Sterling Check Corp. (NASDAQ:STER) Q4 2022 Earnings Call Transcript

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So, our view is the deals are there, you have to build strong relationships with these targets, in many cases, this is their life’s work, this is meaningful to them, they care deeply about the clients, and the people and we are very good at that and we are very good at making sure people know that when they hand over these treasured assets to us, we’re going to take care of those clients really, really well. In terms of your question about the future. I would just emphasize that what we find is we get inbounds from target to are not even running processes, they want us, they want Sterling, they’re not generally out there looking for anyone who will buy it, because they know that they can find that good home for folks. in terms of our plans for the year at this point, we continue to see a lot of potential opportunities that are out there.

I would not expect us to do tuck-in M&A for at least the next two quarters, would be my expectation. Not so much because we need to take a pause to integrate these couple assets, but just because I think in our minds we want to make sure that some of the companies that we were talking to before. For example, if they change their expectations on price, we’d be happy to get back engaged with them, we like their businesses generally, and so we think it may just take a quarter or two for that to happen. And then otherwise for us, I think we do need to spend one to two quarters, making sure that we do a great job of retaining and migrating these clients on the A-Check platform really putting in place the things we need to need to do to expand effectively with Socrates in Latin America, but I wouldn’t expect that pause to be more than two quarters in terms of those integration efforts.

And so, you never know with M&A, because you have to have two to tango, but it is something that we continue to see as attractive, as accretive and as a really good use of our capital after our first priority, which is the organic revenue growth.

Operator: The next question comes from Andrew Nicholas from William Blair. Andrew. Your line is open. Please go ahead.

Andrew Nicholas: Hi. Good morning. Thanks for taking my questions. You’ve talked quite a bit about your expectations for ’23 and then also how fourth quarter played out, relative to your expectations. I’m just curious, are there any major distinctions underlying guidance for next year between how you would expect the U.S. business and international business to perform, whether it’s in terms of base growth or retention, or any of the different metrics that you track or are those two kind of buckets behaving relatively similarly at this point?

Peter Walker: Hey, Andrew. Good morning. So obviously FX has been a major headwind for us in 2022. We do expect that to be less of a headwind next year just because of the currencies we currently operate. I would say going into 2023, our plans for the U.S. business and the international business in terms of base growth and cadence are pretty similar.

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