Business Segments

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Business Segments

The Company’s chief operating decision makers evaluate the Company’s performance in various ways, including: (1) the results of our individual homebuilding operating segments and the results of our financial services operations; (2) the results of our homebuilding reportable segments; and (3) our consolidated financial results.

In accordance with ASC 280, Segment Reporting (“ASC 280”), we have identified each homebuilding division as an operating segment and have elected to aggregate our operating segments into separate reportable segments as they share similar aggregation characteristics prescribed in ASC 280 in the following regards: (1) long-term economic characteristics; (2) historical and expected future long-term gross margin percentages; (3) housing products, production processes and methods of distribution; and (4) geographical proximity.

The homebuilding operating segments that comprise each of our reportable segments are as follows:

Northern	Southern
Chicago, Illinois	Orlando, Florida
Cincinnati, Ohio	Sarasota, Florida
Columbus, Ohio	Tampa, Florida
Indianapolis, Indiana	Austin, Texas
Minneapolis/St. Paul, Minnesota	Dallas/Fort Worth, Texas
Detroit, Michigan	Houston, Texas
	San Antonio, Texas
	Charlotte, North Carolina
	Raleigh, North Carolina

The following table shows, by segment, revenue, operating income and interest expense for the three and nine months ended September 30, 2020 and 2019, as well as the Company’s income before income taxes for such periods:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2020		2019			2020		2019
Revenue:
Northern homebuilding	$	350,591	$	270,063		$	890,201	$	723,295
Southern homebuilding	468,384		369,828			1,188,056		995,305
Financial services (a)	28,946		13,454			61,461		39,540
Total revenue	$	847,921	$	653,345		$	2,139,718	$	1,758,140
Operating income:
Northern homebuilding	$	38,365	$	29,587	(b)	$	91,487	$	70,559	(b)
Southern homebuilding	55,861		32,500			129,037		76,308
Financial services (a)	19,887		6,609			37,706		19,943
Less: Corporate selling, general and administrative expense	(18,017)		(14,047)			(41,891)		(35,556)
Total operating income	$	96,096	$	54,649	(b)	$	216,339	$	131,254	(b)
Interest expense:
Northern homebuilding	$	122	$	1,505		$	2,636	$	5,360
Southern homebuilding	409		2,146			3,759		8,602
Financial services (a)	708		986			2,059		2,664
Total interest expense	$	1,239	$	4,637		$	8,454	$	16,626
Equity in income from joint venture arrangements	(252)		(52)			(307)		(118)
Income before income taxes	$	95,109	$	50,064		$	208,192	$	114,746

(a)Our financial services operational results should be viewed in connection with our homebuilding business as its operations originate loans and provide title services primarily for our homebuying customers, with the exception of an immaterial amount of mortgage refinancing.

(b)Includes $0.1 million of acquisition-related charges taken during the three months ended September 30, 2019 and $0.6 million of acquisition-related charges taken during the nine months ended September 30, 2019 as a result of our acquisition of Pinnacle Homes in Detroit, Michigan on March 1, 2018.

The following tables show total assets by segment at September 30, 2020 and December 31, 2019:

	September 30, 2020
(In thousands)	Northern		Southern			Corporate, Financial Services and Unallocated			Total
Deposits on real estate under option or contract	$	4,173	$	33,191		$	—		$	37,364
Inventory (a)	832,855		973,190			—			1,806,045
Investments in joint venture arrangements	1,324		32,714			—			34,038
Other assets	39,462		64,660		(b)	438,986		(c)	543,108
Total assets	$	877,814	$	1,103,755		$	438,986		$	2,420,555

	December 31, 2019
(In thousands)	Northern		Southern			Corporate, Financial Services and Unallocated		Total
Deposits on real estate under option or contract	$	3,655	$	24,877		$	—	$	28,532
Inventory (a)	783,972		957,003			—		1,740,975
Investments in joint venture arrangements	1,672		36,213			—		37,885
Other assets	21,564		52,662		(b)	223,976		298,202
Total assets	$	810,863	$	1,070,755		$	223,976	$	2,105,594

(a)Inventory includes single-family lots, land and land development costs; land held for sale; homes under construction; model homes and furnishings; community development district infrastructure; and consolidated inventory not owned.

(b)Includes development reimbursements from local municipalities.

(c)Includes a $34.2 million increase in operating lease right-of-use assets primarily due to the commencement of a ten-year renewable lease on June 29, 2020 for the Company’s new corporate headquarters.