HireRight Holdings Corporation (NYSE: HRT) ("HireRight" or the
"Company"), a leading provider of background screening services,
today announced financial results for its first quarter ended March
31, 2024.
First Quarter 2024 Highlights:
- Revenues of $173.2 million, compared to prior year period
revenues of $175.4 million
- Net loss attributable to HireRight of $3.3 million, compared to
prior year period net loss of $7.9 million
- Adjusted EBITDA of $40.3 million, compared to prior year period
Adjusted EBITDA of $33.0 million
- Diluted loss per share of $0.05, compared to prior year period
diluted loss per share of $0.10
- Adjusted diluted earnings per share of $0.22, compared to prior
year period adjusted diluted earnings of $0.15 per share
“We’re pleased with our performance during the first quarter and
our ongoing progress delivering on controllable initiatives focused
on margin expansion and customer satisfaction,” said HireRight
President and CEO Guy Abramo. "We remain the only provider in the
industry that can deliver a compliance solution through a unified
global platform, evidenced by our continued success winning new
global customers. Regardless of our future ownership structure,
we're confident in HireRight’s long-term ability to continue to
grow margins, expand upsells and cross sells, and add new logos,
expanding our market share and capitalizing on evolving industry
dynamics including the changing competitive landscape."
Liquidity and Capital Resources
The Company had $236.0 million of capital available at March 31,
2024, consisting of $77.3 million of cash and $158.7 million of
available borrowing capacity under its revolving credit facility.
Cash used in operating activities was $9.2 million for the three
months ended March 31, 2024, compared to $5.0 million for the same
period in 2023, primarily due to the impact of expenses related to
the Merger Agreement.
About HireRight
HireRight is a leading global provider of technology-driven
workforce risk management and compliance solutions. We provide
comprehensive background screening, verification, identification,
monitoring, and drug and health screening services for
approximately 37,000 customers across the globe. We offer our
services via a unified global software and data platform that
tightly integrates into our customers’ human capital management
systems enabling highly effective and efficient workflows for
workforce hiring, onboarding, and monitoring. In 2023, we screened
over 26 million job applicants, employees and contractors for our
customers and processed over 95 million screens. For more
information, visit www.HireRight.com or contact
InvestorRelations@HireRight.com.
Non-GAAP Financial Measures
To supplement the financial results presented in accordance with
generally accepted accounting principles in the United States
(“GAAP”), HireRight presents certain non-GAAP financial measures. A
“non-GAAP financial measure” is a numerical measure of a company’s
financial performance that excludes amounts that are included in
the most directly comparable measure calculated and presented in
accordance with GAAP, or that includes amounts that are excluded
from the most directly comparable measure calculated and presented
in accordance with GAAP in the statements of operations, balance
sheets or statements of cash flow of the Company.
We believe that the presentation of our non-GAAP financial
measures provides information useful to investors in assessing our
financial condition and results of operations. These measures
should not be considered an alternative to net income (loss) or any
other measure of financial performance or liquidity presented in
accordance with GAAP. These measures have important limitations as
analytical tools because they exclude some but not all items that
affect the most directly comparable GAAP measures. Additionally, to
the extent that other companies in our industry define similar
non-GAAP measures differently than we do, the utility of those
measures for comparison purposes may be limited.
The non-GAAP financial measures presented in this earnings
release are Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net
Income, and Adjusted Diluted Earnings Per Share. Reconciliations of
these non-GAAP financial measures to the most directly comparable
measures calculated and presented in accordance with GAAP are
provided as schedules attached to this release.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA represents, as applicable for the period, net
income (loss) attributable to HireRight Holdings Corporation before
income (loss) attributable to noncontrolling interest, interest
expense, income taxes, depreciation and amortization expense,
stock-based compensation, realized and unrealized gain (loss) on
foreign exchange, restructuring charges, amortization of cloud
computing software costs, legal settlement costs or insurance
recoveries deemed by management to be outside the normal course of
business, and other items management believes are not
representative of the Company’s core operations. Adjusted EBITDA
Margin is defined as Adjusted EBITDA divided by revenues for the
period. Adjusted EBITDA and Adjusted EBITDA Margin are supplemental
financial measures that management and external users of our
financial statements, such as industry analysts, investors, lenders
and rating agencies, may use to assess our:
- Operating performance as compared to other publicly traded
companies without regard to capital structure or historical cost
basis;
- Ability to generate cash flow;
- Ability to incur and service debt and fund capital
expenditures; and
- Viability of acquisitions and other capital expenditure
projects and the returns on investment of various investment
opportunities.
Adjusted Net Income and Adjusted Diluted Earnings Per
Share
In addition to Adjusted EBITDA, management believes that
Adjusted Net Income is a strong indicator of our overall operating
performance and is useful to our management and investors as a
measure of comparative operating performance from period to period.
We define Adjusted Net Income as net income (loss) attributable to
HireRight Holdings Corporation adjusted for income (loss)
attributable to noncontrolling interest, amortization of acquired
intangible assets, loss on modification and extinguishment of debt,
stock-based compensation, realized and unrealized gain (loss) on
foreign exchange, restructuring charges, amortization of cloud
computing software costs, legal settlement costs or insurance
recoveries deemed by management to be outside the normal course of
business, and other items management believes are not
representative of the Company’s core operations, to which we apply
a blended statutory tax rate. See the footnotes to the table below
for a description of certain of these adjustments. We define
Adjusted Diluted Earnings Per Share as Adjusted Net Income divided
by the weighted average number of shares outstanding (diluted) for
the applicable period. We believe Adjusted Diluted Earnings Per
Share is useful to investors and analysts because it enables them
to better evaluate per share operating performance across reporting
periods and to compare our performance to that of our peer
companies.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the federal securities laws. You can often identify
forward-looking statements by the fact that they do not relate
strictly to historical or current facts, or to the timing or nature
of future operating or financial performance or other events.
Forward-looking statements may include, but are not limited to,
statements concerning our anticipated financial performance,
including, without limitation, revenue, profitability, net income
(loss), adjusted EBITDA, adjusted EBITDA margin, adjusted net
income, earnings per share ("EPS"), adjusted diluted earnings per
share, and cash flow; strategic objectives; investments in our
business, including development of our technology and introduction
of new offerings; sales growth and customer relationships; our
competitive differentiation; our market share and leadership
position in the industry; market conditions, trends, and
opportunities; future operational performance.
Forward-looking statements are not guarantees. They reflect our
current expectations and projections with respect to future events
and are based on assumptions and estimates and subject to known and
unknown risks, uncertainties and other factors that may cause our
actual results, performance or achievements to be materially
different from expectations or results projected or implied by
forward-looking statements.
Factors that could cause actual results to differ from those
anticipated by forward-looking statements include, among other
things, our vulnerability to adverse economic conditions, including
without limitation, inflation and recession, which could increase
our costs and suppress labor market activity and our revenue; the
aggressive competition we face; failure to implement successfully
our ongoing technology improvement and cost reduction initiatives;
our heavy reliance on information management systems, vendors, and
information sources that may not perform as we expect; the
significant risk of liability we face in the services we perform;
the fact that data security, data privacy and data protection laws,
emerging restrictions on background reporting due to alleged
discriminatory impacts and adverse social consequences, and other
evolving regulations and cross-border data transfer restrictions
may increase our costs, limit the use or value of our services and
adversely affect our business; our ability to maintain our
professional reputation and brand name; the impacts, direct and
indirect, of pandemics or other calamitous events on our business,
our personnel and vendors, and the overall economy; social,
political, regulatory and legal risks in markets where we operate;
the impact of foreign currency exchange rate fluctuations;
unfavorable tax law changes and tax authority rulings; any
impairment of our goodwill, other intangible assets and other
long-lived assets; our ability to execute and integrate future
acquisitions; our ability to access additional credit or other
sources of financing; and increased cybersecurity requirements,
vulnerabilities, threats and more sophisticated and targeted
cyber-related attacks that could pose a risk to our systems,
networks, solutions, services and data. For more information on the
business risks we face and factors that could affect the outcome of
forward-looking statements, refer to our Annual Report on Form 10-K
filed with the SEC on March 12, 2024, in particular the sections of
that document entitled "Risk Factors," "Forward-Looking
Statements," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations,” and other filings we make
from time to time with the SEC. We undertake no obligation to
update publicly any forward-looking statements, whether as a result
of new information, future events or otherwise.
HireRight Holdings Corporation
Consolidated Balance Sheets (Unaudited)
March 31,
December 31,
2024
2023
(in thousands, except share and
per share data)
Assets
Current assets
Cash and cash equivalents
$
77,285
$
123,416
Accounts receivable, net of allowance for
credit losses of $5,182 and $5,422 at March 31, 2024 and December
31, 2023, respectively
131,037
120,724
Prepaid expenses and other current
assets
21,472
19,556
Total current assets
229,794
263,696
Property and equipment, net
7,916
6,393
Right-of-use assets, net
5,608
6,150
Intangible assets, net
282,196
297,401
Goodwill
836,568
837,514
Cloud computing software, net
34,450
36,144
Deferred tax assets
83,491
76,736
Other non-current assets
24,887
24,256
Total assets
$
1,504,910
$
1,548,290
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable
$
8,769
$
9,496
Accrued expenses and other current
liabilities
94,194
100,963
Accrued salaries and payroll
20,285
29,392
Debt, current portion
7,500
7,500
Total current liabilities
130,748
147,351
Debt, long-term portion
723,455
726,767
Tax receivable agreement liability,
long-term portion
162,669
183,835
Deferred tax liabilities
10,616
10,817
Other non-current liabilities
10,287
10,757
Total liabilities
1,037,775
1,079,527
Commitments and contingent liabilities
Stockholders' equity
Preferred stock, $0.001 par value,
authorized 100,000,000 shares; none issued and outstanding as of
March 31, 2024 and December 31, 2023
—
—
Common stock, $0.001 par value, authorized
1,000,000,000 shares; 80,201,053 and 80,199,299 shares issued, and
67,352,961 and 67,351,207 shares outstanding as of March 31, 2024
and December 31, 2023, respectively
80
80
Additional paid-in capital
827,173
823,621
Treasury stock, at cost; 12,848,092 and
12,848,092 shares repurchased at March 31, 2024 and December 31,
2023, respectively
(137,596
)
(137,596
)
Accumulated deficit
(230,621
)
(227,350
)
Accumulated other comprehensive loss
(9,225
)
(7,587
)
Total HireRight Holdings Corporation
stockholders' equity
449,811
451,168
Noncontrolling interest
17,324
17,595
Total stockholders’ equity
467,135
468,763
Total liabilities and stockholders’
equity
$
1,504,910
$
1,548,290
HireRight Holdings Corporation
Consolidated Statements of Operations (Unaudited)
Three Months Ended
March 31,
2024
2023
(in thousands, except share and
per share data)
Revenues
$
173,202
$
175,447
Expenses
Cost of services (exclusive of
depreciation and amortization below)
91,638
98,451
Selling, general and administrative
54,734
59,726
Depreciation and amortization
19,173
18,417
Total expenses
165,545
176,594
Operating income (loss)
7,657
(1,147
)
Other expenses
Interest expense, net
17,726
12,402
Other expense, net
6
306
Total other expenses
17,732
12,708
Loss before income taxes
(10,075
)
(13,855
)
Income tax benefit
(6,533
)
(5,944
)
Net loss
$
(3,542
)
$
(7,911
)
Less: Net loss attributable to
noncontrolling interest
(271
)
—
Net loss attributable to HireRight
Holdings Corporation
$
(3,271
)
$
(7,911
)
Net loss per share attributable to
HireRight Holdings Corporation:
Basic
$
(0.05
)
$
(0.10
)
Diluted
$
(0.05
)
$
(0.10
)
Weighted-average shares
outstanding:
Basic
67,351,727
77,285,116
Diluted
67,351,727
77,285,116
HireRight Holdings Corporation
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
2024
2023
(in thousands)
Cash flows from operating
activities
Net loss
$
(3,542
)
$
(7,911
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
19,173
18,417
Deferred income taxes
(6,488
)
(6,590
)
Amortization of debt issuance costs
474
803
Amortization of contract assets
1,314
1,212
Amortization of right-of-use assets
402
2,384
Amortization of unrealized gains on
terminated interest rate swap agreements
—
(2,527
)
Amortization of cloud computing software
costs
1,733
1,571
Stock-based compensation
3,552
3,828
Other non-cash charges, net
(87
)
(383
)
Changes in operating assets and
liabilities:
Accounts receivable
(10,085
)
2,838
Prepaid expenses and other current
assets
(1,917
)
(1,465
)
Cloud computing software
(39
)
(6,125
)
Other non-current assets
(2,043
)
(1,893
)
Accounts payable
(737
)
(1,804
)
Accrued expenses and other current
liabilities
(475
)
(771
)
Accrued salaries and payroll
(9,306
)
(5,140
)
Operating lease liabilities, net
(1,377
)
(1,284
)
Other non-current liabilities
219
(175
)
Net cash used in operating activities
(9,229
)
(5,015
)
Cash flows from investing
activities
Purchases of property and equipment
(2,648
)
(693
)
Capitalized software development
(2,899
)
(2,918
)
Other investing
—
(1,000
)
Net cash used in investing activities
(5,547
)
(4,611
)
Cash flows from financing
activities
Repayments of debt
(3,750
)
(2,088
)
Payment of tax receivable agreement
liability
(27,169
)
—
Repurchases of common stock
—
(24,584
)
Net cash used in financing activities
(30,919
)
(26,672
)
Net decrease in cash, cash equivalents and
restricted cash
(45,695
)
(36,298
)
Effect of exchange rates
(436
)
306
Cash, cash equivalents and restricted
cash
Beginning of year
123,416
163,402
End of period
$
77,285
$
127,410
Cash paid for
Interest
$
17,467
$
15,221
Income taxes
$
2,416
$
639
Supplemental schedule of non-cash
activities
Unpaid property and equipment and
capitalized software purchases
$
648
$
821
Reconciliation of GAAP Measures to Non-GAAP Measures
(Unaudited)
The following table reconciles our non-GAAP financial measure of
Adjusted EBITDA to net income (loss), our most directly comparable
financial measures calculated and presented in accordance with
GAAP, for the periods presented.
Three Months Ended
March 31,
2024
2023
(in thousands, except
percents)
Net loss
$
(3,542
)
$
(7,911
)
Loss attributable to noncontrolling
interest
271
—
Net loss attributable to HireRight
Holdings Corporation
(3,271
)
(7,911
)
Income tax benefit
(6,533
)
(5,944
)
Interest expense, net
17,726
12,402
Depreciation and amortization
19,173
18,417
EBITDA
27,095
16,964
Stock-based compensation
3,552
3,828
Realized and unrealized loss on foreign
exchange
119
307
Restructuring charges (1)
2,140
9,874
Amortization of cloud computing software
costs (2)
1,733
1,571
Other items (3)
5,673
497
Adjusted EBITDA
$
40,312
$
33,041
Net income (loss) margin attributable
to HireRight Holdings Corporation(4)
(1.9
)%
(4.5
)%
Adjusted EBITDA margin
23.3
%
18.8
%
(1)
Restructuring charges represent costs
incurred in connection with the Company’s global restructuring
plan. Costs incurred in connection with the plan during the three
months ended March 31, 2024 primarily include: (i) $1.0 million of
severance and benefits related to impacted employees, (ii) $0.7
million of professional service fees related to the execution of
our cost savings initiatives, and (iii) $0.3 million related to the
abandonment of certain of our leased facilities. Restructuring
charges incurred in connection with the plan during the three
months ended March 31, 2023 include: (i) $4.4 million of severance
and benefits related to impacted employees, (ii) $4.0 million of
professional service fees related to the execution of our cost
savings initiatives, and (iii) $1.4 million related to the
abandonment of certain of our leased facilities.
(2)
Amortization of cloud computing software
costs consists of expense recognized in selling, general and
administrative expenses for capitalized implementation costs for
cloud computing IT systems incurred in connection with our platform
and fulfillment technology initiatives that are intended to achieve
greater operational efficiencies. This expense is not included in
depreciation and amortization above.
(3)
Other items for the three months ended
March 31, 2024 consist primarily of (i) professional services fees
of $5.3 million related to the pending take-private process, and
(ii) $0.4 million of professional services fees not related to core
operations. Other items for the three months ended March 31, 2023
consist of professional service fees not related to core
operations.
(4)
Net income (loss) margin attributable to
HireRight represents net income (loss) attributable to HireRight
divided by revenues for the period.
The following table reconciles our non-GAAP financial measure of
Adjusted Net Income to net income (loss), our most directly
comparable financial measure calculated and presented in accordance
with GAAP, for the periods presented:
Three Months Ended
March 31,
2024
2023
(in thousands)
Net loss
$
(3,542
)
$
(7,911
)
Loss attributable to noncontrolling
interest
271
—
Net loss attributable to HireRight
Holdings Corporation
(3,271
)
(7,911
)
Income tax benefit
(6,533
)
(5,944
)
Amortization of acquired intangible
assets
15,883
15,394
Interest expense swap adjustments (1)
—
(2,527
)
Interest expense discounts (2)
473
803
Stock-based compensation
3,552
3,828
Realized and unrealized loss on foreign
exchange
119
307
Restructuring charges (3)
2,140
9,874
Amortization of cloud computing software
costs (4)
1,733
1,571
Other items (5)
5,673
497
Adjusted income before income taxes
19,769
15,892
Adjusted income taxes (6)
5,140
4,132
Adjusted Net Income
$
14,629
$
11,760
The following table sets forth the calculation of Adjusted
Diluted Earnings Per Share for the periods presented.
Three Months Ended
March 31,
2024
2023
Diluted net loss per share
$
(0.05
)
$
(0.10
)
Loss attributable to noncontrolling
interest
—
—
Diluted net loss per share attributable
to HireRight Holdings Corporation
(0.05
)
(0.10
)
Income tax benefit
(0.10
)
(0.08
)
Amortization of acquired intangible
assets
0.24
0.20
Interest expense swap adjustments (1)
—
(0.03
)
Interest expense discounts (2)
0.01
0.01
Stock-based compensation
0.05
0.05
Realized and unrealized loss on foreign
exchange
—
—
Restructuring charges (3)
0.03
0.13
Amortization of cloud computing software
costs (4)
0.03
0.02
Other items (5)
0.09
0.01
Adjusted income before income taxes
0.30
0.21
Adjusted income taxes (6)
(0.08
)
(0.06
)
Adjusted Diluted Earnings Per
Share
$
0.22
$
0.15
Weighted average number of shares
outstanding - diluted
67,351,727
77,285,116
(1)
Interest expense swap adjustments consist
of amortization of unrealized gains on our terminated interest rate
swap agreements, which were recognized through December 2023 as a
reduction in interest expense.
(2)
Interest expense discounts consist of
amortization of original issue discount and debt issuance
costs.
(3)
Restructuring charges represent costs
incurred in connection with the Company’s global restructuring
plan. Costs incurred in connection with the plan during the three
months ended March 31, 2024 primarily include: (i) $1.0 million of
severance and benefits related to impacted employees, (ii) $0.7
million of professional service fees related to the execution of
our cost savings initiatives, and (iii) $0.3 million related to the
abandonment of certain of our leased facilities. Restructuring
charges incurred in connection with the plan during the three
months ended March 31, 2023 include: (i) $4.4 million of severance
and benefits related to impacted employees, (ii) $4.0 million of
professional service fees related to the execution of our cost
savings initiatives, and (iii) $1.4 million related to the
abandonment of certain of our leased facilities.
(4)
Amortization of cloud computing software
costs consists of expense recognized in selling, general and
administrative expenses for capitalized implementation costs for
cloud computing IT systems incurred in connection with our platform
and fulfillment technology initiatives that are intended to achieve
greater operational efficiencies. This expense is not included in
depreciation and amortization above.
(5)
Other items for the three months ended
March 31, 2024 consist primarily of (i) professional services fees
of $5.3 million related to the pending take-private process, and
(ii) $0.4 million of professional services fees not related to core
operations. Other items for the three months ended March 31, 2023
consist of professional service fees not related to core
operations.
(6)
Adjusted income taxes are based on the tax
laws in the jurisdictions in which the Company operates and exclude
the impact of net operating losses and valuation allowances to
calculate a non-GAAP blended statutory rate of 26% for the three
months ended March 31, 2024 and 2023. Adjusted income taxes for the
three months ended March 31, 2023 have been updated to conform to
the current year methodology.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240507605993/en/
Investors: InvestorRelations@HireRight.com +1
949-528-1000 Media: Media.Relations@HireRight.com
HireRight (NYSE:HRT)
Gráfico Histórico do Ativo
De Jan 2025 até Fev 2025
HireRight (NYSE:HRT)
Gráfico Histórico do Ativo
De Fev 2024 até Fev 2025
