First Advantage Corp (FA) 2023 Q4 法說會逐字稿

Good day, everyone. My name is Leo, and I will be your conference operator today. I would like to welcome you to the First Advantage Fourth Quarter and Full Year 2023 Earnings Conference Call and Webcast. Hosting the call today from First Advantage is Stephanie Gorman, Vice President of Investor Relations. (Operator Instructions) Please note, today's event is being recorded.

今天是個好日子。我叫 Leo，今天我將擔任你們的會議操作員。歡迎您參加首優諮詢 2023 年第四季和全年財報電話會議和網路廣播。今天主持 First Advantage 電話會議的是投資者關係副總裁 Stephanie Gorman。（操作員說明）請注意，今天的活動正在錄製中。

It is now my pleasure to turn the call over to Stephanie Gorman. You may begin.

現在我很高興將電話轉給史蒂芬妮戈爾曼。你可以開始了。

Thank you, Leo. Good morning, everyone. I'm joined on our call today by Scott Staples, our Chief Executive Officer; and David Gamsey, our Chief Financial Officer. As you may have seen today, we announced the definitive agreement to acquire Sterling Check Corp.

謝謝你，利奧。大家，早安。我們的執行長 Scott Staples 也參加了今天的電話會議。以及我們的財務長 David Gamsey。正如您今天可能已經看到的，我們宣布了收購 Sterling Check Corp. 的最終協議。

We will first discuss the transaction, then cover First Advantage's fourth quarter and full year 2023 results as well as our 2024 outlook. Then we will open the call for questions. In the Investors section of our website, you will find a press release on the Sterling acquisition, in addition to our earnings press release and slide presentation to accompany today's discussion. This webcast is being recorded and will be available for replay on our Investor Relations website.

我們將首先討論該交易，然後介紹第一優諮詢第四季和 2023 年全年業績以及我們的 2024 年展望。然後我們將開始提問。在我們網站的投資者部分，您將找到有關 Sterling 收購的新聞稿，以及伴隨今天討論的收益新聞稿和幻燈片簡報。該網路廣播正在錄製中，並將在我們的投資者關係網站上重播。

Before we begin our prepared remarks, I would like to remind everyone that our discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are discussed in more detail in our filings with the SEC, including our 2022 Form 10-K and our 2023 Form 10-K to be filed with the SEC. Such factors may be updated from time to time in our periodic filings with the SEC, and we do not undertake any obligation to update forward-looking statements.

在我們開始準備好的發言之前，我想提醒大家，我們今天的討論將包括前瞻性陳述。此類前瞻性陳述並非對未來績效的保證。由於多種因素，實際結果可能與前瞻性聲明中明示或暗示的結果有重大差異。這些因素在我們向 SEC 提交的文件中進行了更詳細的討論，包括我們向 SEC 提交的 2022 年 10-K 表格和 2023 年 10-K 表格。這些因素可能會在我們向美國證券交易委員會提交的定期文件中不時更新，我們不承擔更新前瞻性聲明的任何義務。

Throughout this conference call, we will also present and discuss non-GAAP financial measures. Reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures to the extent available without unreasonable efforts appear in today's earnings press release and presentation, which are available on our Investor Relations website.

在整個電話會議中，我們還將介紹和討論非公認會計準則財務指標。今天的收益新聞稿和簡報中顯示了我們的非公認會計準則財務指標與其最直接可比較的公認會計準則財務指標的調節，而無需做出不合理的努力，這些資訊可以在我們的投資者關係網站上找到。

I will now hand the call over to Scott.

我現在將把電話轉給斯科特。

Thank you, Stephanie, and good morning, everyone. This is an exciting day for First Advantage as we announced our agreement to acquire Sterling. This strategic and accretive acquisition will benefit customers and investors and drive long-term value creation.

謝謝斯蒂芬妮，大家早安。對於首優諮詢來說，這是激動人心的一天，我們宣布同意收購 Sterling。這項策略性增值收購將使客戶和投資者受益，並推動長期價值創造。

I'll start by walking through an overview of the rationale behind this acquisition. Against the backdrop of a highly fragmented large and growing market for our services, adding Sterling to First Advantage will allow us to further strengthen our high-quality and cost-effective background screening, identity and verification solutions for the benefit of customers of all sizes across industry verticals and geographies.

我將首先概述此次收購背後的理由。在我們的服務市場高度分散、規模龐大且不斷增長的背景下，將Sterling 加入First Advantage 將使我們能夠進一步加強我們高品質且具有成本效益的背景篩選、身份和驗證解決方案，為全球各種規模的客戶帶來利益。行業垂直和地域。

Our product offerings are highly complementary, which should unlock upsell and cross-sell opportunities and enable improved customer experiences across our combined customer base. The transaction will enable us to increase investment and drive innovation in key development areas of our business, like artificial intelligence and next-generation digital identification technology, all with the goal of helping our customers hire smarter and onboard faster.

我們的產品具有高度互補性，這應該會釋放追加銷售和交叉銷售的機會，並改善我們整個客戶群的客戶體驗。這項交易將使我們能夠在人工智慧和下一代數位識別技術等業務關鍵發展領域增加投資並推動創新，所有這些目標都是幫助我們的客戶更聰明、更快地招募。

With this investment, we will be increasingly well positioned to meet the evolving needs of our customers, deliver an even better customer and applicant experience and do so more efficiently by leveraging best practices and technologies from both companies. With the addition of Sterling, First Advantage will have a more balanced revenue mix across customer verticals and geographies, which will reduce seasonality and improve resource planning, operational efficiency and resilience across macro cycles.

透過這項投資，我們將能夠更好地滿足客戶不斷變化的需求，提供更好的客戶和申請人體驗，並透過利用兩家公司的最佳實踐和技術更有效率地實現這一目標。隨著 Sterling 的加入，First Advantage 將在客戶垂直領域和地理上擁有更平衡的收入組合，這將減少季節性並改善整個宏觀週期的資源規劃、營運效率和彈性。

This acquisition is also compelling from a financial perspective for First Advantage, for Sterling, and for investors of both companies. It’s just the beginning of a new value creation journey. As David will cover in more detail shortly, we are acquiring Sterling for approximately $2.2 billion in cash and stock. The combination of our companies is expected to generate at least $50 million in run rate synergies in the first 18 months to 24 months with potential material upside. This positions us well to both reduce cost for our customers and create long-term value for our shareholders. We expect the transaction to deliver immediate double-digit accretion to adjusted earnings per share on a run rate synergy basis and to accelerate our objectives to drive long-term profitable growth.

從財務角度來看，此次收購對於 First Advantage、Sterling 以及兩家公司的投資者來說也很有吸引力。這只是新價值創造之旅的開始。正如 David 稍後將詳細介紹的那樣，我們將以約 22 億美元的現金和股票收購 Sterling。我們公司的合併預計將在前 18 個月至 24 個月內產生至少 5000 萬美元的運行率協同效應，並具有潛在的實質優勢。這使我們能夠很好地為客戶降低成本並為股東創造長期價值。我們預計，此交易將在運行率協同的基礎上立即為調整後每股收益帶來兩位數的成長，並加速我們推動長期獲利成長的目標。

And importantly, we’re excited about bringing together the world-class talent of First Advantage and Sterling. We have two high-performing cultures that share a dedication to delivering excellent customer experiences. We look forward to building on that together to deliver substantial value for our customers and shareholders through this acquisition. As the CEO of the combined company, I personally look forward to welcoming the talented Sterling team to First Advantage. Overall, this combination is a transformative step for First Advantage in all our stakeholders.

重要的是，我們很高興能夠將 First Advantage 和 Sterling 的世界級人才聚集在一起。我們擁有兩種高績效文化，都致力於提供卓越的客戶體驗。我們期待在此基礎上共同努力，透過此次收購為我們的客戶和股東創造巨大的價值。作為合併後公司的首席執行官，我個人期待歡迎才華橫溢的 Sterling 團隊加入首優諮詢。總體而言，這種合併對於首優諮詢的所有利害關係人來說都是變革性的一步。

Turning to slide 5, which highlights some key metrics of our combined company. This acquisition will create a combined company with approximately $1.5 billion in revenue that conducts over 200 million background screens annually and serves 80,000 customers across more than 200 countries and territories.

轉向投影片 5，其中重點介紹了合併後公司的一些關鍵指標。此次收購將創建一家年收入約 15 億美元的合併公司，每年進行超過 2 億次背景螢幕，為 200 多個國家和地區的 80,000 名客戶提供服務。

From a geographic perspective, First Advantage and Sterling have complementary international footprint, deepening our local presence and advancing our growth in attractive geographies like EMEA, APAC, LATAM and India. If we look at the verticals where our customers operate, Sterling has strength in serving employers in healthcare, industrials and financial services, which make up over half its business today, while First Advantage particularly excels in the transportation, retail and e-commerce verticals.

從地理角度來看，First Advantage 和Sterling 具有互補的國際影響力，深化了我們的本地影響力，並促進了我們在歐洲、中東和非洲、亞太地區、拉丁美洲和印度等有吸引力的地區的增長。如果我們看看客戶經營的垂直行業，Sterling 在為醫療保健、工業和金融服務領域的雇主提供服務方面具有優勢，這些領域目前佔其業務的一半以上，而First Advantage 在運輸、零售和電子商務垂直領域尤其擅長。

Together, we will have greater product and vertical diversification that generates cross-selling opportunities and reduces seasonality in our business, which will enable more accurate planning for greater operational efficiency. And the combination is expected to greatly reduce customer concentration by diversifying our customer base. Together, we will be able to better support companies as they manage risk and hire the best talent.

我們將共同實現更大的產品和垂直多元化，從而產生交叉銷售機會並減少業務的季節性，從而實現更準確的規劃，從而提高營運效率。此次合併預計將透過使我們的客戶群多樣化而大大降低客戶集中度。我們將共同努力，更好地支持企業管理風險和聘用最優秀的人才。

Turning to slide 6. The combination of First Advantage and Sterling's technology products, data and capabilities will further enrich our offerings across background checks, digital identity and biometrics, verification solutions, drug and health screening, continuous monitoring and beyond. We expect feature functionality that will reduce turnaround time and cost for customers.

轉到投影片 6。First Advantage 和 Sterling 的技術產品、數據和能力的結合將進一步豐富我們在背景調查、數位身分和生物識別、驗證解決方案、藥物和健康篩檢、持續監測等領域的產品。我們期望功能能夠減少客戶的周轉時間和成本。

We see exciting opportunities to use our complementary portfolio to sell incremental products and services to both companies' customers. For example, we expect to be able to bring First Advantage's I-9 and WOTC offering to Sterling's customers and certain of Sterling's digital identity solutions to First Advantage customers.

我們看到了令人興奮的機會，可以利用我們的互補產品組合向兩家公司的客戶銷售增量產品和服務。例如，我們希望能夠將 First Advantage 的 I-9 和 WOTC 產品帶給 Sterling 的客戶，並將 Sterling 的某些數位身分解決方案帶給 First Advantage 客戶。

We'll also have an opportunity to bring First Advantage's leading automation expertise to Sterling. We expect that as we find new ways to utilize our technologies and capabilities, the combined company will be able to leverage First Advantage's AI-driven intelligent routing and proprietary data assets to reduce reliance on third-party data providers, advancing our commitment to delivering cost-effective solutions to our customers.

我們還將有機會將 First Advantage 領先的自動化專業知識引入 S​​terling。我們預計，隨著我們找到利用我們的技術和能力的新方法，合併後的公司將能夠利用First Advantage 的人工智慧驅動的智慧路由和專有資料資產來減少對第三方資料提供者的依賴，從而推進我們對交付成本的承諾-為我們的客戶提供有效的解決方案。

This transaction also creates the opportunity to accelerate innovation in ways that will meet the dynamic needs of customers and deliver an elevated applicant experience while also improving operational efficiencies. For example, with greater capacity for investment, the combined company will accelerate innovation focused on artificial intelligence, impacting both the front-end applicant experience and the back-end fulfillment process and other technologies that will shape this industry over the long-term.

此交易也創造了加速創新的機會，以滿足客戶的動態需求，提供更好的申請人體驗，同時提高營運效率。例如，憑藉更大的投資能力，合併後的公司將加速以人工智慧為重點的創新，影響前端申請人體驗和後端履行流程以及其他將長期塑造該行業的技術。

Similarly, the transaction will enable greater combined investment in next-generation digital identification technologies, building on our existing services and the acquisition of Infinite ID digital identification has been a core part of First Advantage's strategy and bringing together our identity verification and identity fraud solutions will enable First Advantage to further innovate in delivering state-of-the-art digital identity solutions to our customers. Overall, our acquisition of Sterling will accelerate our strategic objectives toward sustainable long-term value creation for customers and shareholders.

同樣，該交易將在我們現有服務的基礎上對下一代數位識別技術進行更大的聯合投資，收購Infinite ID 數位識別一直是First Advantage 戰略的核心部分，將我們的身份驗證和身份欺詐解決方案整合在一起將使首優諮詢能夠進一步創新，為客戶提供最先進的數位身分解決方案。整體而言，我們對 Sterling 的收購將加速我們的策略目標，為客戶和股東創造可持續的長期價值。

Our enhanced growth opportunities and improved diversification set us up to deliver a stronger, more comprehensive value proposition to customers in a large, growing and highly fragmented $13 billion market for our services. And this combination enables accelerated investment in our products to fuel innovation and growth. I am confident that this acquisition is the right step to create meaningful value for First Advantage's current customers and shareholders, and those of the combined company.

我們增強的成長機會和改善的多元化使我們能夠在價值 130 億美元的龐大、不斷成長且高度分散的服務市場中為客戶提供更強大、更全面的價值主張。這種組合可以加速對我們產品的投資，從而推動創新和成長。我相信，此次收購是為 First Advantage 現有客戶和股東以及合併後公司的客戶和股東創造有意義價值的正確步驟。

I will now turn the call over to David to discuss the financial details of the transaction.

我現在將把電話轉給大衛，討論交易的財務細節。

Thank you, Scott. Turning to slide 7, I’ll take you through the financial aspects and structure of the transaction.

謝謝你，斯科特。轉向投影片 7，我將帶您了解交易的財務面向和結構。

Total purchase price consideration for this transaction is $2.2 billion. The consideration will include $1.2 billion in cash, 27.15 million shares of newly issued First Advantage common stock and the assumption of Sterling debt, which will be retired at closing. This translates to a purchase price of $16.73 per share, which represents a premium of 35% to Sterling’s closing price yesterday and 26% premium to the 30-day VWAP. We will be acquiring Sterling at a synergized adjusted EBITDA buy-in multiple that represents a discount to First Advantage’s current trading multiple. We expect the transaction to deliver significant total shareholder return in the long run.

本次交易的總收購價為 22 億美元。對價將包括 12 億美元現金、2,715 萬股新發行的 First Advantage 普通股以及承擔 Sterling 債務，該債務將在交易完成時註銷。這意味著每股購買價格為 16.73 美元，比英鎊昨天的收盤價溢價 35%，比 30 天成交量加權平均價格溢價 26%。我們將以協同調整後的 EBITDA 買入倍數收購 Sterling，該倍數較 First Advantage 目前的交易倍數有折扣。我們預計，從長遠來看，此交易將為股東帶來可觀的總回報。

This transaction essentially doubles First Advantage’s revenues and adjusted EBITDA, and we expect the transaction to deliver immediate double-digit accretion to adjusted earnings per share, assuming run rate synergies. I’ll discuss the pro forma profile in more depth shortly. It also provides greater trading liquidity for investors, creating an even more compelling opportunity for investors in this industry.

這項交易基本上使 First Advantage 的收入和調整後 EBITDA 翻了一番，假設運行率協同效應，我們預計該交易將立即為調整後每股收益帶來兩位數的增長。我很快就會更深入地討論備考概況。它還為投資者提供了更大的交易流動性，為該行業的投資者創造了更有吸引力的機會。

Within 18 months to 24 months after closing, First Advantage expects to achieve at least $50 million in synergies as identified by our team and supported by an adviser. These synergies would be driven by a reduction in third-party data costs and efficiencies across operations, product and technology and SG&A, including the elimination of duplicative public company costs, such as the combination of insurance programs and one audit and one set of tax returns. We see potential for upside on the expected synergies value over time.

在交易完成後的 18 個月至 24 個月內，首優諮詢預計將實現至少 5,000 萬美元的協同效應（經我們團隊確定並得到顧問的支持）。這些協同效應將透過降低第三方資料成本以及營運、產品和技術以及銷售、一般管理費用（SG&A）效率的降低來推動，包括消除重複的上市公司成本，例如保險計劃與一項審計和一套納稅申報表的組合。我們認為隨著時間的推移，預期協同價值會有上升的潛力。

We have secured fully committed financing for this transaction with $1.8 billion of new seven-year term debt. The new financing is in addition to the existing debt on our balance sheet.

我們已透過 18 億美元的新七年期債務為本次交易獲得全額承諾融資。新的融資是我們資產負債表上現有債務的補充。

I'll talk through the balance sheet impacts of the transaction in more detail shortly. Regarding timing, the transaction is expected to close approximately in the third quarter of 2024, subject to required regulatory approvals, clearances and other customary closing conditions. We cannot control the exact timing, but we will be prepared to close as soon as all approvals have been received.

我稍後將更詳細地討論該交易對資產負債表的影響。至於時間安排，該交易預計將於 2024 年第三季左右完成，具體取決於所需的監管批准、許可和其他慣例成交條件。我們無法控制確切的時間，但我們將準備在收到所有批准後立即關閉。

First Advantage shareholders will own approximately 84% of the combined company and Sterling shareholders will own approximately 16%. There will be approximately 173 million diluted shares outstanding. As a result of the transaction, we have suspended purchases under our share buyback program.

First Advantage 股東將持有合併後公司約 84% 的股份，Sterling 股東將持有約 16% 的股份。稀釋後的流通股數量約為 1.73 億股。由於此交易，我們暫停了股票回購計畫下的購買活動。

Our primary focus upon closing will be on integration, synergies, deleveraging and most importantly, on our customers. The acquisition of Sterling is a significant step forward in our value creation playbook. It is just the beginning. We have the leadership team, industry expertise, technology and systems to successfully execute and integrate this transaction and deliver shareholder and customer value.

交易完成後我們的主要關注點將是整合、協同效應、去槓桿化，最重要的是我們的客戶。收購 Sterling 是我們在價值創造方面向前邁出的重要一步。這只是一個開始。我們擁有領導團隊、行業專業知識、技術和系統來成功執行和整合這項交易並為股東和客戶創造價值。

Now turning to slide 8. Our proposed acquisition of Sterling generates a strong pro forma financial profile. Using the year-end figures that First Advantage and Sterling reported today, we will have pro forma $1.5 billion in 2023 revenues and $473 million in combined EBITDA, including expected run rate synergies. This represents a 32% adjusted EBITDA margin, which is approximately 100 basis points above First Advantage's current margin. We expect to generate double-digit EPS accretion on a run rate basis with continued ability to compound EPS at teens growth rate over time.

現在轉到投影片 8。我們對 Sterling 的擬議收購產生了強勁的預期財務狀況。根據 First Advantage 和 Sterling 今天報告的年終數據，我們預計 2023 年的收入將為 15 億美元，綜合 EBITDA 為 4.73 億美元，其中包括預期的運行率協同效應。這意味著調整後的 EBITDA 利潤率為 32%，比 First Advantage 目前的利潤率高出約 100 個基點。我們預計，在運行率的基礎上，每股盈餘將實現兩位數的成長，隨著時間的推移，每股盈餘將繼續以十幾歲的成長率複合成長。

Now on slide 9, I'll focus on how the transaction impacts our capital structure. First Advantage will assume and retire Sterling's outstanding debt at closing. As previously mentioned, this along with the cash consideration portion of the purchase price will be funded through a new $1.8 billion seven-year term loan and cash on the balance sheet. We have already secured financing commitments for this new facility from a consortium of banks. Additionally, as part of this financing agreement, we will be upsizing our current $100 million revolver to $250 million and extending the maturity date to 2030.

現在在投影片 9 上，我將重點討論該交易如何影響我們的資本結構。First Advantage 將在交易結束時承擔並清償 Sterling 的未償債務。如前所述，這筆資金連同購買價格的現金對價部分將透過新的 18 億美元七年期貸款和資產負債表上的現金提供資金。我們已經從銀行財團獲得了對該新設施的融資承諾。此外，作為該融資協議的一部分，我們將把目前的 1 億美元左輪融資規模擴大到 2.5 億美元，並將到期日延長至 2030 年。

Net leverage at closing will be in the range of 4 times depending on the exact timing of closing. The debt will be covenant-light, consistent with our current agreement, further reducing risk and increasing flexibility. Our long-term goal is to reduce and maintain net leverage between 2 times and 3 times. Our expected liquidity at closing and our combined company's ability to generate cash flow will leave us with greater than 2.5 times interest coverage, ample room to achieve our capital allocation priorities and deleverage organically over time.

收盤時的淨槓桿將在 4 倍範圍內，具體取決於收盤的具體時間。債務將是輕量級的，符合我們目前的協議，進一步降低風險並提高靈活性。我們的長期目標是降低淨槓桿並維持在2倍至3倍之間。我們預計交割時的流動性以及合併後公司產生現金流的能力將使我們擁有超過2.5 倍的利息覆蓋率，並有充足的空間來實現我們的資本配置優先事項並隨著時間的推移有機地去槓桿化。

For context, pro forma combined cash flow from operations was approximately $300 million based on actual 2023 results. Our well-built financial foundation and resilient business model have supported our history of strong adjusted EBITDA margins and robust operating cash flows, creating a healthy balance sheet that has given us the flexibility to acquire Sterling.

就背景而言，根據 2023 年實際業績，預計營運合併現金流量約為 3 億美元。我們良好的財務基礎和富有彈性的商業模式支持了我們強勁的調整後 EBITDA 利潤率和強勁的營運現金流，創造了健康的資產負債表，使我們能夠靈活地收購 Sterling。

Looking ahead, and as previously mentioned, we expect First Advantage to continue compounding EPS at a teens growth rate over time through the combination of top line growth, ongoing synergy capture and significant deleveraging via strong organic free cash flow generation. We will continue to selectively and strategically invest in the business to fuel long-term organic growth and to successfully integrate Sterling, particularly to drive the innovation that we know will most benefit our customers. Consistent with our historical capital allocation strategy, going forward, we plan to focus our uses of capital on prudent deleveraging towards our long-term net leverage target range, which will help support earnings growth.

展望未來，正如之前提到的，我們預計首優諮詢將透過營收成長、持續的協同效應獲取以及透過強大的有機自由現金流產生實現的大幅去槓桿化相結合，繼續以十幾歲的複合成長率實現每股收益複合成長率。我們將繼續有選擇地、策略性地投資該業務，以推動長期有機成長並成功整合 Sterling，特別是推動我們知道最有利於客戶的創新。與我們歷史上的資本配置策略一致，未來，我們計劃將資本的使用重點放在審慎去槓桿上，以實現我們的長期淨槓桿目標範圍，這將有助於支持盈利增長。

Now let me take you through our full year and fourth quarter results as well as our stand-alone First Advantage 2024 outlook. Turning now to a recap of our full year results on slide 12.

現在，讓我向您介紹我們的全年和第四季度業績以及我們的首優諮詢 2024 年獨立展望。現在回顧幻燈片 12 上的全年業績。

We are pleased with our overall annual performance coming in within 1% of our original 2023 guidance ranges for revenues and adjusted EBITDA and performing in line with what we communicated for adjusted net income and adjusted diluted EPS. This is further evidence that we continue to be diligent and successful at controlling what can be controlled within our business despite the challenging macro environment. Revenues grew sequentially throughout the year in every single quarter, including Q4, coming in at $764 million, a decrease of 5.7% from the prior year, with constant currency revenues of $766 million.

我們對我們的整體年度業績與我們最初的 2023 年收入和調整後 EBITDA 指導範圍的差距在 1% 以內感到滿意，並且與我們所傳達的調整後淨利潤和調整後稀釋每股收益一致。這進一步證明，儘管宏觀環境充滿挑戰，我們仍然勤奮並成功地控制了我們業務內可以控制的事情。全年每季的營收都在環比成長，包括第四季度，營收為 7.64 億美元，比上年下降 5.7%，不變貨幣收入為 7.66 億美元。

For the year, Infinite ID, which we acquired in September 2023, contributed approximately $3 million to our revenues. As we have discussed throughout 2023, we have been pleased that our upsell, cross-sell, new logos and attrition rates have broadly aligned with our historical revenue growth rates. Our base growth, which is more sensitive and correlated to changes in the macro environment, declined on lower volumes. We believe that when the macro environment stabilizes, our base growth will normalize to our historical rate of 2% to 4%.

我們於 2023 年 9 月收購的 Infinite ID 為我們貢獻了約 300 萬美元的營收。正如我們在 2023 年討論的那樣，我們很高興我們的追加銷售、交叉銷售、新徽標和流失率與我們的歷史收入增長率大致一致。我們的基數成長對宏觀環境的變化更加敏感且相關，但因銷量下降而下降。我們相信，當宏觀環境穩定後，我們的基數成長將正常化至2%至4%的歷史成長率。

In our Americas segment, revenues of $673 million or 87% of consolidated revenues were down 3.1% from the prior year. In our international segment, revenues of $97 million or 13% of consolidated revenues were down 21% from the prior year. On a constant currency basis, international revenues were $99 million or down 19% year over year.

在我們的美洲部門，營收為 6.73 億美元，佔合併收入的 87%，比上年下降 3.1%。在我們的國際部門，營收為 9,700 萬美元，佔合併收入的 13%，比前一年下降了 21%。以固定匯率計算，國際營收為 9,900 萬美元，年減 19%。

Adjusted EBITDA for the year was $238 million, and our adjusted EBITDA margin was a robust 31.1%, representing year-over-year expansion. Our adjusted effective tax rate was 23.5%. Adjusted net income was $146 million and adjusted diluted EPS was $1.

本年度調整後 EBITDA 為 2.38 億美元，調整後 EBITDA 利潤率為 31.1%，較去年同期擴張。我們調整後的有效稅率為 23.5%。調整後淨利為 1.46 億美元，調整後稀釋每股收益為 1 美元。

Looking now at our fourth quarter results on slide 13. The fourth quarter exemplified the continued strength of our flexible business model, disciplined cost management and investments in technology and automation, which were key drivers of achieving a record adjusted EBITDA margin of nearly 34% and strong cash flow from operations of $57 million. Our fourth quarter revenues were $203 million, a decrease of 4.7% from the prior year. Given the mix of our domestic and international businesses, currency had little impact on fourth quarter results with constant currency revenues of $202 million.

現在就來看看投影片 13 上我們第四季的業績。第四季度體現了我們靈活的業務模式、嚴格的成本管理以及對技術和自動化的投資的持續優勢，這些是實現創紀錄的近34% 的調整後EBITDA 利潤率和5700 萬美元強勁運營現金流的關鍵驅動因素。我們第四季的營收為 2.03 億美元，比去年同期下降 4.7%。考慮到我們的國內和國際業務的組合，貨幣對第四季度業績的影響不大，貨幣不變收入為 2.02 億美元。

For the quarter, Infinite ID contributed approximately $2 million to our revenues. We continue to make great progress building our customer base during the fourth quarter and the year. We had 10 bookings in the fourth quarter of $500,000 or more of expected annual contract value, and 46 for the year, of which approximately half were new logos, and the other half were upsell cross-sell.

本季度，Infinite ID 為我們貢獻了約 200 萬美元的營收。我們在第四季和今年繼續在建立客戶群方面取得巨大進展。第四季我們有 10 筆訂單，預計年度合約價值 50 萬美元或以上，全年有 46 筆訂單，其中大約一半是新徽標，另一半是追加銷售交叉銷售。

That said, total base continued to be under pressure in the fourth quarter, declining $28 million or 13%, driven by peak season ending earlier than expected and continued macro-driven weak performance in our India and APAC markets. We are well positioned to take advantage of the upside from a market recovery when it materializes. The base decline for the quarter was partially offset from upsell and cross-sell, which contributed $12.7 million or nearly 6% to our performance. Revenues from new customer logos contributed an additional $8.3 million or approximately 4%.

儘管如此，第四季的總基數繼續面臨壓力，下降了 2,800 萬美元，即 13%，這是由於旺季提前結束以及印度和亞太市場宏觀經濟驅動的疲軟表現所致。我們處於有利地位，可以在市場復甦實現時利用其上行空間。本季的基數下降部分被追加銷售和交叉銷售所抵消，這為我們的業績貢獻了 1,270 萬美元，近 6%。新客戶商標帶來的收入額外貢獻了 830 萬美元，約 4%。

In our Americas segment, revenues of $182 million or 89% of consolidated revenues were down 3.1% from prior year. This quarter held up relatively well, which is primarily attributable to our broad-based resilient customers. All of our fundamentals remain strong. As a reminder, JOLTS data is correlated to our Americas-based growth.

在美洲部門，營收為 1.82 億美元，佔合併收入的 89%，比前一年下降 3.1%。本季的表現相對較好，這主要歸功於我們廣泛的彈性客戶。我們所有的基本面仍然強勁。提醒一下，JOLTS 數據與我們在美洲的成長相關。

Looking at December 2023 JOLTS data, openings and hires increased slightly month over month and remained relatively high by historical standards, but separations declined. Employers are holding on to talent longer. Quits fell to the lowest monthly level in nearly three years. These declining hiring trends continue to impact our Americas space, which for the quarter was down 12%.

從 2023 年 12 月的 JOLTS 數據來看，空缺職位和招聘人數逐月略有增加，按照歷史標準保持相對較高，但離職率有所下降。雇主留住人才的時間更長。退出率降至近三年來的最低月度水準。這些下降的招聘趨勢繼續影響我們的美洲地區，本季該地區下降了 12%。

In our International segment, revenues of $22 million or 11% of consolidated revenues were down 16% from the prior year. On a constant currency basis, international revenues were $21 million or down 18% year over year.

在我們的國際部門，營收為 2,200 萬美元，佔合併收入的 11%，比上年下降 16%。以固定匯率計算，國際營收為 2,100 萬美元，年減 18%。

The decrease was due primarily to base weakness in India and APAC, offset in part by relative strength in EMEA. As a reminder, our direct exposure to China is less than 1% of our total revenues and has little impact on our business. In the fourth quarter, India was down approximately 36%, given our regional exposure to BPO and IT services-related businesses and APAC was down 21%, driven by the financial services sector and other regional market dynamics.

下降的主要原因是印度和亞太地區的基礎疲軟，但部分被歐洲、中東和非洲地區的相對強勢所抵消。需要提醒的是，我們對中國的直接敞口不到總收入的 1%，對我們的業務影響不大。第四季度，由於我們對 BPO 和 IT 服務相關業務的區域曝險，印度下降了約 36%，而在金融服務業和其他區域市場動態的推動下，亞太地區下降了 21%。

We achieved a record consolidated adjusted EBITDA margin of 33.7% on adjusted EBITDA of $68 million, which represented an improvement of 140 basis points sequentially and 60 basis points on a year-over-year basis. This is another proof point that our business remains resilient in the face of top line headwinds.

我們實現了創紀錄的綜合調整後 EBITDA 利潤率 33.7%，調整後 EBITDA 為 6,800 萬美元，季增 140 個基點，年增 60 個基點。這是我們的業務在面臨頂線逆風時仍保持彈性的另一個證據。

Our adjusted effective tax rate was 21.2%, which reflects a one-time favorable adjustment. Adjusted net income was $43 million, and adjusted diluted EPS was $0.29, which includes a $0.02 negative impact from our August 2023 special dividend.

調整後的有效稅率為21.2%，屬於一次性優惠調整。調整後淨利為 4,300 萬美元，調整後攤薄每股收益為 0.29 美元，其中包括 2023 年 8 月特別股息帶來的 0.02 美元負面影響。

Now turning to slide 14. I’d also like to highlight that in 2023, we generated operating cash flows of $163 million, ending the year with $214 million of cash on the balance sheet. We continue to return capital to shareholders through our $218 million one-time special dividend and repurchasing $59 million of stock as part of our buyback program.

現在轉到投影片 14。我還想強調的是，2023 年，我們產生了 1.63 億美元的營運現金流，年底資產負債表上的現金為 2.14 億美元。作為回購計畫的一部分，我們繼續透過 2.18 億美元的一次性特別股利和回購 5,900 萬美元的股票向股東返還資本。

We spent $41 million on the acquisition of Infinite ID, growing our vertical capabilities and expanding our product suite. Additionally, we spent $28 million on capital-related investments. In December, we entered into two new interest rate swap agreements that take the place of our existing interest rate collars that mature today.

我們斥資 4,100 萬美元收購了 Infinite ID，增強了我們的垂直能力並擴展了我們的產品套件。此外，我們還花了 2,800 萬美元用於資本相關投資。12 月，我們簽訂了兩項新的利率掉期協議，取代了今天到期的現有利率範圍。

Now moving to slide 15 and a discussion of our outlook. In developing our stand-alone guidance for 2024, we considered many factors. First was the current macroeconomic environment, including the softening in hiring trends and the reduction in employee churn. These dynamics were partially offset by discussions with our customers who are becoming more optimistic and seem ready to start investing in new growth opportunities. On top of this, the Sterling acquisition announced today will require significant amounts of management time and resources to complete and integrate. As such, the midpoint of our guidance reflects a conservative posture towards growth and profitability in 2024.

現在轉到投影片 15，討論我們的前景。在製定 2024 年獨立指南時，我們考慮了許多因素。首先是當前的宏觀經濟環境，包括招募趨勢的疲軟和員工流失的減少。這些動態被與客戶的討論部分抵消，客戶變得更加樂觀，似乎準備好開始投資新的成長機會。除此之外，今天宣布的 Sterling 收購將需要大量的管理時間和資源來完成和整合。因此，我們指導的中點反映了對 2024 年成長和獲利能力的保守態度。

For First Advantage on a stand-alone basis throughout 2024, we expect sequential quarter-over-quarter growth for revenues, adjusted EBITDA and adjusted EBITDA margins similar to 2023. We expect customer retention to remain in line with our strong historical performance of around 97%. We also expect continued execution of upsell, cross-sell and new logo growth consistent with historical trends and long-term targets.

對於 First Advantage 在 2024 年的獨立基礎上，我們預期營收、調整後 EBITDA 和調整後 EBITDA 利潤率將較上季持續成長，與 2023 年類似。我們預計客戶保留率將與我們 97% 左右的強勁歷史表現保持一致。我們也預期追加銷售、交叉銷售和新標誌的成長將繼續與歷史趨勢和長期目標保持一致。

The midpoint of our guidance range assumes that there will be further macro-driven base declines, with base remaining negative in the first three quarters, though improving sequentially and then turning positive in Q4. However, assuming the economy begins to recover later in the year and into 2025, we are extremely well positioned to benefit.

我們指導範圍的中點假設宏觀驅動的基數將進一步下降，前三個季度基數仍為負，但隨後有所改善，然後在第四季度轉為正值。然而，假設經濟在今年稍後直至 2025 年開始復甦，我們完全有能力受益。

For 2024, we expect to generate full year revenues in the range of $750 million to $800 million. Based on the midpoint of $775 million, this results in positive year-over-year organic revenue growth. This includes revenues related to Infinite ID, which is expected to contribute approximately $7 million in the first eight months of the year as we approach the anniversary of the acquisition at the beginning of September.

2024 年，我們預計全年營收將在 7.5 億至 8 億美元之間。根據 7.75 億美元的中位數計算，這將帶來同比有機收入正成長。其中包括與 Infinite ID 相關的收入，隨著 9 月初的收購週年紀念日臨近，預計今年前 8 個月將貢獻約 700 萬美元的收入。

At our midpoint, we expect to maintain full year adjusted EBITDA margins of approximately 31% and adjusted EBITDA in the range of $228 million to $248 million. This is after considering approximately $10 million in increases in employee wages and benefits and normalization of management incentive plans, as well as approximately $7 million in new investments in product, technology and sales.

在我們的中點，我們預計全年調整後 EBITDA 利潤率將保持在約 31%，調整後 EBITDA 在 2.28 億美元至 2.48 億美元之間。這是在考慮了員工工資和福利增加約 1000 萬美元、管理激勵計劃正常化以及產品、技術和銷售方面約 700 萬美元的新投資之後。

We are continuing to selectively invest in our business to strengthen our client relationships and to bring them the best possible offering in the industry. At the midpoint, we expect our 2024 adjusted net income to be approximately $135 million and adjusted diluted EPS of $0.93.

我們將繼續有選擇地投資我們的業務，以加強我們的客戶關係，並為他們提供業內最好的產品。我們預計 2024 年調整後淨利約為 1.35 億美元，調整後稀釋每股收益為 0.93 美元。

We have provided an adjusted diluted EPS bridge on slide 16 that walks you through the puts and takes in comparing 2023 results to what we expect in 2024. This is very important to understand. On a like-for-like basis, after adjusting for impacts, including our 2023 one-time special dividend, expiring interest rate swaps and the positive impact from our 2023 share buybacks, adjusted 2023 EPS would have been $0.92. We expect diluted EPS expansion at the midpoint of our guidance range in 2024 when taking into account these and other items.

我們在投影片 16 上提供了調整後的稀釋每股盈餘橋樑，可引導您了解看跌選擇權和選擇權，並將 2023 年結果與我們對 2024 年的預期進行比較。理解這一點非常重要。在同類基礎上，在對影響進行調整後，包括我們的2023 年一次性特別股息、即將到期的利率掉期以及我們2023 年股票回購的積極影響，調整後的2023 年每股收益將為0.92 美元。考慮到這些和其他項目，我們預計 2024 年稀釋後每股收益擴張將達到我們指導範圍的中點。

We have also provided a summary of selected 2024 modeling assumptions in the appendix including a range of $30 million to $33 million of capital expenditures, of which $3 million relates to a new US criminal data AI project and $4 million relates to a large-scale computer refresh project. The balance, consistent with 2023, primarily relates to capitalized software development costs.

我們還在附錄中提供了選定的2024 年建模假設的摘要，包括3000 萬至3300 萬美元的資本支出，其中300 萬美元與新的美國犯罪數據人工智能項目相關，400 萬美元與大型計算機相關刷新項目。與 2023 年一致，餘額主要與資本化軟體開發成本有關。

Looking now at the quarterly phasing of our 2024 guidance. We expect Q1 year-over-year consolidated revenues to decline by approximately 5%. We expect sequential top line improvement as we move throughout 2024 with Q2 results coming in relatively flat year over year. We expect positive overall growth in the second half of the year more heavily weighted toward Q4. We expect our Q1 adjusted EBITDA margin to be between 27% and 28%, which is consistent with the first quarter of the last three years. Starting with Q2, we expect adjusted EBITDA margins to be above 30% and to improve in the second half of the year following a similar pattern to 2023. Overall, we are extremely well positioned to benefit when the macro environment improves. Please note that we expect to provide guidance on the combined company after the Sterling acquisition closes.

現在來看看我們 2024 年指導的季度階段。我們預計第一季合併收入將年減約 5%。我們預計 2024 年全年營收將連續改善，第二季業績年比相對持平。我們預計下半年整體正成長將更集中在第四季度。我們預計第一季調整後 EBITDA 利潤率將在 27% 至 28% 之間，這與過去三年第一季的情況一致。從第二季開始，我們預計調整後 EBITDA 利潤率將超過 30%，並在下半年有所改善，與 2023 年類似。整體而言，當宏觀環境改善時，我們非常有能力受益。請注意，我們預計在 Sterling 收購完成後為合併後的公司提供指導。

Let me now turn the call back over to Scott before we open the line for questions.

現在讓我將電話轉回給史考特，然後再打開提問線。

Thank you, David. I want to acknowledge the great progress our First Advantage team made throughout 2023. I'm especially proud that we did not take our foot off the gas pedal even as we continue to navigate an uncertain macro environment and evolving labor market. We are well positioned to weather the current environment and benefit greatly once it stabilizes and starts to improve.

謝謝你，大衛。我要對首優諮詢團隊在 2023 年的巨大進步表示認可。我特別自豪的是，即使我們繼續應對不確定的宏觀環境和不斷變化的勞動力市場，我們也沒有鬆開油門。我們已經做好了應對當前環境的準備，一旦環境穩定並開始改善，我們就會受益匪淺。

We are excited about today's definitive agreement to acquire Sterling, which will allow us to extend our high-quality and cost-effective background screening, identity and verification technology solutions for the benefit of customers of all sizes across industry verticals and geographies. Looking forward, we remain focused on long-term profitable growth and maximize value for all stakeholders.

我們很高興今天達成收購Sterling 的最終協議，這將使我們能夠擴展高品質且具有成本效益的背景篩選、身份和驗證技術解決方案，為跨行業垂直和地理的各種規模的客戶帶來利益。展望未來，我們仍然專注於長期獲利成長並為所有利害關係人實現價值最大化。

With that, we will open the line for questions.

至此，我們將開通提問專線。

(Operator Instructions) Shlomo Rosenbaum, Stifel.

（操作員說明）Shlomo Rosenbaum，Stifel。

First of all, just when you're combining two of the top three companies in the space, I just wanted to get your take on your considerations around the DOJ on this and the work you've done over there. And then I just have a follow-up in terms of just the combination.

首先，當您合併該領域排名前三的公司中的兩家時，我只是想了解您對司法部對此的考慮以及您在那裡所做的工作。然後我就組合進行後續操作。

Yes, Shlomo, so I mean, first of all, I'll tell you, we've hired some great experts in the space who will guide us through the process. But let's keep coming back to the market on this, because this is a large $13 billion market, and we've always told you how fragmented it is. I mean there's lots of competitors of all sizes and shapes across the world. We think we got a great case, but we'll let the experts guide us through the process and we'll see where it takes us. But like I said, this is a very large but very fragmented market, lots of competitors.

是的，什洛莫，所以我的意思是，首先，我會告訴你，我們已經聘請了該領域的一些優秀專家，他們將指導我們完成整個過程。但讓我們繼續回到市場上來，因為這是一個 130 億美元的大市場，我們一直告訴你它是多麼分散。我的意思是，世界各地有很多各種規模和形狀的競爭對手。我們認為我們得到了一個很好的案例，但我們會讓專家指導我們完成整個過程，然後看看它會帶我們走向何方。但就像我說的，這是一個非常大但非常分散的市場，有很多競爭對手。

Okay. And then just in terms of the combination, you point to $50 million in synergies. Is that all cost synergies? And can you talk a little bit more about just on the ground practically, the combination of the two companies, how will you accelerate organic revenue growth? Like what would the -- if you could just give some examples? Hey, they have this customer, we could sell this to, you have that customer I could sell that to. Can you just give us some on-the-ground examples of why this makes sense?

好的。然後就組合而言，您指出了 5000 萬美元的協同效應。這就是成本協同效應嗎？您能否實際談談兩家公司的合併，您將如何加速有機收入成長？如果你能舉一些例子的話，會怎麼樣？嘿，他們有這個客戶，我們可以把它賣給你，你有那個客戶，我可以把它賣給你。您能否給我們一些實際例子來說明為什麼這是有意義的？

Yes. David, why don't you take the synergy part, and I'll take the second part of that.

是的。大衛，你為什麼不承擔協同作用部分，我來承擔第二部分。

Okay. So Shlomo, from a synergy perspective, the $50 million, at least $50 million, that is from a cost perspective basis. We think there is upside relative to revenue synergies from a cross-sell perspective, and Scott can give you some specific examples relative to that. We think we can get that $50 million in 18 months to 24 months. Some of it is very low-hanging and we're going to go get right away.

好的。所以什洛莫，從協同效應的角度來看，5000 萬美元，至少 5000 萬美元，這是從成本角度來看的。我們認為，從交叉銷售的角度來看，收入綜效是有好處的，而史考特可以給你一些與此相關的具體例子。我們認為我們可以在 18 個月到 24 個月內拿到 5000 萬美元。其中一些是非常容易實現的，我們將立即著手解決。

Yes, I think just to answer your cross-sell, and it's actually probably, I think, a broader question that you're asking. I think one of the things that we really like is the complementary vertical exposure or overlap actually. So just think about it. As we said in the script, Sterling's largest verticals of healthcare and financial services and business, commercial services, et cetera, map really well to our large ones, which are transportation, retail, e-commerce. So we really love the fact that their vertical strengths match so well to our vertical strengths.

是的，我想只是為了回答你的交叉銷售，我認為這實際上可能是你問的一個更廣泛的問題。我認為我們真正喜歡的事情之一是互補的垂直曝光或實際上的重疊。所以想想吧。正如我們在劇本中所說，斯特林最大的醫療保健和金融服務以及商業、商業服務等垂直行業與我們的大型垂直行業（運輸、零售、電子商務）非常吻合。因此，我們真的很喜歡他們的垂直優勢與我們的垂直優勢如此匹配。

And now we've got potentially obviously a much larger customer base with 80,000 customers. And we feel like -- we have our I-9 product, our WOTC product could be sold across the Sterling base and their digital identity solutions across our base, et cetera. But again, we're talking about early days here. We've got to sit down and map this all out, but we think there's great opportunities for what I just walked you through.

現在我們顯然擁有更大的潛在客戶群，擁有 80,000 名客戶。我們感覺——我們有 I-9 產品、我們的 WOTC 產品可以在 Sterling 基地銷售，他們的數位身分解決方案可以在我們基地銷售，等等。但我們再次強調的是早期的情況。我們必須坐下來規劃這一切，但我們認為我剛才向您介紹的內容存在很大的機會。

Ashish Sabadra, RBC Capital Markets.

Ashish Sabadra，加拿大皇家銀行資本市場。

Just wanted to drill down further on the cost synergy front. I think there was a reference to a reduction in third-party costs. I was wondering if you could provide any more clarity on that front. And then also, during the last question, there was a reference to certain low-hanging fruits. I was wondering can you provide color on that front as well?

只是想進一步深入研究成本協同學的問題。我認為其中提到了第三方成本的降低。我想知道您是否可以在這方面提供更清晰的資訊。然後，在最後一個問題中，也提到了某些容易實現的目標。我想知道你能在前面提供顏色嗎？

So Ashish from a third-party data perspective, as you know, we have our Verified database, and we have our SmartHub technology that's AI-driven. And that allows us to use our own database and other sources for employment and education verification. Sterling does not currently have access to that database or to that technology. And we believe that we can help drive down costs once we can integrate them into that SmartHub technology.

因此，Ashish 從第三方資料的角度來看，如您所知，我們擁有經過驗證的資料庫，我們擁有人工智慧驅動的 SmartHub 技術。這使我們能夠使用我們自己的資料庫和其他來源進行就業和教育驗證。Sterling 目前無法存取該資料庫或該技術。我們相信，一旦我們將它們整合到 SmartHub 技術中，我們就可以幫助降低成本。

As far as low-hanging fruit, there are a lot of opportunities, right? We're only going to need one audit. We're only going to need one set of tax returns. We're going to consolidate our insurance programs. You eliminate one complete public company cost scenario. So there are a lot of really easy costs we can go after really quickly.

就容易實現的目標而言，有很多機會，對嗎？我們只需要一次審核。我們只需要一套報稅表。我們將整合我們的保險計劃。您消除了完整的上市公司成本情境。因此，我們可以很快地追求很多非常簡單的成本。

That's very helpful color. And as we look out to 2024, thanks for providing some good commentary on trends by quarter. I was just wondering if you could also provide some color by end markets or verticals, where are you seeing better hiding strength versus verticals which are still weak in '24?

這是非常有用的顏色。在我們展望 2024 年時，感謝您對季度趨勢提供了一些精彩的評論。我只是想知道您是否也可以透過終端市場或垂直市場提供一些顏色，與 24 年仍然較弱的垂直市場相比，您在哪裡看到更好的隱藏強度？

Yes. Ashish, the story really hasn't changed here too much. It's been like a repeat for us over literally maybe the last year, where we still continue to see good strength in the transportation and home delivery verticals. Retail, e-commerce actually flattish for us.

是的。Ashish，這裡的故事確實沒有太大改變。這對我們來說就像是去年的重演，我們仍然在運輸和送貨上門垂直領域看到了良好的實力。零售、電子商務對我們來說其實是平淡的。

But keep in mind, as we've said many, many times, our retail, e-commerce footprint is really more of the large discounters and the online e-tailers. And there's still obviously a high demand for those companies' products and services because of inflation and things like that.

但請記住，正如我們多次說過的那樣，我們的零售、電子商務足跡實際上更多的是大型折扣店和線上電子零售商。由於通貨膨脹等原因，對這些公司的產品和服務的需求顯然仍然很高。

All-year long, verticals like staffing and financial services have been down and continue to be down. And the one vertical which I missed when I talked about positive is healthcare. Healthcare has done really well for us this year and especially over the last quarter or two. So yes, in the end, it all washes out with exactly what we've given you with results and guidance. We expect more the same from those verticals, at least for the first three quarters.

全年以來，人員配備和金融服務等垂直行業一直在下降，並將繼續下降。當我談論積極因素時，我錯過了一個垂直領域：醫療保健。今年，醫療保健為我們帶來了非常好的業績，尤其是在過去一兩個季度。所以，是的，最終，這一切都會隨著我們為您提供的結果和指導而消失。我們預計這些垂直領域的情況會更加相似，至少在前三個季度是如此。

Andrew Steinerman, JPMorgan.

安德魯‧史坦納曼，摩根大通。

I wanted to ask a little bit about the SmartHub and the identification of third-party costs being -- I guess you just listed it up. You listed before operational efficiencies. Is the reduction of third-party costs, which I understand is usually passed along to the customer, is it the bigger savings for FA than the operational savings across your products, et cetera. And so my question is on SmartHub. Is it that up to the customer if they select to use SmartHub or not for your verifications?

我想詢問一些有關 SmartHub 和第三方成本識別的問題——我猜您剛剛列出了它。您在營運效率之前列出了。第三方成本的降低（據我所知通常會轉嫁到客戶身上）是否比整個產品的營運成本節省更大？所以我的問題是關於 SmartHub 的。是否由客戶決定是否使用 SmartHub 進行驗證？

Yes. I mean, technically, it would be up to the customer, but I can't point to a customer that doesn't want to use it. So again, think of it as really a router. It's really a fantastic piece of technology because it's got algorithms built into it, and we've been working on it for four-plus years, maybe even five years now.

是的。我的意思是，從技術上講，這將取決於客戶，但我不能指出客戶不想使用它。再次強調，將其視為真正的路由器。這確實是一項非常棒的技術，因為它內建了演算法，我們已經為此工作了四年多，甚至現在可能五年了。

So it's got some AI-driven technology in it. It touches the algorithms. But all it really does, Andrew, is it gives our customers choices. It gives their applicants based off their criteria. It gives the customer choices as to where to go find that data. So I can't remember or think of a customer that doesn't use it. But at the end of the day, what we're really offering is multiple data sources and of course, our own data.

所以它有一些人工智慧驅動的技術。它涉及算法。但安德魯，它真正的作用是為我們的客戶提供選擇。它根據申請人的標準為他們提供服務。它讓客戶可以選擇在哪裡找到該數據。所以我不記得或想不起來有哪個客戶沒有使用過它。但歸根究底，我們真正提供的是多個資料來源，當然還有我們自己的資料。

Our data continues to grow. We add to it every quarter. We add to it every month. And it's a good data source. And with the Sterling acquisition, we'll be able to tap into their data as well, which they don't currently leverage. So we aren't able to quantify that yet because we obviously haven't got into what exactly those records look like and stuff. But we're feeling pretty good about where and how we can leverage this going forward.

我們的數據持續成長。我們每季都會添加。我們每個月都會新增。這是一個很好的資料來源。透過收購 Sterling，我們也將能夠利用他們目前尚未利用的數據。所以我們還無法量化這一點，因為我們顯然還沒有了解這些記錄到底是什麼樣子的。但我們對於未來可以在哪裡以及如何利用這一點感覺非常好。

Scott, the other part of my question was, you listed the reduction of third-party cost before efficiencies in operations and products and technology and SG&A. Like are you saying the reduction of third-party cost in that $50 million target savings is going to be bigger than the efficiencies that follow in that list?

史考特，我的問題的另一部分是，您將第三方成本的降低列在營運、產品、技術以及銷售、管理和管理效率之前。您是說 5000 萬美元的目標節省中第三方成本的降低將大於該清單中隨後的效率嗎？

I don't think it would be bigger. It's just how it was written. I think we'll get way more out of efficiencies. As David mentioned, there's duplicate tax and insurance and all that stuff. So no, I don't think it's a bigger number. It's just how it was written.

我不認為它會更大。就是這麼寫的。我認為我們會從效率中獲得更多。正如大衛所提到的，有重複的稅收和保險以及所有這些東西。所以不，我不認為這個數字更大。就是這麼寫的。

Yes, that makes more sense to me now.

是的，現在這對我來說更有意義。

Manav Patnaik, Barclays.

馬納夫·帕特奈克，巴克萊銀行。

I was hoping just to touch on base growth. I know you gave us some directional color for the year, but just I was hoping you might be able to quantify what you're assuming for '24, just because it sounds like for both you guys and Sterling, the base growth got worse than what you guys kept guiding to. So I was just curious if that was changes in the large customers that I know you talk to regularly or was it the tail end that came short of what you expected?

我希望只是談談基礎成長。我知道你給了我們今年的一些方向性色彩，但我只是希望你能夠量化你對 24 年的假設，只是因為聽起來對你們和斯特林來說，基礎增長比你們一直在指導什麼。所以我只是好奇這是否是我知道您經常與之交談的大客戶的變化，或者是尾部沒有達到您的預期？

So base growth, consolidated base growth was down 13% in Q4, which was greater than we anticipated. As a result of that, we're taking a pretty conservative posture to it. If you look at the midpoint of our guidance for 2024, we're projecting base to be down a little over 5% for the full year. But it's more in the 9% to 13% negative range in Q1 and then improving sequentially from there. But again, down about 5% for the full year.

因此，第四季的基數成長、綜合基數成長下降了 13%，這超出了我們的預期。因此，我們對此採取了相當保守的態度。如果你看看我們 2024 年指導的中點，我們預計全年的基數將下降略高於 5%。但第一季的負值範圍更大，為 9% 至 13%，然後從那裡開始連續改善。但全年再次下降約 5%。

Okay. And then perhaps can you just talk a little bit about pricing trends currently? I know it's not a big part of the algorithm, but does bigger scale help in that equation?

好的。那麼也許您可以談談目前的定價趨勢嗎？我知道這不是演算法的重要組成部分，但是更大的規模對這個方程式有幫助嗎？

Pricing in this industry has been very consistent and very stable. We've had no conversations with Sterling about pricing, nor will we until after closing.

該行業的定價一直非常一致且穩定。我們沒有與斯特林就定價問題進行對話，直到交易結束後我們也不會進行對話。

(Operator Instructions) Kyle Peterson, Needham & Company.

（操作員說明）Kyle Peterson，Needham & Company。

I just wanted to touch on balance sheet and capital allocation. Obviously, the leverage is going to come up a bit with this transaction. But I guess how quickly do you guys feel you can delever the balance sheet more towards that target range, maybe in -- whether it's a status quo macro or if we get some improvement? But yes, I guess where can you get from the 4x to the 2x to 3x?

我只想談談資產負債表和資本配置。顯然，這筆交易的槓桿率將會上升。但我猜你們覺得多久可以將資產負債表進一步去槓桿化以達到目標範圍，也許是——無論是維持現狀的宏觀經濟還是我們得到了一些改進？但是，是的，我想從 4 倍到 2 倍再到 3 倍你能從哪裡得到呢？

So Kyle, we're going to have two primary objectives post-closing, integration and deleveraging. So we throw off a lot of cash. You can see it in our numbers. Combined, we had about $300 million of cash flow from operations. We will be utilizing that to delever as quickly as possible.

凱爾，我們在交割後將有兩個主要目標：整合和去槓桿化。所以我們丟掉了很多現金。您可以在我們的數據中看到這一點。我們的營運現金流加起來約為 3 億美元。我們將利用這一點盡快去槓桿化。

Got it. That's helpful. And maybe just a follow-up in terms of some of the other competitive benefits after this deal. It seems like you guys will be the clear number 1 player in the screening space. I just wanted to see if you guys had some thoughts on whether it is how you guys are going to go to market or the value prop of having more scale globally. Maybe just anything in terms of how you guys think it will influence the sales process or ability to push the snowball down the hill on new logos and upsell, cross-sell.

知道了。這很有幫助。也許只是這筆交易後其他一些競爭優勢的後續行動。看起來你們將成為放映空間中明顯的第一名。我只是想看看你們是否對進入市場的方式或在全球範圍內擴大規模的價值支撐有一些想法。也許只是你們認為的任何事情都會影響銷售流程或將雪球推下山的新標誌和追加銷售、交叉銷售的能力。

Well, I think there's just a lot of customer benefits here. Sterling does some things really well. We do some things really well. And when you combine them, it's good for the customer and how we was able to launch best-in-breed products across the customer base. Kyle, again, we're still really early days on this, and we've got a lot of planning to do. And so it's hard for me to sit here today and tell you exactly what that landscape will look like.

嗯，我認為這裡為客戶帶來了很多好處。斯特林在某些事情上做得非常好。有些事情我們做得非常好。當您將它們結合起來時，這對客戶以及我們如何能夠在整個客戶群中推出同類最佳產品都有好處。凱爾，再說一次，我們在這方面還處於早期階段，我們還有很多計劃要做。因此，我今天很難坐在這裡準確地告訴你們那片風景會是什麼樣子。

But we just feel like, again, I'll go back to it many, many, many times because this was a key component in us wanting to do this deal was just such the great -- the complementary of the verticals. Again, the verticals they are very strong in are not the same verticals that we're very strong in. And it just makes a good story, I think, for the market.

但我們只是覺得，我會再次回到它很多很多很多次，因為這是我們想要完成這筆交易的關鍵組成部分，它是如此偉大——垂直領域的互補。同樣，他們非常擅長的垂直領域與我們非常擅長的垂直領域並不相同。我認為，這對市場來說只是一個好故事。

That makes sense. And congrats on the transaction.

這就說得通了。並祝賀交易成功。

Heather Balsky, Bank of America.

希瑟‧巴爾斯基，美國銀行。

Another question on the acquisition. And you talked about the diversification in your customer mix just now. I was hoping you could help us just think about that in terms of your long-term strategy.

另一個關於收購的問題。您剛才談到了客戶結構的多元化。我希望你能幫助我們從長期策略的角度來考慮這一點。

I know you've talked a fair amount a lot about your high-growth vertical strategy, and that's driving outsized growth. I think once you're a combined company, how do you think about focusing on higher growth verticals, where the Sterling have higher growth? How much of your business will be in that higher growth area? And then are there parts of your business or parts of their business you might want to prune in order to get the right growth profile?

我知道您已經多次談論了您的高成長垂直策略，而這正在推動超額成長。我認為，一旦你成為一家合併後的公司，你如何看待專注於更高成長的垂直領域，也就是英鎊成長更高的領域？您的業務有多少將集中在那個更高成長的領域？那麼，為了獲得正確的成長狀況，您是否可能想要修剪您的業務或他們的業務的某些部分？

Heather, I think I can work backwards on that. I don't -- again, we're still very early days on this. And obviously, over time, we'll give you more insights into go-to-market strategies. But I don't think there's going to be a need or reason for pruning.

希瑟，我想我可以逆向思考這一點。我不——再說一遍，我們在這方面還處於早期階段。顯然，隨著時間的推移，我們將為您提供有關進入市場策略的更多見解。但我認為沒有必要或理由進行修剪。

If you think about what we've always messaged to you guys about our strategy of high-volume hiring, and I think if you look at, again, across transportation, retail, healthcare, even staffing and hospitality, although very low numbers for us, that strategy maps to about 71% of our revenue. And if you look at Sterling and you look at their verticals and especially, I'll point out healthcare because their healthcare vertical is really strong.

如果你想想我們一直向你們傳達的關於我們的大批量招聘策略的信息，我想如果你再看看交通、零售、醫療保健，甚至人員配備和酒店服務，儘管我們的數字非常低，該策略約占我們收入的71%。如果你看看斯特林，看看他們的垂直領域，特別是，我會指出醫療保健，因為他們的醫療保健垂直領域非常強大。

If you think about our verticals, so again, if you look at transportation, that's 24%. If you look at retail, e-commerce, that's 22%. Healthcare for us, 15%. But if you look at Sterling, you're looking at healthcare of 23%, and they're manufacturing in industrials at 18% and things like that. So I think when you combine the two organizations, you're going to bring obviously some of those numbers down and some of those numbers up.

如果你考慮我們的垂直產業，那麼如果你考慮交通運輸，那就是 24%。如果你看看零售業、電子商務，那就是 22%。我們的醫療保健，15%。但如果你看看英鎊，你會發現醫療保健佔 23%，工業製造業佔 18% 等。因此，我認為，當您將這兩個組織合併時，顯然會導致其中一些數字下降，一些數字上升。

But I think in general, as far as we can tell from our discussions, their strategy in healthcare is very similar to us where it's high volume hiring, stuff like that. So I think there's just a great complementary vertical story here. But it's really more to come. You're going to have to be a little patient with us as we wait for closing and then can give you more information about go-to-market strategies and stuff like that.

但我認為總的來說，據我們從我們的討論中可以看出，他們在醫療保健方面的策略與我們非常相似，都是大量招聘之類的。所以我認為這裡有一個很好的補充垂直故事。但未來還會有更多。當我們等待關閉時，您必須對我們有一點耐心，然後可以為您提供有關進入市場策略和類似內容的更多資訊。

That's really helpful. And for your business on international, can you just help us think about the line of sight you have in terms of stabilization there? Any green shoots that you're seeing in APAC and India?

這真的很有幫助。對於您的國際業務，您能否幫助我們考慮您在穩定方面的視線？您在亞太地區和印度看到了什麼新芽嗎？

Yes, great question. So as we, again, talked to you guys about for literally all of 2023, international has been a drag on the business. And again, let's separate it too, because EMEA has actually done pretty well.

是的，很好的問題。因此，當我們再次與大家談論 2023 年全年時，國際業務一直拖累業務。再說一遍，我們也將其分開，因為 EMEA 實際上做得很好。

So when we talk about international, we're really talking about India and APAC. And India and APAC have been down as David mentioned in his remarks. But I would tell you that starting in Q4 of 2023, we actually started to see stabilization in APAC and India. And obviously, we're hoping that that continues. It's still early days on stabilization. But we think we hit bottom sometime in 2023, and now we're starting to see stabilization and maybe even slight improvement. It's still a bit early days to call it a trend. But again, I think we're starting to see India and APAC come back a little bit.

因此，當我們談論國際時，我們實際上談論的是印度和亞太地區。正如大衛在演講中提到的那樣，印度和亞太地區的業績一直在下滑。但我想告訴你，從 2023 年第四季開始，我們實際上開始看到亞太地區和印度的穩定。顯然，我們希望這種情況能夠持續下去。現在還處於穩定的早期階段。但我們認為我們會在 2023 年的某個時候觸底，現在我們開始看到穩定，甚至可能略有改善。現在稱其為趨勢還為時過早。但我認為我們開始看到印度和亞太地區有所回升。

Scott Wurtzel, Wolfe Research.

史考特‧沃策爾，沃爾夫研究中心。

Just wanted to go back to the synergy side. And appreciate the color on what the low-hanging fruit is on the cost side. So just want to maybe touch on what on the cost side is maybe going to require the most work. And you also mentioned that revenue synergies aren't embedded in the $50 million. I'm just wondering also if there's anything on the cost side that isn't embedded in the $50 million of synergies.

只是想回到協同學。並欣賞成本方面唾手可得的成果的顏色。因此，我只想談談成本方面可能需要最多工作的地方。您也提到，收入綜效並未包含在 5,000 萬美元中。我只是想知道成本方面是否有任何東西沒有包含在 5000 萬美元的協同效應中。

Well, Scott, as we said, we think we can get at least $50 million, and we think we can do that over 18 months to 24 months. Longer term, there’s a lot of opportunity relative to combining fulfillment operations, looking at best practices, refining processes, utilizing AI. As we said, we’re launching a $3 million AI initiative relative to US criminal data. We hope the outcome of that will be something special that will also help drive productivity and reduce costs.

嗯，斯科特，正如我們所說，我們認為我們至少可以獲得 5000 萬美元，而且我們認為我們可以在 18 個月到 24 個月內做到這一點。從長遠來看，結合履行營運、研究最佳實踐、完善流程和利用人工智慧有很多機會。正如我們所說，我們正在啟動一項與美國犯罪數據相關的 300 萬美元人工智慧計畫。我們希望這項成果將是特別的，也將有助於提高生產力和降低成本。

So when you're putting two companies together like this, there are a lot of opportunities. We're going to take best practices. We have a whole team of black belts internally that we're going to be utilizing to identify best practices and best processes. We'll be using some outside advisers to assist us with that as well. And we think there's just a lot of opportunity on a longer-term basis. But we're going to go really hard and fast at that first $50 million.

因此，當你像這樣將兩家公司合併在一起時，就會有很多機會。我們將採取最佳實務。我們內部有一整套黑帶團隊，我們將利用他們來確定最佳實踐和最佳流程。我們還將聘請一些外部顧問來協助我們完成這項工作。我們認為從長遠來看，存在著許多機會。但我們將非常努力、快速地爭取第一筆 5000 萬美元。

Got you. That's helpful. And then just wondering, I think you just mentioned it in your answer, but just wondering if you can expand on what some of these incremental investments in AI could look like as you realize the savings associated with the synergies?

明白你了。這很有幫助。然後我想知道，我想您剛剛在回答中提到了這一點，但只是想知道，當您意識到與協同效應相關的節省時，您是否可以擴展人工智慧的一些增量投資可能會是什麼樣子？

Yes, Scott, let me jump in there. I mean I don’t think we want to give you too much information for competitive reasons on what these projects are about. But I will tell you, in general, we are looking at all aspects of the business of where we can leverage AI and not only how it improves the candidate and customer experience and the offering, but where it potentially also can reduce headcount.

是的，史考特，讓我跳進去。我的意思是，出於競爭原因，我認為我們不想向您提供太多有關這些項目的資訊。但我會告訴你，總的來說，我們正在考慮業務的各個方面，我們可以在哪些方面利用人工智慧，不僅是它如何改善候選人和客戶的體驗和產品，而且還有它可能在哪些方面減少員工數。

And I think we've mentioned to you in the past or to others in the past of where we've already rolled out AI in our call centers with our Click. Chat. Call. initiative that we announced a couple of quarters ago, which not only has improved our CSAT scores but has allowed us to reduce headcount because people are clicking and chatting with AI chatbots, but these are live AI chatbots and things like that, but less of the phone.

我想我們過去曾向您或其他人提到過，我們已經透過 Click 在呼叫中心推出了人工智慧。聊天。稱呼。我們在幾個季度前宣布了一項舉措，這不僅提高了我們的CSAT 分數，還使我們能夠減少員工人數，因為人們會點擊人工智慧聊天機器人並與之聊天，但這些是即時人工智慧聊天機器人之類的東西，但較少電話。

So we think there's a similar type of story across fulfillment on the US criminal side. But again, we're going to keep the secret sauce on that to us, and we'll keep you posted as we actually roll out things.

因此，我們認為美國犯罪方面的履行也存在類似的故事。但同樣，我們將保留這方面的秘密，並且當我們實際推出產品時，我們會及時通知您。

Understood. Congrats on the deal.

明白了。恭喜達成交易。

(Operator Instructions) Shlomo Rosenbaum, Stifel.

（操作員說明）Shlomo Rosenbaum，Stifel。

I want to chip a couple more in, if you don't mind. Scott, one of the critical areas in combining two companies that are background screeners is making sure you don't have a lot of client losses post the deal. And given the complexity of the integration of an acquisition that is close to your guys' size and all that's involved in that, how are you going to really minimize any client losses? And then I have a financial one for David.

如果你不介意的話，我想多捐點錢。斯科特，合併兩家背景篩選公司的關鍵領域之一是確保交易後不會造成大量客戶損失。考慮到收購整合的複雜性與您的人員規模及其涉及的所有內容相近，您將如何真正最大限度地減少客戶損失？然後我為大衛準備了一份財務報告。

Shlomo, great question, and probably the most important question that we've been talking about. So I'll give you a couple of high-level things, but again, we're early days, and we haven't mapped all this stuff out.

Shlomo，很好的問題，也可能是我們一直在討論的最重要的問題。所以我會給你們一些高層次的東西，但同樣，我們還處於早期階段，我們還沒有繪製出所有這些東西。

So first of all, we are going to have a dedicated integration team. This is all they're going to do. And we're going to staff it with some of our best people. We're going to bring in third parties. We're going to take advice of a lot of folks on this. And probably, as you know, from some of the history of this industry, some of the biggest challenges have been not in maybe the integration of operations or sales or any the functions of the Company, but it's really been the technology integrations that have hit snags.

首先，我們將擁有一個專門的整合團隊。這就是他們要做的一切。我們將配備一些最優秀的人才。我們將引入第三方。我們將在這方面聽取許多人的建議。如您所知，從這個行業的一些歷史來看，一些最大的挑戰可能不是營運或銷售或公司任何職能的整合，而是技術整合。障礙。

And I will tell you right now, we are going to take a very conservative approach on tech integration to minimize client loss. We are not going to force large customers onto platforms they don't want to be on or technologies they don't want to be on.

我現在就告訴你，我們將在技術整合方面採取非常保守的方法，以盡量減少客戶損失。我們不會強迫大客戶使用他們不想使用的平台或他們不想使用的技術。

We've got a, what I would call, a very theoretical and high-level strategy at this point, which we will obviously start refining literally starting tomorrow. But we have to obviously wait until close before we can actually get in and really do any of the heavy lifting and even some of the heavy planning. But in general, we're not going to break eggs on the customer side because we're going to take a smart approach to the technology.

我們現在已經有了一個我所說的非常理論化和高水準的策略，我們顯然將從明天開始對其進行完善。但顯然我們必須等到關閉之後才能真正進入並真正完成任何繁重的工作，甚至一些繁重的計劃。但總的來說，我們不會在客戶方面打破雞蛋，因為我們將採取明智的技術方法。

Okay. And then just from the financial side, David, when I do the math using end of year '23 numbers and you assume $50 million of synergies, I'm getting closer to 4.5x leverage. Is the difference the assumption of free cash flow from both companies for another two-plus quarters?

好的。然後，僅從財務方面來看，大衛，當我使用 23 年末的數字進行數學計算時，假設協同效應為 5000 萬美元，我的槓桿率越來越接近 4.5 倍。差異是否是基於兩家公司另外兩個多季度的自由現金流的假設？

That's right. So it all comes down to timing. If it closes June 30, if it closes September 30, both companies throw off a significant amount of cash quarter-over-quarter. Plus there will be a minimum amount of cash on the balance sheet of at least $150 million, maybe up to $200 million at closing. So from a net leverage perspective, that will drive that down even further.

這是正確的。所以這一切都取決於時機。如果它在 6 月 30 日結束，如果它在 9 月 30 日結束，兩家公司都會逐季扔掉大量現金。此外，資產負債表上的現金金額至少為 1.5 億美元，交易結束時可能高達 2 億美元。因此，從淨槓桿角度來看，這將進一步壓低槓桿率。

I see no further questions in the queue. I will now turn the call over to Mr. Staples for closing comments. Please go ahead.

我在隊列中沒有看到更多問題。我現在將把電話轉給史台普斯先生徵求總結意見。請繼續。

Yes. Thank you, operator. And thank, everyone, for your time this morning and for your ongoing support. Take care.

是的。謝謝你，接線生。感謝大家今天早上抽出寶貴的時間以及一直以來的支持。小心。

Thank you. This concludes the First Advantage fourth quarter and full year 2023 earnings conference call and webcast. Thank you all for your participation. At this time, you may disconnect your line. Have a wonderful day.

謝謝。First Advantage 第四季和 2023 年全年財報電話會議和網路廣播到此結束。感謝大家的參與。此時，您可以斷開線路。祝你有美好的一天。