I'm particularly focusing on the cross-selling and branding that you are endeavoring to do and you've hired new people - two people apparent actually to do this. Can you go through the strategy of what your cross selling - what segments at this point and how you are going to attempt to do that on a practical basis. Meaning what are you going to do, what brand are you going to use and who is going to do it for you?

Okay. Lot of questions. Let me try to tackle it. The key opportunity for cross selling, as always, been in the enterprise screening segment, primarily employment based where we're having some pretty good success right now. And that would be background, drug and tax incentive work today. We have a formalized structure in place. We have a person, and that person wasn't unmentioned in the call but we have someone who is in charge and overseas the cross sell initiative between those companies and we have incentive plans in place to encourage our sales reps to do it and training in place to do that also.

So that is established it is working. We are having good successes. None of the revenue that might come out of any of that is forecasted in any of our numbers today so this is upside for us in the next year, I think.

In terms of the branding initiative, the branding initiative - every one of our business will go by some form of the First Advantage name. As I mentioned, we have a new logo design, we have a launch date. It includes advertising and large communications to all of our customers. We have invested big into driving the first advantage brand and I think this will help with our cross sell and the whole reason to do it, really is to drive the cross sell initiatives.

Speaking on one other area that we think we also may start to see some pretty decent cross sell growth in the transportation area. If you remember we did a Compunet purchase late last year and Compunet is a database of people with bad debt, of companies that don't pay their bills in the transportation arena and there's 3700 clients in that space, transportation companies that subscribe to that service, but anyway, we've targeted that particular area to cross sell a number of our other products like background screening, drug screening, tax incentive work also.

So the two main areas of cross sell, transportation and on the employment side branding will be a big deal for us with the re-branding effort that we are doing. All of the various companies take on First Advantage in some form and we will talk more about that and we'll start issuing press releases out relating to the branding initiative as we get closer to the launch date.

And does some of the branding initiative have to do with increasing the organic growth rate in perhaps some of the enterprise areas that haven't been doing as well?

Absolutely. Branding is designed to increase organic growth. That's the sum of our strategic acquisitions. The deal we did this morning, although it's a small deal is a huge lift to our screening room from an organic growth standpoint. Adding the finger print capabilities has already added one large financial institution that we otherwise would not have gotten. It was to take away from one of our large competitors and historically, we've not had that capability so we're focusing on branding as part of it. We're focusing on product expansion.

I think you'll see more products added. I love that biometrics field and if you guys won't ask me the question, I'll bring it up myself. I think that's a big launch for us. And the way we're doing it; we're entering that space in a real smart, efficient way and we'll grow that business with our partners in the business and I think it's going to turn out to be one of our best fields ever.

Response is great to biometrics alternatives for companies that do background screening. With the financial services aside, you need access to finger printed information and this is going to give us a pretty good solution at a relatively inexpensive price.

Alright. Thank you very much.

Thank you.

Thank you. Nat Otis, you may ask your question and please state your company name.

Good morning, Nat Otis, KB&W.

Good morning Nat.

Good Morning. First question; in the past you've talked about moving into the government's space. I think I've asked this before on an earnings call and I think you've taken a measured pace and I just wanted to find out any updates on what your thoughts are on kind of entering the government market place?

Right. We've formed a government services subsidiary. We've hired a bunch of consultants to help us launch in that space. We have not made any public announcements related to this specifically, but we have been investing into that area from a marketing and a structural standpoint throughout this first quarter specifically.

It's an area that I think we do have real good opportunities. We will be bidding on a number of government contracts this year and what we're doing now is we're organizationally setting up to do that. I'm hopeful that we'll start to make some progress on that this year.

Okay. At any point in the future will you actually put any press announcement together on it or elaborate more on what you're doing?

I think I'm going to wait until we actually get our first customer and then jump all over that. The subsidiary is established, but until it's got something tangible to talk about, I don't see the point in - you know I don't like to put out press releases just to get our name in the paper. I think the truth is we need to sign some business in that space and once we starting signing business, we'll do releases.

Okay. And just following up on an earlier question on the consumer direct business, can you elaborate on maybe what your thoughts are now following the announcement of the CIG transaction? Maybe how that might have changed your view of Consumer Direct and maybe if you have any new thoughts on what you might do in that space going forward maybe with respect to the CIG transaction?

Okay, sure. Actually, it helps that segment is about a $20 million book of business in the direct to consumer credit reporting for CIG that I think will fit very well and I would imagine that we would report that as part of our consumer segment separately and as they sell the merge product, fraud identity products that are sold on the market place today, I think there's an opportunity for us to fill more of that product through our US search site.

I think that the direct consumer or consumer business in general has a lot of potential going forward with the combined companies. The teletrack business they have there may give us the opportunity to offer some interesting products. First American have a number of data base type products that seem to have value in the market place today and we're exploring those, so I think you should view the consumer segment that we have today as being very much enhanced through the CIG bill and then I think should see it as a long term part of our business; an area that I think now that we have a little more - a bigger breadth (ph) of products here and greater opportunities to move forward and actually much better management than we've ever had before.

Great. Thank you.

Thank you. Colin Gillis, you may ask your question and please state you company name.

Yes, it's Colin Gillis with Adams Harkness.

Hi Colin.

Hey John, How are you guys doing?

Good.

So I was just wondering if you could give me a little color about the kind of screening business - if you see that heating up seasonally like you'd expect or if it's even a little more robust like that Wall Street Journal article we were talking about a couple of weeks ago showing that the people are moving back into tenant rental apartments.

Yes, Colin. The tenant business is great. I almost don't want to talk about it. It's doing extremely well. We'd hate to have more competition than I have today. That business, we talked about incremental margins a little bit and businesses that really do well with increased transaction flow. And our tenant screening business has been really exceptional in that area. It's extremely well managed.

We've done a number of very smart acquisitions in this space and it consistently out performs for us. So I know that we've grown this business and we've grown these margins in a perceived to be a very weak tenant market. If in fact there is a good market ahead, I can't wait, because to us, we've never seen that down market. It's only been all up for us because of the success of the integration of those companies.

I would tell you that the tenant screening business has been our model business for acquiring and integrating companies. We do it quickly. We save a lot of money on every deal and our incremental margins are strong.

That's great. Do you know - is there a date for the share holder vote for CIG? Or a time frame?

No, there isn't yet. We're calling - this is John Lamson - we anticipate signing - right now we have a letter of intent and we certainly anticipate signing a defendant of agreement soon and at that time start the process with the SCC and going out for share holder approval. It's hard to pin point a date until we get further along in the process.

Sure. Yes, of course. And then finally on the rebranding - and I know this is probably going to be difficult to answer, but has there been any thought about how many brands you might want to keep? And I know they might all wind up sort of as part of a family of First Advantage, but have you thought about the total number of brands you might want to keep?

Well, Colin, U.S. search will stand on its own. That will not be branded First Advantage. It's got its own great brand. Our business lines themselves have for example - I'll give you a good example of a brand that will be out there. Our tax incentive business today is called CIC, it's also - we have three different things - we have (inaudible) - that will just be generally known as First Advantage tax incentive services.

It will be part of the First Advantage family but it will have its own First Advantage brand. Many of our other businesses, since we're in a few different business lines, like transportation will have its own brand, but it will be First Advantage transportation.

Our employment screening today - we actually are going to (inaudible) First Advantage Employment Screening services, so that kind of is a look and feel of the way I think you can anticipate it. We try to group product lines, group certain businesses together that naturally make sense and then just reinforce the logo and the image of First Advantage as a single company, a multi product company.

Got it. And we're going to see that start to hit in June?

Right. We're going to launch it in a big way. We're launching it once.

Okay, beautiful. Thank you.

Thank you. Our final question comes from Brad Eichler. You may ask your question and please state your company name.

John and John, I'm looking at the First American press release that just came out and in looking at their credit business, I've got a question as it relates to it. It looks to me that the credit business revenues were up about 6% in the quarter, which is a $3.9 million increase year over year and when you look at the margin that EBIT profit on that business, it looks like it was up 25% and up 3.9 million as well.

So it looks like 100% of the incremental revenue dropped to the EBIT line. EBIT margin 28% in the quarter up from 22% last year and I'm getting ready to jump on the FAF call, but I'm just curious; what's going on here? Obviously you guys are paying a lot of attention to this seeing that you're acquiring it and how much more room for margin expansion exists?

You know, Brad, either they had a very good quarter, no doubt, we were pleased. It's hard for us to comment on that company too much just because we're not inside every day. The one comment I will make that just like you - there have been some questions about our margins relating to certain businesses today, any transactional business like some of the businesses we have and clearly they have a number of very good transactional businesses in that space.

The incremental margins in many cases is really just the cost of the data itself, because infrastructure costs are so high and once you've got the infrastructure, then everything just kind of falls to the bottom line.

So without knowing the mix of exactly how they did what they did, my one comment would be that higher volumes for them just naturally will always flow to the bottom line. And I guess to some extent, lower volumes will go the other way too, but they had a good quarter. We were very pleased. We are very excited about the business. As I've said before, we are very familiar with its history and the management team and they've done a lot of right things and we can't wait for them to be a part of us to help us going forward with some of the things that we are doing.

Okay, thank you.

Thank you. That's all the time we have for questions today. This concludes this morning's call. We'd like to remind listeners that this call is available for replay.

First Advantage would like to thank you for your participation. This concludes today's conference call. You may now disconnect.