−Removed: The Company's business involves a number of risks and uncertainties.
−Removed: You should carefully consider the following risks, together with the information provided elsewhere in this Annual Report.
−Removed: The items described below are not the only risks we face.
−Removed: Additional risks that are currently unknown to us or that are currently considered to be immaterial may also impair the business or adversely affect our financial condition or results of operations.
+Added: Described below are certain risks to our business and the industry in which we operate.
+Added: You should carefully consider the risks described below, together with the financial information and other information contained in this Annual Report and in our other public disclosures.
+Added: If any of the following risks actually occurs, our business, financial condition, results of operations, cash flows, and prospects could be materially and adversely affected.
+Added: As a result, our future results could differ materially from historical results and from guidance we may provide regarding our expectations of our future financial performance, and the trading price of our common stock could decline.
Business and Operational Risks
5 unchanged sentences
Our products are produced in a manner that is considered labor-intensive and requires a consistent and available workforce, which may be adversely affected by a large-scale decline in public health conditions or other emergencies.
−Removed: The Company's results of operations can be adversely affected by labor shortages and the pricing and availability of transportation or raw materials
+Added: The Company's results of operations can be adversely affected by labor shortages and the pricing, availability, or transportation costs of raw materials
The homebuilding industry has from time-to-time experienced labor shortages and other labor related issues.
8 unchanged sentences
We have experienced production halts from shortages of primary building materials in the past, and although we attempt to increase the sales prices of our homes in response to higher materials costs, such increases may lag behind the escalation of material costs.
−Removed: Shutdowns or delays at the United States/Mexico border could affect the Company's ability to ship materials to and receive finished goods from our Mexico production facilities
−Removed: We have two production lines in Mexico which are dependent upon receiving materials from our facility in Presidio, Texas.
−Removed: Shutdown or delays at the United States/Mexico border could impact production at those facilities and our ability to receive the finished goods from those facilities, each of which could adversely affect our results of operations.
Excessive health and safety incidents relating to our operations could be costly to the Company
13 unchanged sentences
If we are not able to maintain current levels of coverage, or if warranty and construction defect claims exceed current levels, our results of operations or financial condition could be adversely affected.
−Removed: Some of the Company's manufacturing production employees are represented by unions, and failure to negotiate reasonable collective bargaining agreements may result in strikes, work stoppages or substantially higher ongoing labor costs
−Removed: Certain manufacturing production employees (approximately 6% of our total employees) are represented by unions and are covered by collective bargaining agreements, which expire in February 2024 and May 2026.
−Removed: Wages, health and welfare benefits, work rules and other issues have historically been negotiated in a reasonable amount of time and have previously not resulted in any extended work stoppages.
−Removed: However, if we are unable to negotiate acceptable new agreements, it could result in worker strikes, loss of business, disruption of operations and increased operating costs as a result of higher wages or benefits paid to union members, which would have an adverse effect on our business and results of operations.
Products supplied to the Company or work done by subcontractors can expose the Company to risks that could adversely affect its business
5 unchanged sentences
Increases in the rate of cancellations of home sales orders could have an adverse effect on the Company's business
−Removed: Our backlog reflects home sales orders with our distributors and home buyers for homes that have not yet been delivered.
+Added: Our backlog reflects home sales orders with our distributors and home buyers for homes that have not yet entered production.
Distributors and home buyers may cancel orders prior to production without penalty.
64 unchanged sentences
Our obligation under these repurchase agreements ceases upon the purchase of the home by the retail customer.
−Removed: The maximum amount of contingent obligations under such repurchase agreements was approximately $177.9 million as of April 1, 2023, before reduction for the resale value of the homes.
+Added: The maximum amount of contingent obligations under such repurchase agreements was approximately $120.5 million as of March 30, 2024, before reduction for the resale value of the homes.
We may be required to honor contingent repurchase obligations in the future and may incur additional expense as a consequence of these repurchase agreements.
1 unchanged sentence
A write-off of all or part of the Company's goodwill could adversely affect its results of operations and financial condition
−Removed: As of April 1, 2023, 9% of our total assets consisted of goodwill, all of which is attributable to our factory-built housing segment.
−Removed: In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 350, Intangibles—Goodwill and Other ("ASC 350"), goodwill is tested annually for impairment.
+Added: As of March 30, 2024, 9% of our total assets consisted of goodwill, all of which is attributable to our factory-built housing segment.
+Added: In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 350, Intangibles—Goodwill and Other ("ASC 350"), goodwill is tested at least annually for impairment.
If goodwill becomes impaired, such impairment is charged as an expense in the period in which it occurs.
30 unchanged sentences
Depending on the length of disruption, such factors could have a material adverse impact on our consolidated financial statements.
+Added: Some of the Company's manufacturing production employees are represented by unions, and failure to negotiate reasonable collective bargaining agreements may result in strikes, work stoppages or substantially higher ongoing labor costs
+Added: Certain manufacturing production employees (approximately 7% of our total employees) are represented by unions and are covered by collective bargaining agreements, which expire in April 2026 and February 2027.
+Added: Wages, health and welfare benefits, work rules and other issues have historically been negotiated in a reasonable amount of time and have previously not resulted in any extended work stoppages.
+Added: However, if we are unable to negotiate acceptable new agreements, it could result in worker strikes, loss of business, disruption of operations and increased operating costs as a result of higher wages or benefits paid to union members, which would have an adverse effect on our business and results of operations.
+Added: Shutdowns or delays at the United States/Mexico border could affect the Company's ability to ship materials to and receive finished goods from our Mexico production facilities
+Added: We have two production lines in Mexico which are dependent upon receiving materials from our facility in Presidio, Texas.
+Added: Shutdown or delays at the United States/Mexico border could impact production at those facilities and our ability to receive the finished goods from those facilities, each of which could adversely affect our results of operations.
Industry and Economic Risks
16 unchanged sentences
An increase in interest rates could reduce potential buyers' ability or desire to obtain financing with which to buy homes and adversely affect the Company's business or financial results.
−Removed: The Federal Reserve Board has recently raised its benchmark rate, with further increases possible.
+Added: The Federal Reserve Board has raised its benchmark rate multiple times in recent years, with further increases possible.
Increases in interest rates could significantly increase the cost of owning a new home, which usually reduces the number of potential buyers who can afford, or are willing, to purchase homes we build.
This could adversely impact demand for our homes and the ability of potential customers to obtain financing, adversely affecting our business, financial condition and operating results.
−Removed: Changes in the exchange rates for Mexican Pesos could adversely affect the value of the Company's investments in Mexico and cause foreign exchange losses
−Removed: We have production operations in Mexico, and unfavorable changes in the exchange rate for Mexican Pesos could adversely affect the reported value of our investments and/or results of operations.
Availability of wholesale financing for industry distributors continues to be limited to a few floor plan lenders and lending limits may be reduced from time to time, which can negatively affect distributor demand
23 unchanged sentences
Among other things, unfavorable changes in employment levels, job growth, consumer confidence and income, inflation, deflation, trade tariffs, foreign currency exchange rates, interest rates and adverse developments with respect to specific financial institutions or the broader financial services industry may further reduce demand for our products or have an adverse effect on the availability of financing to our customers, which could negatively affect our business, results of operations and financial condition.
+Added: Changes in the exchange rates for Mexican Pesos could adversely affect the value of the Company's investments in Mexico and cause foreign exchange losses
+Added: We have production operations in Mexico, and unfavorable changes in the exchange rate for Mexican Pesos could adversely affect the reported value of our investments and/or results of operations.
Legal and Regulatory Risks
6 unchanged sentences
A variety of federal, state and local laws and regulations affect the production and sale of manufactured housing.
−Removed: Please refer to the section above under the heading "Business - Government Regulation" for a description of many of these laws and regulations.
+Added: Please refer to Part I, Item 1, "Business - Government Regulation" for a description of many of these laws and
Our failure to comply with such laws and regulations could expose us to a wide variety of sanctions, including closing one or more manufacturing facilities.
5 unchanged sentences
The Company may face risks related to the SEC Litigation, including potential shareholder litigation or potential reputational damage that the Company may suffer as a result of the litigation
−Removed: As disclosed in Part I, Item 3, Legal Proceedings, on September 2, 2021, the SEC filed a civil complaint in the United States District Court, District of Arizona, naming the Company along with the Company's former Chairman, President & Chief Executive Officer ("former CEO") and the Company's former Chief Financial Officer, alleging violations of the antifraud and internal accounting control provisions of the Securities Exchange Act of 1934 (the "Exchange Act") based on trading in the shares of another company directed by the former CEO that resulted in an unrealized gain of approximately $265,000.
+Added: As disclosed in Part I, Item 3, "Legal Proceedings", on September 2, 2021, the SEC filed a civil complaint in the United States District Court, District of Arizona, naming the Company along with the Company's former Chairman, President & Chief Executive Officer ("former CEO") and the Company's former Chief Financial Officer ("former CFO"), alleging violations of the antifraud and internal accounting control provisions of the Exchange Act based on trading in the shares of another company directed by the former CEO that resulted in an unrealized gain of approximately $265,000.
In fiscal 2022, the Company recorded an accrual relating to this loss contingency.
−Removed: On September 23, 2022, the United States District Court for the District of Arizona approved the settlement of the SEC action against the Company.
+Added: On September 23, 2022, the United States District Court for the District of Arizona approved the settlement of the SEC action against the Company (the "SEC Settlement").
Without admitting or denying the findings of the consent judgment, the Company agreed to the imposition of an injunction against future violations of the antifraud and internal accounting control provisions of the Exchange Act and a monetary penalty of $1.5 million, which did not have a material impact on the Company's financial statements.
The settlement resolves all claims in such action against the Company.
+Added: In May 2024, the SEC settled all pending litigation with our former CFO and as a result all SEC claims against the Company and our former officers are now closed (collectively, the "SEC Litigation").
We are unable to predict what consequences any investigation by any regulatory agency may have on us, including significant legal and accounting expenses.
16 unchanged sentences
There can be no assurance that any of these sources will be available to us at any time or that they will be available on satisfactory terms.
+Added: Our failure to maintain effective internal control over financial reporting could harm our business and financial results
+Added: Our management is responsible for maintaining effective internal control over financial reporting.
+Added: Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.
+Added: Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that we would prevent or detect a misstatement of our financial statements or fraud.
Certain provisions of the Company's organizational documents could delay or make more difficult a change in control of the Company
−Removed: Certain provisions of the Company's Restated Certificate of Incorporation, as amended, and Third Amended and Restated Bylaws could delay or make more difficult transactions involving a change of control and may have the effect of entrenching the current management or possibly depressing the market price of the Company's common stock.
−Removed: For example, the Company's Restated Certificate of Incorporation, as amended, and Third Amended and Restated Bylaws authorize blank series preferred stock, establish a staggered board of directors and impose certain procedural and other requirements for stockholder proposals.
−Removed: UNRESOLVED STAFF COMMENTS
+Added: Certain provisions of the Company's Restated Certificate of Incorporation, as amended, and Fourth Amended and Restated Bylaws could delay or make more difficult transactions involving a change of control and may have the effect of entrenching the current management or possibly depressing the market price of the Company's common stock.
+Added: For example, the Company's Restated Certificate of Incorporation, as amended, and Fourth Amended and Restated Bylaws authorize blank series preferred stock, establish a staggered board of directors and impose certain procedural and other requirements for stockholder proposals.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.