Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 01, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-40982 | |
Entity Registrant Name | HireRight Holdings Corp | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-1092072 | |
Entity Address, Address Line One | 100 Centerview Drive, Suite 300 | |
Entity Address, City or Town | Nashville | |
Entity Incorporation, State or Country Code | TN | |
Entity Address, Postal Zip Code | 37214 | |
City Area Code | (615) | |
Local Phone Number | 320-9800 | |
Title of 12(b) Security | Common stock, par value $0.001 per share | |
Trading Symbol | HRT | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 69,695,156 | |
Entity Central Index Key | 0001859285 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 77,492 | $ 162,092 |
Restricted cash | 0 | 1,310 |
Accounts receivable, net of allowance for credit losses of $5,027 and $5,812 at June 30, 2023 and December 31, 2022, respectively | 142,400 | 136,656 |
Prepaid expenses and other current assets | 19,178 | 18,745 |
Total current assets | 239,070 | 318,803 |
Property and equipment, net | 8,210 | 9,045 |
Right-of-use assets, net | 5,368 | 8,423 |
Intangible assets, net | 304,019 | 331,598 |
Goodwill | 813,439 | 809,463 |
Cloud computing software, net | 40,313 | 35,230 |
Deferred tax assets | 78,543 | 74,236 |
Other non-current assets | 20,609 | 18,949 |
Total assets | 1,509,571 | 1,605,747 |
Current liabilities | ||
Accounts payable | 10,539 | 11,571 |
Accrued expenses and other current liabilities | 96,920 | 75,208 |
Accrued salaries and payroll | 28,085 | 31,075 |
Debt, current portion | 8,350 | 8,350 |
Total current liabilities | 143,894 | 126,204 |
Debt, long-term portion | 680,508 | 683,206 |
Tax receivable agreement liability, long-term portion | 183,504 | 210,543 |
Deferred taxes liabilities | 5,513 | 5,748 |
Other non-current liabilities | 9,753 | 11,728 |
Total liabilities | 1,023,172 | 1,037,429 |
Commitments and contingent liabilities (Note 12) | ||
Preferred stock, $0.001 par value, authorized 100,000,000 shares; none issued and outstanding as of June 30, 2023 and December 31, 2022 | 0 | 0 |
Common stock, $0.001 par value, authorized 1,000,000,000 shares; 79,850,295 and 79,660,397 shares issued, and 70,326,266 and 78,131,568 shares outstanding as of June 30, 2023 and December 31, 2022, respectively | 80 | 80 |
Additional paid-in capital | 815,411 | 805,799 |
Treasury stock, at cost; 9,524,029 and 1,528,829 shares repurchased at June 30, 2023 and December 31, 2022, respectively | (102,889) | (16,827) |
Accumulated deficit | (221,189) | (215,790) |
Accumulated other comprehensive loss | (5,014) | (4,944) |
Total stockholders’ equity | 486,399 | 568,318 |
Total liabilities and stockholders’ equity | $ 1,509,571 | $ 1,605,747 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 5,027 | $ 5,812 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, issued (in shares) | 79,850,295 | 79,660,397 |
Common stock, outstanding (in shares) | 70,326,266 | 78,131,568 |
Treasury stock (in shares) | 9,524,029 | 1,528,829 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenues | $ 192,124 | $ 222,292 | $ 367,571 | $ 421,003 |
Expenses | ||||
Cost of services (exclusive of depreciation and amortization below) | 98,576 | 119,990 | 197,027 | 232,393 |
Selling, general and administrative | 56,128 | 54,387 | 115,854 | 102,654 |
Depreciation and amortization | 18,766 | 18,049 | 37,183 | 36,110 |
Total expenses | 173,470 | 192,426 | 350,064 | 371,157 |
Operating income | 18,654 | 29,866 | 17,507 | 49,846 |
Other expenses | ||||
Interest expense, net | 13,543 | 4,957 | 25,945 | 12,514 |
Other expense, net | 242 | 33 | 548 | 74 |
Total other expenses | 13,785 | 4,990 | 26,493 | 12,588 |
Income (loss) before income taxes | 4,869 | 24,876 | (8,986) | 37,258 |
Income tax expense (benefit) | 2,357 | 430 | (3,587) | 1,248 |
Net income (loss) | $ 2,512 | $ 24,446 | $ (5,399) | $ 36,010 |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ 0.03 | $ 0.31 | $ (0.07) | $ 0.45 |
Diluted (in dollars per share) | $ 0.03 | $ 0.31 | $ (0.07) | $ 0.45 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 73,090,366 | 79,405,872 | 75,108,902 | 79,399,440 |
Diluted (in shares) | 73,992,149 | 79,478,094 | 75,108,902 | 79,443,173 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | ||
Statement of Other Comprehensive Income [Abstract] | |||||
Net income (loss) | $ 2,512 | $ 24,446 | $ (5,399) | $ 36,010 | |
Unrealized (loss) gain on derivatives qualified for hedge accounting: | |||||
Unrealized gain on interest rate swaps | 0 | 0 | 0 | 7,981 | |
Reclassification adjustment included in earnings | [1] | (2,275) | (4,082) | (4,802) | (4,584) |
Total unrealized gain (loss) | (2,275) | (4,082) | (4,802) | 3,397 | |
Currency translation adjustment, net of tax expense of $67 and $83 for the three months ended June 30, 2023 and 2022, respectively, and $87 and $146 for the six months ended June 30, 2023 and 2022, respectively | 1,955 | (10,042) | 4,732 | (13,835) | |
Other comprehensive loss | (320) | (14,124) | (70) | (10,438) | |
Comprehensive income (loss) | $ 2,192 | $ 10,322 | $ (5,469) | $ 25,572 | |
[1]Represents the reclassification of the effective portion of the gain on the Company's interest rate swaps into interest expense. Includes reclassification to earnings as a reduction to interest expense of unrealized gains included in accumulated other comprehensive loss on the condensed consolidated balance sheet related to the interest rate swap agreements terminated on February 18, 2022. See Note 10 for additional information. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Other Comprehensive Income [Abstract] | ||||
Currency translation adjustment, tax portion | $ (67) | $ (83) | $ (87) | $ (146) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Beginning balance (in shares) at Dec. 31, 2021 | 79,392,937 | |||||
Beginning balance at Dec. 31, 2021 | $ 445,717 | $ 79 | $ 0 | $ 793,382 | $ (360,364) | $ 12,620 |
Treasury stock, beginning (in shares) at Dec. 31, 2021 | 0 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock under stock-based compensation plans, net of shares withheld for employee taxes (in shares) | 39,384 | |||||
Issuance of common stock under stock-based compensation plans, net of shares withheld for employee taxes | 0 | 0 | ||||
Net income (loss) | 36,010 | 36,010 | ||||
Stock-based compensation | 7,184 | 7,184 | ||||
Other comprehensive income (loss) | (10,438) | (10,438) | ||||
Ending balance (in shares) at Jun. 30, 2022 | 79,432,321 | |||||
Treasury stock, ending (in shares) at Jun. 30, 2022 | 0 | |||||
Ending balance at Jun. 30, 2022 | 478,473 | $ 79 | $ 0 | 800,566 | (324,354) | 2,182 |
Beginning balance (in shares) at Mar. 31, 2022 | 79,392,937 | |||||
Beginning balance at Mar. 31, 2022 | 463,761 | $ 79 | $ 0 | 796,176 | (348,800) | 16,306 |
Treasury stock, beginning (in shares) at Mar. 31, 2022 | 0 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock under stock-based compensation plans, net of shares withheld for employee taxes (in shares) | 39,384 | |||||
Issuance of common stock under stock-based compensation plans, net of shares withheld for employee taxes | 0 | 0 | ||||
Net income (loss) | 24,446 | 24,446 | ||||
Stock-based compensation | 4,390 | 4,390 | ||||
Other comprehensive income (loss) | (14,124) | (14,124) | ||||
Ending balance (in shares) at Jun. 30, 2022 | 79,432,321 | |||||
Treasury stock, ending (in shares) at Jun. 30, 2022 | 0 | |||||
Ending balance at Jun. 30, 2022 | $ 478,473 | $ 79 | $ 0 | 800,566 | (324,354) | 2,182 |
Beginning balance (in shares) at Dec. 31, 2022 | 78,131,568 | 78,131,568 | ||||
Beginning balance at Dec. 31, 2022 | $ 568,318 | $ 80 | $ (16,827) | 805,799 | (215,790) | (4,944) |
Treasury stock, beginning (in shares) at Dec. 31, 2022 | 1,528,829 | 1,528,829 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock under stock-based compensation plans, net of shares withheld for employee taxes (in shares) | 189,898 | |||||
Issuance of common stock under stock-based compensation plans, net of shares withheld for employee taxes | $ 541 | 541 | ||||
Net income (loss) | (5,399) | (5,399) | ||||
Stock-based compensation | 9,071 | 9,071 | ||||
Repurchase of common stock (in shares) | (7,995,200) | (7,995,200) | ||||
Repurchase of common stock | (86,062) | $ (86,062) | ||||
Other comprehensive income (loss) | $ (70) | (70) | ||||
Ending balance (in shares) at Jun. 30, 2023 | 70,326,266 | 70,326,266 | ||||
Treasury stock, ending (in shares) at Jun. 30, 2023 | 9,524,029 | 9,524,029 | ||||
Ending balance at Jun. 30, 2023 | $ 486,399 | $ 80 | $ (102,889) | 815,411 | (221,189) | (5,014) |
Beginning balance (in shares) at Mar. 31, 2023 | 75,874,099 | |||||
Beginning balance at Mar. 31, 2023 | 538,975 | $ 80 | $ (42,337) | 809,627 | (223,701) | (4,694) |
Treasury stock, beginning (in shares) at Mar. 31, 2023 | 3,791,229 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock under stock-based compensation plans, net of shares withheld for employee taxes (in shares) | 184,967 | |||||
Issuance of common stock under stock-based compensation plans, net of shares withheld for employee taxes | 541 | 541 | ||||
Net income (loss) | 2,512 | 2,512 | ||||
Stock-based compensation | 5,243 | 5,243 | 0 | |||
Repurchase of common stock (in shares) | (5,732,800) | (5,732,800) | ||||
Repurchase of common stock | (60,552) | $ (60,552) | ||||
Other comprehensive income (loss) | $ (320) | (320) | ||||
Ending balance (in shares) at Jun. 30, 2023 | 70,326,266 | 70,326,266 | ||||
Treasury stock, ending (in shares) at Jun. 30, 2023 | 9,524,029 | 9,524,029 | ||||
Ending balance at Jun. 30, 2023 | $ 486,399 | $ 80 | $ (102,889) | $ 815,411 | $ (221,189) | $ (5,014) |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities | ||
Net income (loss) | $ (5,399) | $ 36,010 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 37,183 | 36,110 |
Deferred income taxes | (4,991) | 243 |
Amortization of debt issuance costs | 1,613 | 1,759 |
Amortization of contract assets | 2,470 | 2,166 |
Amortization of right-of-use assets | 3,456 | 1,355 |
Amortization of unrealized gains on terminated interest rate swap agreements | (4,802) | (6,263) |
Amortization of cloud computing software costs | 3,285 | 466 |
Stock-based compensation | 9,071 | 7,305 |
Other non-cash charges, net | (344) | 1,473 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (4,917) | (34,969) |
Prepaid expenses and other current assets | (435) | 1,924 |
Cloud computing software | (8,368) | (16,475) |
Other non-current assets | (3,317) | (2,732) |
Accounts payable | (905) | (10,154) |
Accrued expenses and other current liabilities | (5,249) | 23,158 |
Accrued salaries and payroll | (3,002) | (2,136) |
Operating lease liabilities, net | (2,605) | (2,604) |
Other non-current liabilities | (172) | (770) |
Net cash provided by operating activities | 12,572 | 35,866 |
Cash flows from investing activities | ||
Purchases of property and equipment | (2,102) | (2,763) |
Capitalized software development | (5,261) | (5,417) |
Other investing | (2,000) | 0 |
Net cash used in investing activities | (9,363) | (8,180) |
Cash flows from financing activities | ||
Repayments of debt | (4,175) | (4,175) |
Payments for termination of interest rate swap agreements | 0 | (18,445) |
Repurchases of common stock | (85,759) | 0 |
Proceeds from issuance of common stock in connection with stock-based compensation plans | 613 | 0 |
Other financing | (72) | (342) |
Net cash used in financing activities | (89,393) | (22,962) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (86,184) | 4,724 |
Effect of exchange rates | 274 | (1,397) |
Cash, cash equivalents and restricted cash | ||
Beginning of year | 163,402 | 116,214 |
End of period | 77,492 | 119,541 |
Cash paid for | ||
Interest | 30,843 | 16,945 |
Income taxes | 963 | 1,529 |
Supplemental schedule of non-cash activities | ||
Unpaid property and equipment and capitalized software purchases | $ 662 | $ 1,939 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies | Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies Organization Description of Business HireRight Holdings Corporation (“HireRight” or the “Company”) is incorporated in Delaware. The Company is a leading global provider of technology-driven workforce risk management and compliance solutions, providing comprehensive background screening, verification, identification, monitoring, and drug and health screening services for customers across the globe, predominantly under the HireRight brand. Income Tax Receivable Agreement In connection with the Company’s initial public offering (“IPO”), the Company entered into an income tax receivable agreement (“TRA”), which provides for the payment by the Company over a period of approximately 12 years to pre-IPO equityholders or their permitted transferees of 85% of the benefits, if any, that the Company and its subsidiaries realize, or are deemed to realize (calculated using certain assumptions) in U.S. federal, state, and local income tax savings as a result of the utilization (or deemed utilization) of certain existing tax attributes. As of June 30, 2023 and December 31, 2022, the Company had a total liability of $210.5 million in connection with the projected obligations under the TRA. TRA related liabilities are classified as current or non-current based on the expected date of payment and are included on the Company’s condensed consolidated balance sheets under the captions accrued expenses and other current liabilities and tax receivable agreement liability, long-term portion, respectively. See Note 5 — Accrued Expenses and Other Current Liabilities for further details related to the current portion of the TRA liability. Basis of Presentation and Principles of Consolidation The unaudited condensed consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries. The Company accounts for investments in unconsolidated entities where it exercises significant influence, but does not have control, using the equity method. The unaudited condensed consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States of America ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 10, 2023 (“Annual Report”). The December 31, 2022 condensed consolidated balance sheet data included herein was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, all adjustments, consisting of normal recurring items, necessary for the fair statement of the condensed consolidated financial statements have been included. All intercompany balances and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared on a consistent basis with the accounting policies described in Note 1 of the notes to the audited consolidated financial statements for the year ended December 31, 2022, included in the Annual Report. Significant Accounting Policies The Company’s significant accounting policies are discussed in “Note 1 — Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies” of the notes to the audited consolidated financial statements for the year ended December 31, 2022, included in the Annual Report. There have been no significant changes to these policies which have had a material impact on the Company’s unaudited condensed consolidated financial statements during the six months ended June 30, 2023. Use of Estimates Preparation of the Company’s unaudited condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates, judgments, and assumptions that affect the amounts reported and disclosed in the financial statements. The Company believes that the estimates, judgments, and assumptions used to determine certain amounts that affect the financial statements are reasonable based upon information available at the time they are made. The Company uses such estimates, judgments, and assumptions when accounting for items and matters such as, but not limited to, the allowance for credit losses, customer rebates, impairment assessments and charges, recoverability of long-lived assets, deferred tax assets, lease accounting, uncertain tax positions, income tax expense, liabilities under the TRA, derivative instruments, fair value of debt, stock-based compensation expense, useful lives assigned to long-lived assets, and the stand-alone selling price of performance obligations for revenue recognition purposes. Results and outcomes could differ materially from these estimates, judgments, and assumptions due to risks and uncertainties. Goodwill The change in goodwill during the six months ended June 30, 2023 was driven primarily by foreign currency translation, as the U.S. dollar strengthened against the British pound and other currencies. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Recently Issued Accounting Pronouncements Adopted Accounting Pronouncements Adopted in 2023 In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “ Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” to provide financial statement users with more useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which delayed the effective date for this guidance until the fiscal year beginning after December 15, 2022 including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2016-13 effective January 1, 2023, using the modified retrospective transition method. The adoption of this ASU did not have a material impact on the condensed consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which aims to improve the accounting for acquired revenue contracts with customers in a business combination. The ASU requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The new guidance is effective for the Company for annual periods beginning after December 15, 2023 and interim periods within those fiscal years. The Company adopted ASU 2021-08 effective January 1, 2023. The adoption of this ASU did not have a material impact on the condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU 2020-04 , “Reference Rate Reform (Topic 848),” which provides temporary, optional practical expedients and exceptions to enable a smoother transition to the new reference rates which will replace the London Interbank Offered Rate (“LIBOR”) and other reference rates expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope, ” which expanded the scope of Topic 848 to include derivative instruments impacted by the discounting transition. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” which extended the temporary accounting rules under Topic 848 from December 31, 2022 to December 31, 2024. The Company does not expect the adoption of this guidance to have a material impact on the condensed consolidated financial statements. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets, and Other Non-Current Assets | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets, and Other Non-Current Assets | Prepaid Expenses and Other Current Assets, and Other Non-Current Assets The components of prepaid expenses and other current assets were as follows: June 30, 2023 December 31, 2022 (in thousands) Prepaid software licenses, maintenance and insurance $ 9,950 $ 9,237 Other prepaid expenses and current assets 9,228 9,508 Total prepaid expenses and other current assets $ 19,178 $ 18,745 The components of other non-current assets were as follows: June 30, 2023 December 31, 2022 (in thousands) Contract implementation assets $ 18,505 $ 17,983 Other non-current assets 2,104 966 Total other non-current assets $ 20,609 $ 18,949 See Note 14 — Revenues for further discussion on contract implementation costs and related amortization included in cost of services in the Company’s condensed consolidated statements of operations. |
Right-of-Use Assets and Lease L
Right-of-Use Assets and Lease Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Right-of-Use Assets and Lease Liabilities | Right-of-Use Assets and Lease Liabilities The Company leases office facilities under operating leases in various domestic and foreign locations with initial terms ranging from 1 to 12 years. Some leases include one or more options to extend the term of the lease, generally at the Company’s sole discretion, with renewal terms that can extend the lease term up to 5 years. The Company’s operating leases were as follows: June 30, 2023 December 31, 2022 (in thousands) Right-of-use assets, net (1) $ 5,368 $ 8,423 Current operating lease liabilities (2) $ 5,014 $ 5,509 Operating lease liabilities, long-term (2) 8,265 10,055 Total operating lease liabilities $ 13,279 $ 15,564 (1) Includes impact of accelerated expense on abandoned right-of-use assets related to the global restructuring plan, see Note 19 — Restructuring and Related Charges for additional information. (2) Current and long-term operating lease liabilities are recorded in accrued expenses and other current liabilities, Supplemental cash flow information related to leases was as follows: Six Months Ended 2023 2022 (in thousands) Cash paid for amounts included in measurement of operating lease liabilities $ 3,104 $ 2,697 ROU assets obtained in exchange for operating lease liabilities $ 897 $ 11,150 The weighted average remaining lease term and weighted average discount rate for the Company’s operating leases were as follows: June 30, 2023 2022 Weighted average remaining lease term (in years) 3.94 4.34 Weighted average discount rate 4.9 % 4.6 % |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities The components of accrued expenses and other current liabilities were as follows: June 30, 2023 December 31, 2022 (in thousands) Accrued data costs $ 36,815 $ 34,080 Tax receivable agreement liability, current portion 27,039 — Other 33,066 41,128 Total accrued expenses and other current liabilities $ 96,920 $ 75,208 |
Accrued Salaries and Payroll
Accrued Salaries and Payroll | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Salaries and Payroll | Accrued Salaries and Payroll The components of accrued salaries and payroll were as follows: June 30, 2023 December 31, 2022 (in thousands) Wages, benefits and taxes (1) $ 18,952 $ 15,198 Accrued bonus 9,133 15,877 Total accrued salaries and payroll $ 28,085 $ 31,075 (1) Accrued wages, benefits and taxes at June 30, 2023 includes $2.6 million in accrued employee severance and benefits related to the workforce reduction. See Note 19 — Restructuring and Related Charges for additional information. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt The components of debt were as follows: June 30, 2023 December 31, 2022 (in thousands) Amended First Lien Term Loan Facility $ 695,338 $ 699,513 Amended Revolving Credit Facility — — Total debt 695,338 699,513 Less: Unamortized original issue discount (1,190) (1,464) Less: Unamortized debt issuance costs (5,290) (6,493) Less: Current portion of long-term debt (8,350) (8,350) Long-term debt, less current portion $ 680,508 $ 683,206 On July 12, 2018, the Company entered into the following credit arrangements: • a first lien senior secured term loan facility, in an aggregate principal amount of $835.0 million, maturing on July 12, 2025 (“First Lien Term Loan Facility”); • a first lien senior secured revolving credit facility, in an aggregate principal amount of up to $100.0 million, including a $40.0 million letter of credit sub-facility, maturing on July 12, 2023 (“Revolving Credit Facility” and, together with the First Lien Term Loan Facility, the “First Lien Facilities”). On June 3, 2022, the Company entered into an amendment to the First Lien Term Loan Facility (“Amended First Lien Term Loan Facility”) with the lenders party thereto and Bank of America, N.A. as administrative agent. The Amended First Lien Term Loan Facility amends the Company’s First Lien Facilities, by and among the Company, the lending institutions from time to time party thereto and Bank of America, N.A. as administrative agent, collateral agent and a letter of credit issuer (as amended through the Amended First Lien Term Loan Facility, the “Amended First Lien Facilities”). Under the Amended First Lien Facilities, (i) the aggregate commitments under the Company’s Revolving Credit Facility were increased from $100.0 million to $145.0 million; (ii) the maturity date of the Revolving Credit Facility was extended from July 12, 2023 to June 3, 2027 or, if earlier, 91 days prior to the maturity of the Company’s term loans under the Amended First Lien Facilities, as may be extended or refinanced; and (iii) the interest rate benchmark applicable to the Revolving Credit Facility was converted from LIBOR to term Secured Overnight Financing Rate (“SOFR”). The Revolving Credit Facility as amended is herein after referred to as the “Amended Revolving Credit Facility.” The Company’s existing term loans under the Amended First Lien Facilities remained in effect. Upon the effectiveness of the Amended First Lien Term Loan Facilities, the Company did not have any outstanding principal balance on the Revolving Credit Facility. The Amended First Lien Term Loan Facilities did not modify the financial covenants, negative covenants, mandatory prepayment events or security provisions or arrangements under the Amended First Lien Facilities. Amended First Lien Facilities The Company is required to make scheduled quarterly payments equal to 0.25% of the aggregate initial outstanding principal amount of the Amended First Lien Term Loan Facility, or approximately $2.1 million per quarter, with the remaining balance payable at maturity. The Company may make voluntary prepayments on the Amended First Lien Term Loan Facility at any time prior to maturity at par. The Company is required to make prepayments on the Amended First Lien Term Loan Facility with the net cash proceeds of certain asset sales, debt incurrences, casualty events and sale-leaseback transactions, subject to certain specified limitations, thresholds and reinvestment rights. Additionally, the Company is required to make annual prepayments on the Amended First Lien Term Loan Facility with a percentage (subject to leverage-based reductions) of the Company’s excess cash flow, as defined therein, if the excess cash flow exceeds a certain specified threshold. For the three and six months ended June 30, 2023 and 2022, the Company was not required to make a prepayment under the Amended First Lien Term Loan Facility based on the Company’s excess cash flow. The Amended First Lien Term Loan Facility has an interest rate calculated as, at the Company’s option, either (a) LIBOR determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs (“LIBOR Reference Rate”) with a floor of 0.00% or (b) a base rate determined by reference to the highest of (i) the federal funds effective rate plus 0.50% per annum, (ii) the rate the Administrative Agent announces from time to time as its prime lending rate in New York City, and (iii) one-month adjusted LIBOR plus 1.00% per annum (“ABR”), in each case, plus the applicable margin of 3.75% for LIBOR loans and 2.75% for ABR loans, and is payable on each interest payment date, at least quarterly, in arrears. The applicable margin for borrowings under the Revolving Credit Facility is 3.00% for SOFR loans and 2.00% for ABR loans, in each case, subject to adjustment pursuant to a leverage-based pricing grid. As of June 30, 2023, the Amended First Lien Term Loan Facility accrued interest at one-month LIBOR plus 3.75%, and the Amended Revolving Credit Facility accrued interest at one-month SOFR plus 2.50% based upon the current pricing grid. Unlike the Amended Revolving Credit Facility, the interest rates for the Amended First Lien Term Loan Facility are calculated using LIBOR, which is scheduled to become unavailable. The Financial Conduct Authority in the United Kingdom, LIBOR’s regulator, recently required the continued publishing of “synthetic” 1-, 3- and 6-month U.S.-dollar LIBOR for a period of 15 months after June 30, 2023, for use in certain cases to aid in the transition. The credit agreement underlying the Amended First Lien Term Loan Facility contemplates that, if the administrative agent determines that LIBOR is unavailable or is replaced by a new benchmark interest rate to replace LIBOR for syndicated loans, then, the administrative agent and the Borrower may amend the Amended First Lien Term Loan Facility to replace LIBOR with an alternate benchmark rate (“LIBOR Successor Rate”) unless lenders holding more than 50% in value of the loans or commitments under the credit agreement do not accept such amendment. If no LIBOR Successor Rate has been determined, the obligation of lenders to make or maintain LIBOR loans will be suspended (to the extent of the affected LIBOR rate loans or interest periods), and the LIBOR component will no longer be utilized in determining an alternative benchmark rate. Under such circumstances, the Borrower can revoke any pending request for a new borrowing, conversion to, or continuation of LIBOR loans or such loans will be deemed to be ABR loans of the same amount. The Borrower from time to time may elect to convert all or a portion of its SOFR loans under the Revolving Credit Facility into ABR loans, and may elect to convert all or a portion of its LIBOR loans under the Amended First Lien Term Loan Facility into ABR loans, in each case, subject to a minimum conversion amount of $2.5 million. The Company’s obligations under the Amended First Lien Facilities are guaranteed, jointly and severally, on a senior secured first-priority basis, by substantially all of the Company’s domestic wholly-owned material subsidiaries, as defined in the agreement, and are secured by first-priority security interests in substantially all of the assets of the Company and its domestic wholly-owned material subsidiaries, subject to certain permitted liens and exceptions. Collateral includes all outstanding equity interests in whatever form of the borrower and each restricted subsidiary that is owned by any credit party. As of June 30, 2023, the Company had $143.7 million in available borrowing under the Amended Revolving Credit Facility, after utilizing $1.3 million for letters of credit. The Company is required to pay a quarterly fee of 0.38% on unutilized commitments under the Amended Revolving Credit Facility, subject to adjustment pursuant to a leverage-based pricing grid. As of both June 30, 2023 and December 31, 2022, the quarterly fee on unutilized commitments under the Amended Revolving Credit Facility was 0.38%. Debt Covenants The Amended First Lien Facilities contain certain covenants and restrictions that limit the Company’s ability to, among other things: (a) incur additional debt or issue certain preferred equity interests; (b) create or permit the existence of certain liens; (c) make certain loans or investments (including acquisitions); (d) pay dividends on or make distributions in respect of the capital stock or make other restricted payments; (e) consolidate, merge, sell, or otherwise dispose of all or substantially all of the Company’s assets; (f) sell assets; (g) enter into certain transactions with affiliates; (h) enter into sale-leaseback transactions; (i) restrict dividends from the Company’s subsidiaries or restrict liens; (j) change the Company’s fiscal year; and (k) modify the terms of certain debt agreements. In addition, the Amended First Lien Facilities also provide for customary events of default. The Company was in compliance with the covenants under the Amended First Lien Facilities through the three and six months ended June 30, 2023. The Company is also subject to a springing financial maintenance covenant under the Amended Revolving Credit Facility, which requires the Company to not exceed a specified first lien leverage ratio at the end of each fiscal quarter if the outstanding loans and letters of credit under the Amended Revolving Credit Facility, subject to certain exceptions, exceed 35% of the total commitments under the Amended Revolving Credit Facility at the end of such fiscal quarter. The Company was not subject to this covenant as of June 30, 2023 and December 31, 2022, as outstanding loans and letters of credit under the Amended Revolving Credit Facility did not exceed 35% of the total commitments under the facility. Other Amortization of debt discount and debt issuance costs related to the Amended First Lien Term Loan Facility are included in interest expense in the condensed consolidated statements of operations and were as follows: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands) Debt discount amortization $ 138 $ 132 $ 274 $ 262 Debt issuance costs amortization 604 584 1,203 1,162 Total debt discount and issuance costs $ 742 $ 716 $ 1,477 $ 1,424 Interest expense also includes the amortization of debt issuance costs for the Amended Revolving Credit Facility of $0.1 million and $0.2 million for the three months ended June 30, 2023 and 2022, respectively, and $0.1 million and $0.3 million, for the six months ended June 30, 2023 and 2022, respectively. Unamortized debt issuance costs for the Amended Revolving Credit Facility are recorded in other non-current assets on the Company’s condensed consolidated balance sheets. The weighted average interest rate on outstanding borrowings during the six months ended June 30, 2023 and the year ended December 31, 2022 was 8.6% and 5.5%, respectively. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value MeasurementsThe accounting standard for fair value measurements defines fair value, establishes a market-based framework or hierarchy for measuring fair value, and requires disclosures about fair value measurements. The standard is applicable whenever assets and liabilities are measured at fair value. The fair value hierarchy established in the standard prioritizes the inputs used in valuation techniques into three levels as follows: Level 1 Quoted prices in active markets for identical assets and liabilities; Level 2 Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data; or Level 3 Amounts derived from valuation models in which unobservable inputs reflect the reporting entity’s own assumptions about the assumptions of market participants that would be used in pricing the asset or liability, such as discounted cash flow models or valuations. The Company’s outstanding debt instruments are recorded at their carrying values in the condensed consolidated balance sheets, which may differ from their respective fair values. The estimated fair value of the Company’s debt, which is Level 2 of the fair value hierarchy, is based on quoted prices for similar instruments in active markets or identical instruments in markets that are not active. The fair value of the Company’s Amended First Lien Term Loan Facility is calculated based upon market price quotes obtained for the Company’s debt agreements (Level 2 fair value inputs). The fair value of the Amended Revolving Credit Facility approximates carrying value, based upon the short-term duration of the interest rate periods currently available to the Company. The estimated fair values were as follows: June 30, 2023 December 31, 2022 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Amended First Lien Term Loan Facility $ 694,148 $ 694,585 $ 698,049 $ 673,617 Amended Revolving Credit Facility — — — — Total Debt $ 694,148 $ 694,585 $ 698,049 $ 673,617 |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company entered into interest rate swap agreements with a total notional amount of $700 million with an effective date of December 31, 2018 (“Interest Rate Swap Agreements”) with a scheduled expiration date of December 31, 2023. Prior to termination discussed herein, the Interest Rate Swap Agreements were determined to be effective hedging agreements. Effective February 18, 2022, the Company terminated the Interest Rate Swap Agreements. In connection with the termination of the Interest Rate Swap Agreements, the Company made a payment of $18.4 million to the swap counterparties. Following these terminations, $21.5 million of unrealized gains related to the terminated Interest Rate Swap Agreements included in accumulated other comprehensive income (loss) will be reclassified to earnings as reductions to interest expense through December 31, 2023. The Company reclassified interest expense related to hedges of these transactions into earnings as follows: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands) Reclassification of the effective portion of the gain on the Interest Rate Swap Agreements into interest expense $ — $ — $ — $ 1,679 Reclassification of unrealized gains related to terminated Interest Rate Swap Agreements into interest expense (2,275) (4,082) (4,802) (6,263) Total reclassification adjustments included in earnings $ (2,275) $ (4,082) $ (4,802) $ (4,584) The results of derivative activities are recorded in cash flows from operating activities on the condensed consolidated statements of cash flows. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) consists primarily of unrealized gains related to the terminated Interest Rate Swap Agreements and cumulative foreign currency translation adjustments. The components of accumulated other comprehensive income (loss) as of June 30, 2023 and December 31, 2022 were as follows: Derivative Currency Total (in thousands) Balance at December 31, 2022 $ 8,849 $ (13,793) $ (4,944) Other comprehensive income (loss) (4,802) 4,732 (70) Balance at June 30, 2023 $ 4,047 $ (9,061) $ (5,014) The accumulated net loss in foreign currency translation adjustment primarily reflects the strengthening of the U.S. dollar against the British pound and the Japanese yen. As of June 30, 2023, the remaining $4.0 million of the accumulated other comprehensive income related to terminated Interest Rate Swap Agreements is expected to be reclassified into earnings as a reduction to interest expense through December 31, 2023. |
Segment and Geographic Informat
Segment and Geographic Information | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segments and Geographic Information The Company operates in one reportable segment. Revenues are attributed to each geographic region based on the location of the HireRight entity that has contracted for the services that result in the revenues. The following table summarizes the Company’s revenues by region: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands, except percent) Revenues: United States $ 177,266 92.3 % $ 205,359 92.4 % $ 338,960 92.2 % $ 388,736 92.3 % International 14,858 7.7 % 16,933 7.6 % 28,611 7.8 % 32,267 7.7 % Total revenues $ 192,124 100.0 % $ 222,292 100.0 % $ 367,571 100.0 % $ 421,003 100.0 % The following table summarizes the Company’s long-lived assets, which consist of property and equipment, net, and operating lease ROU assets, net, by geographic region: June 30, 2023 December 31, 2022 (in thousands) Long-lived assets: United States $ 7,334 $ 10,811 International 6,244 6,657 Total long-lived assets $ 13,578 $ 17,468 |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities Indemnification In the ordinary course of business, the Company enters into agreements with customers, providers of services and data that the Company uses in its business operations, and other third parties pursuant to which the Company agrees to indemnify and defend them and their affiliates for losses resulting from claims of intellectual property infringement, damages to property or persons, business losses, and other costs and liabilities. Generally, these indemnity and defense obligations relate to claims and losses that result from the Company’s acts or omissions, including actual or alleged process errors, inclusion of erroneous or impermissible information, or omission of includable information in background screening reports that the Company prepares. In addition, under some circumstances, the Company agrees to indemnify and defend contract counterparties against losses resulting from their own business operations, obligations, and acts or omissions, or the business operations, obligations, and acts or omissions of third parties. For example, its business interposes the Company between suppliers of information that the Company includes in its background screening reports and customers that use those reports; the Company generally agrees to indemnify and defend its customers against claims and losses that result from erroneous information provided by its suppliers, and also to indemnify and defend its suppliers against claims and losses that result from misuse of their information by its customers. The Company’s agreements with customers, suppliers, and other third parties typically include provisions limiting its liability to the counterparty, and the counterparty’s liability to the Company. However, these limits often do not apply to indemnity obligations. The Company’s rights to recover from one party for its acts or omissions may be capped below the Company’s obligation to another party for those same acts or omissions, and the Company’s obligation to provide indemnity and defense for its own acts or omissions in any particular situation may be uncapped. The Company has entered into indemnification agreements with the members of its board of directors and executive officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service. In addition, customers of the Company may seek indemnity for negligent hiring claims that result from the Company’s alleged failure to identify or report adverse background information about an individual. The Company is not aware of any pending demands to provide indemnity or defense under such agreements that would reasonably be expected to have a material adverse effect on its condensed consolidated financial statements. |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings The Company is subject to claims, investigations, audits, and enforcement proceedings by private plaintiffs, third parties the Company does business with, and governmental and regulatory authorities charged with overseeing the enforcement of laws and regulations that govern the Company’s business. In the U.S., most of these matters arise under the federal Fair Credit Reporting Act and various state and local laws focused on privacy and the conduct and content of background reports. These claims are typically brought by individuals alleging process errors, inclusion of erroneous or impermissible information, or failure to include appropriate information in background reports prepared about them by the Company. Proceedings related to the Company’s U.S. operations may also be brought under the same laws by the Consumer Financial Protection Bureau or Federal Trade Commission, or by state authorities. Claims or proceedings may also arise under the European Union (“E.U.”) and U.K. General Data Protection Regulations and other laws around the world addressing privacy and the use of background information such as criminal and credit histories, and may be brought by individuals about whom the Company has prepared background reports or by the Data Protection Authorities of E.U. member states and other governmental authorities. In addition, customers of the Company may seek indemnity for negligent hiring claims that result from the Company’s alleged failure to identify or report adverse background information about an individual. In addition to claims related to privacy and background checks, the Company is also subject to other claims and proceedings arising in the ordinary course of its business, including without limitation claims for indemnity by customers and vendors, employment-related claims, and claims for alleged taxes owed, infringement of intellectual property rights, and breach of contract. The Company accrues for contingent liabilities if it is probable that a liability has been incurred and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. Although the Company and its subsidiaries are subject to various claims and proceedings from time to time in the ordinary course of business, the Company and its subsidiaries are not party to any pending legal proceedings that the Company believes to be material. |
Revenues
Revenues | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Revenues consist of service revenue and surcharge revenue. Service revenue consists of fees charged to customers for services provided by the Company. Surcharge revenue consists of fees charged to customers for obtaining data from federal, state and local jurisdictions, and certain commercial data providers required to fulfill the Company’s performance obligations. Revenue is recognized when the Company satisfies its obligation to complete the service and delivers the screening report to the customer. Disaggregated revenues were as follows: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands) Revenues: Service revenues $ 137,176 $ 158,425 $ 260,872 $ 299,928 Surcharge revenues 54,948 63,867 106,699 121,075 Total revenues $ 192,124 $ 222,292 $ 367,571 $ 421,003 Contract Implementation Costs Contract implementation costs represent incremental set up costs to fulfill contracts with customers, including, for example, salaries and wages incurred to onboard customers onto the Company’s platform to enable the customers to request and access completed background screening reports. Contract implementation costs, net of accumulated amortization are recorded in other non-current assets on the Company’s condensed consolidated balance sheets and amortization expense is recorded in cost of services (exclusive of depreciation and amortization) in the Company’s condensed consolidated statements of operations. Amortization of contract implementation costs included in cost of services (exclusive of depreciation and amortization) was $1.3 million and $2.5 million for the three and six months ended June 30, 2023, respectively, and $1.1 million and $2.2 million for the three and six months ended June 30, 2022, respectively. See Note 3 — Prepaid Expenses and Other Current Assets, and Other Non-Current Assets for contract implementation costs included in the Company’s condensed consolidated balance sheets. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense (benefit) and effective tax rates were as follows: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands, except effective tax rate) Income (loss) before income taxes $ 4,869 $ 24,876 $ (8,986) $ 37,258 Income tax expense (benefit) 2,357 430 (3,587) 1,248 Effective tax rate 48.4 % 1.7 % 39.9 % 3.3 % The effective tax rate for the three and six months ended June 30, 2023, differs from the federal statutory rate of 21% primarily due to state taxes, non-deductible stock-based compensation expense, and U.S. tax on foreign operations partially offset by the recognition of stranded deferred taxes in other accumulated comprehensive loss. The effective tax rate for the three and six months ended June 30, 2022 differs from the federal statutory rate of 21% primarily due to valuation allowances, state taxes, and U.S. tax on foreign operations. Prior to September 2022, the Company’s net U.S. federal and state deferred tax assets were fully offset by a valuation allowance, excluding a portion of its deferred tax liabilities for tax deductible goodwill, primarily as a result of the Company’s lack of U.S. earnings history and cumulative loss position. The Company prepares a quarterly analysis of its deferred tax assets which considers positive and negative evidence, including its cumulative income (loss) position, revenue growth, continuing and improved profitability, and expectations regarding future profitability. Although the Company believes its estimates are reasonable, the ultimate determination of the appropriate amount of valuation allowance involves significant judgment. The Company determined sufficient positive evidence existed to conclude that the U.S. deferred tax assets are more likely than not realizable. As a result, the Company released the valuation allowance attributed to the deferred tax assets associated with the Company’s operations in the U.S. during the third quarter of 2022. There is no change in assessment as of June 30, 2023. On August 16, 2022, the "Inflation Reduction Act" (H.R. 5376) was signed into law in the United States. Among other things, the Act imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. During the six months ended June 30, 2023, the Company recorded $0.8 million of excise tax related to share repurchases, which are recorded in Treasury stock on the Company’s condensed consolidated balance sheets. The Company does not currently expect the Inflation Reduction Act to have a material impact on the condensed consolidated financial statements. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Equity Incentive Plans The Company issues stock-based compensation awards under the 2021 Omnibus Incentive Plan (“Omnibus Incentive Plan”), and prior to the IPO the Company issued stock-based compensation under the HireRight GIS Group Holdings LLC Equity Incentive Plan (“Equity Plan”). At June 30, 2023, the total number of shares authorized for issuance under the Omnibus Incentive Plan was 14.2 million shares and 7.3 million shares remain available for issuance. Stock-Based Compensation Expense Stock-based compensation expense recognized in the condensed consolidated statements of operations was as follows: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands) Selling, general and administrative $ 4,972 $ 4,367 $ 8,153 $ 6,994 Cost of services (exclusive of depreciation and amortization) 271 144 918 311 Total stock-based compensation expense $ 5,243 $ 4,511 $ 9,071 $ 7,305 Stock Options under the Equity Plan For stock options issued under the Equity Plan that were outstanding and unvested as of June 30, 2023, the Company expects to recognize future compensation expense of $3.2 million over a weighted average remaining vesting period of 1.6 years. Awards under the Omnibus Incentive Plan The Company granted 46,081 options during the six months ended June 30, 2023 under the Omnibus Incentive Plan, with a weighted average grant date fair value of $3.96 calculated using the Black-Scholes option valuation model. For options under the Omnibus Incentive Plan outstanding and unvested as of June 30, 2023, the Company expects to recognize future compensation expense of $6.1 million over a weighted average remaining vesting period of 2.4 years. The Company granted 3,378,508 restricted stock units (“RSU”), including the performance RSUs discussed below, with a weighted average grant date fair value of $9.11 per share during the six months ended June 30, 2023 under the Omnibus Incentive Plan. For RSUs outstanding and unvested as of June 30, 2023, the Company expects to recognize future compensation expense of $38.4 million over a weighted average remaining vesting period of 2.6 years. On March 20, 2023, the Company approved a grant of a total of 2,561,275 performance RSUs. A total of 1,116,323 of these performance RSUs had a grant-date fair value of $5.67 per unit based on a Monte Carlo valuation model and may vest upon the achievement of a market condition related to total shareholder return, achievement of stock price targets of the Company's common stock, and are subject to continued service. The expected stock-based compensation expense for the market condition performance RSUs is $6.3 million and is expected to be recognized over the period from grant date through March 2026. The remaining portion, 1,444,952 units, of these performance RSUs granted on March 20, 2023, had a grant date fair value of $10.90 per unit and may vest upon the achievement of AEBITDA performance targets and are subject to continued service. The total expected stock-based compensation expense for the AEBITDA performance RSUs is $15.8 million and is expected to be recognized over the period from grant date through March 2026. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Repurchase of Common Stock On November 14, 2022, the Company announced that its Board of Directors authorized a $100.0 million share repurchase program that was completed on June 21, 2023 (the “Initial Program”). Pursuant to the Initial Program, the Company repurchased a total of 9.3 million shares of the Company’s common stock at an average price paid of $10.79 per share, including commissions paid and excise taxes. On June 22, 2023, the Company announced that its Board of Directors authorized an additional share repurchase program for repurchase of up to an additional $25.0 million of the Company's common stock, par value $0.001 (the "2023 Program"). Through June 30, 2023, the Company repurchased 0.2 million shares of Common stock under the 2023 Program for $2.1 million, including commissions paid and excise taxes, at an average price paid of $11.29 per share. As of June 30, 2023, approximately $22.9 million remained available for future purchases under the 2023 Program. The repurchased shares under both the Initial program and the 2023 Program are recorded as “Treasury stock” on the Company's condensed consolidated balance sheets. The Initial Program authorized, and the 2023 Program authorizes, repurchases in the open market in accordance with the requirements of Rule 10b-18, in privately negotiated transactions or otherwise, including through Rule 10b5-1 trading plans, with the amount and timing of repurchases depending on stock price, trading volume, market conditions and other general business considerations. The Initial Program did not obligate the Company to acquire |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic net income (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted average number of outstanding shares during the period. The weighted average outstanding shares may include potentially dilutive equity awards. Diluted net income (loss) per share includes the effects of potentially dilutive equity awards, which include stock options, restricted stock units, and other potentially dilutive equity awards outstanding during the year. For the three and six months ended June 30, 2023, there were 5,691,271, and 9,089,946 potentially dilutive equity awards, respectively, which were excluded from the calculations of diluted EPS because including them would have had an anti-dilutive effect. For the three and six months ended June 30, 2022, there were 7,266,364 and 6,883,842 potentially dilutive awards, which were excluded from the calculation of diluted EPS because including them would have had an anti-dilutive effect. Basic and diluted EPS for the three and six months ended June 30, 2023 and 2022 were: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands, except share and per share data) Numerator: Net income (loss) $ 2,512 $ 24,446 $ (5,399) $ 36,010 Denominator: Weighted average shares outstanding - basic 73,090,366 79,405,872 75,108,902 79,399,440 Effect of dilutive equity awards 901,783 72,222 — 43,733 Weighted average shares outstanding - diluted 73,992,149 79,478,094 75,108,902 79,443,173 Net income (loss) per share: Basic $ 0.03 $ 0.31 $ (0.07) $ 0.45 Diluted $ 0.03 $ 0.31 $ (0.07) $ 0.45 |
Restructuring and Related Charg
Restructuring and Related Charges | 6 Months Ended |
Jun. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Charges | Restructuring and Related Charges Global Restructuring Plan In the first quarter of 2023, the Company began a global restructuring plan intended to improve the Company’s cost structure, operating efficiency, and profitability as part of its ongoing margin improvement initiatives. The plan involves reduction in force, offshoring certain functions, and other measures designed to reduce costs to achieve the Company’s long term margin goals. The plan was approved and initiated in the first quarter of 2023 and is expected to continue throughout 2023 and early 2024. During the three and six months ended June 30, 2023, the Company recognized restructuring charges of $4.9 million and $10.7 million respectively, primarily for employee severance and benefits in connection with the workforce reduction, accelerated expense on abandoned right-of-use assets, and other restructuring charges. In addition, the Company incurred professional service fees of $3.2 million and $7.3 million during the three and six months ended June 30, 2023, respectively, for consulting costs related to the execution of the Company’s global restructuring plan. All charges were recorded as selling, general and administrative expenses and cost of services (exclusive of depreciation and amortization) in the condensed consolidated statements of operations. The Company expects to recognize additional restructuring charges in 2023 and early 2024 of $15.0 million to $18.0 million, primarily for severance and benefits, professional service fees, and transition costs. The Company is continuing to evaluate operating costs and outsourcing opportunities and the expected charges related to our global restructuring plan may be greater than expected, including charges for additional severance and professional service fees. The components of the restructuring charges (including professional service fees) are as follows: Three Months Ended June 30, Six Months Ended June 30, 2023 (in thousands) Severance and benefits (1) $ 3,441 $ 7,827 Accelerated expense on abandoned right-of-use assets (2) 728 2,210 Professional fees (3) 3,249 7,255 Other (4) 697 697 Total restructuring charges $ 8,115 $ 17,989 (1) Charges of $1.5 million and $3.2 million recorded in cost of services (exclusive of depreciation and amortization) for the three and six months ended June 30, 2023. Charges of $1.9 million and $4.6 million recorded in selling, general and administrative expenses for the three and six months ended June 30, 2023. (2) Charges for accelerated expense and additional costs associated with abandoned right-of-use assets recorded in selling, general and administrative expenses. (3) Professional service fees consist of consulting costs related to the execution of the Company’s global restructuring plan to improve the Company’s cost structure, operating efficiency, and redesign and right size the organization. These charges are recorded in selling, general and administrative expenses. (4) Other charges recorded in selling, general and administrative expenses. The following table provides the components of and changes in the Company’s restructuring and related charges, included in accrued salaries and payroll and accrued expenses and other current liabilities on the condensed consolidated balance sheets: June 30, 2023 (in thousands) Balance at December 31, 2022 $ — Charges incurred (1) 15,779 Payments (10,484) Balance at June 30, 2023 $ 5,295 (1) Includes $7.8 million in charges for employee severance and benefits related to the workforce reduction, $2.6 million of which remains unpaid as of June 30, 2023. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On December 31, 2022, and February 16, 2023, the Company entered into definitive agreements to purchase 60% of the equity interests in Digital Technology Identity Services, LLC, a privately held company, for a total purchase price of approximately $26.5 million, subject to purchase price adjustments including for working capital, indebtedness, and a one-year $2.3 million cash holdback. The purchase was completed on July 3, 2023 and was funded with available cash. The fair value of identifiable net assets acquired is currently being assessed. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net income (loss) | $ 2,512 | $ 24,446 | $ (5,399) | $ 36,010 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Organization, Basis of Presen_2
Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation and Principles of Consolidation The unaudited condensed consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries. The Company accounts for investments in unconsolidated entities where it exercises significant influence, but does not have control, using the equity method. The unaudited condensed consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States of America ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 10, 2023 (“Annual Report”). The December 31, 2022 condensed consolidated balance sheet data included herein was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, all adjustments, consisting of normal recurring items, necessary for the fair statement of the condensed consolidated financial statements have been included. All intercompany balances and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared on a consistent basis with the accounting policies described in Note 1 of the notes to the audited consolidated financial statements for the year ended December 31, 2022, included in the Annual Report. |
Principles of Consolidation | Basis of Presentation and Principles of Consolidation The unaudited condensed consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries. The Company accounts for investments in unconsolidated entities where it exercises significant influence, but does not have control, using the equity method. The unaudited condensed consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States of America ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 10, 2023 (“Annual Report”). The December 31, 2022 condensed consolidated balance sheet data included herein was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, all adjustments, consisting of normal recurring items, necessary for the fair statement of the condensed consolidated financial statements have been included. All intercompany balances and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared on a consistent basis with the accounting policies described in Note 1 of the notes to the audited consolidated financial statements for the year ended December 31, 2022, included in the Annual Report. |
Use of Estimates | Use of Estimates Preparation of the Company’s unaudited condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates, judgments, and assumptions that affect the amounts reported and disclosed in the financial statements. The Company believes that the estimates, judgments, and assumptions used to determine certain amounts that affect the financial statements are reasonable based upon information available at the time they are made. The Company uses such estimates, judgments, and assumptions when accounting for items and matters such as, but not limited to, the allowance for credit losses, customer rebates, impairment assessments and charges, recoverability of long-lived assets, deferred tax assets, lease accounting, uncertain tax positions, income tax expense, liabilities under the TRA, derivative instruments, fair value of debt, stock-based compensation expense, useful lives assigned to long-lived assets, and the stand-alone selling price of performance obligations for revenue recognition purposes. Results and outcomes could differ materially from these estimates, judgments, and assumptions due to risks and uncertainties. |
Recently Issued Accounting Pronouncements Adopted and Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Adopted Accounting Pronouncements Adopted in 2023 In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “ Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” to provide financial statement users with more useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which delayed the effective date for this guidance until the fiscal year beginning after December 15, 2022 including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2016-13 effective January 1, 2023, using the modified retrospective transition method. The adoption of this ASU did not have a material impact on the condensed consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which aims to improve the accounting for acquired revenue contracts with customers in a business combination. The ASU requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The new guidance is effective for the Company for annual periods beginning after December 15, 2023 and interim periods within those fiscal years. The Company adopted ASU 2021-08 effective January 1, 2023. The adoption of this ASU did not have a material impact on the condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU 2020-04 , “Reference Rate Reform (Topic 848),” which provides temporary, optional practical expedients and exceptions to enable a smoother transition to the new reference rates which will replace the London Interbank Offered Rate (“LIBOR”) and other reference rates expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope, ” which expanded the scope of Topic 848 to include derivative instruments impacted by the discounting transition. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” which extended the temporary accounting rules under Topic 848 from December 31, 2022 to December 31, 2024. The Company does not expect the adoption of this guidance to have a material impact on the condensed consolidated financial statements. |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets, and Other Non-Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Summary of Prepaid Expenses and Other Current Assets | The components of prepaid expenses and other current assets were as follows: June 30, 2023 December 31, 2022 (in thousands) Prepaid software licenses, maintenance and insurance $ 9,950 $ 9,237 Other prepaid expenses and current assets 9,228 9,508 Total prepaid expenses and other current assets $ 19,178 $ 18,745 |
Summary of Other Non-Current Assets | The components of other non-current assets were as follows: June 30, 2023 December 31, 2022 (in thousands) Contract implementation assets $ 18,505 $ 17,983 Other non-current assets 2,104 966 Total other non-current assets $ 20,609 $ 18,949 |
Right-of-Use Assets and Lease_2
Right-of-Use Assets and Lease Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Assets and Liabilities, Lessee | The Company’s operating leases were as follows: June 30, 2023 December 31, 2022 (in thousands) Right-of-use assets, net (1) $ 5,368 $ 8,423 Current operating lease liabilities (2) $ 5,014 $ 5,509 Operating lease liabilities, long-term (2) 8,265 10,055 Total operating lease liabilities $ 13,279 $ 15,564 (1) Includes impact of accelerated expense on abandoned right-of-use assets related to the global restructuring plan, see Note 19 — Restructuring and Related Charges for additional information. (2) Current and long-term operating lease liabilities are recorded in accrued expenses and other current liabilities, |
Lease, Cost | Supplemental cash flow information related to leases was as follows: Six Months Ended 2023 2022 (in thousands) Cash paid for amounts included in measurement of operating lease liabilities $ 3,104 $ 2,697 ROU assets obtained in exchange for operating lease liabilities $ 897 $ 11,150 The weighted average remaining lease term and weighted average discount rate for the Company’s operating leases were as follows: June 30, 2023 2022 Weighted average remaining lease term (in years) 3.94 4.34 Weighted average discount rate 4.9 % 4.6 % |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | The components of accrued expenses and other current liabilities were as follows: June 30, 2023 December 31, 2022 (in thousands) Accrued data costs $ 36,815 $ 34,080 Tax receivable agreement liability, current portion 27,039 — Other 33,066 41,128 Total accrued expenses and other current liabilities $ 96,920 $ 75,208 |
Accrued Salaries and Payroll (T
Accrued Salaries and Payroll (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Salaries and Payroll | The components of accrued salaries and payroll were as follows: June 30, 2023 December 31, 2022 (in thousands) Wages, benefits and taxes (1) $ 18,952 $ 15,198 Accrued bonus 9,133 15,877 Total accrued salaries and payroll $ 28,085 $ 31,075 (1) Accrued wages, benefits and taxes at June 30, 2023 includes $2.6 million in accrued employee severance and benefits related to the workforce reduction. See Note 19 — Restructuring and Related Charges for additional information. |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The components of debt were as follows: June 30, 2023 December 31, 2022 (in thousands) Amended First Lien Term Loan Facility $ 695,338 $ 699,513 Amended Revolving Credit Facility — — Total debt 695,338 699,513 Less: Unamortized original issue discount (1,190) (1,464) Less: Unamortized debt issuance costs (5,290) (6,493) Less: Current portion of long-term debt (8,350) (8,350) Long-term debt, less current portion $ 680,508 $ 683,206 |
Amortization of Debt Discount and Debt Issuance | Amortization of debt discount and debt issuance costs related to the Amended First Lien Term Loan Facility are included in interest expense in the condensed consolidated statements of operations and were as follows: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands) Debt discount amortization $ 138 $ 132 $ 274 $ 262 Debt issuance costs amortization 604 584 1,203 1,162 Total debt discount and issuance costs $ 742 $ 716 $ 1,477 $ 1,424 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Liabilities | The estimated fair values were as follows: June 30, 2023 December 31, 2022 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Amended First Lien Term Loan Facility $ 694,148 $ 694,585 $ 698,049 $ 673,617 Amended Revolving Credit Facility — — — — Total Debt $ 694,148 $ 694,585 $ 698,049 $ 673,617 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Interest Expense Reclassification | The Company reclassified interest expense related to hedges of these transactions into earnings as follows: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands) Reclassification of the effective portion of the gain on the Interest Rate Swap Agreements into interest expense $ — $ — $ — $ 1,679 Reclassification of unrealized gains related to terminated Interest Rate Swap Agreements into interest expense (2,275) (4,082) (4,802) (6,263) Total reclassification adjustments included in earnings $ (2,275) $ (4,082) $ (4,802) $ (4,584) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (loss) as of June 30, 2023 and December 31, 2022 were as follows: Derivative Currency Total (in thousands) Balance at December 31, 2022 $ 8,849 $ (13,793) $ (4,944) Other comprehensive income (loss) (4,802) 4,732 (70) Balance at June 30, 2023 $ 4,047 $ (9,061) $ (5,014) |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Revenues and Property and Equipment by Geographic Region | Revenues are attributed to each geographic region based on the location of the HireRight entity that has contracted for the services that result in the revenues. The following table summarizes the Company’s revenues by region: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands, except percent) Revenues: United States $ 177,266 92.3 % $ 205,359 92.4 % $ 338,960 92.2 % $ 388,736 92.3 % International 14,858 7.7 % 16,933 7.6 % 28,611 7.8 % 32,267 7.7 % Total revenues $ 192,124 100.0 % $ 222,292 100.0 % $ 367,571 100.0 % $ 421,003 100.0 % The following table summarizes the Company’s long-lived assets, which consist of property and equipment, net, and operating lease ROU assets, net, by geographic region: June 30, 2023 December 31, 2022 (in thousands) Long-lived assets: United States $ 7,334 $ 10,811 International 6,244 6,657 Total long-lived assets $ 13,578 $ 17,468 |
Revenues (Tables)
Revenues (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Disaggregated revenues were as follows: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands) Revenues: Service revenues $ 137,176 $ 158,425 $ 260,872 $ 299,928 Surcharge revenues 54,948 63,867 106,699 121,075 Total revenues $ 192,124 $ 222,292 $ 367,571 $ 421,003 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense (Benefit) and Effective Tax Rates | Income tax expense (benefit) and effective tax rates were as follows: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands, except effective tax rate) Income (loss) before income taxes $ 4,869 $ 24,876 $ (8,986) $ 37,258 Income tax expense (benefit) 2,357 430 (3,587) 1,248 Effective tax rate 48.4 % 1.7 % 39.9 % 3.3 % |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation Expense | Stock-based compensation expense recognized in the condensed consolidated statements of operations was as follows: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands) Selling, general and administrative $ 4,972 $ 4,367 $ 8,153 $ 6,994 Cost of services (exclusive of depreciation and amortization) 271 144 918 311 Total stock-based compensation expense $ 5,243 $ 4,511 $ 9,071 $ 7,305 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Unit, Basic and Diluted | Basic and diluted EPS for the three and six months ended June 30, 2023 and 2022 were: Three Months Ended June 30, Six Months Ended 2023 2022 2023 2022 (in thousands, except share and per share data) Numerator: Net income (loss) $ 2,512 $ 24,446 $ (5,399) $ 36,010 Denominator: Weighted average shares outstanding - basic 73,090,366 79,405,872 75,108,902 79,399,440 Effect of dilutive equity awards 901,783 72,222 — 43,733 Weighted average shares outstanding - diluted 73,992,149 79,478,094 75,108,902 79,443,173 Net income (loss) per share: Basic $ 0.03 $ 0.31 $ (0.07) $ 0.45 Diluted $ 0.03 $ 0.31 $ (0.07) $ 0.45 |
Restructuring and Related Activ
Restructuring and Related Activities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | The components of the restructuring charges (including professional service fees) are as follows: Three Months Ended June 30, Six Months Ended June 30, 2023 (in thousands) Severance and benefits (1) $ 3,441 $ 7,827 Accelerated expense on abandoned right-of-use assets (2) 728 2,210 Professional fees (3) 3,249 7,255 Other (4) 697 697 Total restructuring charges $ 8,115 $ 17,989 (1) Charges of $1.5 million and $3.2 million recorded in cost of services (exclusive of depreciation and amortization) for the three and six months ended June 30, 2023. Charges of $1.9 million and $4.6 million recorded in selling, general and administrative expenses for the three and six months ended June 30, 2023. (2) Charges for accelerated expense and additional costs associated with abandoned right-of-use assets recorded in selling, general and administrative expenses. (3) Professional service fees consist of consulting costs related to the execution of the Company’s global restructuring plan to improve the Company’s cost structure, operating efficiency, and redesign and right size the organization. These charges are recorded in selling, general and administrative expenses. (4) Other charges recorded in selling, general and administrative expenses. The following table provides the components of and changes in the Company’s restructuring and related charges, included in accrued salaries and payroll and accrued expenses and other current liabilities on the condensed consolidated balance sheets: June 30, 2023 (in thousands) Balance at December 31, 2022 $ — Charges incurred (1) 15,779 Payments (10,484) Balance at June 30, 2023 $ 5,295 (1) Includes $7.8 million in charges for employee severance and benefits related to the workforce reduction, $2.6 million of which remains unpaid as of June 30, 2023. |
Organization, Basis of Presen_3
Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Tax receivable agreements, term | 12 years | |
Tax receivable agreements, percentage of benefits payable to shareholders | 0.85 | |
Tax receivable agreements, estimated tax liability, current and noncurrent | $ 210.5 | $ 210.5 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets, and Other Non-Current Assets - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid software licenses, maintenance and insurance | $ 9,950 | $ 9,237 |
Other prepaid expenses and current assets | 9,228 | 9,508 |
Total prepaid expenses and other current assets | $ 19,178 | $ 18,745 |
Prepaid Expenses and Other Cu_4
Prepaid Expenses and Other Current Assets, and Other Non-Current Assets - Summary of Other Non-Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Contract implementation assets | $ 18,505 | $ 17,983 |
Other non-current assets | 2,104 | 966 |
Total other non-current assets | $ 20,609 | $ 18,949 |
Right-of-Use Assets and Lease_3
Right-of-Use Assets and Lease Liabilities - Narrative (Details) | Jun. 30, 2023 |
Lessee, Lease, Description [Line Items] | |
Lease renewal term | 5 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 12 years |
Right-of-Use Assets and Lease_4
Right-of-Use Assets and Lease Liabilities - Lease Summary (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Right-of-use assets, net | $ 5,368 | $ 8,423 |
Current operating lease liabilities | 5,014 | 5,509 |
Operating lease liabilities, long-term | 8,265 | 10,055 |
Total operating lease liabilities | $ 13,279 | $ 15,564 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued expenses and other current liabilities |
Right-of-Use Assets and Lease_5
Right-of-Use Assets and Lease Liabilities - Supplemental Cash Flow (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Leases [Abstract] | ||
Cash paid for amounts included in measurement of operating lease liabilities | $ 3,104 | $ 2,697 |
ROU assets obtained in exchange for operating lease liabilities | $ 897 | $ 11,150 |
Right-of-Use Assets and Lease_6
Right-of-Use Assets and Lease Liabilities - Weighted Average (Details) | Jun. 30, 2023 | Jun. 30, 2022 |
Leases [Abstract] | ||
Weighted average remaining lease term (in years) | 3 years 11 months 8 days | 4 years 4 months 2 days |
Weighted average discount rate | 4.90% | 4.60% |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accrued data costs | $ 36,815 | $ 34,080 |
Tax receivable agreement liability, current portion | 27,039 | 0 |
Other | 33,066 | 41,128 |
Total accrued expenses and other current liabilities | $ 96,920 | $ 75,208 |
Accrued Salaries and Payroll (D
Accrued Salaries and Payroll (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Wages, benefits and taxes | $ 18,952 | $ 15,198 |
Accrued bonus | 9,133 | 15,877 |
Total accrued salaries and payroll | 28,085 | 31,075 |
Global Restructuring Plan | ||
Restructuring Cost and Reserve [Line Items] | ||
Severance and benefits | 5,295 | $ 0 |
Global Restructuring Plan | Employee Severance | ||
Restructuring Cost and Reserve [Line Items] | ||
Severance and benefits | $ 2,600 |
Debt - Schedule of Debt Instrum
Debt - Schedule of Debt Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Total debt | $ 695,338 | $ 699,513 |
Less: Unamortized original issue discount | (1,190) | (1,464) |
Less: Unamortized debt issuance costs | (5,290) | (6,493) |
Less: Current portion of long-term debt | (8,350) | (8,350) |
Long-term debt, less current portion | 680,508 | 683,206 |
Amended First Lien Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 695,338 | 699,513 |
Amended Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 0 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 03, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Jul. 12, 2018 | |
Debt Instrument [Line Items] | |||||||
Days prior to term loan debt, gross | 91 days | ||||||
Amortization of debt issuance costs | $ 1,613,000 | $ 1,759,000 | |||||
Weighted average interest rate | 8.60% | 8.60% | 5.50% | ||||
Amended First Lien Term Loan Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, successor holding rate, threshold | 50% | 50% | |||||
Debt instrument, minimum conversion threshold | $ 2,500,000 | $ 2,500,000 | |||||
Line of Credit | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 1% | ||||||
Line of Credit | Amended First Lien Term Loan Facility | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount | $ 835,000,000 | ||||||
Periodic payment percentage of principal | 0.25% | ||||||
Periodic payment, amount | $ 2,100,000 | ||||||
Debt instrument, floor | 0% | ||||||
Line of Credit | Amended First Lien Term Loan Facility | Federal Funds | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.50% | ||||||
Line of Credit | Amended First Lien Term Loan Facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 3.75% | ||||||
Line of Credit | Amended First Lien Term Loan Facility | ABR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 2.75% | ||||||
Line of Credit | Amended Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 145,000,000 | 100,000,000 | |||||
Available borrowing | $ 143,700,000 | $ 143,700,000 | |||||
Unused capacity, commitment fee percentage | 0.38% | 0.38% | 0.38% | ||||
Debt instrument leverage ratio percent | 35% | 35% | 35% | ||||
Amortization of debt issuance costs | $ 100,000 | $ 200,000 | $ 100,000 | $ 300,000 | |||
Line of Credit | Amended Revolving Credit Facility | ABR | |||||||
Debt Instrument [Line Items] | |||||||
Margin for borrowing | 2% | ||||||
Line of Credit | Amended Revolving Credit Facility | SOFR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 2.50% | ||||||
Margin for borrowing | 3% | ||||||
Line of Credit | Letter of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 40,000,000 | ||||||
Letters of credit outstanding | $ 1,300,000 | $ 1,300,000 |
Debt - Amortization of Debt Dis
Debt - Amortization of Debt Discount and Debt Issuance Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Debt Instrument [Line Items] | ||||
Debt issuance costs amortization | $ 1,613 | $ 1,759 | ||
First and Second Lien Term Loan Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Debt discount amortization | $ 138 | $ 132 | 274 | 262 |
Debt issuance costs amortization | 604 | 584 | 1,203 | 1,162 |
Total debt discount and issuance costs | $ 742 | $ 716 | $ 1,477 | $ 1,424 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instruments | $ 694,148 | $ 698,049 |
Carrying Value | Line of Credit | Amended First Lien Term Loan Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instruments | 694,148 | 698,049 |
Carrying Value | Line of Credit | Amended Revolving Credit Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instruments | 0 | 0 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instruments | 694,585 | 673,617 |
Fair Value | Line of Credit | Amended First Lien Term Loan Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instruments | 694,585 | 673,617 |
Fair Value | Line of Credit | Amended Revolving Credit Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instruments | $ 0 | $ 0 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) - USD ($) | 6 Months Ended | |||
Feb. 18, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2018 | |
Derivative [Line Items] | ||||
Payments for termination of interest rate swap | $ 0 | $ 18,445,000 | ||
Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Notional amount | $ 700,000,000 | |||
Payments for termination of interest rate swap | $ 18,400,000 | |||
Unrealized gains related to terminated interest rate swap | $ 21,500,000 |
Derivative Instruments - Summar
Derivative Instruments - Summary of Reclassification (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | ||
Derivative [Line Items] | |||||
Derivative Instrument, Gain (Loss) Reclassified from AOCI into Income, Effective Portion, Statement of Income or Comprehensive Income [Extensible Enumeration] | Interest expense, net | Interest expense, net | Interest expense, net | Interest expense, net | |
Total reclassification adjustments included in earnings | [1] | $ (2,275) | $ (4,082) | $ (4,802) | $ (4,584) |
Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Total reclassification adjustments included in earnings | 0 | 0 | 0 | 1,679 | |
Interest Rate Swap, Terminated | |||||
Derivative [Line Items] | |||||
Total reclassification adjustments included in earnings | $ (2,275) | $ (4,082) | $ (4,802) | $ (6,263) | |
[1]Represents the reclassification of the effective portion of the gain on the Company's interest rate swaps into interest expense. Includes reclassification to earnings as a reduction to interest expense of unrealized gains included in accumulated other comprehensive loss on the condensed consolidated balance sheet related to the interest rate swap agreements terminated on February 18, 2022. See Note 10 for additional information. |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Schedule of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 538,975 | $ 463,761 | $ 568,318 | $ 445,717 |
Other comprehensive income (loss) | (320) | (14,124) | (70) | (10,438) |
Ending balance | 486,399 | 478,473 | 486,399 | 478,473 |
Accumulated Other Comprehensive Income (Loss) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (4,694) | 16,306 | (4,944) | 12,620 |
Other comprehensive income (loss) | (320) | (14,124) | (70) | (10,438) |
Ending balance | (5,014) | $ 2,182 | (5,014) | $ 2,182 |
Derivative Instruments | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 8,849 | |||
Other comprehensive income (loss) | (4,802) | |||
Ending balance | 4,047 | 4,047 | ||
Currency Translation Adjustment | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (13,793) | |||
Other comprehensive income (loss) | 4,732 | |||
Ending balance | $ (9,061) | $ (9,061) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) - Narrative (Details) $ in Millions | Jun. 30, 2023 USD ($) |
Equity [Abstract] | |
Interest expense on hedges expected to be reclassified into earnings, next twelve months | $ 4 |
Segment and Geographic Inform_3
Segment and Geographic Information - Narrative (Details) | 6 Months Ended |
Jun. 30, 2023 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Segment and Geographic Inform_4
Segment and Geographic Information -Schedule of Revenues and Property and Equipment by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenues | $ 192,124 | $ 222,292 | $ 367,571 | $ 421,003 | |
Total long-lived assets | 13,578 | $ 13,578 | $ 17,468 | ||
Geographic Concentration Risk | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenues | $ 192,124 | $ 222,292 | |||
Revenue from Contract with Customer Benchmark | Geographic Concentration Risk | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Percentage of revenue by geographic region | 100% | 100% | 100% | 100% | |
United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total long-lived assets | $ 7,334 | $ 7,334 | 10,811 | ||
United States | Geographic Concentration Risk | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenues | $ 177,266 | $ 205,359 | $ 338,960 | $ 388,736 | |
United States | Revenue from Contract with Customer Benchmark | Geographic Concentration Risk | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Percentage of revenue by geographic region | 92.30% | 92.40% | 92.20% | 92.30% | |
International | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total long-lived assets | $ 6,244 | $ 6,244 | $ 6,657 | ||
International | Geographic Concentration Risk | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenues | $ 14,858 | $ 16,933 | $ 28,611 | $ 32,267 | |
International | Revenue from Contract with Customer Benchmark | Geographic Concentration Risk | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Percentage of revenue by geographic region | 7.70% | 7.60% | 7.80% | 7.70% |
Commitments and Contingent Li_2
Commitments and Contingent Liabilities (Details) - Private Investment $ in Millions | Feb. 16, 2023 USD ($) |
Other Commitments [Line Items] | |
Percentage of voting interests in agreement | 60% |
Other commitment | $ 26.5 |
Revenues - Disaggregation of Re
Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 192,124 | $ 222,292 | $ 367,571 | $ 421,003 |
Service | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 137,176 | 158,425 | 260,872 | 299,928 |
Surcharge | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 54,948 | $ 63,867 | $ 106,699 | $ 121,075 |
Revenues - Narrative (Details)
Revenues - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | ||||
Amortization of contract assets | $ 1,300 | $ 1,100 | $ 2,470 | $ 2,166 |
Income Taxes -Schedule of Incom
Income Taxes -Schedule of Income Tax Expense (Benefit) and Effective Tax Rates (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income (loss) before income taxes | $ 4,869 | $ 24,876 | $ (8,986) | $ 37,258 |
Income tax expense (benefit) | $ 2,357 | $ 430 | $ (3,587) | $ 1,248 |
Effective tax rate | 48.40% | 1.70% | 39.90% | 3.30% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Income Tax Disclosure [Abstract] | |
Excise taxes collected | $ 0.8 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |
Mar. 20, 2023 | Jun. 30, 2023 | |
Omnibus incentive plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized to issue (in shares) | 14,200,000 | |
Available for issuance (in shares) | 7,300,000 | |
Number of options granted (in shares) | 46,081 | |
Weighted-average grant date fair value for options granted (in dollars per share) | $ 3.96 | |
Time Vesting, Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense not yet recognized | $ 3.2 | |
Compensation expense not yet recognized, weighted-average period | 1 year 7 months 6 days | |
Options | Omnibus incentive plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense not yet recognized | $ 6.1 | |
Compensation expense not yet recognized, weighted-average period | 2 years 4 months 24 days | |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense not yet recognized | $ 38.4 | |
Compensation expense not yet recognized, weighted-average period | 2 years 7 months 6 days | |
Granted in period (in shares) | 3,378,508 | |
Granted, weighted average grant date fair value (in dollars per share) | $ 9.11 | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted in period (in shares) | 2,561,275 | |
Performance Shares, Market Conditions | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted in period (in shares) | 1,116,323 | |
Granted, weighted average grant date fair value (in dollars per share) | $ 5.67 | |
Equity-based compensation expense (benefit) | $ 6.3 | |
Performance Shares, AEBITDA Performance | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted in period (in shares) | 1,444,952 | |
Granted, weighted average grant date fair value (in dollars per share) | $ 10.90 | |
Equity-based compensation expense (benefit) | $ 15.8 |
Stock-Based Compensation - Comp
Stock-Based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense (benefit) | $ 5,243 | $ 4,511 | $ 9,071 | $ 7,305 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense (benefit) | 4,972 | 4,367 | 8,153 | 6,994 |
Cost of services (exclusive of depreciation and amortization) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense (benefit) | $ 271 | $ 144 | $ 918 | $ 311 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | 6 Months Ended | 7 Months Ended | ||||
Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2023 | Jun. 21, 2023 | Jun. 22, 2023 | Dec. 31, 2022 | Nov. 14, 2022 | |
Equity, Class of Treasury Stock [Line Items] | |||||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||
Treasury stock, value, acquired | $ 60,552 | $ 86,062 | |||||
Initial Program | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Stock repurchase program, authorized amount | $ 100,000 | ||||||
Repurchase of common stock (in shares) | 9.3 | ||||||
Shares acquired, average cost per share (in dollars per share) | $ 10.79 | ||||||
2023 Program | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Repurchase of common stock (in shares) | 0.2 | ||||||
Shares acquired, average cost per share (in dollars per share) | $ 11.29 | ||||||
Stock repurchase program, additional authorized amount | $ 25,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.001 | ||||||
Treasury stock, value, acquired | $ 2,100 | ||||||
Stock repurchase program, remaining authorized repurchase amount | $ 22,900 | $ 22,900 | $ 22,900 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per unit (in shares) | 5,691,271 | 7,266,364 | 9,089,946 | 6,883,842 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Earnings Per Unit, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator: | ||||
Net income (loss) | $ 2,512 | $ 24,446 | $ (5,399) | $ 36,010 |
Denominator: | ||||
Weighted average shares outstanding - basic (in shares) | 73,090,366 | 79,405,872 | 75,108,902 | 79,399,440 |
Effect of dilutive equity awards (in shares) | 901,783 | 72,222 | 0 | 43,733 |
Weighted average shares outstanding - diluted (in shares) | 73,992,149 | 79,478,094 | 75,108,902 | 79,443,173 |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ 0.03 | $ 0.31 | $ (0.07) | $ 0.45 |
Diluted (in dollars per share) | $ 0.03 | $ 0.31 | $ (0.07) | $ 0.45 |
Restructuring and Related Cha_2
Restructuring and Related Charges - Narrative (Details) - Global Restructuring Plan $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 4,900 | $ 10,700 |
Professional fees | 3,249 | 7,255 |
Minimum | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and related cost, expected cost remaining | 15,000 | 15,000 |
Maximum | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and related cost, expected cost remaining | $ 18,000 | $ 18,000 |
Restructuring and Related Cha_3
Restructuring and Related Charges - Schedule of Restructuring Charges (Details) - Global Restructuring Plan - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 | Jun. 30, 2023 | |
Restructuring Cost and Reserve [Line Items] | ||
Severance and benefits | $ 3,441 | $ 7,827 |
Accelerated expense on abandoned right-of-use assets | 728 | 2,210 |
Professional fees | 3,249 | 7,255 |
Other | 697 | 697 |
Total restructuring charges | 8,115 | 17,989 |
Cost of Goods and Service, Excluding Depreciation, Depletion, and Amortization | ||
Restructuring Cost and Reserve [Line Items] | ||
Severance and benefits | 1,500 | 3,200 |
Selling, general and administrative | ||
Restructuring Cost and Reserve [Line Items] | ||
Severance and benefits | $ 1,900 | $ 4,600 |
Restructuring and Related Cha_4
Restructuring and Related Charges - Changes in Restructuring and Related Charges (Details) - Global Restructuring Plan - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 | Jun. 30, 2023 | |
Restructuring Reserve | ||
Balance at December 31, 2022 | $ 0 | |
Charges incurred | 15,779 | |
Payments | (10,484) | |
Balance at June 30, 2023 | $ 5,295 | 5,295 |
Severance and benefits | 3,441 | 7,827 |
Employee Severance | ||
Restructuring Reserve | ||
Balance at June 30, 2023 | $ 2,600 | $ 2,600 |
Subsequent Events (Details)
Subsequent Events (Details) - Private Investment $ in Thousands | Feb. 16, 2023 USD ($) |
Subsequent Event [Line Items] | |
Percentage of voting interests in agreement | 60% |
Other commitment | $ 26,500 |
Cash holdback period | 1 year |
Cash holdback amount | $ 2,300 |