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Note 17 - Operating and Reporting Segments
 3 Months Ended
Jan. 31, 2024
Operating and Reporting Segments  
Operating and Reporting Segments

17.

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 was as follows:


Three Months Ended

January 31,

(In thousands)

2024

2023

Revenues:

Northeast

 $ 191,440 $ 211,462

Southeast

 106,010 73,794

West

 278,457 215,734

Total homebuilding

 575,907 500,990

Financial services

 15,268 12,164

Corporate and unallocated

 3,021 2,212

Total revenues

 $ 594,196 $ 515,366

Income before income taxes:

Northeast

 $ 35,909 $ 28,512

Southeast

 14,875 11,623

West

 20,592 9,889

Total homebuilding

 71,376 50,024

Financial services

 3,797 3,111

Corporate and unallocated (1)

 (42,610 ) (35,088 )

Income before income taxes

 $ 32,563 $ 18,047


(1)

Corporate and unallocated for the three months ended January 31, 2024 included corporate general and administrative expenses of $37.1 million, interest expense of $3.7 million (a component of Other interest in our Condensed Consolidated Statements of Operations), $3.2 million of other net expenses and $1.4 of gain on extinguishment of debt. 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, and $3.0 million of other net expenses.


January 31,

October 31,

(In thousands)

2024

2023

Assets:

Northeast

 $ 524,029 $ 483,784

Southeast

 333,582 286,701

West

 773,215 733,318

Total homebuilding

 1,630,826 1,503,803

Financial services

 149,633 168,671

Corporate and unallocated

 559,919 820,466

Total assets

 $ 2,340,378 $ 2,492,940