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Reportable Segments | 6 Months Ended
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Jun. 30, 2024
Segment Reporting [Abstract] |
Reportable Segments | Note 15. Reportable Segments We have two reportable segments, Americas and International. Our chief operating decision maker (“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 CODM also uses 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 (loss) 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, “Summary of Significant Accounting 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 industry verticals in the United States, Canada, and Latin America. International. The International segment provides services similar to our Americas segment in regions outside of the Americas. We primarily deliver our solutions across multiple industry verticals in the Europe, India, and Asia Pacific. A reconciliation of Segment Adjusted EBITDA to net income (loss) for the three and six months ended June 30, 2024 and 2023 is as follows (in thousands):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Adjusted EBITDA |  |  |  |  |  |  |  |  |  |  |  |
Americas |  | $ | 51,594 |  |  | $ | 52,324 |  |  | $ | 95,263 |  |  | $ | 96,980 |
International |  |  | 4,167 |  |  |  | 3,647 |  |  |  | 7,056 |  |  |  | 7,551 |
Total |  | $ | 55,761 |  |  | $ | 55,971 |  |  | $ | 102,319 |  |  | $ | 104,531 |
Adjustments to reconcile to net income: |  |  |  |  |  |  |  |  |  |  |  |
Interest expense, net |  |  | 7,353 |  |  |  | 3,887 |  |  |  | 10,923 |  |  |  | 12,568 |
Provision (benefit) for income taxes |  |  | 689 |  |  |  | 3,968 |  |  |  | (699 | ) |  |  | 4,649 |
Depreciation and amortization |  |  | 29,978 |  |  |  | 32,056 |  |  |  | 59,800 |  |  |  | 63,922 |
Share-based compensation |  |  | 5,048 |  |  |  | 3,601 |  |  |  | 9,799 |  |  |  | 5,659 |
Transaction and acquisition-related charges(a) |  |  | 9,873 |  |  |  | 1,190 |  |  |  | 21,865 |  |  |  | 2,261 |
Integration, restructuring, and other charges(b) |  |  | 959 |  |  |  | 1,487 |  |  |  | 1,678 |  |  |  | 3,765 |
Net income (loss) |  | $ | 1,861 |  |  | $ | 9,782 |  |  | $ | (1,047 | ) |  | $ | 11,707 |
(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. Transaction and acquisition related charges for the three and six months ended June 30, 2024 include approximately $9.2 million and $20.3 million of expense, respectively, associated with the pending acquisition of Sterling, primarily consisting of legal, regulatory, and diligence professional service fees. The three and six months ended June 30, 2024 and 2023 also include insurance costs incurred related to the initial public offering. (b) Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to nonrecurring legal exposures, foreign currency (gains) losses, (gains) losses on the sale of assets, and other non-recurring items. Geographic Information The Company categorizes 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):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Revenues |  |  |  |  |  |  |  |  |  |  |  |
Americas |  | $ | 162,378 |  |  | $ | 162,682 |  |  | $ | 311,505 |  |  | $ | 314,738 |
International |  |  | 24,187 |  |  |  | 24,113 |  |  |  | 46,210 |  |  |  | 48,961 |
Eliminations |  |  | (2,019 | ) |  |  | (1,480 | ) |  |  | (3,753 | ) |  |  | (2,864 | )
Total revenues |  | $ | 184,546 |  |  | $ | 185,315 |  |  | $ | 353,962 |  |  | $ | 360,835 |
The following table sets forth net long-lived assets by geographic area (in thousands):
|  | June 30, 2024 |  |  | December 31, 2023 |
Long-lived assets, net |  |  |  |  |  |
United States, country of domicile |  | $ | 1,041,734 |  |  | $ | 1,083,318 |
All other countries |  |  | 161,722 |  |  |  | 168,068 |
Total long-lived assets, net |  | $ | 1,203,456 |  |  | $ | 1,251,386 |

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- Definition The entire disclosure for reporting segments including data and tables. 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