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Note 17 - Operating and Reporting Segments
 6 Months Ended
Apr. 30, 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

Six Months Ended

April 30,

April 30,

(In thousands)


2024

2023

2024

2023

Revenues:







Northeast
$ 199,087

$ 212,047
$ 390,527 $ 423,509

Southeast

128,787


101,050
234,797 174,844

West

361,234


374,001
639,691 589,735

Total homebuilding

689,108


687,098
1,265,015 1,188,088

Financial services

17,167


14,203
32,435 26,367

Corporate and unallocated

2,105


2,360
5,126 4,572

Total revenues
$ 708,380

$ 703,661
$ 1,302,576 $ 1,219,027

Income before income taxes:









Northeast
$ 31,730

$ 28,711
$ 67,639 $ 57,223

Southeast

27,067


14,848
41,942 26,471

West

35,597


28,219
56,189 38,108

Total homebuilding

94,394


71,778
165,770 121,802

Financial services

5,144


4,051
8,941 7,162

Corporate and unallocated (1)



(30,146 )

(29,706 ) (72,756 ) (64,794 )

Income before income taxes
$ 69,392

$ 46,123
$ 101,955 $ 64,170


(1)

Corporate and unallocated for the three months ended April 30, 2024, included corporate general and administrative expenses of $32.5 million, interest expense of $1.7 million (a component of Other interest in our Condensed Consolidated Statements of Operations) and $4.1 million of other income. Corporate and unallocated for the six months ended April 30, 2024, included corporate general and administrative expenses of $69.7 million, interest expense of $5.4 million, $0.9 million of other income and $1.4 million of gain on extinguishment of debt. Corporate and unallocated for the three months ended April 30, 2023, included corporate general and administrative expenses of $25.1 million, interest expense of $5.2 million and $0.6 million of other income. Corporate and unallocated for the six months ended April 30, 2023, included corporate general and administrative expenses of $50.6 million, interest expense of $11.8 million and $2.4 million of other expenses.


April 30,

October 31,

(In thousands)

2024

2023

Assets:

Northeast

 $ 580,881 $ 483,784

Southeast

 298,069 286,701

West

 779,012 733,318

Total homebuilding

 1,657,962 1,503,803

Financial services

 142,559 168,671

Corporate and unallocated

 517,125 820,466

Total assets

 $ 2,317,646 $ 2,492,940