Restructuring and integration expense

9 Months Ended

Sep. 30, 2023

Restructuring and Related Activities [Abstract]

Restructuring and integration expense consists of costs related to initiatives to drive earnings and cash flow growth and also includes costs related to the consolidation and migration of certain applications and processes, including our financial management systems. These costs consist primarily of consulting, project management services and internal labor, as well as other costs associated with our initiatives, such as costs associated with facility closures and consolidations. In addition, we have recorded employee severance costs across functional areas. Restructuring and integration expense is not allocated to our reportable business segments.

We are currently pursuing several initiatives designed to support our growth strategy and to increase our efficiency, and we recently announced our North Star initiative. The goal of this initiative is to further drive shareholder value by expanding our earnings before interest, taxes, depreciation and amortization (EBITDA) growth trajectory, increasing cash flow, paying down debt and improving our leverage ratio. North Star is a balanced mix of structural cost reductions focused on organizational structure, processes and operational improvements, in addition to workstreams to drive revenue growth. We have already combined like-for-like capabilities, reduced management layers and consolidated core operations to run more efficiently and create the ability to invest in high impact talent to accelerate our growth businesses of payments and data. The associated costs, which consisted primarily of consulting and severance costs, drove the increase in restructuring and integration costs during the quarter ended September 30, 2023.

Restructuring and integration expense is reflected on the consolidated statements of comprehensive (loss) income as follows:


	Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Total cost of revenue	$	6,429	$	131	$	10,868	$	216
Operating expenses	22,935		15,188		60,067		46,614
Restructuring and integration expense	$	29,364	$	15,319	$	70,935	$	46,830

Restructuring and integration expense for each period was comprised of the following:


	Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
External consulting fees	$	10,939	$	7,670	$	31,561	$	24,670
Employee severance benefits	11,179		3,826		17,526		8,232
Internal labor	2,469		1,877		6,341		6,177
Other	4,777		1,946		15,507		7,751
Restructuring and integration expense	$	29,364	$	15,319	$	70,935	$	46,830

Our restructuring and integration accruals are included in accrued liabilities on the consolidated balance sheets and represent expected cash payments required to satisfy the remaining severance obligations to those employees already terminated and those expected to be terminated under our various initiatives. The majority of the employee reductions and the related severance payments are expected to be completed by the first quarter of 2024.

Changes in our restructuring and integration accruals were as follows:


(in thousands)	Employee severance benefits
Balance, December 31, 2022	$	8,528
Charges	17,961
Reversals	(435)
Payments	(11,448)
Balance, September 30, 2023	$	14,606

The charges and reversals presented in the rollforward of our restructuring and integration accruals do not include items charged directly to expense as incurred, as those items are not reflected in accrued liabilities on the consolidated balance sheets.