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PulteGroup To Lay Off, Furlough Employees; Sees Q2 Charge Of About $10 Mln

PulteGroup, Inc. (PHM) on Monday provided an update on actions it has taken in response to the COVID-19 pandemic. The home builder plans to reduce its targeted overhead expense through a combination of layoffs, furloughs and other cost cutting initiatives, and expects to incur a second-quarter charge of about $10 million for severance and related expenses.

While announcing its first-quarter earnings results, PulteGroup had reported that after a very strong start to the year, housing demand slowed materially beginning in mid-March as the country was impacted by the COVID-19 pandemic.

In response to the pandemic, the company modified its sales, construction and administrative processes to allow its business to operate, while protecting the health and safety of its customers, trade partners and employees.

Ryan Marshall, PulteGroup President and CEO, noted that after an initial significant contraction in housing demand, recent sales trends have been more encouraging as weekly net new orders went from about 140 homes in the last week of March to almost 400 homes in the final full week of April that ended May 3.

"While order rates have improved, our net new orders for the month of April were still down approximately 50% from the prior year, so we have taken steps to reduce our targeted overhead expense through a combination of layoffs, furloughs and other cost cutting initiatives," added Marshall.

PulteGroup said the steps it has taken are expected to reduce overhead expenses by about $100 million on an annualized basis, of which about $65 million will be realized over the remainder of 2020.

To help support employees impacted by these actions, PulteGroup's senior leaders, along with its board of directors, have agreed to temporarily reduce their compensation.

The company will redirect the foregone compensation into its employee assistance fund. It has also modified the terms of this fund to significantly broaden the areas of coverage, and to make assistance available to any PulteGroup employees who were furloughed or released as part of these recent overhead reductions.

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