LDI - loanDepot to cut 2000 more jobs take charge up $79.5M in revamp

loanDepot ( NYSE: LDI ) stock is rising 1.4% in Tuesday premarket trading after the lender announced plans to drive down costs through lowering headcount, simplifying its structure, focus on automation and operating leverage, and it pivots to the purchase market and less rate-sensitive cash-out refinances.

The actions are expected to result in charges and impairment of up to $79.5M. Through its Vision 2025 initiative, the loan platform is adjusting to the severe downturn in refinancing that occurred after the Federal Reserve started raising its interest rates. With higher rates, consumers and businesses have less incentive to refinance mortgages and other loans.

"After two years of record-breaking volumes, the market has contracted sharply and abruptly in 2022. We are taking decisive action to meet this challenge head on," loanDepot ( LDI ) President and CEO Frank Martell said.

The company expects the realignment to generate ~$375M-$400M of annualized savings by the end of this year through headcount reduction, attrition, business process optimization, reduced marketing and third-party spending, and real estate consolidation. It continues to target a return to run-rate operating profitability exiting 2022.

Vision 2025 is expected to cut ~2,000 jobs for the rest of the year. Current headcount is ~8,500. The company had already eliminated ~2,800 positions earlier in the year.

loanDepot ( LDI ) expects to record $3.5M-$4.5M of severance and benefits-related payments in Q2 2022; other non-operating expenses expected to be incurred in Q2 related to its actions include ~$2.0M of real estate exit costs and $2.5M-$3.0M of outside service expenses. In addition it will record non-cash impairment charge of $42.0M as of June 30, 2022.

It expects additional non-operating expenses of $25.0M-$28.0M related to the realignment and plan.

Conference call at 8:30 AM ET.

SA contributor Donovan Jones keeps a Hold rating on LDI until it executes cost reductions and charts a path to profitability

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