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Reportable Segments
 6 Months Ended
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