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Note 10 - Operating and Reporting Segments
 12 Months Ended
Oct. 31, 2024
Operating and Reporting Segments  
Operating and Reporting Segments

10. Operating and Reporting Segments

  

HEI’s operating segments are components of the Company’s business for which discrete financial information is available and reviewed regularly by the chief operating decision maker, our Chief Executive Officer, to evaluate performance and make resource allocations.

  

We currently have homebuilding operations in 13 states that are aggregated into reportable segments based primarily upon geographic proximity.

  

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

  

Homebuilding:

(1)

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

(2)

Southeast (Florida, Georgia and South Carolina)

(3)

West (Arizona, California and Texas)

  

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.

  

Corporate and unallocated primarily represents operations at our headquarters in New Jersey. This includes our executive offices, information services, human resources, corporate accounting, training, treasury, process redesign, internal audit, construction services, administration of insurance, quality and safety. It also includes interest income and interest expense resulting from interest incurred that cannot be capitalized in inventory in the homebuilding segments, as well as the gains or losses on extinguishment of debt from any debt repurchases or exchanges.

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.

  

Operational results of each segment are not necessarily indicative of the results that would have occurred had the segment been an independent stand-alone entity during the periods presented.


Financial information relating to our reportable segments are as follows:

 

Year Ended October 31,

(In thousands)

2024

2023

2022

Revenues:

Northeast

$ 1,036,049 $ 968,851 $ 1,085,081

Southeast

448,902 420,296 323,961

West

1,437,894 1,295,992 1,450,632

Total homebuilding

2,922,845 2,685,139 2,859,674

Financial services

74,064 60,088 61,540

Corporate and unallocated

8,009 10,789 1,017

Total revenues

$ 3,004,918 $ 2,756,016 $ 2,922,231

Income before income taxes:

Northeast

$ 190,477 $ 178,516 $ 177,406

Southeast

77,613 77,750 60,178

West

123,246 114,084 207,519

Total homebuilding

391,336 370,350 445,103

Financial services

24,124 19,365 19,121

Corporate and unallocated (1)

(98,371 ) (133,764 ) (144,471 )

Income before income taxes

$ 317,089 $ 255,951 $ 319,753

  

(1) Corporate and unallocated for the year ended October 31, 2024 included corporate general and administrative expenses of $139.7 million, gain on extinguishment of debt of $1.4 million and $(39.9) million of other (income) expenses, net. Corporate and unallocated for the year ended October 31, 2023 included corporate general and administrative expenses of $103.2 million, interest expense of $17.7 million, loss on extinguishment of debt of $25.6 million and $(12.7) million of other (income) expenses, net. Corporate and unallocated for the year ended October 31, 2022 included corporate general and administrative expenses of $102.6 million, interest expense of $28.6 million, loss on extinguishment of debt of $6.8 million and $6.5 million of other (income) expenses, net.

  

October 31,

(In thousands)

2024

2023

Assets:

Northeast

$ 664,064 $ 483,784

Southeast

296,058 286,701

West

889,704 733,318

Total homebuilding

1,849,826 1,503,803

Financial services

203,589 168,671

Corporate and unallocated

552,159 820,466

Total assets

$ 2,605,574 $ 2,492,940




October 31,

(In thousands)

2024

2023

Investments in and advances to unconsolidated joint ventures:

Northeast

$ 79,659 $ 56,758

Southeast

55,344 35,262

West

6,348 4,503

Total homebuilding

141,351 96,523

Corporate and unallocated

1,559 1,363

Total investments in and advances to unconsolidated joint ventures

$ 142,910 $ 97,886

  

Year Ended October 31,

(In thousands)

2024

2023

2022

Homebuilding interest expense:

Northeast

$ 33,459 $ 32,071 $ 31,552

Southeast

21,071 20,055 17,403

West

66,029 65,068 55,056

Total homebuilding

120,559 117,194 104,011

Corporate and unallocated

- 17,707 28,572

Financial services interest expense (income) (1)

125 1 (213 )

Total interest expense, net

$ 120,684 $ 134,902 $ 132,370

  

(1)

Financial services interest expense (income) is included in Financial services revenue or expense in the Consolidated Statements of Operations.

  

Year Ended October 31,

(In thousands)

2024

2023

2022

Depreciation:

Northeast

$ 1,241 $ 4,352 $ 1,542

Southeast

392 444 291

West

1,475 1,325 1,298

Total homebuilding

3,108 6,121 3,131

Financial services

251 - 5

Corporate and unallocated

4,371 2,677 2,321

Total depreciation

$ 7,730 $ 8,798 $ 5,457

  

Year Ended October 31,

(In thousands)

2024

2023

2022

Net additions to property and equipment:

Northeast

$ 1,211 $ 1,678 $ 1,848

Southeast

1,172 263 229

West

1,578 1,599 1,841

Total homebuilding

3,961 3,540 3,918

Financial services

621 1,040 28

Corporate and unallocated

13,277 14,241 8,646

Total net additions to property and equipment

$ 17,859 $ 18,821 $ 12,592

  

Year Ended October 31,

(In thousands)

2024

2023

2022

Equity in earnings from unconsolidated joint ventures:

Northeast

$ 26,899 $ 27,253 $ 12,674

Southeast

19,459 15,696 16,359

West

5,904 211 -

Total equity in earnings from unconsolidated joint ventures

$ 52,262 $ 43,160 $ 29,033