Segment Reporting

9 Months Ended

Sep. 30, 2022

Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]

Segment Reporting

Segment Reporting

An operating segment is defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, to evaluate performance and make operating decisions. We have identified our CODM as two key executives—the Executive Chairman and the Chief Executive Officer (“CEO”).

We have identified each homebuilding division as an operating segment. Our homebuilding operating segments have been aggregated into the reportable segments noted below because they are similar in the following regards: (1) economic characteristics; (2) housing products; (3) class of homebuyer; (4) regulatory environments; and (5) methods used to construct and sell homes. Our homebuilding reportable segments are as follows

•West (Arizona, California, Nevada, New Mexico, Oregon, Texas and Washington)

•Mountain (Colorado, Idaho and Utah)

•East (Florida, mid-Atlantic, which includes Maryland, Pennsylvania and Virginia, and Tennessee)

Our financial services business consists of the operations of the following operating segments: (1) HomeAmerican Mortgage Corporation (“HomeAmerican”); (2) Allegiant Insurance Company, Inc., A Risk Retention Group (“Allegiant”); (3) StarAmerican Insurance Ltd. (“StarAmerican”); (4) American Home Insurance Agency, Inc.; and (5) American Home Title and Escrow Company. Due to its contributions to consolidated pretax income, we consider HomeAmerican to be a reportable segment (“mortgage operations”). The remaining operating segments have been aggregated into one reportable segment (“other”) because they do not individually exceed 10 percent of: (1) consolidated revenue; (2) the greater of (a) the combined reported profit of all operating segments that did not report a loss or (b) the positive value of the combined reported loss of all operating segments that reported losses; or (3) consolidated assets.

Corporate is a non-operating segment that develops and implements strategic initiatives and supports our operating divisions by centralizing key administrative functions such as finance, treasury, information technology, insurance, risk management, litigation and human resources. Corporate also provides the necessary administrative functions to support MDC as a publicly traded company. A portion of the expenses incurred by Corporate are allocated to the homebuilding operating segments based on their respective percentages of assets, and to a lesser degree, a portion of Corporate expenses are allocated to the financial services segments. A majority of Corporate’s personnel and resources are primarily dedicated to activities relating to the homebuilding segments, and, therefore, the balance of any unallocated Corporate expenses is included in the homebuilding operations section of our consolidated statements of operations and comprehensive income.

The following table summarizes revenues for our homebuilding and financial services operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(Dollars in thousands)
Homebuilding
West	$	772,356	$	729,777	$	2,267,946	$	2,194,071
Mountain	424,397		379,041		1,196,526		1,104,391
East	210,889		148,883		634,513		368,870
Total homebuilding revenues	$	1,407,642	$	1,257,701	$	4,098,985	$	3,667,332
Financial Services
Mortgage operations	$	16,933	$	31,122	$	56,611	$	89,608
Other	17,168		11,982		42,850		31,837
Total financial services revenues	$	34,101	$	43,104	$	99,461	$	121,445

The following table summarizes pretax income (loss) for our homebuilding and financial services operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(Dollars in thousands)
Homebuilding
West	$	105,680	$	120,284	$	384,714	$	330,390
Mountain	68,106		55,386		197,747		165,296
East	28,245		15,410		94,046		34,091
Corporate	(33,815)		(25,928)		(79,521)		(63,609)
Total homebuilding pretax income	$	168,216	$	165,152	$	596,986	$	466,168
Financial Services
Mortgage operations	$	5,676	$	21,214	$	23,782	$	61,341
Other	11,897		6,326		25,866		15,037
Total financial services pretax income	$	17,573	$	27,540	$	49,648	$	76,378
Total pretax income	$	185,789	$	192,692	$	646,634	$	542,546

The following table summarizes total assets for our homebuilding and financial services operations. The assets in our West, Mountain and East segments consist primarily of inventory while the assets in our Corporate segment primarily include our cash and cash equivalents, marketable securities and deferred tax assets. The assets in our financial services segment consist mostly of cash and cash equivalents, marketable securities and mortgage loans held-for-sale.

	September 30, 2022		December 31, 2021
	(Dollars in thousands)
Homebuilding assets
West	$	2,595,147	$	2,472,378
Mountain	1,164,506		1,072,717
East	494,078		450,675
Corporate	691,130		547,364
Total homebuilding assets	$	4,944,861	$	4,543,134
Financial services assets
Mortgage operations	$	255,469	$	313,373
Other	131,483		107,021
Total financial services assets	$	386,952	$	420,394
Total assets	$	5,331,813	$	4,963,528