Restructuring Charges

9 Months Ended

Sep. 30, 2023

Restructuring and Related Activities [Abstract]

Restructuring and Asset Impairment Charges

Restructuring

During the three and nine months ended September 30, 2023 we incurred restructuring costs of $20 million and $54 million, respectively. We incurred these charges primarily as a result of our acquisition of Evoqua. Approximately, $11 million and $25 million of the charges related to stock-based compensation expense due to acceleration clauses in Evoqua's equity compensation agreements for the three and nine months ended September 30, 2023, respectively. Approximately $1 million and $14 million of the charges represented the reduction of headcount related to the integration of Evoqua for the three and nine months ended September 30, 2023, respectively. Additionally, during the three and nine months ended September 30, 2023, we incurred $8 million and $15 million, respectively of charges related to our efforts to reposition our businesses to optimize our cost structure, improve our operational efficiency and effectiveness, strengthen our competitive positioning and better serve our customers. The charges were incurred across all of our segments.

During the three and nine months ended September 30, 2022 we incurred restructuring charges of $3 million and $9 million, respectively. We incurred these charges primarily as a continuation of our efforts to reposition our European and North American businesses to optimize our cost structure and improve our operational efficiency and effectiveness. The charges included the reduction of headcount across the Water Infrastructure, Applied Water and Measurement & Control Solutions segments.

The following table presents the components of restructuring expense and asset impairment charges:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2023		2022		2023		2022
By component:
Severance and other charges	$	17	$	3	$	52	$	9

Asset impairment	3		—		3		—

Reversal of restructuring accruals	—		—		(1)		—
Total restructuring costs	$	20	$	3	$	54	$	9
Asset impairment charges	1		12		3		13
Total restructuring and asset impairment charges	$	21	$	15	$	57	$	22

By segment:
Water Infrastructure	$	1	$	2	$	4	$	4
Applied Water	5		—		6		1
Measurement & Control Solutions	4		13		10		17
Integrated Solutions & Services	—		—		4		—
Corporate and other	11		—		33		—

The following table displays a roll-forward of the restructuring accruals, presented on our Condensed Consolidated Balance Sheets within "Accrued and other current liabilities" and "Other non-current accrued liabilities", for the nine months ended September 30, 2023 and 2022:


(in millions)	2023		2022
Restructuring accruals - January 1	$	10	$	7
Restructuring costs, net	54		9
Cash payments	(12)		(7)
Asset impairment	(3)		—
Stock based compensation expense	(25)		—
Foreign currency and other	3		(1)
Restructuring accruals - September 30	$	27	$	8

By segment:
Water Infrastructure	$	3	$	1
Applied Water	1		—
Measurement & Control Solutions	7		3
Integrated Solutions & Services	4		—
Regional selling locations (a)	3		2
Corporate and other	9		2

(a)Regional selling locations consist primarily of selling and marketing organizations and related support services that incurred restructuring expense that was allocated to the segments. The liabilities associated with restructuring expense were not allocated to the segments.

The following table presents expected restructuring spend in 2023 and thereafter:


(in millions)	Water Infrastructure		Applied Water		Measurement & Control Solutions		Integrated Solutions & Services		Corporate		Total
Actions Commenced in 2023:
Total expected costs	$	5	$	7	$	10	$	7	$	33	$	62
Costs incurred during Q1 2023	1		1		3		—		—		5
Costs incurred during Q2 2023	2		—		1		4		22		29
Costs incurred during Q3 2023	1		5		3		—		11		20
Total expected costs remaining	$	1	$	1	$	3	$	3	$	—	$	8

The Water Infrastructure, Applied Water, Measurement & Control Solutions, Integrated Solutions & Services and Corporate actions commenced in 2023 consist primarily of severance charges. The actions are expected to continue through the end of 2024.

Asset Impairment

During the third quarter of 2023, we recognized a $1 million impairment charge for certain fixed assets within our Measurement & Control Solutions segment.

During the first quarter of 2023, we determined that internally developed in-process software within our Measurement & Control Solutions segment was impaired as a result of actions taken to prioritize strategic investments and we therefore recognized an impairment charge of $2 million. Refer to Note 9, "Goodwill and Other Intangible Assets," for additional information.

During the third quarter of 2022, we determined that certain assets including software and customer relationships within our Measurement & Control Solutions segment were impaired. Accordingly, we recognized an impairment charge of $12 million. Refer to Note 9, "Goodwill and Other Intangible Assets," for additional information.