We have experienced significant volatility in market conditions during 2020. We
began the year under positive demand conditions that resulted in net new orders
increasing more than 30% for both January and
In response to the COVID-19 pandemic and various state and local orders, we instituted the following actions in March:
• Placed restrictions on business travel for our employees and imposed mandatory quarantine periods for employeeswho traveled to areas impacted by the pandemic; • Closed our sales centers, model homes, and design centers to the general public and shifted to appointment-only interactions with our customers where permitted, following recommended distancing and other health and safety protocols when meeting in person with a customer; • Enhanced our virtual sales tools to give customers the ability to shop for a new home from their mobile device or personal computer; • Closed the public gathering spaces of our amenity centers as well as community pools and athletic facilities; • Modified our corporate and division office functions in order to allow all of our employees to work remotely except for essential minimum basic operations which could only be done in an office setting;
• Eliminated non-emergency warranty work in our customers' homes;
• Modified much of our customer interactions around the mortgage origination and closing process to be virtual and minimize in-person interactions; and • Modified our construction operations to enforce enhanced safety protocols around social distancing, hygiene, and health screening.
As the pandemic spread and government and business responses expanded, we focused on protecting our liquidity and closely managing our cash flows, including through the following actions:
• Delaying the acquisition of certain land parcels and slowing land development where practical; • Limiting our investment in house construction, including strictly limiting production of new unsold "speculative" homes, and contacting backlog customers to reconfirm status before beginning construction of sold homes; • As a precautionary measure, proactively drawing$700.0 million under the Revolving Credit Facility in March;
• Suspending the repurchase of shares under our share repurchase program; and
• Reducing headcount and other overhead expenses.
The severity of these restrictions and the date we resumed more normal
operations has varied by market based on the reduction in restrictions under
"shelter in place" orders and improvement in public health conditions. While all
of the above-referenced steps were, and some remain, necessary and appropriate
in light of the COVID-19 pandemic, they impacted our ability to operate our
business in its ordinary and traditional course. Combined with the decrease in
demand that occurred as the result of the severe macroeconomic conditions, our
net new orders declined significantly in late March through April. Demand began
to stabilize in
While our operations are now fully functioning, subject to regulated restrictions and safety constraints we have enacted in order to protect our employees, trade contractors, and customers, the current resurgence of the COVID-19 pandemic in key areas of our operations may require us to implement restrictions on our operations in the future. The potential magnitude or duration of the business and economic impacts from the unprecedented public health effort to contain and combat the spread of COVID-19 are uncertain and may include, among other things, significant volatility in financial markets. In addition, we can provide no assurance as to whether the COVID-19 public health effort will be intensified to such an extent that we will not be able to
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conduct business operations in certain of our served markets or at all for an indefinite period. There are no reliable estimates of how long the COVID-19 pandemic will last or how severe it may be, and therefore, the unpredictability of the current economic and public health conditions will continue to evolve. However, we believe that the steps we have taken over the years to reduce risk to our operations and the measures we have taken recently to meet the challenges of the COVID-19 pandemic position us well to continue to serve our customers, protect our employees and business partners, and deliver value for our stakeholders.
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