XML 32 R22.htm IDEA: XBRL DOCUMENT v3.22.2.2
Reportable Segments
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Reportable Segments

Note 16. Reportable Segments

During the first quarter of 2022, the Company made organizational changes and modified additional information provided to its CODM to better align with how its CODM assesses performance and allocates resources. As a result, we have two reportable segments, Americas and International. Our CODM uses the profit measure of Adjusted EBITDA, on both a consolidated and a segment basis, to allocate resources and assess performance of our businesses. We use Adjusted EBITDA as our profit measure because it eliminates the impact of certain items that we do not consider indicative of operating performance, which is useful to compare operating results between periods. Our board of directors and executive management team also use Adjusted EBITDA as a compensation measure for both segment and corporate management under our incentive compensation plans. Adjusted EBITDA is also a measure frequently used by securities analysts, investors, and other interested parties in their evaluation of the operating performance of companies similar to ours.

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.

The segment financial information below aligns with how we report information to our CODM to assess operating performance and how the Company manages the business. Corporate costs are generally allocated to the segments based upon estimated revenues levels and other assumptions that management considers reasonable. The CODM does not review the Company’s assets by segment; therefore, such information is not presented. The accounting policies of the segments are the same as described in Note 2, “Significant Accounting and Reporting Policies” and Note 9, “Revenues.”

The following is a description of our two reportable segments:

Americas. This segment performs a variety of background check and compliance services across all phases of the workforce lifecycle from pre-onboarding services to post-onboarding and ongoing monitoring services, covering employees, contractors, contingent and extended workers, drivers, tenants, and volunteers. 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.

A reconciliation of Segment Adjusted EBITDA to net income for the three and nine months ended September 30, 2022 and 2021 is as follows (in thousands):

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

57,205

 

 

$

53,223

 

 

$

156,978

 

 

$

136,278

 

International

 

 

6,983

 

 

 

10,721

 

 

 

21,644

 

 

 

20,578

 

Total

 

$

64,188

 

 

$

63,944

 

 

$

178,622

 

 

$

156,856

 

Adjustments to reconcile to net income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

1,740

 

 

 

4,706

 

 

 

4,002

 

 

 

21,875

 

Provision for income taxes

 

 

6,709

 

 

 

3,397

 

 

 

17,076

 

 

 

2,025

 

Depreciation and amortization

 

 

34,744

 

 

 

35,812

 

 

 

103,185

 

 

 

106,493

 

Loss on extinguishment of debt

 

 

—

 

 

 

—

 

 

 

—

 

 

 

13,938

 

Share-based compensation

 

 

2,022

 

 

 

1,343

 

 

 

5,824

 

 

 

4,569

 

Transaction and acquisition-related charges (a)

 

 

1,908

 

 

 

2,144

 

 

 

4,585

 

 

 

6,510

 

Integration, restructuring, and other charges (b)

 

 

(144

)

 

 

257

 

 

 

(508

)

 

 

780

 

Net income

 

$

17,209

 

 

$

16,285

 

 

$

44,458

 

 

$

666

 
(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 includes incremental professional service fees incurred related to the initial public offering and subsequent one-time compliance efforts. The three and nine months ended September 30, 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.

Geographic Information

The Company bases revenues by geographic region in which the revenues and invoicing are recorded. Other than the United States, no single country accounted for 10% or more of our total revenues during these periods.

The following summarizes revenues by geographical region for the three and nine months ended September 30, 2022 and 2021 (in thousands):

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

176,091

 

 

$

158,972

 

 

$

506,770

 

 

$

421,795

 

International

 

 

31,628

 

 

 

35,595

 

 

 

96,413

 

 

 

82,237

 

Eliminations

 

 

(1,733

)

 

 

(1,700

)

 

 

(5,755

)

 

 

(4,269

)

Total revenues

 

$

205,986

 

 

$

192,867

 

 

$

597,428

 

 

$

499,763

 

The following table sets forth net long-lived assets by geographic area as of September 30, 2022 and December 31, 2021 (in thousands):

 

 

September 30, 2022

 

 

December 31, 2021

 

Long-lived assets, net

 

 

 

 

 

 

United States, country of domicile

 

$

1,161,230

 

 

$

1,213,093

 

All other countries

 

 

183,509

 

 

 

199,459

 

Total long-lived assets, net

 

$

1,344,739

 

 

$

1,412,552