First Advantage Corp (FA) 2005 Q2 法說會逐字稿

Thank you all for holding, and welcome to First Advantage Corporation's second quarter conference call. All participants will be on a listen only mode until the question and answer session of today's call. This call is being recorded and will be available for replay from the Company's investor relation pages of their website at www.fadv.com and through August 2nd by dialing toll-free within the United States 800-925-4387 or 203-369-3525 outside the U.S.

A copy of today's press release is also available on the Company's website, at www.fadv.com. We will now turn the call over to Miss Cindy Williams, Investor Relations manager, to make a brief introductory statement. Thank you ma'am, you may begin.

... remind listeners that management's commentary and responses to your questions may contain forward-looking statements, including statements regarding shareholder approval of the CIG transaction, future impact of the CIG transaction, features (ph) of the Company's growth strategy, domestic and international markets, third quarter results, and other statements that do not relate strictly to historical or current fact. 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 forward 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, changing 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 in 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 begin our conference call this afternoon, with our Chief Financial Officer, and Executive Vice President, John Lamson, who will provide an overview of our financial performance for the second quarter of 2005. Following John, we will hear 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 Mr. John Lamson.

Thank you Cindy and good afternoon everyone. We reported net income of $462,000, or $0.02 per diluted share, for the current quarter. Results include $3.7 million of nondeductible merger costs, in connection with the pending acquisition of the Credit Information Group, $2 million of relocation costs, and $290,000 of costs related to the launch of the corporate branding initiative that was announced in June of this year.

The total after-tax impact of these costs on results of operations for the quarter was to reduce net income by $5.1 million and reduce primary and diluted earnings per share by $0.21. Net income was $3.2 million, or $0.15 per share, for the quarter ended June 30th 2004, and $3.2 million, or $0.14 a share for the quarter ended March 31st 2005.

Revenues for the Company or $83.4 million and $68.9 million for the current quarter and the June 30th 2004 quarter respectively. Revenue was 72.3 million for the quarter ended March 31st 2005. Service fee revenue, which excludes reimbursed government fees, was $71.1 million in the current quarter compared to $58 million in the second quarter of last year, and $60.2 million in the first quarter of 2005.

Earnings before interest, taxes, depreciation and amortization, EBITDA, was $8.5 million and $9.2 million for the quarter's ended June 30th 2005 and 2004. Costs incurred in connection with the pending acquisition of CIG, the relocation costs and the branding costs, reduced EBITDA by $6 million in the current quarter. A reconciliation of EBITDA to net income is included in our earnings release.

As we've previously discussed, historical income statements of First Advantage will be restated to include results of operations of CIG at historical cost. After giving effect to the acquisition of CIG, First Advantage's restated net income would be $12.5 million or $0.23 per diluted share, and $26.7 million or $0.50 per diluted share for the 3 and 6 months periods ended June 30th 2005.

These restated results include the aforementioned merger relocation and branding costs, which reduced restated net income by $5.1 million in the second quarter, and the 6 months period ended June 30th 2005, and thus reduced restated primary and fully diluted earnings per share by $0.10 in each of those periods. After giving effect to the acquisition of CIG, restated revenue would be $163.4 million and $303.7 million for the 6 and 6 months ended June 30th 2005.

I'll briefly go over some of our segment information for the current quarter. As most of you know, we report our financial results in 3 segments; enterprise screening, which includes our resident screening, employment screening, occupational health and tax businesses. The second segment is the risk mitigation segment, which includes transportation and investigative services. And our third segment is the consumer direct segment, which is our people search business, known as US Search.

Our largest segment, enterprise screening, reported service revenue of $55 million for the current quarter compared to $44.7 million for the second quarter of 2004, and $45.3 million for the first quarter of 2005.

The organic growth rate was 9.7% year over year. The enterprise-screening segment reported operating income of $10.7 million compared to 6.6 million for the second quarter of 2004, and 6.6 million in the first quarter of 2005. The operating margin for the enterprise-screening segment was 19.5% for the current quarter, 14.7% for the second quarter of 2004, and 14.6% for the first quarter of this year.

When you compare the second quarter of 2005 to the second quarter of 2004, service revenue increased by 23% earnings increased by 63%, and margins increased by 32%. These growth rates are the result of the continued successful implementation of the Company's growth strategy to acquire businesses for scale, product expansion, and cross sell opportunities. Sequentially, revenue increased by 22%, earnings by 62%, and margins by 33%.

Our risk mitigation segment reported service revenue of $13.1 million for the second quarter of 2005, compared to $10.8 million for the second quarter of 2004, and $12.2 million for the first quarter of 2005. Revenue declined by 5% from last year, excluding acquisitions.

The risk mitigation segment reported operating income of $2.6 million for the current quarter, compared to $2 million for the second quarter of last year, and $2.4 million for the first quarter of 2005. The operating margin for the segment was 20.3% for the current quarter, compared to 18.9% in the second quarter of 2004 and 19.9% for the first quarter of 2005.

Service revenue increased by 20.3%, earnings increased by 29%, and margins increased by 7% when comparing the second quarter of 2005 to the second quarter of 2004. Sequentially, revenue increased by 7%, and earnings increased by 9%.

First Advantage's consumer direct segment reported service revenue of $3.7 million for the current quarter, compared to 3 million in the second quarter of 2004, and 3.3 million in the first quarter of 2005. The segment reported operating income of $369,000 for the second quarter of this year compared to a loss of 126,000 in the second quarter of 2004, and income of 307,000 in the first quarter of 2005.

Our corporate expenses were 10.4 million for the second quarter of 2005 compared to 3 million in the second quarter of 2004, and 3.8 million for the first quarter of 2005. The corporate expenses in the second quarter of 2005 include the $6 million of costs related to the CIG merger, the relocation expenses, and the branding costs.

Interest expense was 1.4 million in the current quarter, compared to 1.1 million in the first quarter of 2005, and $500,000 in the second quarter of 2004. The increase is primarily due to higher debt levels in order to finance acquisitions. The weighted average interest rate was approximately 4.6% in the current quarter, compared to 4.4% in the first quarter of this year and 3.1% in the second quarter of 2004. At June 30th 2005, total debt outstanding was $135 million and shareholders equity was $306 million.

John Long, our President and CEO, will now discuss the status of our current operations. John?

Thank you John, and good afternoon everyone. As John mentioned earlier, during the second quarter we incurred onetime acquisition and consolidation related expenses. Additionally, at the corporate level technology costs were incurred to facilitate the resources necessary for our recent rebranding initiative and cross selling opportunities going forward. Combined, these costs represent a total after-tax impact and reduction of net income by $5.1 million and a reduction in primary and diluted earnings per share of $0.21.

We anticipated and disclosed most of these expenses previously, and aside from these nonrecurring costs, we are pleased with the quarter. We believe we are moving in the right direction with proven revenue growth, and satisfactory operating margins in line with our previous expectations.

The quarter saw solid organic growth of 9.7% from our enterprise-screening segment, and significant margin improvement from 14.7% to 19.5% over the same period last year. Tenant (ph) screening continues to excel, and our employment screening operations also had good year over year growth.

Several significant events occurred during the second quarter, having a direct impact on our strategic goals and objectives, the first of which was to enter into a definitive agreement to acquire the Credit Information Group from First American Corporation. Secondly, we launched our rebranding strategy to facilitate our ongoing growth initiatives. And finally, we successfully completed the acquisition of Quest Research, which expands our presence internationally into India, East Asia, and Australia.

We are very excited about nearing the end of the CIG acquisition process. This highly accretive transaction will create a base from which First Advantage can grow both organically through cross sell initiatives as well as provide the financial strength for future acquisitions. The combined companies will provide complementary services and create a more efficient and competitive Company.

As this process continues to move forward, it remains subject to a majority approval by our Class A shareholders at our Annual Shareholders Meeting, scheduled for September 13th. We anticipate closing the CIG transactions shortly after such approval is received. After giving effect to the CIG transaction, the combined operating earnings of the 2 companies would be $0.33 per share for the 3 months ending June, and $0.60 per share for the 6 months ending June 30th. This is before onetime charges.

On June 20th, we launched our new brand strategy, which was designed to bring together First Advantage's business-to-business subsidiaries under one name, look, and culture. This is a costly process, but well worth the investment. As our Company continues to grow and additional acquisitions are made, we intend to rapidly integrate them into this new brand architecture.

I would like to spend a minute on our international opportunities. The acquisition of Quest Research was a real eye-opener. Based in Mumbai India, it has offices throughout India as well as Beijing, Hong Kong, Singapore and Australia. These are not one-person sales offices, loose affiliations, or outsourcing centers. These are rapidly growing employment screening service centers manned by Quest employees and servicing Quest global customers.

I have rarely in my career seen such an enormous opportunity, and it is now the intent of First Advantage to expand its screening services rapidly across the globe. We are of the opinion that despite what other companies may put in their brochures, there are no true global players, and we intend to fill the apparent void. We have an opportunity to define this market and believe that this strategy will lead to strong overseas profits over time, give us a unique advantage domestically when competing for business with multinational corporations.

As I have stated in the past, our third quarter is typically our strongest, and the CIG businesses are doing very well. We will provide earnings guidance for the remainder of 2005 after the conclusion of the transaction in September. We will also be holding an analyst day on November 9th at the NASDAQ market offices in New York, where we will launch our new corporate strategy.

Let me conclude by saying that the CIG transaction is a very positive transaction for the shareholders of First Advantage. In addition to the positive earnings boost, it allows us to alter our business model in a number of very positive ways. We look forward to announcing and future plans shortly, after we close in September. I would now like to open up the call for questions.

And thank you sir, we will now begin the question-and-answer session.

[Operator Instructions].

One moment please for the first question. Okay, and first question comes from Nat Otis. Please state your company name.

KBW. Good afternoon. First quick question, and these are actually just both number questions. Do you have an organic growth rate for the risk mitigation segment this quarter?

Yes, Nat, this is John Lamson.

Hey John.

Year over year it was down 5%, the revenue in the risk mitigation.

So organic growth was down 5%?

Yes.

Okay. For each of the events this quarter, do you have an after-tax specific number? I know you had an overall after-tax number, but do you have one for each of the charges?

Well, I don't know -- guarantee I can do all the math in my head, but I can tell you the 3.7 million of cost for the acquisition of CIG are not deductible, so there's no tax effect to those. And then if you take the other 2 at 290,000 and the 2 million, roughly 41% is a tax benefit, and I think if you go through that math you'll see how we got the 5.1 impact on net income.

All right, that makes sense. That takes care of my questions for now, thanks.

Okay, thank you.

Our next question comes from Dave Koning. Please state your company name.

Robert W. Baird, and congrats guys, good quarter, and congrats too to the CIG Group, it looks like they had a great quarter as well.

Thank you.

Thank you Dave.

I was wondering just to make sure I understand this correctly, but it looks like in the first half, after the impact of some of the onetime items, that the CIG was accretive by about $0.13, and I know -- I think your old guidance was for the full year to be about $0.06 accretive. Am I looking at this right? And then secondly, would you expect -- I know you won't give full guidance yet, but would you expect it to continue to be accretive throughout the second half as well?

Let's put it this way: We are surprised, although in some respects not surprised. You know, it's been a great company, as you may or may not know, I was very familiar with the formation of that original company in the mid 90s. I mean everything's running great, they are the best-positioned company to take advantage of the environment they are in. Their earnings are terrific and they are much higher than we anticipated, and we have good reason to believe that they should have strong earnings in the future. Again, not prepared really to give guidance, but we are very happy about their earnings.

Okay, thanks, and just one follow-up, I know during the quarter you made a couple acquisitions, you mentioned Quest, and then also I think Bar None during June. I'm just wondering what the revenue contribution for those 2 during the quarter was?

Yes, this is John Lamson. Bar None was in the CIG group and I believe that for the quarter was about $800,000 of revenue that it contributed for their numbers, and Quest ...

...Quest was ...

... was in our -- was First Advantage, just to distinguish between the 2.

Quest was over 2 million.

Yes, and that contributed a couple million dollars in revenue in the second quarter.

Okay, great, thanks, and again, congrats.

Thank you. Thank you very much.

Our next question comes from Jeff Kessler. Your line is open, and Please state your company name.

This is actually Jeff - I mean Armanos (ph) here for Jeff. First, a quick question. With these onetime charges, do you anticipate any sort of additional charges in the quarter to come? Or is this pretty much it for the year?

Well, this is John Lamson. We -- you know, we certainly at this time don't anticipate any charges like this, going forward.

Okay. And then I guess with your focus that you have now on sort of -- in capturing more of an international market share, does that shift you away from domestic or is it just sort of your priority would be international and domestic would still be on your radar screen?

Oh no, very much the opposite. I think they drive side-by-side. What is neat about the international part is they really think it will help us domestically in many ways. I mean we don't have most of the multinational customers as clients today. As a matter of fact, I'm almost embarrassed to tell you how few we have. I mean we've grown our business by and large through small and midsize clients. The big market share, the big market opportunities, are the multinational clients. They don't really have good international alternatives, and I'll tell you what, I mean this is a scenario that I'm taking on personally.

I believe that most of what people believe that out there is not legitimate, it's smoke and mirrors, it's loose affiliations, there really is not a true international player out there and I challenge anyone to show me an international player in India today that is any of the names that you guys might think of. The point being here is when you go out there and you see what's happening in the marketplace, there is tremendous demand because of the outsourcing that's going on around the world, tremendous demand for these services. We are being driven into areas that we never thought we'd ever be, and this is by our customers. We are going to take it, and when we get it, we are going to use it to get more business domestically.

All right, that's great. And one final question, just on the regulatory front. I mean domestically are you seeing any sort of the you know regulation that might affect you guys and the way you run business? And I guess related to that, I mean this international expansion with regulatory situations internationally be a consideration for you guys as well?

Let me just comment quickly on international. There appears to be by and large less regulation in Asia, so from the standpoint of expanding our business I see a lot less restriction there. Domestically, I mean there's a lot of issues that keep getting brought up. You know, there's a lot of advantages to the CIG deal, not the least of which is in earnings, but also we gained from their regulatory expertise. You know, they do sell you know millions of credit reports a year and, they're a highly regulated business, and they have a strong compliance unit. So we will benefit from that. So I mean it's an issue I think that affects a lot of companies like ourselves, but I feel comfortable that we will be able to handle it.

All right, thanks a lot guys.

Our next question comes from Brian Ruttenbur. Please state your company name.

Hi, Brian Ruttenbur, Morgan Keegan. A couple quick questions. First of all, can you estimate the September debt load that you're going to have post CIG, maybe give us a range where you guys are going to shake out?

Brian, this is John Lamson. I don't think it'll -- you know, over the next month or 2 it's going to change appreciably. And then of course after the -- you know, after the transaction takes place, $20 million of the debt is exchanged for equity from -- with First American, so if anything, obviously because of that, it'll go down.

Okay, so assuming you don't make any other acquisitions between now and the time CIG closes, you should have about 115 million of debt, is that correct?

Yes, in that range, 115, 125 range. Yes.

Okay. Do you see internal growth changing at all with CIG? You are growing what -- 8, 10% internal the right now, is that correct?

Yes, that's approximately right, yes.

You know, the short answer is if anything no, and I would tell you maybe it'll help us accelerate some of our organic growth in the future. It's a little early yet. I think -- we are still developing some of the strategies that we are going to be announcing later this year, but I'm very optimistic that we can continue to grow at good strong rates going forward. So can we do 8 to 10 next year? I'm not prepared to answer that, but I like the shape of the business in general, so I think we'll do well.

Okay, and then 2 more quick questions; they will be easy for you. This has been asked but in a little bit different way, is there cyclicality with the CIG business?

Sure. Sure, it's a credit-based business. Rates go out, it's going to have an impact on the business, but you know, the growth rate on the company and the market share growth in the company has been very strong. The new products that have been added are strong; they are very creative, they've done a good job of expanding the business, and I don't see any reason why that would change in the future.

So even when business has historically dropped in the past, they've continued to grow their market share. So -- and remember, the combined business -- I'm sure you're pointing directly at mortgage a little bit, the mortgage portion of the business will be about 20% of all of First Advantage going forward. So even if there is some cyclicality in mortgage business, I don't see it as having a major materially impact on the combined operations.

Okay, and any seasonality that you see -- now that I talk cyclicality, how about seasonality?

You know, they are I think a little bit like some of our employment businesses; not as many mortgages made during the holidays, but -- spring and the summer are usually the best times for some of the purchases that are made, so there's a lot of similar types of trends, but I would even -- you know, just on counter of cylicality I would argue that we are developing in our Company some good counter cyclicality, in terms of the fact that typically when interest rates are higher, the economy is stronger and employment is stronger. So if anything, if the credit transactions are little lower because of higher interest rates, more than likely, that means our employment businesses are doing pretty good. So we've wound up with a pretty good balance as a result of this transaction.

Okay. And then last question, I'll let somebody else jumped and there, the risk mitigation, the reason for the drop in the quarter?

You know, the business has just been a slow business for us to get going. We are not very big, as you can -- well, maybe you really can't see it. So it's really being held back a little bit by some of the investigative businesses that we have, where we have not done much investment and we really need to do some more. It's not a big problem, and actually, as the quarter went on, that business got considerably stronger. We will just probably have to make some more business -- make some more investment into that business so that we can do a little better.

Right, thank you very much, good quarter.

Not a big problem for us. It's just more of right now we're kind of -- missed our opportunity a year or 2 to take advantage, and we just need to be a little bit bigger.

Okay, thank you.

And our next question comes from Colin Gillis. Please state your company name.

It's Adams Harkness. And congratulations, John and John, on a great quarter.

Thank you.

Thank you Colin.

So I just want to talk a little bit about the overseas environment. I mean can you talk about, you know, what you see in terms of pricing overseas for screening, whether it's equal to the US market or do you see it offering more attractive margins?

It's higher.

Higher, right? And can you talk a little bit about what the client base is for Quest? You know, are you seeing US based companies setting up offices in India? Or is it also local companies, you know, like the outsourcers?

It's both. The way I think it happened was the US companies drove the market initially, but -- through the outsourcing arrangements, but now, the Indian companies are stepping right up behind it. I mean really, India's is no different than anywhere else; they have a lot of the same issues, there's just a lot more people. And as the education of the -- populace gets greater and the opportunities to make more money gets greater, they are going to have a lot more of the same problems we have.

So yes we are seeing it from all ends of that market. We are going to invest heavily into the Indian operations going forward. And then some of the clients that are doing business over there want to take us into other parts of Asia that we are not in today. So, I'm looking forward to going back. It was actually one of the greatest trips I've been on. We are just going to take this market.

And then once you -- outside of India, what are the other countries that you're looking at?

Philippines. Really, Great Britain.

Okay, and you guys ...

...All of Europe really is open right now, and ultimately I mean if we're going to be a true global player, we are going to need to go into Latin America.

Okay, great. Then the organic growth number for the enterprise screening in the quarter, did I miss that?

Yes, it was -- for the enterprise screening, it was 9.7% year over year.

Okay, great, thank you. And then just finally, any -- it's probably too soon, but any color or thoughts you can -- you can give about regarding the government sector? Any steps you're taking in entering that market?

Well, we have organized a government subsidiary and we are bidding on deals right now. We haven't spoken much about it's because there's been nothing to announce. As soon as I have something to announce, I'll be -- stars and stripes forever (ph) will be announcing them on the Internet, but yes, we are bidding deals actively now.

Okay, great, thank you.

[Operator Instructions].

Our next question comes from Brad Eichler. Please state your company name.

Hey John and John.

Hey Brad.

Brad, how are you?

Doing great. Most of my questions have been asked, but I want to get a couple clarifications. First of all on your guidance for the balance of the year, originally your guidance was $0.85 to $0.95 for the year. I just want to make certain by withholding your guidance for the last 2 quarters are you in any way changing what you feel like is the underlying earnings power of the base business?

The answer is no. Okay? I think -- Brad, the CIG deal is so material now to us that it's really changed a lot of things. I mean you know clearly the earnings are higher, I think we'll just be -- I don't want to throw a number out there. I mean we are going to report that the end of -- our third quarter will definitely be reported combined, and it's going to be a higher number than anything we would have done on our own. We want to get a better handle on it, but no, our core business has continued to do well within the range I think that we talked about initially.

I mean the Company is different; you know, we are having to adjust to the new environment we are in with really what is going to be a pretty rapid growth in earnings because of this transaction. So we are doing some things that you know, maybe cost us a penny year or there, but you know the businesses -- the core businesses are in great shape, and we are really thrilled about the progress we are making in the screening businesses, in general, and I think the consumer pickup this year has been good. And I think you'll see improvements in the risk mitigation cycle going forward. So the core businesses on track, the CIG business is doing great, and we are just holding off now because it just seems kind of ludicrous to put out the old numbers.

Okay, will you gave guidance before the third quarter call?

Yes.

Okay. Now, on the risk mitigation business, I understand the issues you're having there in the investigative business. What is the timing of making some of those changes? Should we continue to expect for the next quarter or 2 to have a little bit sub normal organic growth rates? Or is that something that we should see some improvement sooner than that?

Yes, actually Brad, some of the -- we are starting to get to the point where some of the year over year numbers actually get better going forward. So without doing any further deals or without much of the change, they would probably improve, just because we took the bulk of our hit on a year over year basis, so the last year. You know, we also -- because the CIG deal has taken almost 9 months to close, since we first sort of entered to the negotiations, we've been kind of limited in the investments we could make into areas other than CIG.

So we haven't been able to beef that business up, which typically we would have done. So I think you'll see us to some things later on once everything is closed. When we close up CIG, we will have some opportunities in that space to move, but the business on a quarter over quarter basis I believe in the third quarter will grow.

Okay, and then the final question is more of just a clarification. On the one-time items, was this, A) all the merger costs related to the CIG acquisition in this quarter? And B) I'm assuming that all of the branding costs on a go forward basis will just be lumped into operations and not be viewed as any kind of launch or anything in subsequent quarters.

Yes, I'll answer the second one first. Yes, this was just the initial cost that happened this quarter on the branding, and most of the ongoing costs are much more discretionary in nature, and they'll just happen when they happen. Your question about the 3.7 million, yes, we believe, if I understood your question right, that that's going to be substantially all of the charges -- one-time charges that relate to the CIG deal.

Looks like you got a good deal on that one. Thanks.

Okay.

Yes.

Yes, Okay, thank you.

Our next question comes from Mark Marcon. Your line is open, and please state your company name.

RW Baird. Good afternoon.

Hi Mark.

Wondering, with regards to the international expansion, it sounds like an exciting initiative. I was wondering if you could describe how you would -- how you're going to approach that, just from a longer-term perspective, in terms of are you going to fill it out in India and then move out or are you going to move fairly aggressively? How should we think about that, both in terms of -- the steps that you would take, the revenues that might be associated with those steps along with the expenses?

Right. I would think, No. 1, I think aggressive, Okay? I certainly don't want to wait for things to happen, so we are aggressively going to pursue this at this point. I mean we have in place today our Mumbai operation, our Hong Kong operation, our incentives in India and in East Asia, and that's the base from which we can expand, but we are also -- that's for that part of the world.

We've got some other areas, like we -- in making the move out to Asia we've skipped over Europe, and we need to make a move there, so we will look at that from here. That's the area that I'm actively pursuing right now, and that will be our next target. After we are completed, we've completed a move on into Europe, I see us moving into South America, Latin America.

Are you seeing lots of properties that are available out there?

You know, the business is not as advanced as it is here -- a lot of smaller companies that are out there, and some of this we will just have to do organically, but there will be some deals we can do in all of the spaces.

Okay, great. And then with regards to the branding initiative, I mean what do you hope -- what sort of results would you expect to see from the branding initiative?

For the branding initiative, its key to our cross sell strategy long-term. I think you'll never be able to measure it day-to-day, but long-term I think it'll boost our cross sell initiatives between these businesses. You know, when we kind of launch our new strategy later this year, I think it will all become a lot clearer, in how we plan on taking advantage of building the First Advantage Brand.

You know, we've gotten to where we are largely as an unknown company in all of our major circles, and we are really -- this is kind of a painful process, it certainly has short-term earnings impact. But I think it's just going to boost our business (inaudible), and also just getting the name recognized in general I think, will help us even into doing deals. You know, people need to know who we are.

So I'm very comfortable that long-term cross sell initiatives will be boosted dramatically through this initiative. I'm glad we've done it, I'm glad we bit the bullet. This has actually been a good time to do it, while we've been waiting to complete the CIG deal, it's a good time to launch this. So we are excited, and now are not going to do what we did the last time, is wait for the next 27 deals to rebrand them, we are going to rebrand as we go, and it'll be much easier than this was.

Okay, great. And then with regard to the enterprise screening, I mean very strong growth there organically. In terms of employment screening, what are you seeing there? I mean is the growth that you're experiencing there a function off better employment market or getting more clients or a combination of the 2?

I'm going to stick with the all -- did I always take what -- letter E, all of the above. You know, we've added a lot of clients in that business, but the market is better. And also, there's more services being sold into the market today. There's just more demand for these services. One of the other things -- as part of employment screening, we report -- we also sell -- there's tremendous demand from like charities.

If you volunteer for anything, trust me, you are being screened-on today, and we get about 7% of our revenue now comes from that type of work, and a couple years ago it was never done. So we're getting a boost from places we didn't expect. I think, the business again, is good, but employment has definitely been up this year and we are starting to see it in our numbers.

Nice margin improvement there. Where do you think those can go?

Oh, I don't want to project yet. I think there's lots of opportunity for improvement. It's ways to go there.

All right, thank you.

Okay, thank you.

And we have time for one final question, and that comes from Nat Otis. Please state your company name.

Nat Otis, KBW. And I don't have a follow-up question for you, it was already answered.

Okay. Okay now, thanks.

I could answer that one then.

Always good to have a soft ball at the end, huh?

Hello?

I'm sorry, no further questions at this time.

Thank you. Well, that will conclude our call.

Thanks.

Thank you.

And that concludes the conference call for today. Please disconnect your line at this time.