What changed in this filing

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Item 1A. Risk Factors

2023-02-15 compared with 2022-02-16 · 71 added, 61 removed, 213 unchanged (38% of the section changed)

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If mortgage interest rates increase and, consequently, the ability of prospective buyers to finance home purchases is adversely affected, our home sales and cash flow may be adversely affected and the impact may be material.

These risks can also indirectly impact us to the extent our customers need to sell their existing homes to purchase a new home from us if the potential buyer of their home is unable to obtain mortgage financing.

Although long-term interest rates currently remain at historic lows, it is predicted that market interest rates will increase in 2022 and beyond.

A homebuyers' ability to obtain a mortgage loan is largely subject to prevailing interest rates, lenders’ credit standards and appraisals, and the availability of government-supported programs, such as those from the FHA, the VA, Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac").

Additionally, rapid increases in interest rates may negatively impact affordability of a home purchase for existing buyers in backlog who have not yet locked in a mortgage interest rate for their loan.

This could lead to an increase in the number of contract cancellations in our reported sales order numbers.

For example, although long-term interest rates remain low compared to historical averages, in 2022 they increased significantly from their previously historically low averages and are anticipated to continue to increase in the near term.

We believe this increase, coupled with other economic factors, caused our increased cancellation rate.

We may have the ability to offset the impact of rising interest rates on affordability by purchasing interest rate locks;

however, there is no guarantee that interest rate locks will be available for us to purchase at desirable terms, or if they are available, there is no guarantee that they will be utilized by potential customers.

A homebuyer's ability to obtain a mortgage loan is largely subject to prevailing interest rates, lenders’ credit standards and appraisals, and the availability of government-supported programs, such as those from the FHA, the VA, Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac").

If credit standards or appraisal guidelines are tightened, or mortgage loan programs are curtailed, potential buyers of our homes may not be able to obtain necessary mortgage financing.

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A prolonged tightening of the financial markets could also negatively impact our business.

The above risks can also indirectly impact us to the extent our customers need to sell their existing homes to purchase a new home from us if the potential buyer of their home is unable to obtain mortgage financing.

It may also impact the desire for existing homeowners to sell their homes as they may potentially be forfeiting a substantially lower interest rate on their existing home for a higher-rate mortgage on a new home.

Our future operations may be adversely impacted by high inflation or deflation.

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Inflation could increase our cost of financing, materials and labor and could cause our financial results and profitability to decline.

Traditionally, we have attempted to pass cost increases on to our customers through higher sales prices and inflation has not historically had a material adverse effect on our business.

Although, in the event that we are unable to do so in a rising cost environment, our profitability could decline.

Traditionally, we have attempted to pass cost increases on to our customers through higher sales prices and inflation has not historically had a material adverse effect on our business, although in recent months we have absorbed higher material and labor costs which negatively impacted our profitability.

Alternatively, a significant period of deflation could cause a decrease in overall spending and borrowing levels.

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These, or other factors that increase the risk of significant deflation, could have a negative impact on our business or financial results.

High cancellation rates may negatively impact our business.

Our backlog reflects the number and value of homes for which we have entered into non-contingent sales contracts with customers but have not yet delivered those homes.

In connection with the sale of a home, our policy is to generally collect a deposit from our customers, although typically this deposit reflects a small percentage of the total purchase price, and due to local regulations, the deposit may, in certain circumstances, be fully or partially refundable prior to closing.

If the prices for our homes in a given community decline, our neighboring competitors reduce their sales prices (or increase their sales incentives), interest rates increase, the availability of mortgage financing tightens or there is a downturn in local, regional or national economies, homebuyers may elect to cancel their home purchase contracts with us.

We experienced significant cancellations in the last half of 2022 as buyers terminated their existing home purchase contracts due to a variety of reasons, including

uncertainty about current economic conditions, increases in interest rates, changes in personal finances and a shift to resale home inventory due to elongation of cycle times for new homes.

Although the higher cancellations did not have a material adverse effect on our financial results in 2022, we expect that cancellations will trend above normal for at least the first part 2023 and could, in 2023 or in the future, have a material adverse effect on our business as a result of lost sales revenue and the accumulation of unsold housing inventory.

Supply shortages and other risks related to the demand for building materials could materially disrupt our operations and increase costs.

Our ability to timely construct our homes may be significantly impacted by circumstance beyond our control, such as work stoppages, shortages of qualified trades people, lack of availability of utility infrastructure and services, our need to rely on local subcontractors, and shortages or delays in availability of building materials.

Our ability to timely construct our homes may be significantly impacted by circumstances beyond our control, such as work stoppages, shortages of qualified trades people, lack of utility infrastructure and services, our need to rely on local subcontractors, and shortages or delays in availability of building materials.

Constraints of raw materials and finished goods or in the distribution channels of our construction inputs can delay delivery of our homes to customers and can increase our building costs or lead to sales orders cancellations.

For example, in 2021, supply chain constraints for various construction materials related to sustained demand amid the backdrop of a global pandemic have caused our construction cycle times to lengthen.

We believe these conditions may continue in 2022 and potentially beyond.

In 2021 and 2022, supply chain and labor constraints related to sustained demand amid the backdrop of a global pandemic caused our construction cycle times to lengthen, and although we are experiencing a loosening in the supply chain, we believe these conditions may continue for at least the first part of 2023.

These delays impact the timing of our expected home closings and may also result in cost increases that we may not be able to pass to our current or future customers.

Sustained increases in construction costs may, over time, erode our margins, and impact our total order and closing volumes.

Our ability to acquire and develop raw or partially finished lots may be negatively impacted if we are unable to secure performance bonds.

In connection with land development work on our raw or partially developed land, we are often required to provide performance bonds, letters of credit or other assurances for the benefit of the respective municipalities or governmental authorities.

These instruments provide assurance to the beneficiaries that the development will be completed, or that in case we do not perform, that funds from these instruments are available for the municipality or governmental agency to arrange for completion of such work.

Although such instruments are currently accessible, in the future additional performance bonds or

letters of credit may be difficult to obtain, or may become difficult to obtain on terms that are acceptable to us.

If we are unable to secure such instruments, progress on affected projects may be delayed or halted or we may be required to expend additional cash, which may adversely affect our financial position and ability to grow our operations.

If home prices decline, potential buyers may not be able to sell their existing homes, which may negatively impact our sales.

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Declines in home prices could have an adverse effect on our homebuilding business volumes and cash flows.

Legislation related to tariffs could increase the cost to construct our homes.

The cost of certain building materials is influenced by changes in local and global commodity prices as well as government regulation, such as government-imposed tariffs on building supplies such as lumber and flooring materials.

For example, during 2018 and 2019, we experienced increases in the prices of some building materials as a result of such tariffs.

Such cost increases limit our ability to control costs, potentially reducing margins on the homes we build if we are not able to successfully offset the increased costs through higher sales prices.

Additionally, tariffs pose a risk to our supply chain availability if we are forced to use alternative materials or products.

In the latter half of 2022, home prices declined due to the pressures of rising interest rates and we expect this trend to continue into 2023 and potentially beyond.

Our ability to acquire and develop raw or partially finished lots may be negatively impacted if we are unable to secure performance bonds.

Although such instruments are currently accessible, in the future additional performance bonds or letters of credit may be difficult to obtain, or may become difficult to obtain on terms that are acceptable to us.

A reduction in our orders absorption levels may force us to incur and absorb additional community-level costs.

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A reduction in home absorption rates increases the associated holding costs and extends our time and ability to recover such costs.

Legislation related to tariffs could increase the cost to construct our homes.

Such cost increases limit our ability to control costs, potentially reducing margins on the homes we build if we are not able to successfully offset the increased costs through higher sales prices.

Additionally, tariffs pose a risk to our supply chain availability if we are forced to use alternative materials or products.

The value of our real estate inventory may decline, leading to impairments and reduced profitability.

During the last significant homebuilding cycle downturn, and in certain isolated circumstances afterward, we had to impair many of our real-estate assets to fair-value, incurring large impairment charges which negatively impacted our financial results.

Another decline in the homebuilding market may require us to re-evaluate the value of our land holdings and we could incur additional impairment charges, which would decrease both the book value of our assets and stockholders’ equity.

High cancellation rates may negatively impact our business.

Our backlog reflects the number and value of homes for which we have entered into non-contingent sales contracts with customers but have not yet delivered those homes.

Significant cancellations have previously had, and could in the future have, a material adverse effect on our business as a result of lost sales revenue and the accumulation of unsold housing inventory.

Downturns in the economy, or specifically in the homebuilding industry, require us to re-evaluate the value of our land holdings, which could result in significant impairment charges and decrease both the book value of our assets and stockholders’ equity.

During the last significant downturn that began in 2008, and in certain isolated circumstances afterward, we had to impair many of our real-estate assets to fair-value, incurring large impairment charges which negatively impacted our financial results.

During the second half of 2022, the homebuilding market declined amidst higher interest rates and expected future interest rate increases, inflation and deterioration in the general economy.

While we did not record any material impairment charges in 2022, if the market continues to deteriorate further, we may incur significant impairment charges which would negatively impact our financial results.

If we are unable to successfully compete in the highly competitive housing industry, our financial results and growth may suffer.

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Home warranty and construction defect claims are common in the homebuilding industry and can be costly.

We sometimes encounter construction defect issues that may be alleged to be widespread within a single community or geographic area and we are currently managing such an issue, regarding alleged widespread stucco application issues in some of our markets.

We sometimes encounter construction defect issues that may be alleged to be widespread within a single community or geographic area and we are currently managing two such issues regarding alleged widespread stucco application issues in some of our markets and HVAC condensation issues in our Florida markets.

See Note 1 - “Business and Summary of Significant Accounting Policies” and Note 16 - "Commitments and Contingencies" in Part II, Item 8 of this Form 10-K for additional information regarding warranty reserves and adjustments .

In order to account for future potential warranty and construction defect obligations, we establish a warranty reserve in connection with every home closing.

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For example, we may be responsible for applicable self-insured retentions, and certain claims may not be covered by insurance or may exceed applicable coverage limits, which could be material to our financial results.

In addition, the costs of insuring against construction defect and product liability claims are high, and the amount of coverage offered by insurance companies is currently limited.

In addition, the cost of insuring against construction defect and product liability claims is high, and the amount of coverage offered by insurance companies is currently limited.

There can be no assurance that this coverage will not be further restricted and become more costly.

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At December 31, 2022, we had approximately $1.2 billion of indebtedness and $861.6 million of cash and cash equivalents.

If we require working capital greater than that provided by our operations and current liquidity position, including the $717.6 million available to be drawn under our credit facility, we may be required to seek additional capital in the form of equity or debt financing from a variety of potential sources, including bank financing, public bonds or off-balance sheet

If we require working capital greater than that provided by our operations and current liquidity position, including the $725.6 million available to be drawn under our credit facility, we may be required to seek additional capital in the form of equity or debt financing from a variety of potential sources, including bank financing, public bonds or off-balance sheet resources.

There can be no assurance we would be able to obtain such additional capital on terms acceptable to us, if at all.

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Any downgrades from these ratings may impact our ability to obtain future additional financing, or to obtain such financing on terms that are favorable to us and therefore, may adversely impact our future operations.

The physical impacts of climate change such as natural disasters or extreme weather events could increase our costs and adversely affect our operations.

The climates of many of the states in which we have homebuilding operations, including California, Texas, Florida and other coastal areas present increased risks of, and have recently experienced, adverse weather and natural disasters which may be caused by, or exacerbated by, climate change.

The physical impacts of natural disasters or extreme weather events, which may be caused or exacerbated by climate change, could increase our costs and adversely affect our operations.

The climates of many of the states in which we have homebuilding operations, particularly California, Texas, Florida and other coastal areas, present increased risks of, and have recently experienced, adverse weather and natural disasters which may be caused by, or exacerbated by, climate change.

We may not be able to insure against some of these risks, and damage or destruction to our homes under construction or our building lots and community improvements caused by adverse weather or natural disasters could result in uninsured or underinsured losses.

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Any of these events could cause a delay in scheduled closings and a decrease in our revenue, cash flows and earnings.

For example, in September 2022, Hurricane Ian caused limited construction and home closing delays in our Florida markets.

Risks Related to Our Strategy

Our long-term success depends on the availability of lots and land that meet our land investment criteria.

The availability of lots and land that meet our underwriting standards depends on a number of factors outside of our control, including land availability in general, competition with other homebuilders and land buyers, credit market conditions, legal and government agency processes and regulations, inflation in land prices, zoning, availability of utilities, our ability and the costs to obtain building permits, the amount of impact fees, property tax rates and other regulatory requirements.

The availability of lots and land that meet our underwriting standards depends on a number of factors outside of our control, including land availability in general, competition with other homebuilders and land buyers, credit market conditions, legal and government agency processes and regulations, inflation in land prices, zoning, availability of utilities, water rights, our ability and the costs to obtain building permits, the amount of impact fees, property tax rates and other regulatory requirements.

If suitable lots or land becomes less available, or the cost of attractive land increases, it could reduce the number of homes that we may be able to build and sell and reduce our anticipated margins, each of which could adversely impact our financial results.

The availability of suitable land assets could also affect the success of our strategic initiative to increase our number of actively selling communities and to maintain profitability.

The availability of suitable land assets could also affect the success of our strategic initiatives to increase our community count and maintain profitability.

If our current strategies are not successful, it could have negative consequences on our operations, financial position and cash flows.

We focus our community designs, product offerings and marketing on entry-level and first move-up homes based on our belief that these two product types will comprise the majority of the market demand in the near and medium term outlook.

If there is a shift away from, or decrease in, the demand for first-time and first move-up buyers or our entry-level home offerings, it could have negative consequences on our operations, financial position and cash flows.

If there is a shift away from, or decrease in, the demand for our entry-level and first move-up home offerings, it could have negative consequences on our operations, financial position and cash flows if we are unable to shift our product offerings accordingly.

Reduced levels of sales may cause us to re-evaluate the viability of existing land option contracts, resulting in a potential termination of these contracts which may lead to impairment charges.

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Such options generally require a cash deposit that will be forfeited if we do not exercise the option or proceed with the lot purchase(s).

During the last significant downturn, we forfeited significant amounts of deposits and wrote off significant amounts of related pre-acquisition costs related to projects we no longer deemed feasible, as they were not projected to generate acceptable returns.

During the last significant downturn that began in 2008, we forfeited significant amounts of deposits and wrote off significant amounts of related pre-acquisition costs related to projects we no longer deemed feasible, as they were not projected to generate acceptable returns.

Although our participation in such options is more limited at this time, another downturn in the homebuilding market may cause us to re-evaluate the feasibility of our optioned projects which may result in us forfeiting associated deposits, which would reduce our assets and stockholders’ equity.

Our lack of geographic diversification could adversely affect us if the homebuilding industry in our markets decline.

We have operations in Texas, Arizona, California, Colorado, Florida, North Carolina, South Carolina, Georgia and Tennessee.

We have homebuilding operations in Texas, Arizona, California, Colorado, Florida, North Carolina, South Carolina, Georgia, and Tennessee.

Although we have, in recent years, expanded our operations to new markets, our geographic diversification is still more limited than some of our competitors and could adversely impact us if the homebuilding business in our current markets should decline, since we may not have a balancing opportunity in other geographic regions.

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Throughout various homebuilding cycles, we have experienced shortages of skilled labor in certain markets, which led to increased labor costs and delayed construction schedules.

For example, we experienced delays in our construction cycle time in 2021 due to a limited pool of subcontract labor caused by the combined impact of elevated demand for homes and government restrictions on certain activities in some geographies in response to the global pandemic.

For example, we experienced delays in our construction cycle time in 2021 and 2022 due to a limited pool of subcontract labor.

Although we continually strive to be a partner of choice with our trades, we cannot be assured that in the future there will be a sufficient supply of, or satisfactory performance by, these unaffiliated third-party subcontractors and consultants, which could have a material adverse effect on our business.

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We and our service providers employ what we believe are appropriate security, disaster recovery and other preventative and corrective systems and processes.

Additionally, we maintain cyber-security insurance and require our employees to complete an annual information security training and compliance program;

hardware or software), telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions (including the failure to follow our security protocols), or lost connectivity to our networked resources.

Additionally, we maintain cyber-security insurance and require our employees to complete ongoing information security training;

however, our ability to conduct our business may be impaired if these information technology resources are compromised, degraded, damaged or fail, whether due to a virus or other harmful circumstance, intentional penetration or disruption of our information technology resources by a third party, natural disaster, hardware or software corruption or failure or error (including a failure of security controls incorporated into or applied to such hardware or software), telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions (including the failure to follow our security protocols), or lost connectivity to our networked resources.

For example, during the first quarter of 2020, some of our systems were affected by a malware attack that encrypted certain information on some of our systems and resulted in limitations to certain employee access for a short duration to certain of our systems and services, although all core operating activities continued during our remediation process.

We completed this remediation process and our computer systems were restored, and the incident did not have a material adverse effect on our results of operations and/or financial condition and did not result in any exfiltration of data.

We cannot be assured, however, that similar or more serious attacks will not occur in the future and a significant and extended disruption in the functioning of our information technology and other computer resources could damage our reputation and cause us to lose customers and sales, result in the unintended public disclosure or the misappropriation of proprietary, personal and confidential information (including information about our homebuyers, employees and business partners), and require us to incur significant expense to address and remediate these kinds of issues.

While we continuously assess and enhance our cyber-security controls, we cannot be assured that similar or more serious attacks will not occur in the future.

Such events could have a significant and extended disruption to the functioning of our information technology and other computer resources, damage our reputation and cause us to lose customers and sales, result in the unintended disclosure or the misappropriation of proprietary, personal and confidential information (including information about our homebuyers, employees and business partners), and require us to incur significant expense to address and remediate these kinds of issues.

The release of confidential information may also lead to litigation or other proceedings against us by affected individuals and/or business partners and/or by regulators, and the outcome of such proceedings, which could include penalties or fines, could have a material and adverse effect on our consolidated financial statements and reputation.

In addition, the costs of maintaining adequate protection against such threats, depending on their evolution, pervasiveness and frequency and/or government-mandated standards or obligations regarding protective efforts, are expected to continue to increase in the future and may be material to our consolidated financial statements.

In addition, the costs of maintaining adequate protection against such threats, depending on their evolution, pervasiveness and frequency and/or government-mandated standards or obligations regarding protective efforts, are high and expected to continue to increase in the future and may be material to our consolidated financial statements.

The loss of key personnel may negatively impact us.

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Additionally, the Tax Act reduces the cap on mortgage interest deduction to $750,000 of debt for debt incurred after December 15, 2017.

The limits on deductibility of mortgage interest and property taxes may increase the after-tax cost of owning a home for some individuals.

Although we primarily build more affordable homes with proportionally lower property taxes and interest, the limits on deductibility of mortgage interest and property taxes may increase the after-tax cost of owning a home for some individuals.

Any increases in personal income tax rates and/or additional tax deduction limits relating to the cost of home ownership could adversely impact demand for homes, including homes we build, which could adversely affect the results of our operations.

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While we believe we are complying in all material respects with existing climate-related government standards and regulations applicable to our business, we also cannot predict our future exposure given the rapidly changing nature of environmental matters.

There is a variety of new legislation being enacted, or considered for enactment at the federal, state, local and international levels relating to energy and climate change.

There is a variety of new regulations being adopted and legislation being enacted, or considered for enactment, at the federal, state, local and international levels relating to energy and climate change.

This legislation relates to items such as carbon dioxide emissions control and building codes that impose energy efficiency standards.

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Similarly, energy-and climate-related initiatives affect a wide variety of companies throughout the United States and the world and because our operations are heavily dependent on significant amounts of raw materials, such as lumber, steel, and concrete, they could have an indirect adverse impact on our operations and profitability to the extent the manufacturers and suppliers of our materials are burdened with expensive cap and trade and similar energy and climate-related regulations.

The increasing attention to ESG matters and our responses to these matters could have an adverse effect on our business.

We published our inaugural ESG report in 2021.

We voluntarily followed certain reporting frameworks in our ESG report that we believe are of value to our investors and other stakeholders.

The increasing attention to ESG matters and our responses to these matters could have an adverse effect on our business and reputation.

For example, the SEC has recently proposed extensive climate-related disclosure rules and audit requirements.

We voluntarily published our second annual ESG report in 2022 which followed certain reporting frameworks that we believe are of value to our investors and other stakeholders.

However, if mandatory reporting and audit requirements are adopted, it would likely impose significant compliance costs on us.

We intend to continue to research, evaluate, and implement applicable disclosures and initiatives related to ESG matters, however, if we are unable to adequately address such ESG matters or fail to comply with future mandatory reporting requirements, it could negatively impact our reputation and our business results.

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Unfavorable media related to our industry, company, brand, personnel, operations, business performance, or prospects may impact our stock price and the performance of our business, regardless of its accuracy or inaccuracy.

The speed at which negative publicity is disseminated has increased dramatically through the use of electronic communication, including social media outlets, websites, "tweets", and blogs.

Our success in maintaining and expanding our brand image depends on our ability to adapt to this rapidly changing media environment.

The speed at which negative publicity is disseminated has increased dramatically through the use of electronic communication, including social media outlets, websites, "tweets", blogs, and similar platforms.

Our success in maintaining and expanding our brand image depends, in part, on our ability to adapt to this rapidly changing media environment.

Adverse publicity or negative commentary from any media outlets could damage our reputation and reduce the demand for our homes, which would adversely affect our business.

Our business could be materially disrupted by an epidemic or pandemic (such as the present COVID-19 pandemic), or fear of such an event, and the measures that federal, state and local governments and/or health authorities implement to address it.

Our business could be materially disrupted by an epidemic or pandemic, or fear of such an event, and the measures that federal, state and local governments and/or health authorities implement to address it.

Demand for our homes is dependent on a variety of macroeconomic factors, such as employment levels, interest rates, changes in stock market valuations, consumer confidence, housing demand, availability of building materials, availability of financing for home buyers, availability and prices of new homes compared to existing inventory, and demographic trends.

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The words “believe,” “expect,” “anticipate,” “forecast,” “plan,” “intend,” “may,” “will,” “should,” “could,” “estimate,” "target," and “project” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made.

All statements we make other than statements of historical fact are forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933 ("Securities Act"), and Section 21E of the Exchange Act.

All statements we make other than statements of historical fact are forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933 (the "Securities Act"), and Section 21E of the Exchange Act.

Forward-looking statements in this Annual Report include statements concerning our belief that we have ample liquidity;

our goals, strategies and strategic initiatives and the anticipated benefits relating thereto;

our cash management strategy and intentions;

our goals, strategies and strategic initiatives including our all spec-strategy for entry-level homes and the anticipated benefits relating thereto;

our intentions and the expected benefits and advantages of our product and land positioning strategies, including with respect to our focus on the first-time and first move-up buyer and housing demand for affordable homes;

the benefits of and our intentions to use options to acquire land;

our design center strategy;

our preselected design collections strategy;

our exposure to supplier concentration risk and other matters concerning our supply chain;

our delivery of substantially all of our backlog existing as of year end;

our positions and our expected outcome relating to litigation in general;

our positions and our expected outcome relating to litigation and regulatory proceedings in general;

the sufficiency of our warranty reserves;

our intentions to not pay dividends;

growth in the first-time buyer segment that are seeking entry-level homes;

the timing, locations and targeted number of new community openings in 2022 and beyond;

that we may repurchase our debt and equity securities;

our non-use of derivative financial instruments;

expectations regarding our industry and our business into 2022 and beyond, including the potential impact thereon of COVID-19 and governmental imposed restrictions and reaction thereto;

expectations regarding our industry and our business into 2023 and beyond;

the demand for and the pricing of our homes;

our land and lot acquisition strategy (including that we will redeploy cash to acquire well-positioned finished lots and that we may participate in joint ventures or opportunities outside of our existing markets if opportunities arise and the benefits relating thereto);

our land and lot acquisition strategy, including that we will redeploy cash to acquire well-positioned finished lots and that we may participate in joint ventures or other opportunities;

that we may expand into new markets;

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the impact of new accounting standards and changes in accounting estimates;

trends and expectations concerning sales prices, sales orders, cancellations, construction and materials costs, gross margins, land costs, community counts and profitability and future home inventories;

our future cash needs;

trends and expectations concerning future demand for homes, sales prices, sales orders, cancellations, construction and materials costs and availability, gross margins, profitability, liquidity, land costs, community counts and profitability and future home supply and inventories;

our DE&I initiatives and intentions;

our future cash needs and sources;

the impact of seasonality;

that we may pay dividends in the future;

and our future compliance with debt covenants.

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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-K

Item 1A. Risk Factors