SEC Info - Nobility Homes Inc. - ‘10-Q’ for 8/6/22

Nobility Homes Inc. – ‘10-Q’ for 8/6/22

Nobility Homes Inc. – ‘10-Q’ for 8/6/22

On: Monday, 9/19/22, at 1:58pm ET · For: 8/6/22 · Accession #: 1193125-22-247002 · File #: 0-06506

Previous ‘10-Q’: ‘10-Q’ on 6/21/22 for 5/7/22 · Next: ‘10-Q’ on 3/20/23 for 2/4/23 · Latest: ‘10-Q’ on 9/19/23 for 8/5/23

Quarterly Report — Form 10-Q

Filing Table of Contents

‘10-Q’ — Quarterly Report

Document Table of Contents

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

On: Monday, 9/19/22, at 1:58pm ET · For: 8/6/22 · Accession #: 1193125-22-247002 · File #: 0-06506

Previous ‘10-Q’: ‘10-Q’ on 6/21/22 for 5/7/22 · Next: ‘10-Q’ on 3/20/23 for 2/4/23 · Latest: ‘10-Q’ on 9/19/23 for 8/5/23

Quarterly Report — Form 10-QFiling Table of Contents

‘10-Q’ — Quarterly ReportDocument Table of Contents

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly Report — Form 10-Q

Filing Table of Contents

‘10-Q’ — Quarterly Report

Document Table of Contents

Page	(sequential)		(alphabetic)	↑Top
		Alternative Formats (Word, et al.) Condensed Consolidated Balance Sheets as of August 6, 2022 (Unaudited) and November 6, 2021 Condensed Consolidated Statements of Cash Flows for the nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited) Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited) Condensed Consolidated Statements of Income for the three and nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited) Controls and Procedures Exhibits Management's Discussion and Analysis of Financial Condition and Results of Operations Notes to Condensed Consolidated Financial Statements (Unaudited) Other Information Signatures Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds
1	1st Page – Filing Submission
"	Table of Contents
"	Condensed Consolidated Balance Sheets as of August 6, 2022 (Unaudited) and November 6, 2021
"	Condensed Consolidated Statements of Income for the three and nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited)
"	Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited)
"	Condensed Consolidated Statements of Cash Flows for the nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited)
"	Notes to Condensed Consolidated Financial Statements (Unaudited)
"	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Controls and Procedures
"	Other Information
"	Unregistered Sales of Equity Securities and Use of Proceeds
"	Exhibits
"	Signatures

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

i 10-Q

Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended i August 6, i 2022 /

Commission File number

i 000-06506

i NOBILITY HOMES, INC.

(Exact name of registrant as specified in its charter)


i Florida (State or other jurisdiction of incorporation or organization)		i 59-1166102 (I.R.S. Employer Identification No.)


i 3741 S.W. 7th Street i Ocala, i Florida (Address of principal executive offices)		i 34474 (Zip Code)

(

i 352

) i

732-5157

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. i Yes ☒ ; No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). i Yes ☒ ; No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐.

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ ; No i ☒.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.


Title of Class		Shares Outstanding on September 19 , 2022
i Common Stock		i 3,370,912

NOBILITY HOMES, INC.

Condensed Consolidated Balance Sheets


	August 6, 2022 (Unaudited)			November 6, 2021
Assets
Current assets:
Cash and cash equivalents	$	i 20,437,309		$	i 36,126,059
Certificates of deposit		i 1,946,429			i 2,093,015
Short-term investments		i 541,132			i 621,928
Accounts receivable - trade		i 775,596			i 680,228
Note receivable		i 23,905			i 32,825
Mortgage notes receivable		i 15,566			i 22,589
Inventories		i 20,385,622			i 10,394,288
Pre-owned homes, net		i 662,453			i 542,081
Prepaid expenses and other current assets		i 2,314,540			i 1,821,267

Total current assets		i 47,102,552			i 52,334,280
Property, plant and equipment, net		i 7,569,386			i 6,847,780
Pre-owned homes, net		i —			i 755,394
Note receivable, less current portion		i 22,243			i 38,895
Mortgage notes receivable, less current portion		i 132,184			i 222,459
Mobile home park note receivable		i 201,464			i 72,731
Other investments		i 1,829,146			i 1,788,436
Operating lease right of use assets		i —			i 1,597
Cash surrender value of life insurance		i 4,095,216			i 3,966,939
Other assets		i 156,287			i 156,287

Total assets	$	i 61,108,478		$	i 66,184,798

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	i 1,329,275		$	i 939,964
Accrued compensation		i 832,632			i 555,222
Accrued expenses and other current liabilities		i 1,571,351			i 1,513,967
Income taxes payable		i 156,918			i 89,083
Operating lease obligation		i —			i 1,597
Customer deposits		i 11,984,065			i 13,671,092

Total current liabilities		i 15,874,241			i 16,770,925
Deferred income taxes		i 65,496			i 99,568

Total liabilities		i 15,939,737			i 16,870,493

Commitments and contingencies		i			i
Stockholders’ equity:		i			i
Preferred stock, $.10 par value, i i 500,000 / shares authorized; i i i i none / / / issued and outstanding		i —			i —
Common stock, $.10 par value, i i 10,000,000 / shares authorized; i i 5,364,907 / shares issued; i 3,370,912 and i 3,532,100 shares outstanding, respectively		i 536,491			i 536,491
Additional paid in capital		i 10,828,305			i 10,766,253
Retained earnings		i 60,708,402			i 59,742,759
Less treasury stock at cost, i 1,993,995 and i 1,832,807 shares, respectively		( i 26,904,457	)		( i 21,731,198	)

Total stockholders’ equity		i 45,168,741			i 49,314,305

Total liabilities and stockholders’ equity	$	i 61,108,478		$	i 66,184,798

The accompanying notes are an integral part of these condensed consolidated financial statements

Table of Contents

NOBILITY HOMES, INC.

Condensed Consolidated Statements of Income

(Unaudited)

Three Months Ended

Nine Months Ended

Net sales

i 13,846,698

i 11,778,120

i 35,300,014

i 35,592,531

Cost of sales

( i 9,948,638

)

( i 9,265,376

)

( i 25,651,808

)

( i 26,969,655

)

Gross profit

i 3,898,060

i 2,512,744

i 9,648,206

i 8,622,876

Selling, general and administrative expenses

( i 1,653,200

)

( i 1,320,456

)

( i 4,448,349

)

( i 4,144,350

)

Operating income

i 2,244,860

i 1,192,288

i 5,199,857

i 4,478,526

Other income (loss):

Interest income

i 62,449

i 62,491

i 176,706

i 145,621

Undistributed earnings in joint venture - Majestic 21

i 15,488

i 20,202

i 40,710

i 45,959

Proceeds received under escrow arrangement

i 52,140

i 75,156

i 285,639

i 121,024

(Decrease) increase in fair value of equity investment

( i 57,022

)

( i 449

)

( i 80,796

)

i 203,310

Gain on disposal of property, plant and equipment

i —

i 88,936

i —

Miscellaneous

i 161,157

i 48,169

i 187,065

i 73,434

Total other income

i 234,212

i 205,569

i 698,260

i 589,348

Income before provision for income taxes

i 2,479,072

i 1,397,857

i 5,898,117

i 5,067,874

Income tax expense

( i 594,313

)

( i 347,111

)

( i 1,399,498

)

( i 1,226,425

)

Net income

i 1,884,759

i 1,050,746

i 4,498,619

i 3,841,449

Weighted average number of shares outstanding:

Basic

i 3,370,912

i 3,599,133

i 3,460,074

i 3,621,084

Diluted

i 3,376,711

i 3,613,187

i 3,469,769

i 3,630,216

Net income per share:

Basic

i 0.56

i 0.29

i 1.30

i 1.06

Diluted

i 0.56

i 0.29

i 1.30

i 1.06

The accompanying notes are an integral part of these condensed consolidated financial statements

Table of Contents

NOBILITY HOMES, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended August 6, 2022 and July 31, 2021

(Unaudited)

Common
Stock

Additional

Paid-in-Capital

Retained
Earnings

Treasury
Stock

Total

Balance at November 6, 2021

i 3,532,100

i 536,491

i 10,766,253

i 59,742,759

( i 21,731,198

)

i 49,314,305

Stock-based compensation

i 180

—

i 33,218

—

i 2,135

i 35,353

Exercise of employee stock options

i 966

—

( i 17,452

)

—

i 17,452

—

Treasury stock purchase

( i 270

)

—

( i 9,197

)

( i 9,197

)

Net income

—

i 1,157,034

—

i 1,157,034

Balance at February 5, 2022

i 3,532,976

i 536,491

i 10,782,019

i 60,899,793

( i 21,720,808

)

i 50,497,495

Cash dividend

—

( i 3,532,976

)

—

( i 3,532,976

)

Purchase of treasury stock

( i 162,300

)

—

( i 5,186,070

)

( i 5,186,070

)

Stock-based compensation

i 236

—

i 24,904

—

i 2,421

i 27,325

Net income

—

i 1,456,826

—

i 1,456,826

Balance at May 7, 2022

i 3,370,912

i 536,491

i 10,806,923

i 58,823,643

( i 26,904,457

)

i 43,262,600

Stock-based compensation

i —

—

i 21,382

—

i —

i 21,382

Net income

—

i 1,884,759

—

i 1,884,759

Balance at August 6, 2022

i 3,370,912

i 536,491

i 10,828,305

i 60,708,402

( i 26,904,457

)

i 45,168,741

Common
Stock Shares

Common
Stock

Additional

Paid-in-Capital

Retained
Earnings

Treasury
Stock

Total

Balance at October 31, 2020

i 3,631,196

i 536,491

i 10,694,554

i 57,976,051

( i 18,265,820

)

i 50,941,276

Stock-based compensation

—

i 20,521

—

i 20,521

Exercise of employee stock options

i 1,250

—

i 1,950

—

i 13,175

i 15,125

Net income

—

i 1,065,765

—

i 1,065,765

Balance at January 30, 2021

i 3,632,446

i 536,491

i 10,717,025

i 59,041,816

( i 18,252,645

)

i 52,042,687

Cash dividend

—

( i 3,632,100

)

—

( i 3,632,100

)

Purchase of treasury stock

( i 346

)

—

( i 10,553

)

( i 10,553

)

Stock-based compensation

—

i 16,409

—

i 16,409

Net income

—

i 1,724,938

—

i 1,724,938

Balance at May 1, 2021

i 3,632,100

i 536,491

i 10,733,434

i 57,134,654

( i 18,263,198

)

i 50,141,381

Purchase of treasury stock

( i 100,000

)

—

( i 3,468,000

)

( i 3,468,000

)

Stock-based compensation

—

i 16,409

—

i 16,409

Net income

—

i 1,050,746

—

i 1,050,746

Balance at July 31, 2021

i 3,532,100

i 536,491

i 10,749,843

i 58,185,400

( i 21,731,198

)

i 47,740,536

The accompanying notes are an integral part of these condensed consolidated financial statements

Table of Contents

NOBILITY HOMES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended
	August 6, 2022			July 31, 2021
Cash flows from operating activities:
Net income	$	i 4,498,619		$	i 3,841,449
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		i 129,681			i 142,224
Deferred income taxes		( i 34,072	)		i 90,011
Undistributed earnings in joint venture - Majestic 21		( i 40,710	)		( i 45,959	)
Gain on disposal of property, plant and equipment		( i 88,936	)		—
Decrease (increase) in fair market value of equity investments		i 80,796			( i 203,310	)
Stock-based compensation		i 84,060			i 53,340
Amortization of operating lease right of use assets		i 1,597			i 31,226
Decrease (increase) in:
Accounts receivable - trade		( i 95,368	)		( i 344,629	)
Inventories		( i 9,991,334	)		( i 134,246	)
Pre-owned homes		i 635,022			i 124,292
Prepaid expenses and other current assets		( i 493,273	)		( i 355,490	)
Interest receivable		( i 2,429	)		( i 16,223	)
Income tax receivable		i —			i 24,414
(Decrease) increase in:
Accounts payable		i 389,311			( i 109,865	)
Accrued compensation		i 277,410			( i 228,760	)
Accrued expenses and other current liabilities		i 57,384			i 44,028
Income taxes payable		i 67,835			i —
Customer deposits		( i 1,687,027	)		i 7,251,592

Net cash (used in) provided by operating activities		( i 6,211,434	)		i 10,164,094

Cash flows from investing activities:
Purchase of property, plant and equipment		( i 859,321	)		( i 1,916,288	)
Purchase certificates of deposit		( i 1,944,000	)		—
Proceeds from certificates of deposit		i 2,087,936			i 2,496,000
Proceeds from disposal of property, plant and equipment		i 96,970			—
Collections on interest receivable		i 5,079			i 31,620
Collections on mortgage notes receivable		i 97,298			i 1,692
Collections (issuance of) on equipment and other notes receivable		i 25,572			( i 43,661	)
Issuance of mobile home park note receivable		( i 128,733	)		( i 72,731	)
Increase in cash surrender value of life insurance		( i 128,277	)		( i 133,650	)

Net cash (used in) provided by investing activities		( i 747,476	)		i 362,982

Cash flows from financing activities:
Payment of cash dividend		( i 3,532,976	)		( i 3,632,100	)
Proceeds from exercise of employee stock option		i —			i 15,125
Purchase of treasury stock		( i 5,195,267	)		( i 3,478,553	)
Reduction of operating lease obligation		( i 1,597	)		( i 17,372	)

Net cash used in financing activities		( i 8,729,840	)		( i 7,112,900	)

(Decrease) increase in cash and cash equivalents		( i 15,688,750	)		i 3,414,176
Cash and cash equivalents at beginning of year		i 36,126,059			i 30,305,902

Cash and cash equivalents at end of quarter	$	i 20,437,309		$	i 33,720,078

Supplemental disclosure of cash flows information:
Income taxes paid	$	i 1,365,735		$	i 1,112,000

Noncash exercise of employee stock options	$	( i 9,197	)	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements

Table of Contents

Nobility Homes, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 Basis of Presentation and Accounting Policies

The accompanying unaudited condensed financial statements for the three and nine months ended August 6, 2022 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for Form

10-Q.

Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

The unaudited financial information included in this report includes all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods. The results of operations for the three and nine months ended August 6, 2022 are not necessarily indicative of the results of the full fiscal year.

The condensed consolidated financial statements included in this report should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on

Form 10-K

for the fiscal year ended November 6, 2021.

Note 2 Inventories

New home inventory is carried at the lower of cost or net realizable value. The cost of finished home inventories determined on the specific identification method is removed from inventories and recorded as a component of cost of sales at the time revenue is recognized. In addition, an allocation of depreciation and amortization is included in cost of goods sold. Under the specific identification method, if finished home inventory can be sold for a profit there is no basis to write down the inventory below the lower of cost or net realizable value.

Other

pre-owned

homes are acquired (Repossessions Inventory) as a convenience to the Company’s joint venture partner, 21st Mortgage Corporation. This inventory has been repossessed by 21

Mortgage Corporation or through mortgage foreclosure. The Company acquired this inventory at the amount of the uncollected balance of the financing at the time of the foreclosure/repossessions by 21st Mortgage Corporation. The Company records this inventory at cost determined on the specific identification method. All of the refurbishment costs are paid by 21

Mortgage Corporation. This arrangement assists 21

Mortgage Corporation with liquidation of their repossessed inventory. The timing of these repurchases by the Company is unpredictable as it is based on the repossessions 21

Mortgage Corporation incurs in the portfolio. When the home is sold, the Company retains the cost of the home, an interest factor on the cost of the home and a sales commission, from the sales proceeds. Any additional proceeds are paid to 21

Mortgage. Any shortfall from the proceeds to cover these amounts is paid by 21

Mortgage to the Company. As the Company has no risk of loss on the sale, there is no valuation allowance necessary for this inventory.

New Inventory held at consignment locations by affiliated entities is included in the Company’s inventory on the Company’s condensed consolidated balance sheets. Consigned inventory was $ i 915,683 and $ i 794,766 as of August 6, 2022 and November 6, 2021, respectively.

Pre-owned

homes are also taken as

trade-ins

on new home sales

(Trade-in

Inventory). This inventory is recorded at estimated actual wholesale value, which is generally lower than market value, determined on the specific identification method, plus refurbishment costs incurred to date to bring the inventory to a more saleable state.

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The

Trade-in

Inventory amount is reduced where necessary on a unit specific basis by a valuation reserve, which management believes results in inventory being valued at market.

Other inventory costs are determined on a

first-in,

first-out

basis. A breakdown of the elements of inventory is as follows:


	August 6, 2022			November 6, 2021
Raw materials	$	i 2,314,299		$	i 2,225,532
Work-in-process		i 132,416			i 97,021
Inventory consigned to affiliated entities		i 915,683			i 794,766
Finished homes		i 16,869,501			i 7,140,880
Model home furniture		i 153,723			i 136,089

Inventories	$	i 20,385,622		$	i 10,394,288

Pre-owned homes	$	i 662,453		$	i 1,297,475
Less homes expected to sell in 12 months		( i 662,453	)		( i 542,081	)

Pre-owned homes, long term	$	i —		$	i 755,394

/ i

Note 3 Short-term Investments

The following is a summary of short-term investments (available for sale):

August 6, 2022

Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair Value

Equity securities in a public company

i 167,930

i 373,202

i —

i 541,132

November 6, 2021

Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair Value

Equity securities in a public company

i 167,930

i 453,998

i —

i 621,928

The fair values were estimated based on quoted market prices in active markets at each respective period end.

/ i

Note 4 Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses approximates fair value because of the short maturity of those instruments.

The Company accounts for the fair value of financial investments in accordance with FASB Accounting Standards Codification (ASC) No. 820 “Fair Value Measurements” (ASC 820).

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ASC 820 defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability (i.e. exit price) in an orderly transaction between market participants at the measurement date. ASC 820 requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e. inputs) used in the valuation. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The ASC 820 fair value hierarchy is defined as follows:

•

Level 1 - Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

•

Level 2 - Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

•

Level 3 - Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

The following tables represent the Company’s financial assets and liabilities which are carried at fair value.

August 6, 2022

Level 1

Level 2

Level 3

Equity securities in a public company

i 541,132

i —

November 6, 2021

Level 1

Level 2

Level 3

Equity securities in a public company

i 621,928

i —

/ i

Note 5 Net Income per Share

These financial statements include “basic” and “diluted” net income per share information for all periods presented. The basic net income per share is calculated by dividing net income by the weighted-average number of shares outstanding. The diluted net income per share is calculated by dividing net income by the weighted-average number of shares outstanding, adjusted for dilutive common shares.

Note 6 Revenues by Products and Service

The Company operates in one business segment, which is manufactured housing and ancillary services.

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Revenues by net sales from manufactured housing,

pre-owned

homes and insurance agent commissions are as follows:

Three Months Ended

Nine Months Ended

Manufactured housing

Homes sold through Company owned sales centers

i 12,724,766

i 10,128,706

i 31,407,700

i 30,033,265

Homes sold to independent dealers

i 539,350

i 833,904

i 1,472,061

i 3,661,753

Homes sold through manufactured home parks

i 249,760

i 458,955

i 1,240,110

i 1,108,600

i 13,513,876

i 11,421,565

i 34,119,871

i 34,803,618

Pre-owned

homes

i 254,911

i 288,261

i 957,745

i 572,005

Insurance agent commissions

i 77,911

i 68,294

i 222,398

i 216,908

Total net sales

i 13,846,698

i 11,778,120

i 35,300,014

i 35,592,531

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Total net sales in third quarter of 2022 were up 18% to $13,846,698 compared to $11,778,120 in third quarter of 2021. Total net sales for the first nine months of 2022 was $35,300,014 compared to $35,592,531 for the first nine months of 2021. The Company reported net income of $1,884,759 in third quarter of 2022, compared to a net income of $1,050,746 in third quarter 2021. Net income for the first nine months of 2022 was $4,498,619 compared to $3,841,449 for the first nine months of 2021. According to the Florida Manufactured Housing Association, shipments for the industry in Florida for the period from November 2021 through July 2022 were up approximately 22% from the same period last year. Although net sales increased during the three months ended August 6, 2022 as compared to the same period last year, we continued to experience the negative impact of limitations being placed on certain key production materials from suppliers, the delay or lack of key components from vendors as well as back orders, delayed shipments, price increases and labor shortages. These supply chain issues have caused delays in completion of the homes at the manufacturing facility and the set up process of retail homes in the field, resulting in decreased net sales due to our inability to timely deliver and setup homes to customers. We expect that these challenges will continue for the remainder of fiscal year 2022 and potentially beyond until the industry supply chain normalizes.

The following table summarizes certain key sales statistics and percent of gross profit.


	Three Months Ended						Nine Months Ended
	August 6,			July 31,			August 6,			July 31,
	2022			2021			2022			2021
New homes sold through Company owned sales centers		101			104			265			318
Pre-owned homes sold through Company owned sales centers		4			6			13			12
Homes sold to independent dealers		9			26			24			115
Total new factory built homes produced		101			120			306			448
Average new manufactured home price - retail	$	129,343		$	94,385		$	120,796		$	91,488
Average new manufactured home price - wholesale	$	74,747		$	51,919		$	71,012		$	48,720
As a percent of net sales:
Gross profit from the Company owned retail sales centers		20	%		17	%		19	%		17	%
Gross profit from the manufacturing facilities - including intercompany sales		15	%		11	%		14	%		14	%

Maintaining our strong financial position is vital for future growth and success. Because of very challenging business conditions during economic recessions in our market area, management will continue to evaluate all expenses and react in a manner consistent with maintaining our strong financial position, while exploring opportunities to expand our distribution and manufacturing operations.

Our many years of experience in the Florida market, combined with home buyers’ increased need for more affordable housing, should serve the Company well in the coming years. Management remains convinced that our specific geographic market is one of the best long-term growth areas in the country.

On June 5, 2022 the Company celebrated its 55th anniversary in business specializing in the design and production of quality, affordable manufactured homes. With multiple retail sales centers in Florida for over 31 years and an insurance agency subsidiary, we are the only vertically integrated manufactured home company headquartered in Florida.

Insurance agent commission revenues in the third quarter of 2022 were $77,911 compared to $68,294 in the third quarter of 2021. Total insurance agent commission revenues for the first nine months of 2022 were $222,398 compared to $216,908 for the first nine months of 2021. The Company establishes appropriate reserves for policy cancellations based on numerous factors, including past transaction history with customers, historical experience and other information, which is periodically evaluated and adjusted as deemed necessary. In the opinion of management, no reserve was deemed necessary for policy cancellations at August 6, 2022 and November 6, 2021.

Gross profit as a percentage of net sales was 28% in the third quarter of 2022 compared to 21% for the third quarter of 2021 and was 27% for the first nine months of 2022 compared to 24% for the first nine months of 2021. The gross profit in the third quarter of 2022 was $3,898,060 compared to $2,512,744 in the third quarter of 2021 and was $9,648,206 for the first nine months of 2022 compared to $8,622,876 for the first nine months of 2021. The gross profit is dependent on the sales mix of wholesale and retail homes and number of

pre-owned

homes sold. The increase in gross profit as a percentage of net sales is primarily due to increases in our selling prices to offset the higher inflation costs of building products and labor on each home and increase in the average gross profit at our retail sales centers.

Selling, general and administrative expenses as a percent of net sales was 12% in third quarter of 2022 compared to 11% in the third quarter of 2021 and was 13% for the first nine months of 2022 compared to 12% for the first nine months of 2021. Selling, general and administrative expenses in third quarter of 2022 was $1,653,200 compared to $1,320,456 in the third quarter of 2021 and was $4,448,349 for the first nine months of 2022 compared to $4,144,350 for the first nine months of 2021. The dollar increase in expenses in the three and nine months of 2022 compared to the same period last year were due to employee compensation expenses associated with increased sales at the retail sales centers.

We earned interest income of $62,449 for the third quarter of 2022 compared to $62,491 for the third quarter of 2021. For the first nine months of 2022, interest income was $176,706 compared to $145,621 in the first nine months of 2021. The increase in interest income for the first nine months of 2022 is primarily due to the interest earned from the sale of

pre-owned

(repossessed) inventory acquired from the Company’s joint venture partner, 21st Mortgage Corporation in the first quarter of 2022.

Our earnings from Majestic 21 in the third quarter of 2022 were $15,488 compared to $20,202, for the third quarter of 2021. Earnings from Majestic 21 for the first nine months of 2022 were $40,710 compared to $45,959 for the first nine months of 2021. The earnings from Majestic 21 represent the allocation of profit and losses which are owned 50% by 21st Mortgage Corporation and 50% by the Company. The earnings from the Majestic 21 loan portfolio will continue to decrease due to the amortization, maturity and payoff of the loans.

We received distributions from 21

Mortgage Corporation in the third quarter of 2022 of $52,140 compared to $75,156 in the third quarter of 2021 and $285,639 for the first nine months of 2022 compared to $121,024 for the first nine months of 2021. The distributions are from an escrow arrangement related to a Finance Revenue Sharing Agreement (FRSA) between 21

Mortgage Corporation and the Company. The distributions from the escrow arrangement, relates to certain loans financed by 21

Mortgage Corporation, are recorded as income by the Company when received. The increase in distributions in the first nine months of 2022 is due to the timing of the reserve balances. The earnings from the FRSA loan portfolio will continue to decrease due to the amortization and payoff of the loans.

The Company realized

pre-tax

income in the third quarter of 2022 of $2,479,072 as compared to $1,397,857 in the third quarter of 2021. The

pre-tax

income for the first nine months of 2022 was $5,898,117 as compared to $5,067,874 in first nine months of 2021.

The Company recorded an income tax expense in the amount of $594,313 in the third quarter of 2022 as compared to $347,111 in third quarter 2021. Income tax expense for the nine months of 2022 was $1,399,498 compared to $1,226,425 for the nine months of 2021.

We reported net income of $1,884,759 for the third quarter of 2022 or $0.54 per share, compared to $1,050,746 or $0.29 per share, for the third quarter of 2021. For the first nine months of 2022 net income was $4,498,619 or $1.30 per share compared to $3,841,449 or $1.06 per share, in the first nine months of 2021.

Liquidity and Capital Resources

Cash and cash equivalents were $20,437,309 at August 6, 2022 compared to $36,126,059 at November 6, 2021, with the reduction primarily due to increases in inventory. Certificates of deposit were $1,946,429 at August 6, 2022 compared to $2,093,015 at November 6, 2021. Short-term investments were $541,132 at August 6, 2022 compared to $621,928 at November 6, 2021. Working capital was $31,228,311 at August 6, 2022 as compared to $35,563,355 at November 6, 2021. During the first nine months of 2022, the Company repurchased an aggregate of 162,300 shares of its common stock for an aggregate of $5,186,070. A cash dividend was paid from our cash reserves in April 2022 in the amount of $1.00 per share ($3,532,976). The Company purchased $4.6 million of new homes from two independent home manufactures for the Prestige retail sales centers during third quarter of 2022. We own the entire inventory for our Prestige retail sales centers, which includes new and

pre-owned

homes, and do not incur any third party floor plan financing expenses. As of August 6, 2022 the Company has incurred approximately $834,269 of the estimated construction cost of the approximately $1.1 allocated to build an 11,900 square foot frame shop on the Company’s property in Ocala, Florida.

The Company currently has no line of credit facility and no debt and does not believe that such a facility is currently necessary to its operations. The Company also has approximately $4.1 million of cash surrender value of life insurance which it can be accessed as an additional source of liquidity though the Company has not currently viewed this to be necessary. As of August 6, 2022, the Company continued to report a strong balance sheet which included total assets of approximately $61.1 million which was funded primarily by stockholders’ equity of approximately $45.2 million.

Critical Accounting Policies and Estimates

In Item 7 of our Form

10-K,

under the heading “Critical Accounting Policies and Estimates,” we have provided a discussion of the critical accounting policies and estimates that management believes affect its more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. No significant changes have occurred since that time.

Forward-Looking Statements

Certain statements in this report are unaudited or forward-looking statements within the meaning of the federal securities laws. Although Nobility believes that the amounts and expectations reflected in such forward-looking statements are based on reasonable assumptions, there are risks and uncertainties that may cause actual results to differ materially from expectations. These risks and uncertainties include, but are not limited to, the potential adverse impact on our business caused by the

COVID-19

pandemic or other health pandemics, competitive pricing pressures at both the wholesale and retail levels, inflation, increasing material costs (including forest based products) or availability of materials due to supply chain interruptions (such as current inflation with forest products and supply issues with vinyl siding and PVC piping), changes in market demand, increase in interest rates, availability of financing for retail and wholesale purchasers, consumer confidence, adverse weather conditions that reduce sales at retail centers, the risk of manufacturing plant shutdowns due to storms or other factors, the impact of marketing and cost-management programs, reliance on the Florida economy, impact of

Part II. OTHER INFORMATION AND SIGNATURES

There were no reportable events for Item 1 and Items 3 through 5.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company did not repurchase any shares of its common stock during the third quarter ended August 6, 2022.

The Company’s Board of Directors authorized the repurchase of 200,000 shares in September 2021 and in June 2022 authorized an additional 62,300 shares to be repurchased during fiscal year 2022, in the open market. During the first nine months ended August 6, 2022 management has repurchased an aggregate of 162,300 shares of common stock and is authorized to purchase up to an additional 100,000 shares in fiscal year 2022.

Item 6. Exhibits

31. (a)

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

(b)

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

32. (a)

Written Statement of Chief Executive Officer Pursuant to 18 U.S.C. §1350

(b)

Written Statement of Chief Financial Officer Pursuant to 18 U.S.C. §1350

101.

Interactive data filing formatted in XBRL

104.

Cover Page Interactive Date File (formatted as inline XBRL and contained in Exhibit 101.


						NOBILITY HOMES, INC.

DATE: September 19, 2022						By: /s/ *Terry E. Trexler*
						Terry E. Trexler, Chairman,
						President and Chief Executive Officer

DATE: September 19, 2022						By: /s/ *Thomas W. Trexler*
						Thomas W. Trexler, Executive Vice President,
						and Chief Financial Officer

DATE: September 19, 2022						By: /s/ *Lynn J. Cramer, Jr.*
						Lynn J. Cramer, Jr., Treasurer
						and Principal Accounting Officer

This ‘10-Q’ Filing	Date	Other Filings

Filed on:	9/19/22	8-K
For Period end:	8/6/22
	7/31/22
	6/5/22
	5/7/22	10-Q
	2/5/22	10-Q
	11/6/21	10-K
	7/31/21	10-Q
	5/1/21	10-Q
	1/30/21	10-Q
	10/31/20	10-K
		List all Filings


		Page Number
PART I.	Financial Information

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of August 6, 2022 (Unaudited) and November 6, 2021		2

	Condensed Consolidated Statements of Income for the three and nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited)		3

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited)		4

	Condensed Consolidated Statements of Cash Flows for the nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited)		5

	Notes to Condensed Consolidated Financial Statements (Unaudited)		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		10

Item 4.	Controls and Procedures		14

PART II.	Other Information

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		15

Item 6.	Exhibits		15

Signatures			16

Large accelerated filer

Accelerated filer

i
Non-accelerated
filer

Smaller reporting company

Emerging growth company