第一优势（FA）：到2028年实现垂直和数字化增长

2024A2025E860.21,521.21.011.110.91836.61,533.16.5x5.7x3.2x 2026E1,635.61.131,622.43.0x Stephanie Moore * | Equity Analyst(615) 934-1384 | smoore@jefferies.comHarold Antor * | Equity Associate(212) 778-8483 | hantor@jefferies.comPJ Sullivan * | Equity Associate+1 (646) 805-5461 | psullivan@jefferies.comSource: Company data,Jefferies The Long View: First AdvantageInvestment Thesis / Where We Differ•We believe FA is more levered to the unemployment cycle relative toconsensus, and we are in the early stages of a major correction in hiringtrends.•Longer term (post recession), FA can be an 8-10% organic grower, withplenty of white space in the background screening/drug testing TAM of$13bn ($7bn white space).•International opportunity remains large(75%unvended or$3bn),particularly in Asia.•Well positioned in changing work landscape with millennials (1/3 of jobs)changing jobs every 2 years, on average.•Potential to expand margins 100bps+ annually starting in '24 throughoperating leverage and automation initiatives after spending on growthinitiatives rolls off and the employment environment becomes morefavorable.Base Case,$18, +6%•Expect organic growth to be up in 2025,driven by stabilizing macro around employmenttrends.•Expect MSD% organic growth longer term aftermacro picture improves, likely 2H25, in our view.•Synergy from Sterling run $60-70mm.•$18 PT based on our 2026 EBITDA estimate of$469mm at ~11x EV/EBITDA.Sustainability MattersTop Material Issue(s): 1)Critical Incident Risk Mgmt.As a leading global provider of technologysolutions for screening, verifications, safety, and compliance related to human capital, FA helps itscustomers manage risk and hire the best talent. FA’s proprietary technology helps companies providesafer environments for their employees, contractors, tenants, and drivers.2) Data Security.FA hasover 900M records in proprietary databases and recognizes the importance of data privacy. We thinkcompanies should emphasize the protection of their data to reduce risks related to the collection,retention, and disposal of confidential information.Company Target(s): 1)Disclose scope 1, scope 2, and, if appropriate, scope 3 GHG emissions anddescribe targets.Qs to Mgmt: 1)What percentage of your Capex is designated toward cybersecurity?2)What percentageof management positions are held by underrepresented professionals?3)How does the companymanage risks relating to ethical concerns like fraud, bribery, and corruption?Business Services Sector ESG Integration RefreshPlease see important disclosure information on pages 7 - 12 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Upside Scenario,$23, +35%•Hiring trends improve from current levels.•Longer-term organic growth ramps faster thanexpected (above 8-10%) in out years.•Synergies from Sterling run $70mm+•International expansion picks up quicker thanexpected through M&A (~$3bn white space)and organically.•$23 PT based on our 2026 EBITDA estimate of$516mm at ~12x EV/EBITDA. Downside Scenario,$8, -53%•No improvement in base business growth in2H25, leading to flat to negative organic growthin FY25.•Hiring remain pressured and we see noimprovement from current levels•Synergies from Sterling acquisition come inbelow expectations•$8 PT based on our 2026 EBITDA estimate of$422mm at ~8x EV/EBITDA.Catalysts•Proprietary database update•Employment trends deteriorate only marginallyfrom here•Margin expansion for increased tech andautomation investment•Deeper penetration into post onboard market•Proprietary database update 2 Growing Through Digital IdentityGiven the increasing demand for digital identification, FA sees this growing space as a key lever fortheir growth into 2028. Specifically, mgmt believes that the TAM in this market is currently a $10bnopportunity and growing given the use of AI by candidates. Our view is this new line of businesswill increase with demand internationally and domestically and the margin on this business can runhigher than other lines of verification.The rise in demand for digital identification has increased with the use to AI. Said another way,the company highlighted that through normal hiring practices, clients noticed that the person theyinterviewed over video, was not the same person who showed up for the job or the person whofilled out the candidate paperwork. Consequently, companies believe the ability to hire the right andcompliant talent has gotten incrementally more difficult. We believe FA saw this as a strategic wayto provide more value for their clients and improve organic growth and margin for the firm.Mgmt noted that when they pitch digital identification, the sell it to clients as a suite of differentproducts and not as a single solution. Our sense is given the potential ramifications of hiring thewrong talent (leakage of company specific data, malware, regulatory issues etc.) companies arekeen on having access to the full breadth of products to ensure th