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Note 17 - Operating and Reporting Segments
 3 Months Ended
Jan. 31, 2023
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

17.

Operating and Reporting Segments

 

We currently have homebuilding operations in 14 states that are aggregated into reportable segments based primarily upon geographic proximity.

 

Historically, the Company had seven reportable segments consisting of six homebuilding segments (Northeast, Mid-Atlantic, Midwest, Southeast, Southwest and West) and its financial services segment. During the fourth quarter of fiscal 2022, we reevaluated our reportable segments as a result of changes in the business and our management thereof. In particular, we considered the fact that, since our segments were last established, the Company had exited the Minnesota, North Carolina and Tampa markets and is currently in the process of exiting the Chicago market. Applying the principles set forth under Accounting Standards Codification ("ASC") 280, including that our business trends are reflective of economic conditions in markets with general geographic proximity, we realigned our homebuilding operating segments.

 

HEI’s reportable segments now consist of the following three homebuilding segments and a financial services segment.

 

Homebuilding:

 

 

(1)

Northeast (Delaware, Illinois, Maryland, New Jersey, Ohio, Pennsylvania, Virginia and West Virginia)

 (2)Southeast (Florida, Georgia and South Carolina)
 (3)West (Arizona, California and Texas)

  

All prior period amounts related to the segment change have been retrospectively reclassified throughout to conform to the new presentation.

 

Operations of the homebuilding segments primarily include the sale and construction of single-family attached and detached homes, attached townhomes and condominiums, urban infill and active lifestyle homes in planned residential developments. In addition, from time to time, operations of the homebuilding segments include sales of land. Operations of the financial services segment include mortgage banking and title services provided to the homebuilding operations’ customers. Our financial services subsidiaries do not typically retain or service mortgages that we originate but sell the mortgages and related servicing rights to investors.

 

Evaluation of segment performance is based primarily on income (loss) before income taxes. Income (loss) before income taxes for the homebuilding segments consist of revenues generated from the sales of homes and land, income (loss) from unconsolidated entities, management fees and other income, less the cost of homes and land sold, selling, general and administrative expenses and interest expense. Income (loss) before income taxes for the financial services segment consist of revenues generated from mortgage financing, title insurance and closing services, less the cost of such services and corporate general and administrative expenses.

 

Financial information relating to our reportable segments was as follows:

 

  

Three Months Ended

 
  

January 31,

 

(In thousands)

 

2023

  

2022

 
         

Revenues:

        

Northeast

 $211,462  $174,945 

Southeast

  73,794   55,582 

West

  215,734   321,470 

Total homebuilding

  500,990   551,997 

Financial services

  12,164   13,309 

Corporate and unallocated

  2,212   7 

Total revenues

 $515,366  $565,313 
         

Income before income taxes:

        

Northeast

 $28,512  $19,838 

Southeast

  11,623   10,162 

West

  9,889   43,935 

Total homebuilding

  50,024   73,935 

Financial services

  3,111   2,909 

Corporate and unallocated (1)

  (35,088)  (41,443)

Income before income taxes

 $18,047  $35,401 

 

(1)

Corporate and unallocated for the three months ended January 31, 2023 included corporate general and administrative expenses of $25.5 million, interest expense of $6.6 million (a component of Other interest in our Condensed Consolidated Statements of Operations), and $3.0 million of other net expenses. Corporate and unallocated for the three months ended  January 31, 2022 included corporate general and administrative costs of $29.4 million, interest expense of $11.5 million and $0.5 million of other net expenses.

 

  

January 31,

  

October 31,

 

(In thousands)

 

2023

  

2022

 
         

Assets:

        

Northeast

 $494,830  $530,884 

Southeast

  357,831   330,894 

West

  824,696   802,704 

Total homebuilding

  1,677,357   1,664,482 

Financial services

  112,756   155,993 

Corporate and unallocated

  645,072   741,555 

Total assets

 $2,435,185  $2,562,030