HireRight Holdings Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Right-of-Use Assets and Lease Liabilities (Tables)

Right-of-Use Assets and Lease Liabilities (Tables)

12 Months Ended

Dec. 31, 2023

The Company’s operating leases were as follows:


	December 31,
	2023		2022
	(in thousands)
Right-of-use assets, net (1)	$	6,150	$	8,423

Current operating lease liabilities (2)	$	3,754	$	5,509
Operating lease liabilities, long-term (2)	8,909		10,055
Total operating lease liabilities	$	12,663	$	15,564

(1)Includes impact of accelerated expense on abandoned right-of-use assets related to the global restructuring plan in 2023. See Note 24 — Restructuring and Related Charges for additional information.

(2)Current and long-term operating lease liabilities are recorded in accrued expenses and other current liabilities and other non-current liabilities, respectively, on the Company’s consolidated balance sheets.

Schedule of Lease Cost, Supplemental Cash Flow Information and Weighted Average remaining Lease Term and Weighted Average Discount Rate

The components of lease cost are recorded in selling, general, and administrative expenses and were as follows:


	Year Ended December 31,
	2023		2022
	(in thousands)
Operating lease cost	$	5,131	$	3,745
Short-term lease cost	406		435
Variable lease cost	48		47
Sublease income	(1,067)		(483)
Total lease cost	$	4,518	$	3,744

Supplemental cash flow information related to leases was as follows:


	Year Ended December 31,
	2023		2022
	(in thousands)
Cash paid for amounts included in measurement of operating lease liabilities	$	6,277	$	5,687
ROU assets obtained in exchange for operating lease liabilities	$	897	$	11,396

The weighted-average remaining lease term and weighted-average discount rate for the Company’s operating leases were as follows:


	December 31,
	2023		2022
Weighted-average remaining lease term (in years)	3.99		4.07
Weighted-average discount rate	5.4	%	4.7	%

Schedule of Maturities of Company’s Operating Lease Liabilities

Maturities of the Company’s operating lease liabilities as of December 31, 2023 were as follows:


	Year Ended December 31,
	(in thousands)
2023	$	4,649
2024	3,345
2025	2,049
2026	1,552
2027	1,302
Thereafter	1,188
Total lease payments	14,085
Less amount representing interest	(1,422)
Total	$	12,663

Cease-use Liabilities

The Company exited certain facilities in connection with cost savings initiatives and a global restructuring plan As a result, the Company recorded a cease-use liability in 2021. The cease-use liability of $9.0 million was reclassified and treated as a reduction to the beginning ROU asset recorded upon adoption of ASC 842, Leases, on January 1, 2022. Cease-use costs were $0.2 million during the year ended December 31, 2022, and are included as a component of selling, general and administrative expenses in the consolidated statements of operations. Cease-use costs were $10.7 million during the year ended December 31, 2021. In December 2022, the Company revised its projected sublease income and estimates of the costs the Company is obligated to pay under certain of its lease agreements. The change in estimate resulted in a reduction of $0.7 million to cease-use costs.

Cease-use costs are included in accrued expenses and other current liabilities and other non-current liabilities on the consolidated balance sheets as of December 31, 2023, and 2022. The following table summarizes the activity for the liability for cease-use costs for the periods presented:


	Cease-use Liability
	(in thousands)
Balance at December 31, 2020	$	—
Cease-use costs	10,673
Adjustments to deferred rent	1,168
Cash payments	(253)
Balance at December 31, 2021	11,588
Cease-use costs	160
Reclassified as a reduction to the beginning ROU asset upon adoption of ASC 842	(9,001)
Change in estimate	(723)
Accretion of liability	(194)
Payments	(908)
Foreign currency translation	(238)
Balance at December 31, 2022	684
Accretion of liability	(175)
Payments	(24)
Foreign currency translation	(37)
Balance at December 31, 2023	$	448

Schedule of Restructuring Reserve by Type of Cost

The following table summarizes the activity for the liability for cease-use costs for the periods presented:


	Cease-use Liability
	(in thousands)
Balance at December 31, 2020	$	—
Cease-use costs	10,673
Adjustments to deferred rent	1,168
Cash payments	(253)
Balance at December 31, 2021	11,588
Cease-use costs	160
Reclassified as a reduction to the beginning ROU asset upon adoption of ASC 842	(9,001)
Change in estimate	(723)
Accretion of liability	(194)
Payments	(908)
Foreign currency translation	(238)
Balance at December 31, 2022	684
Accretion of liability	(175)
Payments	(24)
Foreign currency translation	(37)
Balance at December 31, 2023	$	448