Restructuring Activities

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

12. Restructuring Activities

On June 14, 2022, the Company committed to and communicated a workforce reduction plan and a wind-down of Modus Technologies, Inc. (“Modus”), a wholly-owned title and escrow software company (collectively, the “Q2 2022 Strategic Actions”). The Q2 2022 Strategic Actions included the elimination of approximately 10% of the Company’s current workforce consisting of approximately 450 positions across the Company. The Q2 2022 Strategic Actions are part of a broader plan by the Company to take meaningful actions to improve the alignment between the Company’s organizational structure and its long-term business strategy, drive cost efficiencies enabled by the Company’s technology and other competitive advantages and continue to drive toward profitability and positive free cash flow (“Transformation Plan”). In addition to the Q2 2022 Strategic Actions, the Transformation Plan is expected to include, but not be limited to, a series of actions such as a reduction in U.S. hiring and backfills resulting from attrition occurring both in the first half of 2022 and anticipated for the remainder of the year; a review of occupancy costs with a view to consolidating offices and reducing related costs; and a planned pause in M&A activity and new market expansion for the remainder of 2022. In August 2022, the Company announced an additional cost reduction program with a goal of reducing operating expenses during the second half of 2022 with the majority concentrated in the areas of technology spend and incentives to acquire agents.

As a result of restructuring actions taken in connection with the Q2 2022 Strategic Actions during the three months ended June 30, 2022, the Company incurred $18.9 million of restructuring costs. These costs were primarily comprised of $14.8 million of severance and other termination benefits for employees whose roles are being eliminated, $1.6 million of lease terminations costs as result of the accelerated amortization of Modus' right-of-use assets and $0.2 million of other

restructuring costs. These costs have been presented within the Restructuring costs line in the condensed consolidated statements of operations. In addition, the Company incurred additional non-cash charges of approximately $4.6 million associated with the discontinued use of certain intangible assets associated with Modus and $0.4 million related to the write-down of Modus' fixed assets for certain real estate leases that have been exited, or partially exited during the three months ended June 30, 2022. These costs have been included within the Depreciation and amortization line in the condensed consolidated statements of operations.

In connection with actions taken by the Company related to the broader Transformation Plan, the Company incurred $2.3 million of lease terminations costs and $1.2 million in depreciation expense as a result of the accelerated amortization of right-of-use assets and the write-down of fixed assets, respectively, for certain additional real estate leases that have been exited or partially exited during the three months ended June 30, 2022. These expenses were included within Restructuring costs and Depreciation and amortization, respectively, in the condensed consolidated statements of operations.

As of June 30, 2022, the Company's remaining liability related to restructuring activities was $10.4 million, primarily related to unpaid severance costs, which is included in Accrued expenses and other current liabilities in the condensed consolidated balance sheet as of June 30, 2022.

The following table summarizes the total costs incurred and expected to be incurred in connection with the Q2 2022 Strategic Actions and other restructuring actions taken during the three and six months ended June 30, 2022 (in millions):


	Total amount expected to be incurred		Amount incurred as of June 30, 2022		Total amount remaining to be incurred
Q2 2022 Strategic Actions:
Severance related personnel costs	$	14.8	$	14.8	$	—
Modus lease termination costs	4.3		1.6		2.7
Accelerated amortization of Modus intangible assets	4.6		4.6		—
Other Modus restructuring costs	0.2		0.2		—
Write-down of Modus fixed assets	0.6		0.4		0.2
Total expense - Q2 2022 Strategic Actions	$	24.5	$	21.6	$	2.9
Other restructuring activities:
Other lease termination costs	2.4		2.3		0.1
Write-down of fixed assets	1.2		1.2		—
Total expense - other restructuring activities	$	3.6	$	3.5	$	0.1
Total expense	$	28.1	$	25.1	$	3.0

The total costs incurred and expected to be incurred in connection with the Q2 2022 Strategic Actions and other restructuring actions taken during the three and six months ended June 30, 2022 were included in the consolidated statements of operations for the three and six months ended June 30, 2022, as follows (in millions):


	Total expected costs		Amount expensed as of June 30, 2022		Remaining expected expense
Restructuring costs	$	21.7	$	18.9	$	2.8
Depreciation and amortization	6.4		6.2		0.2
Total expense	$	28.1	$	25.1	$	3.0