# First Advantage Corp: Form 10-Q for the period ended Mar 31, 2022

- Company: [First Advantage Corp](/companies/fa.md) (CIK 1210677)
- Form: 10-Q
- Filed: 2022-05-11
- Accepted by EDGAR: May 11, 2022, 16:16 ET
- Period: 2022-03-31
- Accession: 0000950170-22-009345
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1210677/000095017022009345/fa-20220331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1210677/000095017022009345/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-01-01 to 2022-03-31 | $189.9m | us-gaap:Revenues |
| Research and development | 3 months, 2022-01-01 to 2022-03-31 | $13.8m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2022-01-01 to 2022-03-31 | $28.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2022-01-01 to 2022-03-31 | $17.1m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2022-01-01 to 2022-03-31 | $4.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-01-01 to 2022-03-31 | $13.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-01-01 to 2022-03-31 | $0.09 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-01-01 to 2022-03-31 | $0.09 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-01-01 to 2022-03-31 | 152,348,806 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2022-01-01 to 2022-03-31 | $41.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2022-01-01 to 2022-03-31 | $2.9m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2022-03-31 | $307.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-03-31 | $477.7m | us-gaap:AssetsCurrent |
| Total assets | at 2022-03-31 | $1.90bn | us-gaap:Assets |
| Current liabilities | at 2022-03-31 | $100.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-03-31 | $757.2m | us-gaap:Liabilities |
| Long-term debt | at 2022-03-31 | $555.3m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2022-03-31 | $1.15bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 60,229 characters.

The following discussion and analysis of First Advantage Corporations’ financial condition and results of operations is provided as a supplement to the condensed consolidated financial statements for the three months ended March 31, 2022, and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021, our “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

### Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. These forward-looking statements relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. In some cases, you can identify these forward-looking statements by the use of words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative version of these words, or similar terms and phrases.

These forward-looking statements are subject to various risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Such risks and uncertainties include, but are not limited to, the following: the impact of COVID-19 and related continuously evolving risks on our results of operations, financial position and/or liquidity; our operations in a highly regulated industry and the fact that we are subject to numerous and evolving laws and regulations, including with respect to personal data and data security; our reliance on third-party data providers; negative changes in external events beyond our control, including our customers’ onboarding volumes, economic drivers which are sensitive to macroeconomic cycles, such as interest rate volatility and inflation, geopolitical unrest, and the COVID-19 pandemic; potential harm to our business, brand and reputation as a result of security breaches, cyber-attacks or the mishandling of personal data; liability and litigation due to the sensitive and privacy-driven nature of our products and solutions, which could be costly and time-consuming to defend and may not be fully covered by insurance; the continued integration of our platforms and solutions with human resource providers such as applicant tracking systems and human capital management systems as well as our relationships with such human resource providers; risks relating to public opinion, which may be magnified by incidents or adverse publicity concerning our industry or operations; our contracts with our customers, which do not guarantee exclusivity or contracted volumes; our reliance on third-party vendors to carry out certain portions of our operations; disruptions, outages or other errors with our technology and network infrastructure, including our data centers, servers and third-party cloud and internet providers and our migration to the cloud; disruptions at our Global Operating Center and other operating centers; operating in a penetrated and competitive market; our ability to obtain, maintain, protect and enforce our intellectual property and other proprietary information; our indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and prevent us from meeting our obligations; Silver Lake controls us and may have interests that conflict with ours or those of our stockholders; our ability to maintain, protect and enforce the confidentiality of our trade secrets; the use of open-source software in our applications; the indemnification provisions in our contracts with our customers and third-party data suppliers; our ability to identify attractive targets or successfully complete such transactions; our international business; our dependence on the service of our key executive and other employees, and our ability to find and retain qualified employees; seasonality in our operations from quarter to quarter; failure to comply with anti-corruption laws and regulations; and changing interpretations of tax laws.

For additional information on these and other factors that could cause First Advantage’s actual results to differ materially from expected results, please see our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. The forward-looking statements included in this Quarterly Report on Form 10-Q speak only as of the date of this Form 10-Q, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.

### Glossary of Selected Terminology

The following terms are used in this Form 10-Q, unless otherwise noted or indicated by the context:

- “Americas” in regards to our business, means the United States, Canada, and Latin America;
- “Enterprise customers” means our customers who contribute $500,000 or more to our revenues in a calendar year;
- “First Advantage,” the “Company,” “we,” “us,” and “our” mean the business of First Advantage

Corporation and its subsidiaries;

- “International” in regards to our business, means all geographical regions outside of the United States, Canada, and Latin America; and
- “Silver Lake” means Silver Lake Group, L.L.C., together with its affiliates, successors, and assignees.

Certain monetary amounts, percentages, and other figures included in this Quarterly Report on Form 10-Q have been subject to rounding adjustments. Percentage amounts included in this Quarterly Report on Form 10-Q have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Quarterly Report on Form 10-Q may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Certain other amounts that appear in this Quarterly Report on Form 10-Q may not sum due to rounding.

### Website and Social Media Disclosure

We use our websites (https://fadv.com/ and https://investors.fadv.com/) to distribute company information. We make available free of charge a variety of information for investors, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission (“SEC”). The information we post on our websites may be deemed material. Accordingly, investors should monitor our websites, in addition to following our press releases, filings with the SEC and public conference calls and webcasts. In addition, you may opt in to automatically receive email alerts and other information about First Advantage when you enroll your email address by visiting the “Email Alerts” section of our investor website at https://investors.fadv.com/. The contents of our websites and social media channels are not, however, a part of this Quarterly Report on Form 10-Q.

### Overview

First Advantage is a leading global provider of technology solutions for screening, verifications, safety, and compliance related to human capital. We deliver innovative solutions and insights that help our customers manage risk and hire the best talent. Enabled by our core proprietary technology, our products and solutions help companies protect their brands and provide safer environments for their customers and their most important resources: employees, contractors, contingent and extended workers, drivers, tenants, and volunteers.

Our comprehensive product suite includes criminal background checks, drug / health screening, extended workforce screening, biometrics & identity, education / work verifications, resident screening, fleet / driver compliance, executive screening, data analytics, continuous monitoring, social media monitoring, and hiring tax incentives. We derive a substantial majority of our revenues from pre-onboarding screening and perform screens in over 200 countries and territories, enabling us to serve as a one-stop-shop provider to both multinational companies and growth companies. Our more than 33,000 customers are global enterprises, mid-sized companies, and small companies, and our products and solutions are used by personnel in recruiting, human resources, risk, compliance, vendor management, safety, and/or security.

Our products are sold both individually and bundled. The First Advantage platform offers flexibility for customers to specify which products to include in their screening package, such as Social Security numbers, criminal records, education and work verifications, sex offender registry, and global sanctions. Generally, our customers order a bundled background screening package or selected combination of screens related to a single individual before they onboard that individual. The type and mix of products and solutions we sell to a customer vary by customer size, their screening requirements and industry vertical. Therefore, order volumes are not comparable across both customers and periods. Pricing can also vary considerably by customer depending on the product mix in their screening packages, order volumes, screening requirements and preferences, pass-through and third-party out of pocket costs, and bundling of products.

We enter into contracts with our customers that are typically three years in length. These contracts set forth the general terms and pricing of our products and solutions but generally do not include minimum order volumes or committed order volumes. Accordingly, contracts do not provide guarantees of future revenues. Due to our contract terms and the nature of the background screening industry, we determined our contract terms for ASC 606 purposes are less than one year. Through our ongoing dialogue with our customers, we have some visibility into their expected future order volumes, although these can be difficult to accurately forecast. We typically bill our customers at the end of each month and recognize revenues as completed orders are reported or otherwise made available to our customers. Over 90% of the criminal searches performed in the United States are completed the same day they are submitted.

We generated revenues of $189.9 million for the three months ended March 31, 2022, as compared to $132.1 million for the three months ended March 31, 2021. These increases were driven by the improvement in the overall economy and hiring market, as well as the addition of a number of large new customers, upselling and cross-selling existing customers, and strong, broad-based demand across our existing customer base. We have experienced additional increases as a result of our recent acquisitions. Approximately 83% of our revenues for the three months ended March 31, 2022 was generated in the Americas, predominantly in the United States, while the remaining 17% was generated internationally. Other than the United States, no single country accounted for 10% or more of our total revenues for the three months ended March 31, 2022. Please refer to “Results of Operations” for further details.

### Segments

During the first quarter of 2022, the Company made organizational changes and modified additional information provided to its chief operating decision maker (“CODM”) to better align with how its CODM assesses performance and allocates resources. As a result, the Company now has two reportable segments, Americas and International:

- ***Americas.*** This segment performs a variety of background check and compliance services across all phases of the workforce lifecycle from pre-onboarding to post-onboarding and ongoing monitoring after the employee, extended worker, volunteer, or tenant has been onboarded. We generally classify our service offerings into three categories: pre-onboarding, post-onboarding, and adjacent products. We deliver our solutions across multiple vertical industries in the United States, Canada, and Latin America markets.
- ***International***. The International segment provides services similar to our Americas segment in regions outside of the Americas. We primarily deliver our solutions across multiple vertical industries in the Europe, India, and Asia Pacific markets.

### Seasonality

We experience seasonality with respect to certain industries due to fluctuations in hiring volumes and other economic activity. For example, pre-onboarding revenues generated from our customers in the retail and transportation industries are historically highest during the September through November months leading up to the holiday season and lowest at the beginning of the new year, following the holiday season. Certain customers across various industries also historically ramp up their hiring throughout the second quarter of the year as winter concludes, commercial activity tied to outdoor activities increases, and the school year ends, giving rise to student and graduate hiring. We expect that further growth in e-commerce, the continued digital transformation of the economy, and other economic forces may impact future seasonality, but we are unable to predict these potential shifts and how our business may be impacted.

### Recent Developments

### M&A

The Company completed its asset purchase of Form I-9 Compliance, a U.S.-based technology solution and consulting service provider for I-9 and E-Verify compliance. The acquisition is effective as of January 1, 2022 and strategically expands the Company’s product suite offerings through the addition of new I-9 and employment eligibility solutions. The results of Form I-9 Compliance, which were not material, have been included in our Americas segment from the effective date of the acquisition.

### COVID-19

The Company continues to closely monitor how COVID-19 is affecting its employees, customers, and business operations. In our continued response to the COVID-19 pandemic, we implemented operational changes to promote the safety of our workforce and to allow us to continue to serve our customers. In the markets in which we operate, we have generally seen improving macroeconomic conditions and saw steady improvements in our results of operations in 2021 and into 2022.

In the United States, we saw strong and improving macroeconomic conditions throughout 2021 and into 2022, including strong gross domestic product (“GDP”) growth and falling unemployment rates. We saw similar improvements in our international markets, although in certain of these markets there remains higher ongoing concerns about the impact of COVID-19. These overall economic improvements are evident in our 2022 results, as revenues for the three months ended March 31, 2022 grew 43.8% compared to the three months ended March 31, 2021. Further discussion regarding the impact of the pandemic to our operations for the three months ended March 31, 2022 and 2021 is provided within this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Given the ongoing uncertainty and unpredictable nature of the pandemic, including the impact of virus variants and the effectiveness of vaccines against those variants, COVID-19 may have a material and adverse impact on various aspects of our business in the future, including our results of operations. The Company will continue to closely monitor the associated impacts and take appropriate actions in an effort to mitigate the COVID-19 pandemic’s negative effects on the Company’s operations and financial results.

For additional information, see our “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

### Recently Issued Accounting Standards

See Note 2 to the condensed consolidated financial statements for disclosure of the impact that recent accounting pronouncements may have on the condensed consolidated financial statements.

### Components of our Results of Operations

### Revenues

The Company derives revenues from a variety of background screening and adjacent products that cover phases from pre-onboarding screening to post-onboarding screening after the employees, contractors, contingent and extended workers, drivers, tenants, and volunteers have been onboarded. We generally classify our products and solutions into three major categories: pre-onboarding, post-onboarding, and adjacent products, each of which is enabled by our technology, proprietary databases, and data analytics capabilities. Pre-onboarding products, which comprise the substantial majority of our revenues, span an extensive array of products that customers typically utilize to enhance their applicant evaluation process and ensure compliance with their workforce onboarding criteria from the time an application is submitted to an applicant’s successful onboarding. Post-onboarding products are comprised of continuous monitoring, re-screening, and other solutions to help our customers keep their end customers, workforces, and other stakeholders safer, productive, and compliant. Adjacent products include products that complement our pre-onboarding and post-onboarding solutions such as fleet / vehicle compliance, hiring tax credits and incentives, resident / tenant screening, employment eligibility, and investigative research.

Our suite of products is available individually or through bundled solutions that can be configured and tailored according to our customers’ needs. We typically bill our customers at the end of each month and recognize revenues after completed orders are reported or otherwise made available to our customers, with a substantial majority of our customers’ orders completed the same day they are submitted. We recognize revenues for other products over time as the customer simultaneously receives and consumes the benefits of the products and solutions delivered.

### Operating Expenses

We incur the following expenses related to our cost of revenues and operating expenses:

- *Cost of Services:* Consists of amounts paid to third parties for access to government records, other third-party data and services, and our internal processing fulfillment and customer care functions. In addition, cost of services includes expenses from our drug screening lab and collection site network as well as our court runner network. Third-party cost of services are largely variable in nature and are typically invoiced to our customers as direct pass-through costs. Cost of services also includes our salaries and benefits expense for personnel involved in the processing and fulfilment of our screening products and solutions, as well as our customer care organization and robotics process automation implementation team. Other costs included in cost of services relate to allocations of certain overhead costs for our revenue-generating products and solutions, primarily consisting of certain facility costs and administrative services allocated by headcount or another related metric. We do not allocate depreciation and amortization to cost of services.
- *Product and Technology Expense*: Consists of salaries and benefits of personnel involved in the maintenance of our technology and its integrations and APIs, product marketing, management of our network and infrastructure capabilities, and maintenance of our information security and business continuity functions. A portion of the personnel costs are related to the development of new products and features that are primarily developed through agile methodologies. These costs are partially capitalized, and therefore, are partially reflected as amortization expense within the depreciation and amortization cost line item. Product and technology expense also includes third-party costs related to our cloud computing services, software licensing and maintenance, telecommunications, and other data processing functions. We do not allocate depreciation and amortization to product and technology expense.
- *Selling, General, and Administrative Expense*: Consists of sales, customer success, marketing, and general and administrative expenses. Sales, customer success, and marketing expenses consist primarily of employee compensation such as salaries, bonuses, sales commissions, stock-based compensation, and other employee benefits for our verticalized Sales and Customer Success teams. General and administrative expenses include travel expenses and various corporate functions including finance, human resources, legal, and other administrative roles, in addition to certain professional service fees and expenses incurred in connection with our IPO and now as a public company. We expect our selling, general, and administrative expenses to increase in the short-term, primarily as a result of additional public company related reporting and compliance costs. Over the long-term, we expect our selling, general, and administrative expenses to decrease as a percentage of revenues as we leverage our past investments. We do not allocate depreciation and amortization to selling, general, and administrative expenses.
- *Depreciation and Amortizatio*n: Property and equipment consisting mainly of capitalized software costs, furniture, hardware, and leasehold improvements are depreciated or amortized and reflected as operating expenses. We also amortize the capitalized costs of finite-life intangible assets acquired in connection with the Silver Lake Transaction and other business combinations. The comparability of our operating expenses over time is affected by the increased depreciation and amortization recorded as a result of applying purchase accounting at the time of the Silver Lake Transaction.

We have a flexible cost structure that allows our business to adjust quickly to the impacts of macroeconomic events and scale to meet the needs of large new customers. Operating expenses are influenced by the amount of revenues and mix of customers that contribute to our revenues for any given period. As revenues grow, we would generally expect cost of services to grow in a similar fashion, albeit influenced by the effects of automation, productivity, and other efficiency initiatives as well as customer and product mix shifts. We regularly review expenses and investments in the context of revenues growth and any shifts we see in cost of services in order to align with our overall financial objectives. While we expect operating expenses to increase in absolute dollars to support our continued growth, we believe that operating expenses will decline gradually as a percentage of total revenues in the future as our business grows and our operating efficiency continues to improve.

### Other (Income) Expense

Our other (income) expense consists of the following:

- *Interest (Income) Expense, Net:* Relates primarily to our debt service costs, the interest-related unrealized gains and losses of our interest rate swaps and, to a lesser extent, the interest on our capital lease obligations and the amortization of deferred financing costs. Additionally, interest expense, net includes interest income earnings on our cash and cash equivalent balances held in interest-bearing accounts. We also earn interest income on our short-term investments which are fixed-time deposits having a maturity date within twelve months.
- *Loss on Extinguishment of Debt*: Reflects losses on the extinguishment of certain debt.

### Provision for Income Taxes

Provision for income taxes consists of domestic and foreign corporate income taxes related to earnings from our sale of services, with statutory tax rates that differ by jurisdiction. Our effective tax rate may be affected by many other factors including changes in tax laws, regulations or rates, new interpretations of existing laws or regulations, shifts in the allocation of income earned throughout the world, and changes in overall levels of income before tax. For example, there are several proposals to change the current tax law, including changes in GILTI. If any or all of these (or similar) proposals are ultimately enacted into law, in whole or in part, they could increase our effective tax rate.

### Results of Operations

The information contained below should be read in conjunction with our accompanying historical condensed consolidated financial statements and the related notes.

### Comparison of Results of Operations for the three months ended March 31, 2022 compared to the three months ended March 31, 2021

*(in thousands, except percentages)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| **Revenues** | $189,881 | $132,070 |
| Operating Expenses: |  |  |
| Cost of services (exclusive of depreciation and amortization below) | 96,431 | 65,945 |
| Product and technology expense | 13,773 | 10,553 |
| Selling, general, and administrative expense | 28,545 | 23,978 |
| Depreciation and amortization | 34,034 | 34,763 |
| Total operating expenses | 172,783 | 135,239 |
| **Income (loss) from operations** | 17,098 | (3,169) |
| Other (Income) Expense: |  |  |
| Interest (income) expense, net | (850) | 6,717 |
| Loss on extinguishment of debt | — | 13,938 |
| Total other (income) expense | (850) | 20,655 |
| Income (loss) before provision for income taxes | 17,948 | (23,824) |
| Provision (benefit) for income taxes | 4,935 | (4,435) |
| **Net income (loss)** | $13,013 | $(19,389) |
| Net income (loss) margin | 6.9% | (14.7)% |

28

#### Revenues

*(in thousands)*

| Revenues | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Americas | $160,088 | $116,524 |
| International | 31,741 | 16,562 |
| Eliminations | (1,948) | (1,016) |
| Total revenues | $189,881 | $132,070 |

Revenues were $189.9 million for the three months ended March 31, 2022, compared to $132.1 million for the three months ended March 31, 2021. Revenues for the three months ended March 31, 2022 increased by $57.8 million, or 43.8%, compared to the three months ended March 31, 2021.

The increase in revenues was primarily due to:

- a net increase of $33.9 million in existing customer revenues as compared to the three months ended March 31, 2021, primarily driven by strong, broad-based growth across key verticals and geographies, which was supported by favorable underlying macroeconomic trends including high, sustained job switching and churn. These existing customer increases were offset by the impact of lost accounts,
- increased revenues of $9.1 million attributable to new customers in both the Americas and International segments, and
- revenues of $14.8 million attributable to the Company’s acquisitions in the Americas and International segments.

The Company experienced high demand among customers in the essential retail, e-commerce, transportation and home delivery, technology, business / financial services and flexible workforce / staffing verticals during the three months ended March 31, 2022 in addition to expansion in International revenues. Pricing remained relatively stable across all periods.

#### Cost of Services

*(in thousands, except percentages)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Revenues | $189,881 | $132,070 |
| Cost of services | 96,431 | 65,945 |
| Cost of services as a % of revenue | 50.8% | 49.9% |

Cost of services was $96.4 million for the three months ended March 31, 2022, compared to $65.9 million for the three months ended March 31, 2021. Cost of services for the three months ended March 31, 2022 increased by $30.5 million, or 46.2%, compared to the three months ended March 31, 2021.

The increase in cost of services was primarily due to:

- an increase in variable third-party data expenses of $24.0 million as a direct result of increased revenues, increases in certain third-party data costs, customer ordering mix, and acquisitions having a larger mix of third-party data expenses,
- a $6.0 million increase in personnel related expenses in our operations and customer care functions as a result of additional operational support headcount to process and fulfill the Company’s order volume growth, and
- a number of cost of services related operating expense increases attributable to insurance, software licenses, and other expenses related to the increased revenues volumes experienced in 2022.

The increase in cost of services was partially offset by:

- foreign currency exchange gains of $0.6 million due to the impact of foreign exchange rate volatility.

Cost of services as a percentage of revenues was 50.8% for the three months ended March 31, 2022, compared to 49.9% for the three months ended March 31, 2021. The cost of services percentage of revenues in the first quarter 2022 was impacted by increases in certain third-party data costs, customer ordering mix, and acquisitions having a larger mix of third-party data expenses. This increase was partially offset by cost savings from the Company’s continued internal operating efficiencies and increased use of automation and RPA tools.

#### Product and Technology Expense

*(in thousands)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Product and technology expense | $13,773 | $10,553 |

Product and technology expense was $13.8 million for the three months ended March 31, 2022, compared to $10.6 million for the three months ended March 31, 2021. Product and technology expense for the three months ended March 31, 2022 increased by $3.2 million, or 30.5%, compared to the three months ended March 31, 2021.

The increase in product and technology expense was primarily due to:

- a $1.7 million increase in personnel-related expenses as a result of additional investments made to enhance our product, solutions, and technology platform, and
- a $1.2 million increase in software licensing related expenses.

#### Selling, General, and Administrative Expense

*(in thousands)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Selling, general, and administrative expense | $28,545 | $23,978 |

Selling, general, and administrative expense was $28.5 million for the three months ended March 31, 2022, compared to $24.0 million for the three months ended March 31, 2021. Selling, general, and administrative expense for the three months ended March 31, 2022 increased by $4.6 million, or 19.0%, compared to the three months ended March 31, 2021.

Selling, general, and administrative expense increased primarily due to:

- a $2.8 million increase in personnel related expenses primarily due to additional investments made in the Company’s Sales and Customer Success functions and additional headcount related to the Company’s growth and operating as a public company,
- a $1.8 million increase in commissions and bonus related expenses due to the Company’s improved operating results during the three months ended March 31, 2022, as well as a transaction bonus expense related to one of the Company’s 2021 acquisitions, and
- a $0.9 million increase in share-based compensation expenses as a result of incremental awards granted since the Company’s IPO, and
- a number of other corporate expenses that increased primarily as a result of the Company now being a publicly traded company and additional 2022 marketing expenses.

The increase in selling, general, and administrative expense was partially offset by:

- a $3.1 million decrease in professional service fees incurred related to the Company’s preparation for its 2021 IPO that did not reoccur in 2022.

#### Depreciation and Amortization

*(in thousands)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Depreciation and amortization | $34,034 | $34,763 |

Depreciation and amortization was $34.0 million for the three months ended March 31, 2022, compared to $34.8 million for the three months ended March 31, 2021. Depreciation and amortization remained relatively flat for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

#### Interest (Income) Expense, Net

*(in thousands)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Interest (income) expense, net | $(850) | $6,717 |

Interest expense, net was $(0.9) million for the three months ended March 31, 2022, compared to $6.7 million for the three months ended March 31, 2021. Interest expense for the three months ended March 31, 2022 decreased by $7.6 million, compared to the three months ended March 31, 2021.

The decrease in interest cost was primarily attributable to $5.3 million of unrealized gains on the interest rate swaps as a result of the increased interest rate volatility observed in the first quarter of 2022. This decrease was further impacted by the Company’s February 2021 refinancing of the Successor First Lien Credit Facility, early repayment of the Successor Second Lien Credit Facility, and the repayment of $200.0 million of the Successor First Lien Credit Facility in June 2021, resulting in interest rate savings due to lower principal and more favorable interest rate margins.

#### Loss on Extinguishment of Debt

*(in thousands)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Loss on extinguishment of debt | $— | $13,938 |

Loss on extinguishment of debt for the three months ended March 31, 2021 relates to expenses stemming from the write-off of debt issuance costs associated with the February 2021 refinancing of the Successor First Lien Credit Facility.

#### Provision for Income Taxes

*(in thousands)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Provision (benefit) for income taxes | $4,935 | $(4,435) |

Our provision for income taxes was $4.9 million for the three months ended March 31, 2022, compared to a (benefit) for income taxes of $(4.4) million for the three months ended March 31, 2021. Our provision for income taxes for the three months ended March 31, 2022 increased by $9.4 million, compared to the three months ended March 31, 2021.

The increase in our provision for income taxes was primarily due to the increase of income before income taxes during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, due to improved operating results.

#### Net Income (Loss) and Net Income (Loss) Margin

*(in thousands, except percentages)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Net income (loss) | $13,013 | $(19,389) |
| Net income (loss) margin | 6.9% | (14.7)% |

Net income was $13.0 million for the three months ended March 31, 2022, compared to a net (loss) of $(19.4) million for the three months ended March 31, 2021. Net income for the three months ended March 31, 2022 increased by $32.4 million compared to the three months ended March 31, 2021.

Net income (loss) margin was 6.9% for the three months ended March 31, 2022, compared to (14.7)% the three months ended March 31, 2021.

The improvement in our net income (loss) margin is attributable to our ability to leverage operating efficiencies to control our overall expenses while increasing revenues and our reduction in interest expense.

### Key Operating and Financial Metrics

In addition to our results determined in accordance with GAAP, we believe certain measures are useful in evaluating our operating performance. Management believes these non-GAAP measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation, and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.

The presentations of these measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP.

### Adjusted EBITDA and Adjusted EBITDA Margin

Management believes that Adjusted EBITDA is a strong indicator of our overall operating performance and is useful to management and investors as a measure of comparative operating performance from period to period. We define Adjusted EBITDA as net income before interest, taxes, depreciation, and amortization, and as further adjusted for loss on extinguishment of debt, share-based compensation, transaction and acquisition-related charges, integration and restructuring charges, and other non-cash charges. We exclude the impact of share-based compensation because it is a non-cash expense and we believe that excluding this item provides meaningful supplemental information regarding performance and ongoing cash generation potential. We exclude loss on extinguishment of debt, transaction and acquisition related charges, integration and restructuring charges, and other charges because such expenses are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis.

Adjusted EBITDA was $53.6 million for the three months ended March 31, 2022 and represented an Adjusted EBITDA Margin of 28.2%. Adjusted EBITDA was $36.6 million for the three months ended March 31, 2021 and represented an Adjusted EBITDA Margin of 27.7%. Adjusted EBITDA for the three months ended March 31, 2022 increased by $17.0 million, or 46.5%, compared to the three months ended March 31, 2021.

Growth in Adjusted EBITDA was driven primarily from revenues growth attributed to new and existing customers and margin expansion attributed to increased automation, cost efficiencies, and operating leverage, but partially offset by higher third-party data costs.

The following table presents a reconciliation of Adjusted EBITDA for the periods presented.

*(in thousands)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Net income (loss) | $13,013 | $(19,389) |
| Interest (income) expense, net | (850) | 6,717 |
| Provision (benefit) for income taxes | 4,935 | (4,435) |
| Depreciation and amortization | 34,034 | 34,763 |
| Loss on extinguishment of debt | — | 13,938 |
| Share-based compensation | 1,859 | 562 |
| Transaction and acquisition-related charges (a) | 1,498 | 3,984 |
| Integration, restructuring, and other charges (b) | (889) | 450 |
| **Adjusted EBITDA** | **$53,600** | **$36,590** |

(a) Represents charges incurred related to acquisitions and similar transactions, primarily consisting of change in control-related costs, professional service fees, and other third-party costs. Additionally, the three months ended March 31, 2021 includes incremental professional service fees incurred related to the IPO and the three months ended March 31, 2022 includes a transaction bonus expense related to one of the Company’s 2021 acquisitions.

(b) Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to legal exposures inherited from legacy acquisitions, foreign currency (gains) losses, and (gains) losses on the sale of assets.

We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenues. The following table presents the calculation of Adjusted EBITDA Margin for the periods presented.

*(in thousands, except percentages)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Adjusted EBITDA | $53,600 | $36,590 |
| Revenues | 189,881 | 132,070 |
| **Adjusted EBITDA Margin** | **28.2%** | **27.7%** |

The following table presents a reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin by segment for the periods presented.

*(in thousands, except percentages)*

| Adjusted EBITDA (1): | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Americas | $46,819 | $33,847 |
| International | 6,781 | 2,743 |
| **Adjusted EBITDA** | $53,600 | $36,590 |
| Revenues |  |  |
| Americas | $160,088 | $116,524 |
| International | 31,741 | 16,562 |
| Less: intersegment eliminations | (1,948) | (1,016) |
| Total revenues | $189,881 | $132,070 |
| Adjusted EBITDA Margin |  |  |
| Americas | 29.2% | 29.0% |
| International | 21.4% | 16.6% |
| **Adjusted EBITDA Margin** | **28.2%** | **27.7%** |

(1) See the reconciliation of net income to Adjusted EBITDA above. Adjusted EBITDA margins are calculated using segment gross revenues and segment Adjusted EBITDA. Consolidated Adjusted EBITDA margin is calculated using consolidated revenues and consolidated Adjusted EBITDA.

### Adjusted Net Income and Adjusted Diluted Earnings Per Share

Similar to Adjusted EBITDA, management believes that Adjusted Net Income and Adjusted Diluted Earnings Per Share are strong indicators of our overall operating performance and are useful to our management and investors as measures of comparative operating performance from period to period. We define Adjusted Net Income for a particular period as net income before taxes adjusted for debt-related costs, acquisition-related depreciation and amortization, share-based compensation, transaction and acquisition related charges, integration and restructuring charges, and other non-cash charges, to which we then apply the related effective tax rate. We define Adjusted Diluted Earnings Per Share as Adjusted Net Income divided by adjusted weighted average number of shares outstanding—diluted.

Adjusted Net Income was $33.5 million for the three months ended March 31, 2022, compared to $20.5 million for the three months ended March 31, 2021. Adjusted Net Income for the three months ended March 31, 2022 increased by $13.0 million, or 63.4%, compared to the three months ended March 31, 2021.

Adjusted Diluted Earnings Per Share was $0.22 for the three months ended March 31, 2022, compared to $0.16 for three months ended March 31, 2021. Adjusted Diluted Earnings Per Share for the three months ended March 31, 2022 increased by $0.06, or 37.5%, compared to the three months ended March 31, 2021.

This growth was driven primarily by the same factors contributing to Adjusted EBITDA growth, though Adjusted Net Income and Adjusted Diluted Earnings Per Share are also impacted by changes in acquisition-related depreciation and amortization and changes in our capital structure that are captured in interest expense. The 2021 February refinancing and repayment of the Company’s Successor First Lien and Successor Second Lien debt and gains or losses on the Company’s interest rate swaps impact the comparability of Adjusted Net Income and Adjusted Diluted Earnings Per Share across historical periods.

The following tables present a reconciliation of Adjusted Net Income for the periods presented.

*(in thousands)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Net income (loss) | $13,013 | $(19,389) |
| Provision (benefit) for income taxes | 4,935 | (4,435) |
| Income (loss) before provision for income taxes | 17,948 | (23,824) |
| Debt-related charges(a) | (4,815) | 14,911 |
| Acquisition-related depreciation and amortization(b) | 29,115 | 31,512 |
| Share-based compensation | 1,859 | 562 |
| Transaction and acquisition-related charges(c) | 1,498 | 3,984 |
| Integration, restructuring, and other charges (d) | (889) | 450 |
| Adjusted Net Income before income tax effect | 44,716 | 27,595 |
| Less: Income tax effect(e) | 11,219 | 7,092 |
| **Adjusted Net Income** | **$33,497** | **$20,503** |

The following table presents the calculation of Adjusted Diluted Earnings Per Share for the periods presented. Prior to the IPO, the equity awards under the Successor Plan were issued by the Company’s Parent. As a result, these awards are not considered equity awards issued by the Company, and therefore not included in the calculation of adjusted weighted average number of shares outstanding—diluted.

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Diluted net income (loss) per share (GAAP) | $0.09 | $(0.15) |
| Adjusted Net Income adjustments per share |  |  |
| Income taxes | 0.03 | (0.03) |
| Debt-related charges (a) | (0.03) | 0.11 |
| Acquisition-related depreciation and amortization (b) | 0.19 | 0.24 |
| Share-based compensation | 0.01 | 0.00 |
| Transaction and acquisition related charges (c) | 0.01 | 0.03 |
| Integration, restructuring, and other charges (d) | (0.01) | 0.00 |
| Adjusted income taxes (e) | (0.07) | (0.05) |
| **Adjusted Diluted Earnings Per Share (Non-GAAP)** | **$0.22** | **$0.16** |
| Weighted average number of shares outstanding used in computation of Adjusted Diluted Earnings Per Share: |  |  |
| Weighted average number of shares outstanding—diluted (GAAP and Non-GAAP) | 152,348,806 | 130,000,000 |

(a) Represents the loss on extinguishment of debt and non-cash interest expense related to the amortization of debt issuance costs for the 2021 February refinancing and repayment of the Company’s Successor First Lien Credit Facility (as defined below) and Successor Second Lien Credit Facility (as defined below), respectively. Beginning in 2022, this adjustment also includes the impact of the change in fair value of interest rate swaps. This adjustment, which represents the fair value gains or losses on the interest rate swaps, was added as a result of the increased interest rate volatility observed in the first quarter of 2022. The Company determined that the impact to the previous year, $1.0 million for the three months ended March 31, 2021, was not significant and therefore the previously reported amounts will not be recast.

(b) Represents the depreciation and amortization expense related to intangible assets and developed technology assets recorded due to the application of ASC 805*, Business Combinations.*

(c) Represents charges incurred related to acquisitions and similar transactions, primarily consisting of change in control-related costs, professional service fees, and other third-party costs. Additionally, the three months ended March 31, 2021 includes incremental professional service fees incurred related to the IPO and the three months ended March 31, 2022 includes a transaction bonus expense related to one of the Company’s 2021 acquisitions.

(d) Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to legal exposures inherited from legacy acquisitions, foreign currency (gains) losses, and (gains) losses on the sale of assets.

(e) Effective tax rates of approximately 25.1% and 25.7% have been used to compute Adjusted Net Income and Adjusted Diluted Earnings Per Share for the three months ended March 31, 2022 and 2021, respectively. As of December 31, 2021, we had net operating loss carryforwards of approximately $120.1 million for federal income tax purposes available to reduce future income subject to income taxes. As a result, the amount of actual cash taxes we pay for federal income taxes differs significantly from the effective income tax rate computed in accordance with GAAP and from the normalized rate shown above.

### Liquidity and Capital Resources

### Liquidity

The Company’s primary liquidity requirements are for working capital, continued investments in software development and other capital expenditures, and other strategic investments. Income taxes are currently not a significant use of funds but after the benefits of our net operating loss carryforwards are fully recognized, could become a material use of funds, depending on our future profitability, and future tax rates. The Company’s liquidity needs are met primarily through cash flows from operations, as well as funds available under our revolving credit facility and proceeds from our term loan borrowings. Our cash flows from operations include cash received from customers, less cash costs to provide services to our customers, which includes general and administrative costs and interest payments.

As of March 31, 2022, we had $307.7 million in cash and cash equivalents and $100.0 million available under our revolving credit facility. As of March 31, 2022, we had $564.7 million of total debt outstanding. We believe our cash on hand, together with amounts available under our revolving credit facility, and cash provided by (used in) operating activities are and will continue to be adequate to meet our operational and business needs in the next twelve months. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds. In the event that we need access to additional cash, we may not be able to access the credit markets on commercially acceptable terms or at all. Our ability to fund future operating expenses and capital expenditures and our ability to meet future debt service obligations or refinance our indebtedness will depend on our future operating performance, which will be affected by general economic, financial, and other factors that may be beyond our control, including those described under our “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

We may from time to time repurchase shares of our common stock in the open market at prevailing market prices (including through a Rule 10b5-1 plan), in privately negotiated transactions, a combination thereof or through other transactions. The actual timing, number, manner and value of any shares repurchased will depend on several factors, including the market price of our stock, general market and economic conditions, our liquidity requirements, applicable legal requirements and other business considerations.

### Long-Term Debt

In February 2020, a new financing structure was established consisting of a new First Lien Credit Agreement (“Successor First Lien Agreement”) and a new Second Lien Credit Agreement (“Successor Second Lien Agreement”) (collectively, the “Successor Credit Agreements”). The Successor First Lien Agreement provided financing in the form of a $670.0 million term loan due January 31, 2027 (“Successor First Lien Credit Facility”) and a $75.0 million new revolving credit facility due January 31, 2025 (“Successor Revolver”). The Successor Second Lien Agreement provided financing in the form of a $145.0 million term loan due January 31, 2028 (“Successor Second Lien Credit Facility”).

On February 1, 2021, we amended the Successor First Lien Agreement to fund $100.0 million of additional first lien term loans and reduce the applicable margins by 0.25%. The refinancing resulted in a loss on extinguishment of debt of $5.1 million, composed of the write-off of $4.5 million of unamortized deferred financing costs and $0.6 million of accrued interest and miscellaneous fees. In addition, we fully repaid the outstanding Successor Second Lien Agreement and recorded a loss on extinguishment of debt of $8.9 million, composed of the write-off of $7.3 million of unamortized deferred financing costs plus a $1.5 million prepayment premium, and $0.1 million of accrued interest and other miscellaneous fees.

In connection with the IPO, the Company entered into an amendment to increase the borrowing capacity under the Successor Revolver from $75.0 million to $100.0 million and extend the maturity date from January 31, 2025 to July 31, 2026.

Borrowings under the Successor First Lien Agreement bear interest at a rate per annum equal to an applicable margin plus, at our option, either (a) a base rate or (b) LIBOR, which is subject to a floor of 0.00% per annum. The applicable margins under the Successor First Lien Agreement are subject to stepdowns based on our first lien net leverage ratio. In connection with the closing of the IPO, each applicable margin was reduced further by 0.25%. In addition, the borrower, First Advantage Holdings, LLC, which is an indirect wholly-owned subsidiary of the Company, is required to pay a commitment fee on any unutilized commitments under the revolving credit facility. The commitment fee rate ranges between 0.25% and 0.50% per annum based on our first lien net leverage ratio. The borrower is also required to pay customary letter of credit fees.

The Successor First Lien Credit Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1.00% of the principal amount. The Successor Revolver has no amortization. The Successor First Lien Credit Facility requires the borrower to prepay outstanding term loans, subject to certain exceptions, with certain proceeds from non-ordinary course asset sales, issuance of debt not permitted by the credit agreement to be incurred and annual excess cash flows. In addition, any voluntary prepayment of term loans in connection with certain repricing transactions on or prior to August 1, 2021 were subject to a 1.00% prepayment premium. Otherwise, the borrower may voluntarily repay outstanding loans without premium or penalty, other than customary “breakage” costs.

In connection with the closing of the IPO, on June 30, 2021, the Company repaid $200.0 million of the Successor First Lien Credit Facility outstanding, of which $44.3 million was applied to all of the remaining quarterly amortizing principal payments due under the Successor First Lien Agreement. The remaining $564.7 million term loan is scheduled to mature on January 31, 2027. As a result of the prepayment, the Company recorded additional interest expense of $3.7 million associated with the accelerated amortization of the related deferred financing costs.

The Successor First Lien Agreement is unconditionally guaranteed by Fastball Parent, Inc., a wholly-owned subsidiary of the Company and the direct parent of the borrower, and material wholly owned domestic restricted subsidiaries of Fastball Parent, Inc. The Successor First Lien Agreement and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by (1) a first priority security interest in certain tangible and intangible assets of the borrower and the guarantors and (2) a first-priority pledge of 100% of the capital stock of the borrower and of each wholly-owned material restricted subsidiary of the borrower and the guarantors (which pledge, in the case of any non-U.S. subsidiary of a U.S. subsidiary, does not include more than 65% of the voting stock of such non-U.S. subsidiary).

The credit agreement contains customary affirmative covenants, negative covenants and events of default (including upon a change of control). The credit agreement also includes a “springing” first lien net leverage ratio test, applicable only to the revolving credit facility, that requires such ratio to be no greater than 7.75:1.00 on the last day of any fiscal quarter if more than 35.0% of the revolving credit facility is utilized on such date.

### Cash Flow Analysis

### Comparison of Cash Flows for the three months ended March 31, 2022 compared to the three months ended March 31, 2021

The following table is a summary of our cash flow activity for the periods presented:

*(in thousands)*

|  | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $41,583 | $23,713 |
| Net cash used in investing activities | (26,472) | (12,127) |
| Net cash used in financing activities | (40) | (50,762) |

#### Cash Flows from Operating Activities

Net cash provided by operating activities was $41.6 million for the three months ended March 31, 2022, compared to $23.7 million for the three months ended March 31, 2021. Net cash provided by operating activities for the three months ended March 31, 2022 increased by $17.9 million compared to the three months ended March 31, 2021. Cash flows from operating activities was positively impacted by increased profitability related to the Company’s revenues growth from existing customers, new customer go-lives, and recent acquisitions. This was offset in part by the use of cash for working capital primarily due to the high level of revenues growth and the timing of compensation payments in the first quarter of 2022.

#### Cash Flows from Investing Activities

Net cash used in investing activities was $26.5 million for the three months ended March 31, 2022, compared to $12.1 million for the three months ended March 31, 2021. Net cash used in investing activities for the three months ended March 31, 2022 increased by $14.3 million compared to the three months ended March 31, 2021. The cash flows used in investing activities for the three months ended March 31, 2022 were impacted by the $19.1 million acquisition of Form I-9 Compliance, net of cash acquired. The remaining investing cash flows are driven primarily by capitalized software development costs and purchases of property and equipment, which increased in 2022 as we continue to make incremental investments in our technology platform.

#### Cash Flows from Financing Activities

Net cash used in financing activities was $0.0 million for the three months ended March 31, 2022, compared to $50.8 million for the three months ended March 31, 2021. Net cash used in financing activities for the three months ended March 31, 2022 decreased by $(50.7) million compared to the three months ended March 31, 2021. Net cash used in financing activities for the three months ended March 31, 2021 was impacted by the Company’s February 2021 debt refinancing which consisted of a refinancing of the Successor First Lien Credit Facility and the full repayment of the Successor Second Lien Credit Facility which did not reoccur in 2022. Cash outflows related to this refinancing were $308.5 million, partially offset by cash inflows of $261.4 million. As part of the refinancing, the Company paid $1.3 million related to new debt issuance costs. The remaining outflows primarily consisted of amortizing principal payments due under the Successor First Lien Credit Facility.

## Market risk

As filed, 210 characters.

As of March 31, 2022, no material change had occurred in our market risks, compared with the disclosure in our Annual Report on Form 10-K and filed with the Securities and Exchange Commission on March 23, 2022.

## Controls and procedures

As filed, 1,801 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosures.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving their desired control objectives. Based on the evaluation of management’s disclosure controls and procedures as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, the disclosure controls and procedures were effective at a reasonable assurance level.

### Changes in Internal Control

During the quarter covered by this report, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 211 characters.

As of March 31, 2022, no material changes had occurred in our risk factors, compared with the disclosure in our Annual Report on Form 10-K and filed with the Securities and Exchange Commission on March 23, 2022.

Filed May 11, 2022.
Source: SEC EDGAR, the filing index for accession 0000950170-22-009345. Last ingested by Listed: Nov 6, 2026, 17:28 ET. No prices; not investment advice.