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Note 17 - Operating and Reporting Segments | 9 Months Ended
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Jul. 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 |  |  | Nine Months Ended |
|  | July 31, |  |  | July 31, |
(In thousands) |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Northeast |  | $ | 201,814 |  |  | $ | 305,577 |  |  | $ | 625,323 |  |  | $ | 721,442 |
Southeast |  |  | 121,240 |  |  |  | 71,542 |  |  |  | 296,084 |  |  |  | 200,359 |
West |  |  | 309,147 |  |  |  | 375,784 |  |  |  | 898,882 |  |  |  | 1,069,917 |
Total homebuilding |  |  | 632,201 |  |  |  | 752,903 |  |  |  | 1,820,289 |  |  |  | 1,991,718 |
Financial services |  |  | 14,649 |  |  |  | 14,533 |  |  |  | 41,016 |  |  |  | 43,548 |
Corporate and unallocated |  |  | 3,107 |  |  |  | 157 |  |  |  | 7,679 |  |  |  | 177 |
Total revenues |  | $ | 649,957 |  |  | $ | 767,593 |  |  | $ | 1,868,984 |  |  | $ | 2,035,443 |
Income before income taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Northeast |  | $ | 29,088 |  |  | $ | 59,958 |  |  | $ | 86,311 |  |  | $ | 117,796 |
Southeast |  |  | 23,431 |  |  |  | 15,263 |  |  |  | 49,902 |  |  |  | 36,185 |
West |  |  | 27,873 |  |  |  | 61,948 |  |  |  | 65,981 |  |  |  | 169,372 |
Total homebuilding |  |  | 80,392 |  |  |  | 137,169 |  |  |  | 202,194 |  |  |  | 323,353 |
Financial services |  |  | 4,304 |  |  |  | 3,743 |  |  |  | 11,466 |  |  |  | 11,566 |
Corporate and unallocated (1) |  |  | (14,306 | ) |  |  | (28,985 | ) |  |  | (79,100 | ) |  |  | (106,646 | )
Income before income taxes |  | $ | 70,390 |  |  | $ | 111,927 |  |  | $ | 134,560 |  |  | $ | 228,273 |
(1) | Corporate and unallocated for the three months ended July 31, 2023 included corporate general and administrative expenses of $27.4 million, interest expense of $2.6 million (a component of Other interest in our Condensed Consolidated Statements of Operations), $(19.8) million of other expense (income), and loss on extinguishment of debt of $4.1 million. Corporate and unallocated for the nine months ended July 31, 2023 included corporate general and administrative expenses of $78.0 million, interest expense of $14.4 million, $(17.4) million of other expense (income), and loss on extinguishment of debt of $4.1 million. Corporate and unallocated for the three months ended July 31, 2022 included corporate general and administrative expenses of $24.8 million, interest expense of $5.0 million, and $(0.8) million of other expense (income). Corporate and unallocated for the nine months ended July 31, 2022 included corporate general and administrative expenses of $75.9 million, interest expense of $25.5 million, loss on extinguishment of debt of $6.8 million, and $(1.6) million of other expense (income).
|  | July 31, |  |  | October 31, |
(In thousands) |  | 2023 |  |  | 2022 |
Assets: |  |  |  |  |  |  |  |
Northeast |  | $ | 514,319 |  |  | $ | 530,884 |
Southeast |  |  | 298,871 |  |  |  | 330,894 |
West |  |  | 745,531 |  |  |  | 802,704 |
Total homebuilding |  |  | 1,558,721 |  |  |  | 1,664,482 |
Financial services |  |  | 115,603 |  |  |  | 155,993 |
Corporate and unallocated |  |  | 719,593 |  |  |  | 741,555 |
Total assets |  | $ | 2,393,917 |  |  | $ | 2,562,030 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 22 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-22 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-15 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 31 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-31 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 42 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-42 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 40 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-40 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//280/tableOfContent Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 26 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-26 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 34 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-34 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 41 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-41 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 + Details
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