Restructuring and integration expense


NOTE 8: RESTRUCTURING AND INTEGRATION EXPENSE

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 actively pursuing 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 this program is to enhance shareholder value by (1) accelerating our adjusted earnings before interest, taxes, depreciation, and amortization (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 employee severance costs, was approximately $13,000 during the six months ended June 30, 2025 and approximately $22,000 during the six months ended June 30, 2024. To date, we have incurred expense of approximately $108,000, and we anticipate that we will incur approximately $5,000 of additional North Star restructuring and integration expense in 2025.

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


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024
Total cost of revenue	$	189	$	(35)	$	941	$	898
Operating expenses	4,047		11,064		11,715		24,868
Restructuring and integration expense	$	4,236	$	11,029	$	12,656	$	25,766

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


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024
Employee severance benefits	$	1,618	$	(415)	$	6,071	$	1,557
External consulting and other costs	737		9,150		3,260		17,119
Internal labor	711		384		1,700		1,222
Other	1,170		1,910		1,625		5,868
Restructuring and integration expense	$	4,236	$	11,029	$	12,656	$	25,766

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 early 2026.

Changes in our restructuring and integration accruals were as follows:


(in thousands)	Employee severance benefits
Balance, December 31, 2024	$	3,755
Charges	6,379
Reversals	(308)
Payments	(4,816)
Balance, June 30, 2025	$	5,010

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.