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Reportable Segments
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
Reportable Segments

Note 17. 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 revenue 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 workers, tenants, and drivers. 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 (loss) for the year ended December 31, 2022 (Successor), for the year ended December 31, 2021 (Successor), for the period from February 1, 2020 through December 31, 2020 (Successor), and for the period from January 1, 2020 through January 31, 2020 (Predecessor) is as follows (in thousands):

 

 

Successor

 

 

 

Predecessor

 

 

 

Year Ended
December 31, 2022

 

 

Year Ended
December 31, 2021

 

 

Period from
February 1, 2020
through
December 31, 2020

 

 

 

Period from
January 1, 2020
through
January 31, 2020

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

221,655

 

 

$

198,473

 

 

$

135,037

 

 

 

$

6,736

 

International

 

 

27,255

 

 

 

27,821

 

 

 

4,739

 

 

 

 

286

 

Total

 

$

248,910

 

 

$

226,294

 

 

$

139,776

 

 

 

$

7,022

 

Adjustments to reconcile to net income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

9,199

 

 

 

24,972

 

 

 

47,384

 

 

 

 

4,489

 

Provision for income taxes

 

 

20,475

 

 

 

8,862

 

 

 

(11,355

)

 

 

 

(871

)

Depreciation and amortization

 

 

138,246

 

 

 

142,815

 

 

 

135,057

 

 

 

 

2,105

 

Loss on extinguishment of debt

 

 

—

 

 

 

13,938

 

 

 

—

 

 

 

 

10,533

 

Share-based compensation

 

 

7,856

 

 

 

9,530

 

 

 

1,876

 

 

 

 

3,976

 

Transaction and acquisition-related charges (a)

 

 

6,018

 

 

 

9,314

 

 

 

10,146

 

 

 

 

22,840

 

Integration, restructuring, and other charges (b)

 

 

2,512

 

 

 

812

 

 

 

4,160

 

 

 

 

480

 

Net income (loss)

 

$

64,604

 

 

$

16,051

 

 

$

(47,492

)

 

 

$

(36,530

)
(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, subsequent one-time compliance efforts, and the registered common stock offering by certain selling stockholders in November 2021. The years ended December 31, 2021 and 2022 (Successor) include 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 (in thousands):

 

 

Successor

 

 

 

Predecessor

 

 

 

Year Ended
December 31, 2022

 

 

Year Ended
December 31, 2021

 

 

Period from
February 1, 2020
through
December 31, 2020

 

 

 

Period from
January 1, 2020
through
January 31, 2020

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

694,865

 

 

$

604,413

 

 

$

430,002

 

 

 

$

32,411

 

International

 

 

122,599

 

 

 

114,009

 

 

 

45,818

 

 

 

 

4,665

 

Eliminations

 

 

(7,441

)

 

 

(6,127

)

 

 

(3,451

)

 

 

 

(291

)

Total revenues

 

$

810,023

 

 

$

712,295

 

 

$

472,369

 

 

 

$

36,785

 

The following table sets forth net long-lived assets by geographic area (in thousands):

 

 

Successor

 

 

Successor

 

 

 

December 31,
2022

 

 

December 31,
2021

 

Long-lived assets, net

 

 

 

 

 

 

United States, country of domicile

 

$

1,134,201

 

 

$

1,213,093

 

International

 

 

180,258

 

 

 

199,459

 

Total long-lived assets, net

 

$

1,314,459

 

 

$

1,412,552