RESTRUCTURING AND INTEGRATION EXPENSE

12 Months Ended

Dec. 31, 2024

Restructuring and Related Activities [Abstract]

Restructuring and integration expense consists of costs related to initiatives aimed at driving earnings and cash flow growth, including costs related to the consolidation and migration of certain applications and processes. These costs consist primarily of consulting, project management services, internal labor, and other items such as facility closure and consolidation costs. Additionally, 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 enhance shareholder value by (1) accelerating our adjusted EBITDA growth, (2) increasing cash flow, (3) reducing debt, and (4) improving our leverage ratio. North Star is a comprehensive, multi-year plan that balances cost reduction and growth opportunities. On the cost side, we are focused on refining our organizational structure and transforming our infrastructure and operations. We have

successfully completed the material elements of our organizational redesign, which included consolidating similar roles, reducing hierarchical layers, and expanding spans of control. We are also leveraging technology and process automation to digitize and streamline our operations. Additionally, we are scaling our operations by consolidating back-office functions and tapping into the global labor market. The associated restructuring and integration expense, which consisted primarily of consulting and severance costs, was approximately $50,000 during 2024 and $45,000 during 2023. We anticipate that we will incur approximately $15,000 of additional North Star restructuring and integration expense in 2025.

Restructuring and integration expense is reflected on the consolidated statements of income as follows for the years ended December 31:


(in thousands)	2024		2023		2022
Total cost of revenue	$	1,880	$	12,230	$	607
Operating expenses	48,570		78,245		62,529
Restructuring and integration expense	$	50,450	$	90,475	$	63,136

Restructuring and integration expense was comprised of the following for the years ended December 31:


(in thousands)	2024		2023		2022
External consulting and other costs	$	33,659	$	52,290	$	32,067
Employee severance benefits	4,374		18,103		12,829
Internal labor	3,356		8,723		7,989
Other	9,061		11,359		10,251
Restructuring and integration expense	$	50,450	$	90,475	$	63,136

Our restructuring and integration accruals are included in accrued liabilities on the consolidated balance sheets. These accruals represent the anticipated cash payments necessary to fulfill the remaining severance obligations for employees who have already been terminated, as well as those expected to be terminated under our various initiatives. We expect that the majority of employee reductions and the associated severance payments will be completed by mid-2025.

Changes in our restructuring and integration accruals were as follows:


(in thousands)	Employee severance benefits
Balance, December 31, 2021	$	5,672
Charges	13,782
Reversals	(953)
Payments	(9,973)
Balance, December 31, 2022	8,528
Charges	18,653
Reversals	(550)
Payments	(16,942)
Balance, December 31, 2023	9,689
Charges	4,932
Reversals	(558)
Payments	(10,308)
Balance, December 31, 2024	$	3,755

The charges and reversals shown in the rollforward of our restructuring and integration accruals exclude items that are expensed as incurred, as these items are not included in accrued liabilities on the consolidated balance sheets.