Note 15 - Segment Information

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

15.    Segment Information

The Company’s operations are organized into three reportable segments: two homebuilding segments (Arizona and California) and fee building.  In determining the most appropriate reportable segments, we considered similar economic and other characteristics, including product types, average selling prices, gross margins, production processes, suppliers, subcontractors, regulatory environments, land position, and underlying demand and supply in accordance with ASC 280.  Our California homebuilding reportable segment aggregates the Southern California and Northern California homebuilding operating segments

Our homebuilding operations acquire and develop land and construct and sell single-family attached and detached homes and may sell land. Our fee building operations build homes and manage construction and sales related activities on behalf of third-party property owners and our joint ventures.  While our corporate operations conduct no independent construction, development, sales or land acquisition activities, our corporate operations develop and implement strategic initiatives and support our operating segments by centralizing key administrative functions such as accounting, finance and treasury, information technology, insurance and risk management, litigation, marketing and human resources.  A portion of the expenses incurred by corporate are allocated to the fee building segment primarily based on its respective percentage of revenues and to each homebuilding segment based on its respective investment in and advances to unconsolidated joint ventures and real estate inventories balances.  The majority of our corporate personnel and resources are primarily dedicated to activities relating to our homebuilding segment, and, therefore, the balance of any unallocated corporate expenses are allocated within our homebuilding reportable segments.

Corporate unallocated assets consists primarily of cash, prepaid taxes and our deferred tax asset.  For cash management efficiency and yield maximization reasons, cash is held at the corporate level.  All cash is held for the benefit of the subsidiaries that comprise the homebuilding and fee building segments, and all operating cash flow is generated by these subsidiaries.  The majority of our prepaid taxes and deferred tax asset are recorded at the corporate level as The New Home Company Inc. is the tax-filing entity for the subsidiaries structured as pass-through entities.  Taxable income or loss and the resulting payment of income taxes is driven by the activities of the Company's subsidiaries.  All other corporate assets comprise less than 3% of the Company's consolidated total assets.  The assets of our fee building segment primarily consist of cash, restricted cash and contracts and accounts receivable.

The reportable segments follow the same accounting policies as our consolidated financial statements described in Note 1. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented. Financial information relating to reportable segments was as follows:

	Year Ended December 31,
	2020			2019			2018
	(Dollars in thousands)
Homebuilding revenues:
California home sales	$	383,536		$	472,242		$	504,029
California land sales		157			41,664			—
Arizona home sales		42,715			60,110			—
Total homebuilding revenues		426,408			574,016			504,029
Fee building revenues, including management fees		81,003			95,333			163,537
Total revenues	$	507,411		$	669,349		$	667,566
Homebuilding pretax loss:
California	$	(35,609	)	$	(5,724	)	$	(19,594	)
Arizona		(25,267	)		(8,144	)		(5,112	)
Total homebuilding pretax loss		(60,876	)		(13,868	)		(24,706	)
Fee building pretax income, including management fees		1,420			2,052			4,401
Total pretax loss	$	(59,456	)	$	(11,816	)	$	(20,305	)

	December 31,
	2020		2019
	(Dollars in thousands)
Homebuilding assets:
California	$	295,340	$	416,179
Arizona		70,457		82,234
Total homebuilding assets		365,797		498,413
Fee building assets		3,756		11,193
Corporate unallocated assets		126,146		93,583
Total assets	$	495,699	$	603,189