Business Segments

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Business Segments

The application of segment reporting requires significant judgment in determining our operating segments. Operating segments are defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the Company’s chief operating decision makers to evaluate performance, make operating decisions and determine how to allocate resources.  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 because each homebuilding division engages in business activities from which it earns revenue, primarily from the sale and construction of single-family attached and detached homes, acquisition and development of land, and the occasional sale of lots to third parties. Our financial services operations generate revenue primarily from the origination, sale and servicing of mortgage loans and title services primarily for purchasers of the Company’s homes and are included in our financial services reportable segment. Corporate is a non-operating segment that develops and implements strategic initiatives and supports our operating segments by centralizing key administrative functions such as accounting, finance, treasury, information technology, insurance and risk management, legal, marketing and human resources.

In accordance with the aggregation criteria defined in ASC 280, we have determined our reportable segments as follows: Northern homebuilding, Southern homebuilding, and financial services operations.  The homebuilding operating segments included in each reportable segment have been aggregated because they share similar aggregation characteristics as 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. We may, however, be required to reclassify our reportable segments if markets that currently are being aggregated do not continue to share these aggregation characteristics.

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	Fort Myers/Naples, Florida
Minneapolis/St. Paul, Minnesota	Austin, Texas
Detroit, Michigan	Dallas/Fort Worth, Texas
	Houston, Texas
	San Antonio, Texas
	Charlotte, North Carolina
	Raleigh, North Carolina
	Nashville, Tennessee

The following table shows, by segment, revenue, operating income and interest (income) expense for 2022, 2021 and 2020, as well as the Company’s income before income taxes for such periods:

	Year Ended December 31,
(In thousands)	2022		2021		2020
Revenue:
Northern homebuilding	$	1,714,236	$	1,595,746	$	1,256,405
Southern homebuilding	2,330,962		2,048,113		1,702,727
Financial services (a)	86,195		102,028		87,013
Total revenue	$	4,131,393	$	3,745,887	$	3,046,145
Operating income (loss):
Northern homebuilding	$	217,499	$	211,958	$	125,588
Southern homebuilding (b)	451,874		312,661		202,561
Financial services (a)	44,382		62,291		53,395
Less: Corporate selling, general and administrative expense	(76,304)		(68,614)		(62,283)
Total operating income (a) (b) (c)	$	637,451	$	518,296	$	319,261
Interest expense (income):
Northern homebuilding	$	(469)	$	76	$	2,465
Southern homebuilding	(1,447)		(464)		4,292
Financial services (a)	5,122		3,912		2,927
Corporate	(956)		(1,368)		—
Total interest expense	$	2,250	$	2,156	$	9,684
Other income (d)	$	(6)	$	(2,046)	$	(466)
Loss on early extinguishment of debt (e)	—		9,072		—
Income before income taxes	$	635,207	$	509,114	$	310,043
Depreciation and amortization:
Northern homebuilding	$	3,308	$	3,407	$	3,342
Southern homebuilding	2,790		3,644		4,468
Financial services	2,178		2,227		3,034
Corporate	8,898		7,637		6,734
Total depreciation and amortization	$	17,174	$	16,915	$	17,578

(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 a $0.9 million net charge for stucco-related repair costs in certain of our Florida communities (as more fully discussed in Note 8 to our Consolidated Financial Statements) taken during 2020.

(c)For the years ended December 31, 2022 and 2020, total operating income was reduced by $18.4 million and $8.4 million, respectively, related to asset impairment charges taken during the period.

(d)Other income is comprised of the gain on the sale of a non-operating asset during the fourth quarter of 2021 as well as equity in income from joint venture arrangements.

(e)Loss on early extinguishment of debt relates to the early redemption of our 5.625% senior notes due 2025 (the “2025 Senior Notes”) during the third quarter of 2021, consisting of a prepayment premium due to early redemption and a write-off of unamortized debt issuance costs.

The following tables show total assets by segment at December 31, 2022 and 2021:

	December 31, 2022
(In thousands)	Northern		Southern			Corporate, Financial Services and Unallocated		Total
Deposits on real estate under option or contract	$	8,138	$	47,601		$	—	$	55,739
Inventory (a)	1,100,472		1,672,391			—		2,772,863
Investments in joint venture arrangements	—		51,554			—		51,554
Other assets	38,265		103,182		(b)	693,320		834,767
Total assets	$	1,146,875	$	1,874,728		$	693,320	$	3,714,923

	December 31, 2021
(In thousands)	Northern		Southern			Corporate, Financial Services and Unallocated		Total
Deposits on real estate under option or contract	$	4,123	$	48,795		$	—	$	52,918
Inventory (a)	987,258		1,412,258			—		2,399,516
Investments in joint venture arrangements	—		57,121			—		57,121
Other assets	37,527		63,844		(b)	628,927		730,298
Total assets	$	1,028,908	$	1,582,018		$	628,927	$	3,239,853

(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.