What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-01-27 compared with 2020-07-29 · 92 added, 110 removed, 113 unchanged (64% of the section changed)

5 unchanged sentences

Our Operations

We are a residential lot development company with operations in 51 markets in 22 states as of June 30, 2020.

We are a residential lot development company with operations in 51 markets in 21 states as of December 31, 2020.

In October 2017, we became a majority-owned subsidiary of D.R.

Our alignment with and support from D.R.

Horton provides us an opportunity to grow our business into a national, well-capitalized residential lot developer selling lots to D.R.

Through our alignment with and support from D.R.

Horton, we have grown our business into a national, well-capitalized residential lot developer selling lots to D.R.

Horton and other homebuilders.

1 unchanged sentence

Horton has significant influence in guiding our strategic direction and operations.

Our strategy is focused on making investments in land acquisition and development to expand our residential lot development business across a geographically diversified national platform.

Our strategy is focused on making investments in land acquisition and development to expand our residential lot development business across a geographically diversified national platform and consolidating market share in the fragmented U.S.

lot development industry.

We are primarily investing in short duration, phased development projects that generate returns similar to production-oriented homebuilders.

2 unchanged sentences

Horton, utilizing available capital prior to its deployment into longer term lot development projects.

During the latter part of March 2020, the impacts of the COVID-19 pandemic (C-19) and the related widespread reductions in economic activity began affecting our business operations and the demand for our residential lots.

However, residential construction is designated an essential business as part of critical infrastructure in almost all municipalities across the U.S.

During March 2020, the impacts of the COVID-19 pandemic (C-19) and the related widespread reductions in economic activity began to temporarily affect our business operations and the demand for our residential lots.

However, residential construction is designated an essential business as part of critical infrastructure in almost all of the municipalities across the U.S.

where we operate.

1 unchanged sentence

Our lot sales pace declined throughout late March and April 2020 as homebuilders slowed their purchases of lots to adjust to expected lower levels of home sales orders as a result of the pandemic.

However, as economic activity and housing market conditions began to improve during the latter part of the quarter our lot sales pace increased.

Although our lot sales pace has improved, we remain cautious as to the impact C-19 may have on our operations and on the overall economy in the future.

However, as economic activity and housing market conditions began to improve, our lot sales pace increased during the last half of fiscal 2020 and the first quarter of fiscal 2021.

Although our lot sales pace has improved, we remain cautious as to the ongoing impact of C-19 on our operations and on the overall economy.

There is significant uncertainty regarding the extent to which and how long C-19 and its related effects will impact the U.S.

economy, capital markets and demand for our lots.

The extent to which C-19 impacts our operational and financial performance will depend on future developments, including the duration and spread of C-19 and the impact on our customers, trade partners and employees, all of which are highly uncertain and cannot be predicted.

The extent to which C-19 impacts our operational and financial performance will depend on future developments, including the duration and severity of C-19 and the impact on our customers, trade partners and employees, all of which are highly uncertain and cannot be predicted.

If economic and housing market conditions are adversely affected for a prolonged period due to C-19 or otherwise, we may be required to evaluate our real estate for potential impairment.

These evaluations could result in impairment charges which could be significant.

We believe we are well positioned to effectively operate during changing economic conditions due to our low net leverage and strong liquidity position, our low overhead model and our strategic relationship with D.R.

1 unchanged sentence

We manage our operations through our real estate segment which is our core business and generates substantially all of our revenues.

The real estate segment primarily acquires land and develops infrastructure for single-family residential communities and its revenues generally come from sales of residential single-family finished lots to local, regional and national homebuilders.

The real estate segment primarily acquires land and develops infrastructure for single-family residential communities and generates revenues from sales of residential single-family finished lots to local, regional and national homebuilders.

We have other business activities for which the related assets and operating results are immaterial, and therefore, are included in our real estate segment.

Results of Operations

The following tables and related discussion set forth key operating and financial data as of and for the three and nine months ended June 30, 2020 and 2019.

The following tables and related discussion set forth key operating and financial data as of and for the three months ended December 31, 2020 and 2019.

Operating Results

Components of pre-tax income were as follows:

Three Months Ended June 30, Nine Months Ended June 30,

2020 2019 2020 2019

Components of income before taxes were as follows:

Three Months Ended December 31,

(In millions)

2 unchanged sentences

Selling, general and administrative expense 15.5 10.5

Equity in loss (earnings) of unconsolidated ventures 0.1 — (0.6) (0.5)

Gain on sale of assets — (1.5) (0.1) (2.4)

Equity in earnings of unconsolidated ventures (0.2) (0.5)

Loss on sale of assets — 0.1

Interest and other income (0.3) (1.7)

1 unchanged sentence

Residential lots sold consist of:

Three Months Ended June 30, Nine Months Ended June 30,

2020 2019 2020 2019

Three Months Ended December 31,

Development projects 3,102 1,406

Lot banking projects 465 1,016

2,023 1,158 6,396 2,224

Average sales price per lot (a)

3 unchanged sentences

Revenues consist of:

Three Months Ended June 30, Nine Months Ended June 30,

2020 2019 2020 2019

Three Months Ended December 31,

(In millions)

3 unchanged sentences

Lot banking projects

37.1 30.6 195.0 45.5

Decrease (increase) in contract liabilities

2.8 (2.0) 2.1 (3.6)

164.4 87.6 537.9 171.6

Residential tract sales — 30.0

Commercial tract sales — — 2.5 18.5

Other 0.1 0.1

1 unchanged sentence

Residential lots sold and residential lot sales revenues have increased as we have grown our business primarily through our strategic relationship with D.R.

In the three months ended June 30, 2020, we sold 1,991 residential lots to D.R.

Horton for $159.3 million, compared to 995 residential lots sold to D.R.

Horton for $75.2 million in the prior year period.

In the nine months ended June 30, 2020, we sold 6,287 residential lots to D.R.

In the three months ended December 31, 2020, we sold 3,389 residential lots to D.R.

Horton for $294.0 million, compared to 2,390 residential lots sold to D.R.

Horton for $215.6 million in the prior year period.

At June 30, 2020, our lot position consisted of 50,700 residential lots, of which approximately 38,300 were owned and 12,400 were controlled through purchase contracts.

Of our owned lots, approximately 14,100 are under contract to sell to D.R.

At December 31, 2020, our lot position consisted of 77,500 residential lots, of which approximately 52,300 were owned and 25,200 were controlled through purchase contracts.

Of our total owned residential lots, approximately 18,300 are under contract to sell to D.R.

Additionally, D.R.

Horton has the right of first offer on approximately 15,500 lots based on executed purchase and sale agreements.

At June 30, 2020, lots owned included approximately 6,000 that are fully developed, of which approximately 2,100 are related to lot banking.

At June 30, 2020, we had approximately 200 lots under contract to sell to builders other than D.R.

Residential tract sales in the three months ended June 30, 2020 consist of 30 residential tract acres sold to D.R.

Horton for $13.4 million.

Residential tract sales in the nine months ended June 30, 2020 consist of 580 residential tract acres sold to third parties for $22.8 million and 66 residential tract acres to D.R.

Horton has the right of first offer on approximately 16,600 of these lots based on executed purchase and sale agreements.

At December 31, 2020, lots owned included approximately 4,900 that are fully developed, of which approximately 1,300 are related to lot banking.

At December 31, 2020, we had approximately 600 lots under contract to sell to builders other than D.R.

In the three months ended December 31, 2020, we sold 178 residential lots to builders other than D.R.

Horton for $12.8 million compared to 32 residential lots sold to builders other than D.R.

Horton for $3.0 million in the prior year period.

Residential tract sales in the three months ended December 31, 2019 consist of 580 residential tract acres sold to third parties for $22.8 million and 36 residential tract acres sold to D.R.

Horton for $7.2 million.

Commercial tract sales in the nine months ended June 30, 2020 consist of 8 commercial tract acres sold to a third party for $2.5 million.

Commercial tract sales in the nine months ended June 30, 2019 primarily consist of the sale of 44 commercial tract acres from a consolidated joint venture for $14.8 million.

Cost of sales in the three and nine months ended June 30, 2020 increased as compared to the prior year periods primarily due to the increases in the number of lots sold.

Cost of sales related to residential and commercial tract sales in the three and nine months ended June 30, 2020 was $12.8 million and $36.7 million, respectively.

Cost of sales in the three months ended December 31, 2020 increased as compared to the prior year period primarily due to the increase in the number of lots sold.

Cost of sales related to residential tract sales in the three months ended December 31, 2019 was $21.5 million.

Selling, General and Administrative (SG&A) Expense and Other Income Statement Items

SG&A expense in the three and nine months ended June 30, 2020 was $11.2 million and $32.8 million, respectively, compared to $7.9 million and $19.8 million in the prior year periods.

SG&A expense in the three months ended December 31, 2020 was $15.5 million compared to $10.5 million in the prior year period.

SG&A expense as a percentage of revenues was 5.0% and 4.2% in the three months ended December 31, 2020 and 2019, respectively.

Our SG&A expense primarily consists of employee compensation and related costs.

Our business operations employed 128 and 63 employees at June 30, 2020 and 2019, respectively.

Our business operations employed 179 and 88 employees at December 31, 2020 and 2019, respectively.

Equity in earnings of unconsolidated ventures in both periods reflects our share of earnings in ventures that we account for using the equity method.

Interest and other income primarily represents interest earned on our cash deposits.

Our income tax expense for the three and nine months ended June 30, 2020 was $0.2 million and $8.9 million compared to $1.5 million and $6.0 million in the prior year periods.

Our effective tax rate was 1.9% and 19.3% for the three and nine months ended June 30, 2020 compared to 17.9% and 20.3% in the prior year periods.

Our effective tax rate for the three and nine months ended June 30, 2020 includes a tax benefit of $2.3 million related to the NOL carryback provisions of the recently enacted CARES Act, which allows us to carryback a portion of our 2018 NOL.

The carryback provisions result in the recognition of previously unrecognized tax benefits and the revaluation of deferred tax assets due to the utilization of NOLs at a higher tax rate in the carryback period.

Our effective tax rate for all periods includes an expense for state income taxes and nondeductible expenses and a benefit related to noncontrolling interests.

At June 30, 2020, we had deferred tax assets, net of deferred tax liabilities, of $3.2 million.

The deferred tax assets were offset by a valuation allowance of $3.3 million, resulting in a net deferred tax liability of $0.1 million, which is included in accrued expenses and other liabilities on our consolidated balance sheets.

At September 30, 2019, deferred tax assets, net of deferred tax liabilities, were $20.7 million, partially offset by a valuation allowance of $3.3 million.

The valuation allowance for both periods was recorded because it is more likely than not that a portion of our state deferred tax assets, primarily NOL carryforwards, will not be realized because we are no longer operating in some states or the NOL carryforward periods are too brief to realize the related deferred tax asset.

Our income tax expense for the three months ended December 31, 2020 and 2019 was $7.1 million and $5.4 million, respectively and our effective tax rate was 24.3% in both periods.

Our effective tax rate for both periods includes an expense for state income taxes and nondeductible expenses and a benefit related to noncontrolling interests.

At December 31, 2020, we had deferred tax liabilities, net of deferred tax assets, of $6.4 million.

The deferred tax assets were partially offset by a valuation allowance of $1.5 million, resulting in a net deferred tax liability of $7.9 million.

At September 30, 2020, deferred tax liabilities, net of deferred tax assets, were $4.2 million.

The deferred tax assets were partially offset by a valuation allowance of $1.5 million, resulting in a net deferred tax liability of $5.7 million.

The valuation allowance for both periods was recorded because it is more likely than not that a portion of our state deferred tax assets, primarily net operating loss (NOL) carryforwards, will not be realized because we are no longer operating in some states or the NOL carryforward periods are too brief to realize the related deferred tax asset.

We will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance on our deferred tax assets.

Any reversal of the valuation allowance in future periods will impact our effective tax rate.

We had no unrecognized tax benefits at June 30, 2020 as a result of the recognition of $1.6 million of previously unrecognized tax benefits during the three months ended June 30, 2020.

All of the $1.6 million of recognized tax benefits affected our tax rate and was attributable to the NOL carryback provisions of the CARES Act allowing previously uncertain tax attributes to be recognized.

Liquidity and Capital Resources

Our strategic relationship with D.R.

Horton has provided us with an opportunity for substantial growth.

Since our merger with D.R.

Horton, we have funded our growth with available cash, borrowings under our revolving credit facility and the issuance of senior unsecured notes and common stock.

At June 30, 2020, we had $355.6 million of cash and cash equivalents and $348.4 million of available borrowing capacity on our revolving credit facility.

At December 31, 2020, we had $237.4 million of cash and cash equivalents and $339.5 million of available borrowing capacity on our revolving credit facility.

We have no senior note maturities until fiscal 2024.

We believe we are well positioned to effectively operate during changing economic conditions because of our low net leverage and strong liquidity position, our low overhead model and our strategic relationship with D.R.

During late March and April, homebuilders slowed their purchases of lots to adjust to expected lower levels of new home demand.

However, as economic activity and housing market conditions began to improve during the latter part of the quarter our lot sales pace increased.

If economic and housing market conditions are adversely affected for a prolonged period and there is decreased demand for our lots, we may need to amend the terms of existing lot sale contracts with homebuilders to adjust to current market conditions.

These amendments could include changes in the timing, amount and pricing of lots to be purchased, the amount of earnest money deposits, and other payment terms.

Such amendments, if significant, could adversely impact our future results of operations and liquidity position.

At June 30, 2020, our ratio of debt to total capital (debt divided by stockholders’ equity plus debt) was 43.1% compared to 36.3% at September 30, 2019 and 39.8% at June 30, 2019.

Our ratio of net debt to total capital (debt net of unrestricted cash divided by stockholders’ equity plus debt net of unrestricted cash) was 25.2% compared to 8.8% at September 30, 2019 and 25.3% at June 30, 2019.

At December 31, 2020, our ratio of debt to total capital (debt divided by stockholders’ equity plus debt) was 42.3% compared to 42.4% at September 30, 2020 and 35.9% at December 31, 2019.

Our ratio of net debt to total capital (debt net of unrestricted cash divided by stockholders’ equity plus debt net of unrestricted cash) was 31.8% compared to 22.1% at September 30, 2020 and 9.7% at December 31, 2019.

Over the long term, we intend to maintain our ratio of net debt to total capital at or below 40%.

We believe that the ratio of net debt to total capital is useful in understanding the leverage employed in our operations.

We believe that our existing cash resources and revolving credit facility will provide sufficient liquidity to fund our near-term working capital needs and debt obligations.

We believe that our existing cash resources and revolving credit facility will provide sufficient liquidity to fund our near-term working capital needs.

Our ability to achieve our long-term growth objectives will depend on our ability to obtain financing in sufficient amounts.

We regularly evaluate alternatives for managing our capital structure and liquidity profile in consideration of expected cash flows, growth and operating capital requirements and capital market conditions.

We may, at any time, be considering or preparing for the purchase or sale of our debt securities, the sale of our common stock or a combination thereof.

However, due to the current economic uncertainties related to C-19, we may be limited in accessing the capital markets or the cost of accessing these markets could become more expensive.

Subject to market conditions we may, at any time, be considering or preparing for the purchase or sale of our debt securities, the sale of our common stock or a combination thereof.

Bank Credit Facility

3 unchanged sentences

Letters of credit issued under the facility reduce the available borrowing capacity.

At June 30, 2020, there were no borrowings outstanding and $31.6 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $348.4 million.

There were no borrowings or repayments under the facility during the nine months ended June 30, 2020.

In October 2019, the revolving credit facility was amended to extend its maturity date to October 2, 2022.

The maturity date may be extended by up to one year on up to two additional occasions, subject to the approval of lenders holding a majority of the commitments.

There were no borrowings or repayments under the facility during the three months ended December 31, 2020.

At December 31, 2020, there were no borrowings outstanding and $40.5 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $339.5 million.

The maturity date of the facility is October 2, 2022, which can be extended by up to one year on up to two additional occasions, subject to the approval of lenders holding a majority of the commitments.

The revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants.

2 unchanged sentences

A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.

At June 30, 2020, we were in compliance with all of the covenants, limitations and restrictions of our revolving credit facility.

In February 2020, we issued $300 million principal amount of 5.0% senior notes pursuant to Rule 144A and Regulation S under the Securities Act.

The notes mature March 1, 2028 with interest payable semi-annually and represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness.

The notes may be redeemed prior to maturity, subject to certain limitations and premiums defined in the indenture agreement.

At December 31, 2020, we were in compliance with all of the covenants, limitations and restrictions of our revolving credit facility.

We have outstanding senior notes as described below that were issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended.

The notes represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness and may be redeemed prior to maturity, subject to certain limitations and premiums defined in the respective indenture.

The notes are guaranteed by each of our subsidiaries to the extent such subsidiaries guarantee our revolving credit facility.

Our $350 million principal amount of 8.0% senior notes mature April 15, 2024 with interest payable semi-annually.

On or after April 15, 2021, the notes may be redeemed at 104% of their principal amount plus any accrued and unpaid interest.

In accordance with the indenture, the redemption price decreases annually thereafter and the notes can be redeemed at par on or after April 15, 2023 through maturity.

The annual effective interest rate of the notes after giving effect to the amortization of financing costs is 8.5%.

Our $300 million principal amount of 5.0% senior notes mature March 1, 2028 with interest payable semi-annually.

On or after March 1, 2023, the notes may be redeemed at 102.5% of their principal amount plus any accrued and unpaid interest.

In accordance with the indenture, the redemption price decreases annually thereafter and the notes can be redeemed at par on or after March 1, 2026 through maturity.

The notes are guaranteed by each of our subsidiaries to the extent such subsidiaries guarantee our revolving credit facility.

The annual effective interest rate of the notes after giving effect to the amortization of financing costs is 5.2%.

We also have $350 million principal amount of 8.0% senior notes due 2024 outstanding.

In March 2020, we repaid $118.9 million principal amount of our 3.75% convertible senior notes in cash at maturity.

The indentures governing the senior notes require that, upon the occurrence of both a change of control and a rating decline (each as defined in the indenture), we offer to purchase the notes at 101% of their principal amount.

The indentures governing the senior notes require that, upon the occurrence of both a change of control and a rating decline (each as defined in the respective indenture), we offer to purchase the notes at 101% of their principal amount.

If we or our restricted subsidiaries dispose of assets, under certain circumstances, we will be required to either invest the net cash proceeds from such asset sales in our business within a specified period of time, repay certain senior secured debt or debt of our non-guarantor subsidiaries, or make an offer to purchase a principal amount of the notes equal to the excess net cash proceeds at a purchase price of 100% of their principal amount.

The indentures contain covenants that, among other things, restrict the ability of us and our restricted subsidiaries to pay dividends or distributions, repurchase equity, prepay subordinated debt and make certain investments;

The indentures contain covenants that, among other things, restrict our ability and the ability of our restricted subsidiaries to pay dividends or distributions, repurchase equity, prepay subordinated debt and make certain investments;

incur additional debt or issue mandatorily redeemable equity;

3 unchanged sentences

and allow to exist certain restrictions on the ability of subsidiaries to pay dividends or make other payments.

At June 30, 2020, we were in compliance with all of the limitations and restrictions associated with our senior note obligations.

At December 31, 2020, we were in compliance with all of the limitations and restrictions associated with our senior note obligations.

Effective April 30, 2020, our Board of Directors authorized the repurchase of up to $30 million of our debt securities.

The authorization has no expiration date.

All of the $30 million authorization was remaining at June 30, 2020.

Shelf Registration Statement

In September 2018, we filed a shelf registration statement with the SEC registering $500 million of equity securities.

At June 30, 2020, $394.3 million remains available for issuance under the shelf registration statement.

All of the $30 million authorization was remaining at December 31, 2020.

Other Note Payable

Our other note payable of $12.5 million was issued as part of a transaction to acquire real estate for development.

The note is non-recourse and is secured by the underlying real estate, accrues interest at 4.0% per annum and matures in October 2023.

Issuance of Common Stock

We have an effective shelf registration statement filed with the SEC in September 2018, registering $500 million of equity securities.

At December 31, 2020, $394.3 million remained available for issuance under the shelf registration statement, $100 million of which is reserved for sales under our at-the-market equity offering program.

As of December 31, 2020, no shares had been issued under the at-the-market equity offering program.

Contractual Obligations and Off-Balance Sheet Arrangements

In support of our residential lot development business, we issue letters of credit under our revolving credit facility and we have a surety bond program that provides financial assurance to beneficiaries related to the execution and performance of certain development obligations.

At June 30, 2020, we had outstanding letters of credit of $31.6 million under the revolving credit facility and surety bonds of $206.2 million, issued by third parties to secure performance under various contracts.

At December 31, 2020, we had outstanding letters of credit of $40.5 million under the revolving credit facility and surety bonds of $293.8 million, issued by third parties to secure performance under various contracts.

We expect that our performance obligations secured by these letters of credit and bonds will generally be completed in the ordinary course of business and in accordance with the applicable contractual terms.

2 unchanged sentences

Operating Cash Flow Activities

In the nine months ended June 30, 2020, net cash used in operating activities was $205.7 million compared to $450.1 million in the nine months ended June 30, 2019.

The net cash used in operating activities in both periods reflects our strategy of continuing to grow our land development operations.

In the three months ended December 31, 2020, net cash used in operating activities was $158.7 million compared to $11.6 million in the three months ended December 31, 2019.

The cash used in operating activities in both periods was primarily due to the increase in real estate as we continue to grow our land development operations.

Investing Cash Flow Activities

In the nine months ended June 30, 2020, net cash provided by investing activities was $3.1 million compared to $0.8 million used in investing activities in the nine months ended June 30, 2019.

The cash provided by investing activities in the current year is primarily the result of distributions received from our unconsolidated ventures.

In the three months ended December 31, 2020, net cash provided by investing activities was $2.0 million compared to $3.1 million in the three months ended December 31, 2019.

The cash provided by investing activities in both periods was primarily the result of distributions received from our unconsolidated ventures.

Financing Cash Flow Activities

In the nine months ended June 30, 2020, net cash provided by financing activities was $175.4 million, consisting primarily of proceeds from the issuance of $300 million principal amount of 5.0% senior notes, partially offset by the repayment of $118.9 million principal amount of our 3.75% convertible senior notes at maturity.

In the nine months ended June 30, 2019, net cash provided by financing activities was $339.1 million, consisting primarily of proceeds from the issuance of $350 million principal amount of 8.0% senior notes, while amounts drawn and repaid on the revolving credit facility totaled $85 million each.

In the three months ended December 31, 2020, net cash used in financing activities was $0.2 million compared to $1.0 million in the three months ended December 31, 2019.

Critical Accounting Policies and Estimates

8 unchanged sentences

Factors and uncertainties that might cause such differences include, but are not limited to:

• the impact of C-19 on the economy and our business;

• the effect of D.R.

2 unchanged sentences

• the effect of our strategic relationship with D.R.

Horton on our ability to maintain relationships with our vendors and customers;

• demand for new housing, which can be affected by a number of factors including the availability of mortgage credit, job growth and fluctuations in interest rates;

• competitive actions by other companies;

• accuracy of estimates and other assumptions related to investment in and development of real estate, the expected timing and pricing of land and lot sales and related cost of real estate sales;

• our ability to comply with our debt covenants, restrictions and limitations;

• our ability to hire and retain key personnel;

• changes in governmental policies, laws or regulations and actions or restrictions of regulatory agencies;

Horton on our ability to maintain relationships with our customers;

• the impact of C-19 on the economy and our business;

• the cyclical nature of the homebuilding and lot development industries and changes in economic, real estate and other conditions;

• competitive conditions in our industry;

• changes in our business strategy and our ability to achieve our strategic initiatives;

• continuing liabilities related to assets that have been sold;

• the impact of governmental policies, laws or regulations and actions or restrictions of regulatory agencies;

• the cost and availability of property suitable for residential lot development;

• general economic, market or business conditions where our real estate activities are concentrated;

• our ability to achieve our strategic initiatives;

• our ability to obtain future entitlement and development approvals;

• our dependence on relationships with national, regional and local homebuilders;

• our ability to obtain or the availability of surety bonds to secure our performance related to construction and development activities and the pricing of bonds;

• obtaining reimbursements and other payments from governmental districts and other agencies and timing of such payments;

• the levels of resale housing inventory in our projects and the regions in which they are located;

• fluctuations in costs and expenses, including impacts from shortages in materials or labor;

• the opportunities (or lack thereof) that may be presented to us and that we may pursue;

• the strength of our information technology systems and the risk of cybersecurity breaches;

• our ability to succeed in new markets;

• the conditions of the capital markets and our ability to raise capital to fund expected growth;

Other factors, including the risk factors described in Item 1A of our 2019 Annual Report on Form 10-K, as supplemented by Part II, Item 1A in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in this Quarterly Report on Form 10-Q, may also cause actual results to differ materially from those projected by our forward-looking statements.

• our ability to manage and service our debt and comply with our debt covenants, restrictions and limitations;

• the volatility of the market price and trading volume of our common stock;

• our ability to hire and retain key personnel;

• the strength of our information technology systems and the risk of cybersecurity breaches and our ability to satisfy privacy and data protection laws and regulations.

Other factors, including the risk factors described in Item 1A of our 2020 Annual Report on Form 10-K, may also cause actual results to differ materially from those projected by our forward-looking statements.

New factors emerge from time to time and it is not possible for us to predict all such factors, nor can we assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

1 unchanged sentence

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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis