Restructuring and integration expense

3 Months Ended

Mar. 31, 2024

Restructuring and Related Activities [Abstract]


NOTE 9: RESTRUCTURING AND INTEGRATION EXPENSE

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. These costs consist primarily of consulting, project management services and internal labor, as well as other costs associated with our initiatives, such as costs related to 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, including several initiatives that we collectively refer to as our North Star program. The goal of these initiatives is to further drive shareholder value by (1) expanding our earnings before interest, taxes, depreciation and amortization ("EBITDA") growth trajectory, (2) increasing cash flow, (3) paying down debt, and (4) improving our leverage ratio. Our various initiatives include 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 to create the ability to invest in high impact talent to accelerate our growth businesses of payments and data. The associated expense, which consisted primarily of consulting costs, was approximately $12,000 during the quarter ended March 31, 2024. To date, we have incurred expense of approximately $60,000, and we anticipate that we will incur an additional $60,000 to $80,000 of North Star restructuring and integration expense through 2025.

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


	Quarter Ended March 31,
(in thousands)	2024		2023
Total cost of revenue	$	933	$	1,153
Operating expenses	13,804		12,941
Restructuring and integration expense	$	14,737	$	14,094

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


	Quarter Ended March 31,
(in thousands)	2024		2023
External consulting and other costs	$	7,969	$	7,692
Employee severance benefits	1,972		186
Internal labor	838		2,122
Other	3,958		4,094
Restructuring and integration expense	$	14,737	$	14,094

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, as well as the related severance payments, are expected to be completed by the end of 2024.

Changes in our restructuring and integration accruals were as follows:


(in thousands)	Employee severance benefits
Balance, December 31, 2023	$	9,689
Charges	2,042
Reversals	(70)
Payments	(4,225)
Balance, March 31, 2024	$	7,436

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.