Q4 2023 First Advantage Corp Earnings Call

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Leo: 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-in webcast. Hosting the call today from First Advantage is Stephanie Gorman, Vice President of Investor Relations. At this time, all participants have been placed in listen-only mode to prevent any background noise.

[music].

Good day every one 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 2000, twenty-three earnings conference call and webcast hope.

Hosting the call today from first advantage is Stephanie Gorman, Vice President of Investor Relations at.

At this time, all participants have been placed and listen only mode to prevent any background noise. After.

Leo: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2.

After the speaker's remarks, there will be a question and answer session.

If you would like to ask a question. During this time. Please press star one on your telephone keypad if.

If at any point. Your question has been answered you may remove yourself from the queue by pressing star too.

Operator: Last, should you require operator assistance, please press star zero. Please note, today's event is being recorded. It is now my pleasure to turn the call over to Stephanie Gorman. You may begin. Thank you, Leo. Good morning, everyone.

Lastly, if you should require operator assistance. Please press stars zero.

These note today's event is being recorded.

It is now my pleasure to turn the call over to Stephanie Gorman you.

You may begin.

Thank you yeah. Good morning, everyone I'm joined on our call today.

Stephanie D. Gorman: 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 announce the definitive agreement to acquire Sterling Check Corp. 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.

Our Chief Executive Officer and David.

Financial Officer.

You may have seen her day, we announced the definitive agreement to acquire Sterling's Esquire.

We will first discuss the transaction then cover first advantages fourth quarter and full year 2023 result, as well as our 2024 outlook. Then we will open the cough a question.

And the investors section of our website, you'll 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 honor Investor Relations website.

Stephanie D. Gorman: 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.

Before we begin our prepared remarks, I would like to remind everyone that our discussion today will include forward looking statements such forward looking lifting statements are not guarantee 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 you discuss.

Stephanie D. Gorman: These factors are discussed in more detail in our filings with the FEC, including our 2022 Form 10-K and our 2023 Form 10-K to be filed with the FEC. 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. 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 effort, appear in today's earnings press release and presentation, which are available on our investor relations website. I will now hand the call over to Scott. Thank you, Stephanie, and good morning, everyone.

More detail in our filings with the S E C, including our 2022 Form 10-K and R. 2000, twenty-three Form 10-K to be filed with the S. E C.

Such factors may be updated from time to time, and our periodic filings with the SEC and we do not undertake any obligation to update forward looking statements.

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 effort, appearing today's earnings press release and presentation, which are available on our Investor Relations website.

I will now hand, the call over to Scott.

Thank you Stephanie and good morning, everyone.

Scott Staples: This is an exciting day for First Advantage as we announce our agreement to acquire Sterling. This strategic and accretive acquisition will benefit customers and investors and drive long-term value creation. I'll start by walking through an overview of the rationale behind this, 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.

This is an exciting day for first advantage as we announced our agreement two cars Sterling.

This strategic an accretive acquisition will benefit customers and investors and drive longterm value creation.

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 two 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.

Scott Staples: 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. With this investment, First Advantage 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. Additionally, 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. 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.

Product offerings are highly complimentary, which should unlock upsell and crossrail opportunities and enable improve customer experiences across our combined customer base.

The transaction will enable us to increase investment and drive innovation and 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.

With this investment will be increasingly well positioned to meet the evolving needs of our customers deliver it even better customer and African 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.

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.

David will cover in more detail. Shortly we are acquiring sterling for approximately $2.2 billion in cash and stock.

Scott Staples: The combination of our companies is expected to generate at least $50 million in run rate synergies in the first 18 to 24 months, with potential material upside. This positions us well to both reduce costs 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. And importantly, we're excited about bringing together the world-class talent of First Advantage and Sterling.

The combination of our companies is expected to generate at least $50 million in run rate synergies in the first 18 to 24 months with potential material upside.

Dispositions as well to both reduce cost for our customers and create longterm value for our shareholders.

We expect the transaction to deliver immediate double digit accretion two adjusted earnings per share on a run rate cinergy basis.

And to accelerate our objective to drive longterm profitable growth.

And importantly, we're excited about bringing together the world class talent first advantage and Sterling, we have too high performing cultures that share a dedication to delivery excellent customer experiences.

Scott Staples: 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 and all our stakeholders. Turning to slide five, 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 checks annually and serves 80,000 customers across more than 200 countries and territories. From a geographic perspective, First Advantage and Sterling have complementary international footprints, deepening our local presence and advancing our growth in attractive geographies like EMEA, APAC, LATAM, and Indeed.

We look forward to building on that together to deliver substantial value for customers and shareholders through this acquisition.

As the C E O of the combined company I personally look forward to welcoming the talented Sterling T. Two first advantage.

Overall this combination is a transfer me to step for first advantage and all our stakeholders.

Turning to slide five.

Which highlight some key metrics of our combined company.

This acquisition will create a combined company with approximately $1.5 billion in revenue that can ducks over 200 million background screens annually and served 80000 customers across more than 200 countries and territories.

From a geographic perspective first advantage in Stirling have complementary international footprint.

Deepening our local presence in advancing our growth and attractive geography's like a media APAC Latam in India.

If you look at the verticals, where our customers operate Sterling has strength and serving employers in health care industrials and financial services, which make up over half its business today, while first advantage, particularly excels in the transportation retail and e-commerce for.

Scott Staples: If we look at the verticals where our customers operate, Sterling has strength in serving employers in healthcare, industrial, and financial services, which make up over half its business today, while First Advantage particularly excels in the transportation, retail, and e-commerce verticals. 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 customers. Together, we will be able to better support companies as they manage risk and hire the best talent. Turning to slide six.

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Together, we will have greater product and vertical through 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 reduced customer concentration by diversifying our customer base.

Together, we will be able to better support companies as a manage risk and hire the best talent.

Turning to slide six.

Scott Staples: 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 features that will reduce turnaround time and cost for customers. 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 i9 and WOTC off to Sterling customers, and certain of Sterling's digital identity solutions to First Advantage customers. We'll also have an opportunity to bring First Advantage's leading automation expertise to Sterling, and we expect that as we find new ways to utilize our technology.

The combination of first advantage in 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.

We see exciting opportunities to use our complimentary portfolio portfolio to sell incremental products and services to both companies customers. For example, we expect to be able to bring first advantages I nine and what's the offerings, two starlings customers and <unk> and certain of Sterling's digital identity solutions to first advantage customer.

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We'll also have an opportunity to bring first advantages 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 advantages 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.

Scott Staples: 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. 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 efficiency, for example, with greater capacity for investment.

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 and applicant experience in the back and fulfillment process and other technologies that will shape. This industry over the long term.

Scott Staples: 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. Similarly, the transaction will enable greater combined investment in next-generation digital identification technologies, building on our existing services and the acquisition of infinite IDs. Digital identification has been a core part of First Advantage's strategy, and bringing together our identity verification and identity fraud will enable First Advantage to further innovate in delivering state-of-the-art digital identity solutions to our customers.

Similarly, the transaction will will enable greater combined investment and next generation digital identification technologies building on our existing services and the acquisition of infinite I D.

Digital identification has been a core part first advantages strategy and bring it together or identity verification and identity fraud solutions will enable first advantage to further innovate and delivering state of the art digital identity solutions to our customers.

David L. Gamsey: Overall, our acquisition of Sterling will accelerate our strategic objectives toward sustainable long-term value creation for customers and shareholders. 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 service. 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. I will now turn the call over to David to discuss the financial details of the transaction. Thank you, Scott.

Overall, our acquisition of Sterling will accelerate our strategic objectives toward sustainable longterm value creation for customers and shareholders.

Or enhance growth opportunities and improve diversification set us up to deliver a stronger more comprehensive value proposition to customers and a large growing and highly fragmented 13 billion dollar 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 is current customers and shareholders and those are the combined company.

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

Thank you Scott turning to slide seven I'll take you through the financial aspects and structure of the transaction.

David L. Gamsey: Turning to slide 7, I'll take you through the financial aspects and structure of the transaction. The 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.

Total purchase price consideration for this transaction is $2.2 billion. It consideration will include $1.2 billion in cash 27.15 million shares of newly issued first advantage common stock and the assumption of Sterling that which will be retired at closing.

This translates to a purchase price of $16.73 per share, which represents a premium or 35% to sterling's closing price yesterday and 26 per cent premium to the 30 day V y.

David L. Gamsey: 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. 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 synergy. I'll discuss the pro forma profile in more depth shortly.

We will be acquiring sterling at a center, Josh adjusted EBITDA I N multiple that represent a discount to first advantages current trading multiple.

We expect the transaction to deliver significant total shareholder return in the long run.

This transaction essentially doubles first advantages revenues and adjusted EBITDA and we expect the transaction to deliver immediate double digit accretion two adjusted earnings per share assuming run rate synergies I'll discuss the pro forma profile in more depth shortly.

David L. Gamsey: It also provides greater trading liquidity for investors, creating an even more compelling opportunity for investors in this industry. Within 18 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 advisor. 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. We have secured fully committed financing for this transaction with $1.8 billion of new seven-year term debt.

It also provides greater trading liquidity for investors, creating an even more compelling opportunity for investors in this industry.

Within 18 to 24 months after closing first advantage expects to achieve at least $50 million in saturday's is identified by our team and supported by an advisor. These.

These synergies would be driven by a reduction in third party data cost and efficiencies across operations product and technology and SG&A, including the elimination of duplicate a public company cough. So it's just a combination of insurance programs and one order one set of tax return.

Aren't we see potential for upside on the expected synergies value over time.

We have secured fully committed financing for this transaction with $1.8 billion of new seven year term death.

David L. Gamsey: The new financing is in addition to the existing debt on our balance sheet. 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.

The new financing is in addition to the existing data on our balance sheet 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 Clarence 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.

First advantage shareholders will own approximately 84% of the combined company and Sterling shareholders will own approximately 16%.

David L. Gamsey: 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. Our primary focus upon closing will be on integration, synergies, deleveraging, and, most importantly, on-air customers. The acquisition of Sterling is a significant step forward in our value creation playbook, but it is just the beginning.

There will be approximately 173 million diluted shares outstanding.

As a result of the transaction, we have suspended purchases under our share buyback program.

Our primary focus upon closing will be on integration cenergy.

Deleveraging and most importantly on our customers.

The acquisition of Sterling is a significant step forward and are of value creation playbook. It is just the beginning we.

David L. Gamsey: We have the leadership team, industry expertise, technology, and systems to successfully execute and integrate this transaction and deliver shareholder and customer value. 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 have the leadership team industry expertise technology and systems to successfully execute and integrate this transaction and deliver shareholder and customer value.

Now turning to slide eight are proposed acquisition of Sterling generates a strong pro forma financial profile.

Using the ear and figures that first advantage in Sterling reported today, we will have pro forma $1.5 billion in 2000, twenty-three revenues and $473 million and combine EBITDA, including expected run rate synergies.

This represents a 32% adjusted EBITDA margin, which is approximately 100 basis points above first advantages current margin.

We expect to generate double digit E. P. S accretion on a run rate basis with continued ability to compound E. P. S at teens growth rate over time.

David L. Gamsey: We expect to generate double-digit EPS accretion on a run rate basis with continued ability to compound EPS at the teens' growth rate over time. Now, on slide 9, I'll focus on how the transaction impacts their 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 7-year term loan and cash on the balance sheet. We have already secured financing commitments for this new facility from a consortium of banks.

Now on fly nine I'll focus on how the transaction impacts their capital structure.

First advantage will assume gonna retire sterling's outstanding dad at closing.

As previously mentioned this along with the cash consideration porch is portion of the purchase price will be funded through a new 1.8 billion dollar 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.

David L. Gamsey: 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. Net leverage at closing will be in the range of four times, depending on the exact timing of closing. The debt will be covenant-like, consistent with their current agreement, further reducing risk and increasing flexibility. Our long-term goal is to reduce and maintain net leverage between two and three times. Our expected liquidity at closing and our combined company's ability to generate cash flow will leave us with greater than two and a half times interest coverage, ample room to achieve our capital allocation priorities and de-leverage organically over time for Contacts. Pro Forma combined cash flow from operations was approximately $300 million based on actual 2023 results.

Additionally, as part of this financing agreement, we will be upsizing, our current 100 million dollar revolver to $250 million and extending the maturity date to 2030.

Net leverage at closing will be in the range of four times, depending on the exact timing of closing.

That that will be covenant light <unk>.

Consistent with our current agreement further reducing risks and increasing flexibility.

Our long term goal is to reduce and maintain net leverage between two and three times.

Our expected liquidity at closing and our combined companies ability to generate cash flow will leave us with greater than two and a half times interest coverage ample room to achieve our capital allocation priorities and deleverage organically over time.

For contacts.

Pro forma combined cash flow from operations was approximately $300 million based on actual 20 twenty-three results.

Our well Bill Financial Foundation, and resilient business model have supported our history of strong adjusted EBITDA margins and robust operating cashless, creating a healthy balance sheet that has given us the flexibility to acquire sterling.

David L. Gamsey: 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. Looking ahead, and as previously mentioned, we expect First Advantage to continue compounding EPS at a teen's 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 their historical capital allocation strategy, going forward, we plan to focus their use of capital on prudent deleveraging towards their long-term net leverage target range, which will help support earnings growth.

Looking ahead and as previously mentioned, we expect first advantage to continue compound H E. P. S. At a team's growth rate over time through the combination of top line growth ongoing cenergy kasher insignificant deleveraging D. A strong organic free cash.

Flow generation.

We will continue to selectively and strategically invest in the business to fuel longterm organic growth and to successfully integrate sterling.

Particularly to drive the innovation that we know will most benefit our customers.

Consistent with their historical capital allocation strategy.

Going forward, we plan to focus our uses of capital on prudent deleveraging towards their longterm net leverage target range, which will help support earnings growth.

David L. Gamsey: Now, let me take you through our full year and fourth quarter results, as well as our standalone First Advantage 2024 outlook. Turning now to a recap of our four full year results on slide 12. 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.

Now let me take you through our full year in fourth quarter resolved as well as are Standalone first advantage 2024 outlook.

Turning now to a recast out there for a full year results on July 12th.

We are pleased with our overall annual performance coming in within 1% of our original 20 twenty-three 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 diligence and successful at controlling what can be controlled within our business. Despite the challenging macro environment.

Revenues grew sequentially throughout the year and every single quarter, including two four coming in at $764 million, a decrease of 5.7% from the prior year with constant currency revenues of $766 million.

David L. Gamsey: For the year, Infinite ID, which we acquired in September 2023, contributed approximately $3 million to our revenue. 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. However, our base growth, which is more sensitive and correlated to changes in the macro environment, declined on lower volume.

The year Infinite I D, 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 their historical revenue growth rates are based growth, which is more sense it up and correlated to changes in the macro environment declined on lower Vaughn.

<unk>, we believe that when the macro environment stabilizes, our base growth will normalize to our historical rate of 2% to 4%.

David L. Gamsey: We believe that when the macro environment stabilizes, our base growth will normalize to our historical rate of 2 to 4 percent. 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.

An hour America's segment revenues of $673 million or 87% of consolidated revenues were down 3.1% from the prior year.

And 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.

Adjusted EBITDA for the year was $238 million and our adjusted EBITDA margin was a robust 31.1% representing year over year expansion.

David L. Gamsey: 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. Now, looking 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 our 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.

Or just it effective tax rate was 23.5% adjusted net income was $146 million and adjusted diluted EPS was one dollar.

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 investment 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 or $203 million, a decrease of 4.7% from the prior year.

Given the mix of our domestic and international businesses currency has little impact on fourth quarter resolved with constant currency revenues of $202 million for the corner infinite I D contributed approximately $2 million to our revenues.

David L. Gamsey: Given the mix of our domestic and international businesses, currency had little impact on fourth quarter results, with constant currency revenues of $202 million. For the quarter, Infinite ID contributed approximately $2 million to our revenue. 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.

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 $500000 or more of expected annual contract value and 46 for the year of which approximately half where new logos and the other half or upsell cross-sell.

David L. Gamsey: 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. However, 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 by upsell and cross-sell, which contributed $12.7 million, or nearly 6% to our performance. Additionally, revenues from new customer logos contributed an additional $8.3 million, or approximately 4%. In our America segment, revenues of $182 million, or 89% of consolidated revenues, were down 3.1% from the prior year.

That said total base continue 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 and or India in APAC markets.

We are well positioned to take advantage of the upside from a market recovery when it materializes the.

But they still have declined for the quarter was partially offset from upselling, 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%.

And are America's segment revenues of $182 million or 89% of consolidated revenues were down 3.1% from prior year.

David L. Gamsey: This quarter held up relatively well, which is primarily attributable to our broad-based, resilient customers. Furthermore, all of our fundamentals remain strong. As a reminder, Jolt's data is correlated to America's base growth. 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, and quits fell to the lowest monthly level in nearly three years.

This quarter held up relatively well, which is primarily attributable to a broad base resilient customers.

All of our fundamentals remain strong.

As a reminder, jolts data is correlated to our mirror because the base growth.

Looking at December 2023, jolts data openings and hires increased slightly monto, Vermont and remained relatively high by historical standards, but separations declined.

Employers are holding onto talent longer <unk>.

<unk> fell to the lowest monthly level in nearly three years.

David L. Gamsey: These declining hiring trends continue to impact our America's base, which for the quarter was down 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. 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 their 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. 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 Our adjusted effective tax rate was 21.2%, which reflects a one-time favorable adjustment.

These declining hiring trends continue to impact or America's space, which for the quarter was down 12%.

And 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 <unk>.

The decrease was due primarily to base weakness in India in APAC, all set in part by relative strength and <unk> <unk>.

As a reminder, or 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 a regional exposure to be P. O N I T services related businesses and a pack was down 21% driven by the financial services sector and other regional market dynamics.

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.

Year basis.

This is another approved point that our business remains resilient in the face of topline headwinds.

Or just it effective tax rate was 21.2%, which reflects a one time favorable adjustment.

David L. Gamsey: Adjusted Net Income was $43 million, and Adjusted Diluted EPS was $0.29, which includes a two-cent negative impact from our August 2023 Special Dividend. 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 Buy Back Program. We've spent $41 million on the acquisition of Infinite ID, growing our vertical capabilities, and expanding our product suite. Additionally, we've spent $28 million on capital-related investments. In December, we entered into two new interest rate swap agreements that took the place of our existing interest rate collars that mature today.

Adjusted net income was $43 million and adjusted diluted EPS was 29 cents, which includes a two cent negative impact from our August 20, twenty-three special dividend.

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 was $214 million of cash on the balance sheet.

We continue to return capital to shareholders through our 218 million dollar one time special dividend and repurchasing 15 minutes $9 million of stock as part of your buyback program.

We spend $41 million on the acquisition of infinite I D growing or vertical capabilities and expanding air products. Sweet. Additionally, we spent $28 million on Capitol related investments in December we entered into two new interest rate swap agreement that take the place of <unk>.

<unk> interest rate callers that mature today.

Now moving to 515 and a discussion of our outlook.

David L. Gamsey: Now, moving to slide 15 and a discussion of our outlook. In developing our stand-alone guidance for 2024, we considered many factors. The first was the current macroeconomic environment, including the softening and hiring trends and the reduction in employee churn. However, these dynamics were partially offset by discussions with their 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.

And 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 charm.

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.

David L. Gamsey: As such, the midpoint of our guidance reflects a conservative posture towards growth and profitability in 2024. For First Advantage on a standalone 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 their strong historical performance of around 97%.

As such the mid point other guidance reflects a conservative posture towards growth and profitability in 2024.

Our first advantage on a standalone 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 their strong historical performance of around 97%.

David L. Gamsey: We also expect continued execution of upsell, cross-sell, and new logo growth consistent with historical trends and long-term targets. 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. For 2024, we expect to generate full-year revenues in the range of $750 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. 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.

We also expect continued execution of up sell cross cell and new logo growth consistent with historical trends and longterm targets.

The mid point of guidance range assumes that there will be further macro driven base declines.

With base remaining negative in the first three quarters fell 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.

For 2024, we expect to generate full year revenues in the range of $750 million to $800 million based.

Based on the mid point of $775 million. This result in positive year over year organic revenue growth.

This includes revenues related to infinite I D, which is expected to contribute approximately $7 million in the first eight months of the year as we approached the anniversary of the acquisition at the beginning of September.

Add her mid point, we expect to maintain full year adjusted EBITDA margins of approximately 31% and adjusted EBITDA in the range of 228 million to $248 million.

David L. Gamsey: 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. 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, with adjusted diluted EPS of $0.93.

This is after considering approximately $10 million, an increase is an employee wages and benefits and normalization of management and setup plans as well as approximately $7 million in new investment and product technology in sales.

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 mid point, we expect 2024, adjusted net income to be approximately $135 million and adjusted diluted EPS of 93 cents.

We have provided and adjusted diluted EPS bridge on slide 16 that walk you through the puts and takes in comparing 2023 resolved to what we expect in 2024.

David L. Gamsey: 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. We have also provided a summary of selected 2024 modeling assumptions in the appendix, including a range of $30 to $33 million of capital expenditures, of which $3 million relates to a new U.S. criminal data AI project and $4 million relates to a large-scale computer refresh project.

This is very important to understand.

On a like for like basis after adjusting for impacts including R. 2023, one time special special dividend.

Expiring interest rate swaps and the positive impact from your 2023 share buybacks adjusted 20 twenty-three EPS would have been 92 cents.

We expect diluted EPS expansion at the mid point of our guidance range in 2024, when taking into account these and other items.

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 U S criminal data AI project.

And for a million dollars relates to a large scale computer refresh project the balance consistent with 2023, primarily relates to capitalized software development costs.

David L. Gamsey: The balance, consistent with 2023, primarily relates to capitalized software development costs. Looking now at the quarterly phasing of our 2024 guidance, we expect Q1 year-over-year consolidated revenues to decline by approximately 5%.

Looking now at the quarterly facing of 2024 guidance.

We expect to one year over year consolidated revenues to declined by approximately 5% we.

David L. Gamsey: 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 percent, which is consistent with the first quarter of the last three years.

We expect sequential topline 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 two four.

We expect your two one adjusted EBITDA margin to be between 27, and 28%, which is consistent with the first quarter of the last three years.

David L. Gamsey: 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. Let me now turn the call back over to Scott before we open the line for questions. First Advantage

Starting with two two 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.

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

Scott Staples: Thank you. Thank you. Thank you, David.

Thank you David I want to acknowledge the great progress our first advantage T 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.

Scott Staples: 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. We are well positioned to weather the current environment and benefit greatly once it stabilizes and starts to improve. 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. With that, we will open the line for questions. Thank you.

We are well positioned to whether the current environment and benefit greatly once it stabilizes and starts to improve.

We are excited about today's definitive agreements requires sterling, which will allow us to extend our high quality and cost effective background screening identity verification technology solutions for the benefit of customers of all sizes across the industry verticals and geographies.

Looking forward, we remain focused on longterm profitable growth and maximize value for all stakeholders with that we will open the line for questions.

Thank you we will now begin the question and answer session. At this time. If you have a question. Please press star one on your telephone keypad. If at any point. Your question has been answered you may remove yourself from the queue by pressing start too if.

Operator: We will now begin the question and answer session. At this time, if you have a question, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2.

Shlomo H. Rosenbaum: If you are using a speakerphone, we request that you pick up your handset while asking your question to provide optimal sound quality. Thank you. Our first question is coming from Shlomo Rosenbaum of Ste. Hi, thank you very much for taking my questions. Just, you know, first of all, when you're combining two of the top three companies in the space, I just want to get your take on your considerations around the DOJ on this and, you know, the work you've done over there. And then I just have a follow-up question in terms of just the combination. Yeah, Shlomo, so I mean, first of all, I'll tell you we've hired some great experts in this space who will guide us, you know, through the process. But let's, you know, let's keep coming back to the Mark, because this is a large $13 billion market, and we've always told you how fragmented it is. I mean, there are lots of competitors of all sizes and shapes across the world.

If you are using a speaker phone, we request that you pick up your handset while asking your question to provide optimal sound quality.

Thank you.

Our first question is coming from Shlomo Rosenbalm of Stifel.

Alright. Thank you very much for taking my questions. Just first of all just when you are combining two of the top three companies in the space I just wanted to get your take on your considerations around the D O J on this end.

You know the work you done over there and and then I just have a follow up in terms of just a combination.

Yeah, it's one of those so I mean.

First of all I'll tell Ya Yeah. We've we've hired you know some great experts in this in this space, who will guide us.

Through the process.

But let's let's keep coming back to the market on this because this is a you know a large 13 billion dollar market and we've we've always told you have fragmented is I mean, there's there's lots of competitors of all sizes and shapes across the world. We think we've got a great case, but.

Scott Staples: We think we've got a great case, but we'll let the experts guide us through the process, and we'll see where it takes us. Like, like I said, this is a very large but very fragmented market. Lots. Okay, thank you. And then, just in terms of the combination, you point to $50 million in synergies. Is that all cost synergies?

Yeah, we'll we'll let the experts got us through the process and you know it you know, we'll see where it takes us but you know like.

Like I said it you know this is a this is a very large but very fragmented market lots of competitors.

Okay. Thank you just and then it just in terms of the combination you point to 50 million in synergies.

<unk> all cost synergies in.

Shlomo H. Rosenbaum: And, you know, can you talk a little bit more about just, you know, on the ground, practically, the combination of the two companies; how will you accelerate organic revenue growth? Like, what would the, you know, 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 real-life examples of why this makes sense? Yeah, David, why don't you take the synergy part, and I'll take the second part?

Can you talk a little bit more about just you know underground practically the combination of the two companies how would you celebrate organic revenue growth like what would you know if you could just give us. Some examples they have this customer we could sell this to you a bad customer I could sell that to can you just give us some underground examples of why this makes sense.

Get David wanting to take the synergy part and I'll take the second part of that.

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 rent revenue standard jeez from a cross sell Perspecta and Scott can give you some specific examples relative.

David L. Gamsey: Okay, so Shlomo, from a synergy perspective, the $50 million, at least $50 million, that is from a cost perspective. We think there is upside relative to revenue synergies from a cross-sell perspective, and Scott can give you some specific examples related to that. We think we can get that $50 million in 18 to 24 months. Some of it is very low-hanging fruit, and we're going to go get it right away. Shlomo, I think, you know... Just to answer your question, and it's actually probably, I think, a broader question that you're asking.

To that we think we can get that $50 million and 18 to 24 months. Some of it is very low hanging and we're gonna go get right away.

No I think you know.

Just to handle the answer your <unk>, it's actually probably I think a broader question that you're asking yeah. I think one of the you know one of the things that we really like is the complementary no vertical exposure.

Scott Staples: You know, I think one of the things that we really like is the complementary, you know, vertical exposure or overlap, actually. So just think about it, you know, as we said in the script, Sterling's largest verticals of, you know, health care and financial services and business and professional services, et cetera, map really well to our large ones, which are transportation, retail, and e-commerce. So we really love the fact that, you know, their vertical strengths match so well with our vertical strengths.

Exposure or overlap actually so just think about it you know you know as we said you know in the script you know sterling's largest vertical so of you know health care and financial services and business Special service et cetera, you know map really well to our large ones.

Which are transportation retail ecommerce. So we really love. The fact that you know, they're they're vertical strengths match. So well two are vertical strikes and now we've got you know you'll <unk>, you'll obviously, a much larger customer base with 80000 customers and we feel like.

Ashish Sabadra: And now, you know, we've got, you know, a potential, obviously, a much larger customer base with 80,000 customers, and we feel like our i9 product, our WOTC product, could be sold across the Sterling base, and, you know, their digital identity solutions across our base, et cetera, you know, but again, we're talking about early days here. We've got to, you know, sit down and map this all out, but we think there are, you know, great opportunities for it. Thank you. We'll take our next question from Ashish Sabadra of RBC Capital Markets. Your line is open.

Are are <unk> are are nine product or waxy product could be sold across the <unk>. The Sterling base and you know their digital identity solutions across our base et cetera, but again, we were talking about early days here, we've got a sit down and map. This all out but we think there's great.

[noise] opportunities for it I just walk you through.

Thank you.

We'll take our next question from Ashish <unk> of RBC capital markets. Your line is open.

Thanks for taking my question just wanted to bring down further on the on the <unk> I think there was in essence to production and took party cost I was wondering if you could provide any more clarity on that trend and then also getting the <unk>.

David L. Gamsey: Thanks for taking my question. 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 any color on that front?

Question that was it a <unk> low hanging fruit I was wondering can you provide cause I don't that sent as well. Thanks.

So she's from a third party data perspective, as you know we have our verify database and we have our smart hub technology, that's AI, driven and that allows us to use our own database and other sources for employment and education verification.

David L. Gamsey: So, Ashish, from a third-party data perspective, as you know, we have our Verify database, and we have our Smart Hub 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 Smart Hub technology. As far as low-hanging fruit goes, there are a lot of opportunities, right? But we're only going to need one audit.

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 smart hub technology as far as low hanging fruit. There are a lot of opportunities right. We're only gonna need one audit.

David L. Gamsey: 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. That's a very helpful color.

We're only gonna need one set of tax returns, we're gonna consolidate our insurance programs, you'll eliminate one complete public company cost scenario. So there are a lot of really easy cause we can go after really quickly.

That's very helpful color and as we look up to 2024, thanks for providing some good call me <unk> <unk> <unk> <unk> I was just wondering if you could also provide some color by <unk> <unk> <unk> <unk> <unk> suggested.

Ashish Sabadra: 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 2024? Yeah, Ashish, the story really hasn't changed here too much.

<unk> <unk> <unk>. Thanks.

Yeah, She's historic really hasn't changed here too much. It's it's been kind of like a <unk> Ah repeat for us over literally maybe the last year.

Scott Staples: It's been kind of like a repeat for us over, you know, literally, maybe the last year, where, you know, we still continue to see, you know, good strength in the transportation and home delivery verticals. You know, retail e-commerce, you know, actually, kind of flat for us. 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 retailers. And those are, you know, there's still obviously high demand for those companies' products and services because of inflation and things like that. All year long, you know, verticals like staffing and financial services have been down and continue to be down.

Where you know we still continue to see you know good strength in the transportation at home delivery verticals <unk>.

<unk> e-commerce at.

Actually kind of flattish for us, but keep in mind as we said many many times.

A retail E. Commerce footprint is is really more of of the large discounters and and and you know the online retailers and those are the you know they're still obviously a high demand for for those companies products and services because of inflation and things like.

That.

All all year long, you know verticals like staffing and financial services have been down and continue to.

B down the one vertical which I missed when I talked about positive is health care health care has done really well for US you know this year and especially over the last quarter or two.

Scott Staples: And the one vertical which I missed when I talked about the positive is health care. Health care has done really well for us this year, and especially over the last quarter or two. So, yeah, you know, in the end, it kind of all washes out with exactly what we've given you with results and guidance. We expect, you know, sort of more of the same from those verticals, at least for the first three quarters. That's very helpful, Kyle. We'll take our next question from Andrew Steinerman of J.P. Morgan. Your line is open.

So yeah it.

In the end it kind of all washes out with exactly you know what we've giving you with results and guidance you'll be kicked we expect you know sort of more of the same from those verticals at least for the first three quarters.

That's very helpful. Thanks.

We'll take our next question from Andrew Steinman of J P. Morgan Your line is open.

Hi, I wanted to ask a little bit about the the smart <unk> and the identification of third party costs being I guess you just listed the top you know he looked at before operational efficiencies.

Andrew Charles Steinerman: Hi, I wanted to ask a little bit about the Smart Hub and the identification of third-party costs being, I guess you just listed it top, you know, you listed it before operational efficiencies, you know, is the reduction of third-party costs, which I understand is usually passed along to the customer, bigger savings for FAA than, you know, than the operational savings across, you know, products, et cetera. And so my question is on Smart Hub; is that up to the customer if they select to use Smart Hub or not for, you know, verification? Um, yeah, technically, it would be up to the customer, but I can't point to a customer that doesn't want to use it.

Efficiencies you know is the reduction of third party costs, which I understand is usually passed along to the customer.

Bigger savings for where is.

Is it the bigger savings for <unk>. Then you know then the operational savings across your products et cetera.

And so my question is on smart hub is it that up to the customer if they if left to use smart hub or not for your verification.

Yeah, I mean, I mean, technically it would be up to the customer, but I can't <unk> can't point to a customer does that doesn't want to use it so.

Andrew Charles Steinerman: So again, think of it as a router. You know, 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. So it's got some AI-driven technology in it, it interacts with the algorithms, but all it really does, Andrew, is it gives our customers choices. It gives their application, you know, based on their criteria; it gives the customer choices as to where to go find that data.

Again think of it think of it as as really a router you know it's it's really.

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 so it's got some AI driven technology in touch with the algorithms, but all it really does Andrew is it gives our our customers choices. It gives their applicants.

You know based off their 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 you know what we're really offering is multiple data sources and of course, our own data.

Scott Staples: So, I can't remember or think of a customer that doesn't use it, but at the end of the day, you know, what we're really offering is multiple data sources and, of course, our own data. You know, our data continues to grow. We add to it every quarter, we add to it every month, and, you know, 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 are feeling pretty good about where and how we can leverage this going forward.

You know our data continues to grow we add to it every quarter, we add to it every month and you know it's it's you know it's good it's good data source and and 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 <unk>.

Quantify that yet because we obviously haven't got into what exactly the you know those records looked like and stuff, but you know we're pretty feeling pretty good about you know where <unk>, where and how we can leverage is going forward.

Scott Staples: The other part of my question was: you listed the reduction of third-party costs before efficiencies and operations of products and technology in SGA. Are you saying the reduction of third-party costs in the $50 million target savings is going to be bigger than the efficiencies that follow in that list? I don't think it would be bigger. It's just how it was written.

Alright, <unk> Scott the other part of my question was you lifted the reduction of third party costs before efficiencies of operations of products and technology yesterday like how you say the reduction of third party costs in the 50 million dollar target savings is gonna be bigger than the efficiencies that follow in that list.

I think I don't think it would be bigger just it's just how it was written.

Scott Staples: I think we'll get way more out of efficiencies, as David mentioned. There's duplicate tax and insurance and all that kind of stuff. So no, I don't think it's a bigger number. It's just how it was written.

I think I think we'll get you know way more out of efficiencies as as David mentioned, you know, there's there's you know duplicate tax and insurance and all that all that kind of stuff. So no I don't I don't think it's a bigger number I just heard what was written.

Scott Staples: No, that makes more sense to me now. Thank you very much. We'll take our next question from Manav Patnaik of Barclays. Your line is open. Thank you. Good morning.

No that makes more sense to me now thank you very much.

We'll take our next question from a <unk> of Barclays. Your line is open.

Thank you. Good morning, I was hoping just to touch on <unk>. They know you gave us some directional color for the year, but just I was hoping you might be able to quantify which means you need between four just because and it sounds like the both of you guys <unk> worst and what you guys kept guiding too. So I was just curious if that was you know change.

Manav Shiv Patnaik: I was hoping just to touch on base growth. I know you gave us some directional color for the year, but I just 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, base growth got worse than what you guys kept guiding it to. So I was just curious if that was, you know, changes in the large customers that I know you talk to regularly, or was it the tail end that kind of came short of what you expected? So, base growth, consolidated base growth, was down 13% in Q4, which was greater than we anticipated.

G as in the large customers that and maybe talk to regularly or was it. The T. Learn that Kenneth you know came short of what you what you expected.

So based growth consolidated base growth was down 13% in two four which was greater than we anticipated as a result of that were taken a pretty conservative posture to it. If you look at the mid point of our guidance for 2024, we're projecting base to be.

David L. Gamsey: As a result of that, we're taking a pretty conservative posture on 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. Okay, and then perhaps just, you know, can you just talk a little bit about the current pricing trends? I know it's not a big part of the algorithm, but, you know, does bigger scale help in that equation?

Down a little over five per cent 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.

Okay, and then perhaps just emailed can you just talk a little bit about pricing trends.

<unk> I know, it's not a big part of the algorithm, but <unk> help in that equation.

You know pricing in this industry has been very consistent and very stable. We've had no conversations with sterling about pricing norwell wait till after closing.

Manav Shiv Patnaik: You know, 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. Okay, thank you. And once again, to ask a question, please press star 1 now on your telephone keypad. We'll move next to Kyle Peterson of Needham & Company. Great. Good morning, guys.

Okay. Thank you.

And once again to ask a question. Please press star one now on your telephone keypad will move next to Kyle Peterson of Needham and company.

Mmm great. Good morning, guys. Thanks for taking the questions and just wanted to touch on the balance sheet and capital location.

Scott Staples: Thanks for taking the questions. I just wanted to touch on the 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 depending on whether it's kind of a status quo macro or if we get some improvement? But yeah, I guess where can you get from the four to the two to three?

The the leverage it's gonna come up a bit you know with this transaction, but I guess you know how quickly do you guys feel you can delever the balance sheet more towards that target range, you know maybe in whether it's kind of a status quo.

Macro or if we get some improvement, but yeah, I guess, where can you get some before to the two to three X.

So Kyle we're gonna have two primary objective suppose closing integration and deleveraging. So we throw off a lot of cash.

Kyle David Peterson: 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.

You can see it in her numbers combined do we had over 300 about $300 million of cash flow from operations, we will be utilizing that to delever as quickly as possible.

David L. Gamsey: We will be utilizing that to delever as quickly as possible. Got it. You know, that's helpful. And maybe just follow up, you know, in terms of, you know, some of the other competitive benefits after this deal, you know, seems like you guys will be kind of the clear number one player in the screening space. But, you know, just wanted to see if you guys had some thoughts on, you know, whether it is kind of how you guys are going to go to market or, you know, the value prop of just having more scale globally. You know, maybe just anything in terms of how you guys think it will influence the sales process or, you know, ability to kind of push the snowball down the hill with new logos and upsell, cross sell. Well, I think, you know, there's a lot of customer benefits here. You know, Sterling does some things really well; we do some things really well, too.

Got it you know that's helpful and maybe just follow up you know in terms of some of the other mmm competitive benefits you know after the steel you know it seems like you guys will be kind of the the Clinton number one player in the screening space <unk> just wanted to see if you guys.

Had some thoughts on.

Whether it is kind of how you guys are going to put in a market or you know the value prop of just having more scale globally. You know maybe just anything in terms of how you guys think I'll influence sales process or you know ability to kind of push the snowball down the hill, you know a new logos and.

Uptoke Russell.

Well I I think there's just a lot of customer benefits here you know Sterling does some things really well, we do some things really well when you combine them yeah, what's good for the customer and how we was able to launch sort of first and breed products across the customer base.

Scott Staples: And when you combine them, you know, it's good for the customer. And how we were able to launch sort of best in breed products across the customer base. Kyle, again, we're still in the really early days on this, and we've got a lot of planning to do. So it's hard for me to sit here today and tell you exactly what that landscape will look like. But, you know, we just feel like, again, I'll go back to it, you know, many, many, many times, because this was a key component in us wanting to do this deal, because it was such a great vertical complement, the complementing of the verticals. Again, what, you know, the verticals they're 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. That makes sense.

Yeah.

Hi, all again, we're still really early days on this and we've got a lot of planning to do and and so this <unk>. It's hard for me to sit here today and tell you exactly what that landscape will look like but yeah. We just we just feel like you know that again I'll go I'll go back to it you know many many many times because this was a key component.

And wanting to do this deal was just touch the the the great you know verdict the complimentary of the verticals again, what <unk> the verticals, they're they're very strong and are not the same verticals that we're very strong and and it just it just makes a good story I think for the market.

That makes sense well, thanks Guzman congrats on the transaction.

We'll take our next question from Heather Belsky of Bank of America.

I think you another question on the acquisition and any talked about the diversification in your your customer Max just now I was hoping you could help us.

Kyle David Peterson: Thanks, guys, and congrats on the transaction. We'll take our next question from Heather Belsky of Bank of America. Hi, thank you.

Heather Belsky: Another question on the acquisition, and you talked about the diversification in your customer mix just now. I was hoping you could help us think about that in terms of your long-term strategy. I know you've talked to Fairmount a lot about your high-growth vertical strategy and that kind of driving outsized growth. Once you're a combined company, how do you think about focusing on higher-growth verticals? Where does Sterling have higher growth?

Think about that from your <unk> in terms of your longterm strategy and I know you've talked a fair amount a lot about your new high growth vertical strategy and that kind of driving upsize growth and once you combine company kind of how do you think about focusing on higher growth vertical kind of where.

Sterling have higher growth how.

How much of your payments will be in that kind of higher growth area. And then are there are there parts of your business or parts of their business you might want to prune and in order to get the right <unk> profile.

Scott Staples: How much of your business will be in that kind of higher growth area? And then are there parts of your business or parts of their business you might want to cut in order to get the right growth profile? I think I can work backwards on that.

Pick up and work backwards on that I I I don't you know again, we're still very early days on this and obviously over time will will give you more insights into into go to market strategy, but I don't you know I don't think there's going to be Anita a reason for pruning.

Scott Staples: I don't, you know, again, we're still in the very early days on this, and obviously, over time, we'll give you more insights into our go-to-market strategy. But I don't, you know, I don't think there's going to be a need or reason for pruning.

<unk> you know if you think about you know what we've always message to you guys about you know our our strategy of high volume hiring and I think if you look at you know again across transportation retail you know health care.

Scott Staples: 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, health care, even staffing and hospitality, although very low numbers for us, that kind of strategy sort of maps to about 71% of... And if you look at Sterling and you look at their verticals, and especially I'll point out healthcare because, you know, their healthcare vertical is You know, if you think about, I think about our verticals, so again, if you look at, yeah, transportation, you know, that's 24%. You know, if you look at retail e-commerce, that's 22%.

Uhm, even staffing and hospitality, although very low numbers for US you know that that kind of strategy sort of map to about 71% of our revenue.

And if you look at Sterling and you look at you know their verticals and especially I'll point out health care, because you know their their health care vertical is really strong you know if you think about I.

I think about our vertical so again if you if you look at transportation, Yeah, that's 24 per cent.

If you look at retail ecommerce, that's 22 per cent health care for 15 per cent, but if you look at Sterling you.

You are looking at health care of 23 per cent.

And you know they're manufacturing and industrial is that you are at 80 per cent and things like that so I think when you when you combine the two organizations.

Scott Staples: Healthcare for us, 15%. But if you look at Sterling, you're looking at healthcare costs of 23.. and, you know, their manufacturing and 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. But I think in general, as far as we can tell from, you know, from our discussions, their strategy in healthcare is very similar to us who are at high volume hiring and stuff like that. So I think there's just a great, you know, sort of complementary vertical story here.

You know you're gonna bring obviously you know some of those numbers down and some of those numbers up but I think in general you know as far as we can you know tell from you know from our discussions on there.

Their strategy in health care is very similar to us where it's high volume hiring and stuff like that so I think there's just a great you know sort of complimentary vertical store here, but it's really more more time, you're going to have to be a little patient with us as we as we you know wait for closing and then can give you more information about you know go to market strategies and stuff like that.

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

Scott Staples: But there is really more to come. You're going to have to be a little patient with us as we, you know, wait for the closing and then can give you more information about, you know, go-to-market strategies and stuff like that. That's really helpful. And for your business in international, can you just help us think about sort of the line of sight you have in terms of stabilization there? Any green shoots that you're seeing at AIPAC in India?

Yeah, Great question, So <unk> as we as we again talk to you guys about for literally all of all of 2023, you know international has been a drag on the business and again, let's separate it too because of me is actually done pretty well. So when we talk about international we're really talking about India.

<unk> and you need need APAC I've been down as as David as David mentioned in his in his remarks, but I will tell you that starting in Q4 of 2023, we actually started to see stabilization in a pack in India, and obviously, we're hoping that.

Heather Belsky: Yeah, great question. So, you know, as we've 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. So, when we talk about international, we're really talking about India and APAC.

You know 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 stably stabilization and maybe even slight improvement you know, it's still a bit early days to call it a trend but.

Scott Staples: 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 in India. And obviously, we're hoping that, you know, that continues. It's still early days for stabilization. But we think we'll hit bottom sometime in 2023, and now we're starting to see stabilization and maybe even slight improvement. You know, it's still early days to call it a trend, but... Again, I think we're starting to see India and AIPAC come back a little bit.

You know I I again, I think we're starting to see India and APEC come back a little bit.

Thank you.

We'll take our next question from Scott Wurtzel of Wolf Research. Your line is open.

Hey, good morning, guys and thank you for taking my questions here just wanted to go back to the synergy side and appreciate the collar on sort of what the low hanging fruit is on the cost side. So just wanted me to 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 fifth.

Scott Darren Wurtzel: Thank you. We'll take our next question from Scott Wurtzel of Wolf Research. Your line is open. Hey, good morning, guys, and thank you for taking my questions here. I just wanted to go back to the synergies side and appreciate the color on sort of 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.

<unk> I'm just wondering also if there's anything on the cost side that isn't.

Embedded in the $50 million of synergies. Thanks.

Well Scott as we said we think we can get at least 50 million and we think we can do that over 18 to 24 months longer term, there's a lot of opportunity relative to combining fulfillment operations looking at best practices refining processes.

Scott Staples: And you also mentioned that revenue synergies aren't embedded in the $50 million. I'm just wondering if there's anything on the cost side that isn't embedded in the $50 million in synergies. Well, Scott, as we said, we think we can get at least $50 million, and we think we can do that in 18 to 24 months. Longer term, there's a lot of opportunity relative to combining fulfillment operations, looking at best practices, refining processes, and utilizing AI, as we said. We're launching a $3 million AI initiative related to U.S. criminal data.

Utilizing AI as we said, we're launching a 3 million dollar a I initiative relative to U S. Criminal data, we hope the outcome of that will be something special that will also help drive productivity and reduce costs <unk>.

You know when you're putting two companies together like this there are a lot of opportunities. We're gonna take best practices, we have a whole team of black belt internally that we're gonna be using utilizing to identify best practices and best processes will be using some outside advisers to assist us.

US with that as well and we think there's just a lot of opportunity on a longer term basis, but we're gonna go really hard and fast at that first 50 million.

David L. Gamsey: We hope the outcome of that will be something special that will also help drive productivity and reduce costs. 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.

Gotcha. That's helpful. And then just wondering I figured just mentioned it in your answer but just wondering if you can expand on what somebody's incremental investments in a I could look like you know as to sort of realize the the savings associated with the synergies.

Yeah, I forgot let me jump in there I mean, I I I don't think we wanted to give you too much information for competitive reasons on.

David L. Gamsey: We'll be using some outside advisors 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. Gotcha, that's helpful.

What what these projects are about but I will I will tell you in general Yeah. We we are looking at all aspects of the business of where we can leverage J I N not only how it improves the candidate in customer experience <unk>, you know and the offering but <unk> potential.

Scott Darren Wurtzel: And then just wondering, I think you just mentioned it in your answer, but just wondering if you could expand on what some of these incremental investments in AI could look like, you know, as you sort of realize the savings associated with the synergy. Yeah, Scott, let me jump in there. I mean, I don't think we want to give you too much information for competitive reasons on, you know, what these projects are about. But I will tell you, in general, we are looking at all aspects of the business where we can leverage AI and not only how it improves the candidate and customer experience and the offering but, you know, where it can potentially also reduce headcount.

Also can reduce headcount and I think we've mentioned to you in the past or you know to others in the past of where where we've already rolled out a I in our in our call centers with our click chat call initiative that we announced a couple of quarters ago, which not only has improved.

R. R. C sat scores, but has allowed us to reduce headcount because people are clicking and chatting.

With a I K I chat plus but these are alive out jackpots and things like that but yeah less less of the phone.

So we think there's a similar type of story across fulfillment on the U S criminal side, but again, we're gonna keep the secret sauce on that you know to us and yeah. We'll we'll keep you posted as we actually roll out things.

Scott Darren Wurtzel: And I think we've mentioned to you in the past or, you know, to others in the past about 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, you know, improved our CSAT scores but has allowed us to, you know, reduce headcount because people are clicking and chatting with AI chatbots, but these are all live AI chatbot So, we think there's a similar type of story across fulfillment on the U.S. criminal side, but again, we're going to sort of keep the secret sauce on that to ourselves, and we'll keep you posted as we actually roll out things.

Understood Thanks, guys and congrats on the deal.

Thank you.

And once again to ask a question. Please press star one now on your telephone keypad, one moment, while B Q.

We have a follow up from Shlomo Rosenbalm of Stifel. Your line is open.

So I went to sleep a couple more and if you don't mind Scott what are what are the critical areas in combining two companies that are background screeners is making sure you don't have a lot of quiet losses posted deal and given the complexity of the integration or you know and <unk>.

<unk> close to you guys size and you know all that's involved in there how are you going to.

Scott Staples: Understood, thanks guys, and congrats on the, Thank you. And once again, to ask a question, please press star one now on your telephone keypad. One moment, Wall-B-Q. We have a follow-up from Shlomo Rosenbaum of Spiefel. Your line is open. I want to slip a couple more in, if you don't mind.

Minimize any quite losses, and then I have a financial one for David.

Shlomo Great question and probably the most important question that we've been that we've been talking about so I'll give you a couple of high level valuable things, but we are you know <unk> again, we're early days and we haven't mapped all this stuff out. So first of all we're going to have a dedicated <unk> integration team. This is.

Shlomo H. Rosenbaum: 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. Ah, Shlomo, great question.

All they're going to do and you know we're gonna staff it with some of our best people were gonna bring in third parties. We're gonna take you know advice of of of a lot of folks on this and probably as you know from you know some of the history of this industry.

Scott Staples: And probably the most important question that we've been talking about. So I'll give you a couple of high-level things, but we are, you know, we're, again, in the early days, and we haven't, you know, mapped all this stuff out. So first of all, we are going to have a dedicated, you know, integration team. This is all they're going to do. And, you know, 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, you know, the 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 maybe the integration of operations or sales or any kind of the functions of the company, but it's really been the technology integrations that have hit snags.

<unk> some of the biggest challenges have been not and maybe the integration of operations or sales or any kind of the functions of the company, but it has really been the technology integration instead of that of hit snags.

And I I will tell you right now we are we are going to take a very conservative approach check check integration to Minimise client loss, we are not going to force you know large customers onto platforms. They don't want to be on our technologies. They don't Wanna be on alright.

We've got we we've got a what I would call a very theoretical and high level strategy at this point, which we will obviously start refining yo 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.

And even some of the heavy planning, but in general we're gonna not gonna, we're we're not going to break eggs on the on the customer side, because we're gonna take a smart approach to technology.

Shlomo H. Rosenbaum: 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, you know, large customers onto platforms they don't want to be on or technologies they don't want to be on. You know, we've got 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 the end 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, not going to, we're not going to break eggs on the customer side because we're going to take a smart approach to technology.

Okay, and then just fill the financial sorry, David what I do the math using kind of interviewer twenty-three numbers in some 50 million of synergies I'm getting closer to four and a half times leverage is the difference the assumption of free cash flow from both companies.

For another you know too close quarters.

That's right. So it all comes down to timing if it closes June 30th the closest September 30.

Both companies throw off a significant amount of cash quarter over quarter, plus there'll be a a minimum amount of cash on the balance sheet of at least 150 million maybe up to $200 million of closing so from a net leverage perspective that'll drive that down even further.

Shlomo H. Rosenbaum: Okay, and then just from the financial side, David, when I do the math using kind of end-of-year 23 numbers and the assumed 50 million in synergies, I'm getting closer to four and a half times leverage. Is the difference the assumption of free cash flow from both companies for another, you know, two plus quarters? That's right. So, it all comes down to timing. If it closes June 30, if it closes September 30, you know, both companies throw off a significant amount of cash quarter over quarter. Plus, there'll be a minimum amount of cash on the balance sheet of at least 150 million, maybe up to 200 million dollars at closing.

Okay. Thank you.

I see no further questions in the queue I'm Gonna I'll turn the call over to Mister Staples for closing comments. Please go ahead.

Yeah. Thank you operator, and thank everyone for your time this morning any for your ongoing support take care.

Thank you. This concludes the first advantage fourth quarter and full year 2023 earnings conference call and webcast. Thank.

Thank you all for your participation at this time you may disconnect your lines have a wonderful day.

David L. Gamsey: So, from a net leverage perspective, that'll drive that down even further. Okay, thank you. I see no further questions in the queue, and I'll turn the call over to Mr. Staples for closing comments.

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Scott Staples: Please go ahead. Yeah, thank you, operator. And thank everyone for their time this morning and for your ongoing support. Take care. 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.

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Operator: Have a wonderful day. First Advantage: Move over. Move over.

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