Table of Contents
UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM
10-Q

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

For the quarterly period ended May 1,July 31, 2021

Commission File number
000-06506

NOBILITY HOMES, INC.

(Exact name of registrant as specified in its charter)

Florida
 
59-1166102

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

3741 S.W. 7th Street

Ocala, Florida

 
34474
(Address of principal executive offices)
 
(Zip Code)

(352)
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.    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).    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.

Large accelerated filer ☐  Accelerated filer ☐
Non-accelerated
filer		 ☒  Smaller reporting company ☒
   Emerging growth company ☐

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  ☒.

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

Shares Outstanding on
Title of Class

 

Shares Outstanding

on June 15,

September 10, 2021

Common Stock
 3,632,100
3,532,100

Table of Contents

NOBILITY HOMES, INC.

INDEX

      
Page

Number
 
PART I.
  

Financial Information

  
Item 1.
  

Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of May  1, 2021 (Unaudited) and October 31, 2020

2

Condensed Consolidated Statements of Income for the three and six months ended May 1, 2021 (Unaudited) and May 2, 2020 (Unaudited)

   3 
  

Condensed Consolidated Balance Sheets as of July 31, 2021 (Unaudited) and October 31, 2020

3
Condensed Consolidated Statements of Changes in Stockholders’ EquityIncome for the three and sixnine months ended May 1,July 31, 2021 (Unaudited) and May 2,August 1, 2020 (Unaudited)

   4 
  

Condensed Consolidated Statements of Cash FlowsChanges in Stockholders’ Equity for the sixthree and nine months ended May 1,July 31, 2021 (Unaudited) and May 2,August 1, 2020 (Unaudited)

   5 
  

Notes to Condensed Consolidated Financial Statements of Cash Flows for the nine months ended July 31, 2021 (Unaudited) and August 1, 2020 (Unaudited)

   6 
Item 2.  

Notes to Condensed Consolidated Financial Statements (Unaudited)

7
    Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

   1112 
Item 4.
  

Controls and Procedures

   1416 
PART II.
  

Other Information

  
Item 2.
  

Unregistered Sales of Equity Securities and Use of Proceeds

   1517 
Item 6.
  

Exhibits

   1517 
Signatures
   1618 

1

2

Table of Contents

NOBILITY HOMES, INC.

Condensed Consolidated Balance Sheets

   May 1, 2021  October 31, 2020 
   (Unaudited)    

Assets

   

Current assets:

   

Cash and cash equivalents

  $33,227,818  $30,305,902 

Certificates of Deposit

   2,088,805   4,602,307 

Short-term investments

   562,719   358,960 

Accounts receivable—trade

   1,817,588   790,046 

Note receivable

   29,110   35,997 

Mortgage notes receivable

   23,752   20,162 

Income taxes receivable

   —     105,676 

Inventories

   10,179,102   9,294,677 

Pre-owned homes, net

   552,375   441,937 

Prepaid expenses and other current assets

   1,637,504   1,014,849 
  

 

 

  

 

 

 

Total current assets

   50,118,773   46,970,513 

Property, plant and equipment, net

   6,918,792   5,142,714 

Pre-owned homes, net

   1,036,596   1,077,240 

Note receivable, less current portion

   —     6,573 

Mortgage notes receivable, less current portion

   222,556   227,509 

Mobile home park note receivable

   2,481   —   

Other investments

   1,755,121   1,729,364 

Deferred income taxes

   —     3,598 

Operating lease right of use assets

   694,629   715,368 

Cash surrender value of life insurance

   3,885,002   3,795,902 

Other assets

   156,287   156,287 
  

 

 

  

 

 

 

Total assets

  $64,790,237  $59,825,068 
  

 

 

  

 

 

 

Liabilities and Stockholders’ Equity

   

Current liabilities:

   

Accounts payable

  $1,285,506  $928,095 

Accrued compensation

   706,736   670,520 

Accrued expenses and other current liabilities

   1,484,542   1,383,833 

Income taxes payable

   219,456   —   

Operating lease obligation

   30,078   24,192 

Customer deposits

   10,145,824   5,098,633 
  

 

 

  

 

 

 

Total current liabilities

   13,872,142   8,105,273 
  

 

 

  

 

 

 

Deferred income taxes

   15,584   —   

Operating lease obligation, less current portion

   761,130   778,519 
  

 

 

  

 

 

 

Total liabilities

   14,648,856   8,883,792 
  

 

 

  

 

 

 

Commitments and contingencies

   

Stockholders’ equity:

   

Preferred stock, $.10 par value, 500,000 shares authorized; none issued and outstanding

   —     —   

Common stock, $.10 par value, 10,000,000 shares authorized; 5,364,907 shares issued; 3,632,100 and 3,631,196 outstanding, respectively

   536,491   536,491 

Additional paid in capital

   10,733,434   10,694,554 

Retained earnings

   57,134,654   57,976,051 

Less treasury stock at cost, 1,732,807 shares in 2021 and 1,733,711 shares in 2020

   (18,263,198)   (18,265,820) 
  

 

 

  

 

 

 

Total stockholders’ equity

   50,141,381   50,941,276 
  

 

 

  

 

 

 

Total liabilities and stockholders’ equity

  $64,790,237  $59,825,068 
  

 

 

  

 

 

 

   July 31, 2021  October 31, 2020 
   (Unaudited)    
Assets
         
Current assets:
         
Cash and cash equivalents
  $33,720,078  $30,305,902 
Certificates of
deposit
   2,090,910   4,602,307 
Short-term investments
   562,270   358,960 
Accounts receivable—trade
   1,134,675   790,046 
Note receivable
   41,636   35,997 
Mortgage notes receivable
   22,217   20,162 
Income taxes receivable
   81,262   105,676 
Inventories
   9,428,923   9,294,677 
Pre-owned
homes, net
   678,303   441,937 
Prepaid expenses and other current assets
   1,370,339   1,014,849 
   
 
 
  
 
 
 
Total current assets
   49,130,613   46,970,513 
Property, plant and equipment, net
   6,916,778   5,142,714 
Pre-owned
homes, net
   716,582   1,077,240 
Note receivable, less current portion
   44,595   6,573 
Mortgage notes receivable, less current portion
   223,762   227,509 
Mobile home park note receivable
   72,731   —   
Other investments
   1,775,323   1,729,364 
Deferred income taxes
   0   3,598 
Operating lease right of use assets
   684,142   715,368 
Cash surrender value of life insurance
   3,929,552   3,795,902 
Other assets
   156,287   156,287 
   
 
 
  
 
 
 
Total assets
  $63,650,365  $59,825,068 
   
 
 
  
 
 
 
Liabilities and Stockholders’ Equity
         
Current liabilities:
         
Accounts payable
  $818,230  $928,095 
Accrued compensation
   441,760   670,520 
Accrued expenses and other current liabilities
   1,427,862   1,383,833 
Operating lease obligation
   33,039   24,192 
Customer deposits
   12,350,225   5,098,633 
   
 
 
  
 
 
 
Total current liabilities
   15,071,116   8,105,273 
   
 
 
  
 
 
 
Deferred income taxes
   86,413   —   
Operating lease obligation, less current portion
   752,300   778,519 
   
 
 
  
 
 
 
Total liabilities
   15,909,829   8,883,792 
   
 
 
  
 
 
 
Commitments and contingencies
   0    0  
Stockholders’ equity:
         
Preferred stock, $.10 par value, 500,000 shares authorized; NaN issued and outstanding
   0—   0—   
Common stock, $.10 par value, 10,000,000 shares authorized; 5,364,907 shares issued; 3,532,100 and
3,631,196 outstanding, respectively
   536,491   536,491 
Additional paid in capital
   10,749,843   10,694,554 
Retained earnings
   58,185,400   57,976,051 
Less treasury stock at cost, 1,832,807 shares in 2021 and 1,733,711 shares in 2020
   (21,731,198)   (18,265,820) 
   
 
 
  
 
 
 
Total stockholders’ equity
   47,740,536   50,941,276 
   
 
 
  
 
 
 
Total liabilities and stockholders’ equity
  $63,650,365  $59,825,068 
   
 
 
  
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements

2

3

Table of Contents

NOBILITY HOMES, INC.

Condensed Consolidated Statements of Income

(Unaudited)

   Three Months Ended  Six Months Ended 
   May 1,  May 2,  May 1,  May 2, 
   2021  2020  2021  2020 

Net sales

  $14,742,900  $10,202,502  $23,814,411  $19,646,354 

Cost of sales

   (11,130,215)   (7,065,007)   (17,704,279)   (13,619,010) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Gross profit

   3,612,685   3,137,495   6,110,132   6,027,344 

Selling, general and administrative expenses

   (1,550,513)   (1,222,628)   (2,823,894)   (2,478,772) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Operating income

   2,062,172   1,914,867   3,286,238   3,548,572 
  

 

 

  

 

 

  

 

 

  

 

 

 

Other income (loss):

     

Interest income

   52,474   84,273   83,130   186,156 

Undistributed earnings in joint venture - Majestic 21

   12,049   20,398   25,757   40,270 

Proceeds received under escrow arrangement

   —     189,285   45,868   272,394 

Increase (decrease) in fair value of equity investment

   123,803   (176,733)   203,759   (180,526) 

Miscellaneous

   17,945   8,649   25,265   19,594 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total other income

   206,271   125,872   383,779   337,888 
  

 

 

  

 

 

  

 

 

  

 

 

 

Income before provision for income taxes

   2,268,443   2,040,739   3,670,017   3,886,460 

Income tax expense

   (543,505)   (490,735)   (879,314)   (936,315) 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net income

  $1,724,938  $1,550,004  $2,790,703  $2,950,145 
  

 

 

  

 

 

  

 

 

  

 

 

 

Weighted average number of shares outstanding:

     

Basic

   3,632,195   3,632,614   3,632,060   3,646,000 

Diluted

   3,642,501   3,633,933   3,638,140   3,647,329 

Net income per share:

     

Basic

  $0.47  $0.43  $0.77  $0.81 

Diluted

  $0.47  $0.43  $0.77  $0.81 

   Three Months Ended  Nine Months Ended 
   July 31,  August 1,  July 31,  August 1, 
   2021  2020  2021  2020 
Net sales
  $11,778,120  $8,800,410  $35,592,531  $28,446,764 
Cost of sales
   (9,265,376)   (6,361,500)   (26,969,655)   (19,980,510) 
   
 
 
  
 
 
  
 
 
  
 
 
 
Gross profit
   2,512,744   2,438,910   8,622,876   8,466,254 
Selling, general and administrative expenses
   (1,320,456)   (1,107,850)   (4,144,350)   (3,586,622) 
   
 
 
  
 
 
  
 
 
  
 
 
 
Operating income
   1,192,288   1,331,060   4,478,526   4,879,632 
   
 
 
  
 
 
  
 
 
  
 
 
 
Other income (loss):
                 
Interest income
   62,491   53,209   145,621   239,365 
Undistributed earnings in joint venture - Majestic 21
   20,202   20,855   45,959   61,125 
Proceeds received under escrow arrangement
   75,156   64,053   121,024   336,447 
(Decrease) increase market value of equity investment
   (449)   21,475   203,310   (159,051) 
Gain on sale of assets
   —   32,041   —   32,041 
Miscellaneous
   48,169   12,910   73,434   32,504 
   
 
 
  
 
 
  
 
 
  
 
 
 
Total other income
   205,569   204,543   589,348   542,431 
   
 
 
  
 
 
  
 
 
  
 
 
 
Income before provision for income taxes
   1,397,857   1,535,603   5,067,874   5,422,063 
Income tax expense
   (347,111)   (375,465)   (1,226,425)   (1,311,780) 
   
 
 
  
 
 
  
 
 
  
 
 
 
Net income
  $1,050,746  $1,160,138  $3,841,449  $4,110,283 
   
 
 
  
 
 
  
 
 
  
 
 
 
Weighted average number of shares outstanding:
                 
Basic
   3,599,133   3,631,089   3,621,084   3,641,048 
Diluted
   3,613,187   3,632,420   3,630,216   3,642,397 
Net income per share:
                 
Basic
  $0.29  $0.32  $1.06  $1.13 
Diluted
  $0.29  $0.32  $1.06  $1.13 
The accompanying notes are an integral part of these condensed consolidated financial statements

3

4

Table of Contents

NOBILITY HOMES, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the sixnine months ended May 1,July 31, 2021 and May 2,August 1, 2020

(Unaudited)

              Accumulated       
              Other       
  Common  Common  Additional  Retained  Comprehensive  Treasury    
  Stock Shares  Stock  Paid-in-Capital  Earnings  Income  Stock  Total 

Balance at October 31, 2020

  3,631,196  $536,491  $10,694,554  $57,976,051  $—    $(18,265,820)  $50,941,276 

Stock-based compensation

  —     —     20,521   —     —     —     20,521 

Exercise of employee stock options

  1,250   —     1,950   —     —     13,175   15,125 

Net income

  —     —     —     1,065,765   —     —     1,065,765 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at January 30, 2021

  3,632,446   536,491   10,717,025   59,041,816   —     (18,252,645)   52,042,687 

Cash dividend

  —     —     —     (3,632,100)   —     —     (3,632,100) 

Purchase of treasury stock

  (346)   —     —     —     —     (10,553)   (10,553) 

Stock-based compensation

  —     —     16,409   —     —     —     16,409 

Net income

  —     —     —     1,724,938   —     —     1,724,938 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at May 1, 2021

  3,632,100  $536,491  $10,733,434  $57,134,654  $—    $(18,263,198)  $50,141,381 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at November 2, 2019

  3,664,070  $536,491  $10,687,662  $55,298,750  $389,164  $(17,445,752)  $49,466,315 

Adoption of ASU 2016-1

  —     —     —     389,164   (389,164)   —     —   

Adoption of ASU 2016-1

  —     —     —     (64,591)   —     —     (64,591) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at November 2, 2019
as adjusted

  3,664,070   536,491   10,687,662   55,623,323   —     (17,445,752)   49,401,724 

Purchase of treasury stock

  (14,400)   —     —     —     —     (345,600)   (345,600) 

Stock-based compensation

  —     —     906   —     —     —     906 

Net income

  —     —     —     1,400,141   —     —     1,400,141 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at February 1, 2020

  3,649,670   536,491   10,688,568   57,023,464   —     (17,791,352)   50,457,171 

Cash dividend

  —     —     —     (3,630,970)   —     —     (3,630,970) 

Purchase of treasury stock

  (18,700)   —     —     —     —     (476,850)   (476,850) 

Stock-based compensation

  —     —     906   —     —     —     906 

Net income

  —     —     —     1,550,004   —     —     1,550,005 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at May 2, 2020

  3,630,970  $536,491  $10,689,474  $54,942,498  $—    $(18,268,202)  $47,900,261 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

                 Accumulated       
                 Other       
   Common  Common   Additional   Retained  Comprehensive  Treasury    
   Stock Shares  Stock   
Paid-in-Capital
   Earnings  Income  Stock  Total 
Balance at October 31, 2020
   3,631,196  $536,491   $10,694,554   $57,976,051  $—    $(18,265,820)  $50,941,276 
Stock-based compensation
   —     —      20,521    —     —     —     20,521 
Exercise of employee stock
                               
options
   1,250   —      1,950    —     —     13,175   15,125 
Net income
   —     —      —      1,065,765   —     —     1,065,765 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Balance at January 30, 2021
   3,632,446   536,491    10,717,025    59,041,816   —     (18,252,645)   52,042,687 
Cash dividend
   —     —      —      (3,632,100)   —     —     (3,632,100) 
Purchase of treasury stock
   (346)   —      —      —     —     (10,553)   (10,553) 
Stock-based compensation
   —     —      16,409    —     —     —     16,409 
Net income
   —     —      —      1,724,938   —     —     1,724,938 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Balance at May 1, 2021
   3,632,100   536,491    10,733,434    57,134,654   —     (18,263,198)   50,141,381 
Purchase of treasury stock
   (100,000)   —      —      —     —     (3,468,000)   (3,468,000) 
Stock-based compensation
   —     —      16,409    —     —     —     16,409 
Net income
   —     —      —      1,050,746   —     —     1,050,746 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Balance at July 31, 2021
   3,532,100  $536,491   $10,749,843   $58,185,400  $—    $(21,731,198)  $47,740,536 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Balance at November 2, 2019
   3,664,070  $536,491   $10,687,662   $55,298,750  $389,164  $(17,445,752)  $49,466,315 
Adoption of ASU
2016-01
   —     —      —      389,164   (389,164)   —     —   
Adoption of ASU
2016-02
   —     —      —      (64,591)   —     —     (64,591) 
Balance at November 2, 2019
   —     —      —      —     —     —     —   
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
 
as adjusted
   3,664,070   536,491    10,687,662    55,623,323   —     (17,445,752)   49,401,724 
Purchase of treasury stock
   (14,400)   —      —      —     —     (345,600)   (345,600) 
Stock-based compensation
   —     —      906    —     —     —     906 
Net income
   —     —      —      1,400,141   —     —     1,400,141 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Balance at February 1, 2020
   3,649,670   536,491    10,688,568    57,023,464   —     (17,791,352)   50,457,171 
Cash dividend
   —     —      —      (3,630,970)   —     —     (3,630,970) 
Purchase of treasury stock
   (18,700)   —      —      —     —     (476,850)   (476,850) 
Stock-based compensation
   —     —      906    —     —     —     906 
Net income
   —     —      —      1,550,004   —     —     1,550,004 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Balance at May 4, 2020
   3,630,970   536,491    10,689,474    54,942,498   —     (18,268,202)   47,900,261 
Stock-based compensation
   226   —      4,174    —     —     2,382   6,556 
Net income
   —     —      —      1,160,138   —     —     1,160,138 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Balance at August 1, 2020
   3,631,196  $536,491   $10,693,648   $56,102,636  $—    $(18,265,820)  $49,066,955 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
  
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements

4

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Table of Contents

NOBILITY HOMES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

   Six Months Ended 
   May 1,  May 2, 
   2021  2020 

Cash flows from operating activities:

   

Net income

  $2,790,703  $2,950,145 

Adjustments to reconcile net income to net cash provide by operating activities:

   

Depreciation

   94,815   78,906 

Deferred income taxes

   19,182   33,794 

Undistributed earnings in joint venture—Majestic 21

   (25,757)   (40,270) 

(Increase) Decrease in fair market value of equity investments

   (203,759)   180,526 

Stock-based compensation

   36,930   1,812 

Amortization of operating lease right of use assets

   20,739   17,840 

Decrease (increase) in:

   

Accounts receivable—trade

   (1,027,542)   857,602 

Inventories

   (884,425)   44,142 

Pre-owned homes

   (69,794)   (363,729) 

Prepaid expenses and other current assets

   (622,655)   143,771 

Interest receivable

   (14,118)   (93,420) 

Income tax receivables

   105,676   —   

(Decrease) increase in:

   

Accounts payable

   357,411   (357,779) 

Accrued compensation

   36,216   (226,639) 

Accrued expenses and other current liabilities

   100,709   (688,836) 

Income taxes payable

   219,456   (1,983,950) 

Customer deposits

   5,047,191   (1,373,367) 
  

 

 

  

 

 

 

Net cash provide by (used in) operating activities

   5,980,978   (819,452) 
  

 

 

  

 

 

 

Cash flows from investing activities:

   

Purchase of property, plant and equipment

   (1,870,893)   (248,655) 

Purchase of certificates of deposit

   —     (20,000) 

Proceeds from certicates of deposit

   2,496,000   —   

Collections on interest receivable

   31,620   50,998 

Collections on mortgage notes receivable

   1,363   1,308 

Collections on equipment and other notes receivable

   13,460   33,986 

Issuance of mobile home park note receivable

   (2,481)   —   

Increase in cash surrender value of life insurance

   (89,100)   (96,000) 
  

 

 

  

 

 

 

Net cash provided by (used in) investing activities

   579,969   (278,363) 
  

 

 

  

 

 

 

Cash flows from financing activities:

   

Payment of cash dividend

   (3,632,100)   (3,630,970) 

Proceeds from excerise of employee stock option

   15,125   —   

Purchase of treasury stock

   (10,553)   (822,450) 

Reduction of operating lease obligation

   (11,503)   (6,270) 
  

 

 

  

 

 

 

Net cash used in financing activities

   (3,639,031)   (4,459,690) 
  

 

 

  

 

 

 

Increase (decrease) in cash and cash equivalents

   2,921,916   (5,557,505) 

Cash and cash equivalents at beginning of year

   30,305,902   22,533,965 
  

 

 

  

 

 

 

Cash and cash equivalents at end of period

  $33,227,818  $16,976,460 
  

 

 

  

 

 

 

Supplemental disclosure of cash flows information:

   

Income taxes paid

  $535,000  $2,965,000 
  

 

 

  

 

 

 

   Nine Months Ended 
   July 31,
2021		  August 1,
2020		 
Cash flows from operating activities:
         
Net income
  $3,841,449  $4,110,283 
Adjustments to reconcile net income to net cash provide by operating activities:
         
Depreciation
   142,224   118,179 
Deferred income taxes
   90,011   60,055 
Undistributed earnings in joint venture - Majestic 21
   (45,959)   (61,125) 
Gain on disposal of property, plant and equipment
   —   (32,041) 
(Increase) decrease in fair market value of equity investments
   (203,310)   159,051 
Stock-based compensation
   53,340   8,368 
Amortization of operating lease right of use assets
   31,226   26,862 
Decrease (increase) in:
         
Accounts receivable - trade
   (344,629)   638,480 
Inventories
   (134,246)   (20,842) 
Pre-owned
homes
   124,292   (385,597) 
Prepaid expenses and other current assets
   (355,490)   155,518 
Interest receivable
   (16,223)   (130,097) 
Income tax receivables
   24,414   —   
(Decrease) increase in:
         
Accounts payable
   (109,865)   (457,884) 
Accrued compensation
   (228,760)   (296,735) 
Accrued expenses and other current liabilities
   44,028   (883,146) 
Income taxes payable
   —   (2,016,132) 
Customer deposits
   7,251,592   69,067 
   
 
 
  
 
 
 
Net cash provided by operating activities
   10,164,094   1,062,264 
   
 
 
  
 
 
 
Cash flows from investing activities:
         
Purchase of property, plant and equipment
   (1,916,288)   (270,365) 
Purchase of certificates of deposit
   —   (20,000) 
Proceeds from certificates of deposit
   2,496,000   2,024,000 
Proceeds from disposal of property, plant and equipment
   —   33,139 
Collections on interest receivable
   31,620   87,358 
Collections on mortgage notes receivable
   1,692   1,596 
(Issuance of) collections
 
o
n
 equipment note receivable 
   (43,661)   66,218 
Issuance of mobile home park note receivable
   (72,731)   —   
Increase in cash surrender value of life insurance
   (133,650)   (144,000) 
   
 
 
  
 
 
 
Net cash provided by investing activities
   362,982   1,777,946 
   
 
 
  
 
 
 
Cash flows from financing activities:
         
Payment of cash dividend
   (3,632,100)   (3,630,970) 
Proceeds from exercise of employee stock option
   15,125   —   
Purchase of treasury stock
   (3,478,553)   (822,450) 
Reduction of operating lease obligation
   (17,372)   (9,507) 
   
 
 
  
 
 
 
Net cash used in financing activities
   (7,112,900)   (4,462,927) 
   
 
 
  
 
 
 
Increase (decrease) in cash and cash equivalents
   3,414,176   (1,622,717)
Cash and cash equivalents at beginning of year
   30,305,902   22,533,965 
   
 
 
  
 
 
 
Cash and cash equivalents at end of period
  $33,720,078  $20,911,248 
   
 
 
  
 
 
 
Supplemental disclosure of cash flows information:
         
Income taxes paid
  $1,112,000  $3,368,000 
   
 
 
  
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements

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Table of Contents

Nobility Homes, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 Basis of Presentation and Accounting Policies

Note 1
Basis of Presentation and Accounting Policies
The accompanying unaudited condensed consolidated financial statements for the three and sixnine months ended May 1,July 31, 2021 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 sixnine months ended May 1,July 31, 2021 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 October 31, 2020.

Note 2 Inventories

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.

The Company acquired certain repossessed
pre-owned
inventory (Buy Back Inventory) in 2011 as part of an Amendment of the Finance Revenue Sharing Agreement with 21
st
Mortgage Corporation. This inventory is valued at the Company’s cost to acquire determined on the specific identification method, plus refurbishment costs (any item on the home that needs to be repaired or replaced) incurred to date to bring the inventory to a more saleable state. The Buy Back 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
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
st
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
st
Mortgage Corporation. This arrangement assists 21
st
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
st
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
st
Mortgage. Any shortfall from the proceeds to cover these amounts is paid by 21
st
Mortgage to the Company. As the Company has no risk of loss on the sale, there is no valuation allowance necessary for this inventory.

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7

Table of Contents

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 $1,052,059$382,279 and $1,277,681 as of May 1,July 31, 2021 and October 31, 2020, 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. 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:

   May 1,   October 31, 
   2021   2020 

Raw materials

  $1,415,876   $1,203,282 

Work-in-process

   97,879    107,651 

Inventory consigned to affiliated entities

   1,052,060    1,277,681 

Finished homes

   7,465,306    6,543,861 

Model home furniture

   147,981    162,202 
  

 

 

   

 

 

 

Inventories

  $10,179,102   $9,294,677 
  

 

 

   

 

 

 

Pre-owned homes

  $1,728,206   $1,686,373 

Inventory impairment reserve

   (139,235)    (167,196) 
  

 

 

   

 

 

 
   1,588,972    1,519,177 

Less homes expected to sell in 12 months

   (552,375)    (441,937) 
  

 

 

   

 

 

 

Pre-owned homes, long-term

  $1,036,596   $1,077,240 
  

 

 

   

 

 

 

Note 3 Short-term Investments

   July 31,
2021		   October 31,
2020		 
Raw materials
  $1,854,317   $1,203,282 
Work-in-process
   136,723    107,651 
Inventory consigned to affiliated entities
   382,279    1,277,681 
Finished homes
   6,910,596    6,543,861 
Model home furniture
   145,008    162,202 
   
 
 
   
 
 
 
Inventories
  $9,428,923   $9,294,677 
   
 
 
   
 
 
 
Pre-owned
homes
  $1,510,484   $1,686,373 
Inventory impairment reserve
   (115,599)    (167,196) 
   
 
 
   
 
 
 
    1,394,885    1,519,177 
Less homes expected to sell in 12 months
   (678,303)    (441,937) 
   
 
 
   
 
 
 
Pre-owned
homes, long-term
  $716,582   $1,077,240 
   
 
 
   
 
 
 
Note 3
Short-term Investments
The following is a summary of short-term investments (available for sale):

   May 1, 2021 
   Cost   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Estimated
Fair Value		 

Equity securities in a public company

  $167,930   $394,789   $—     $562,719 
  

 

 

   

 

 

   

 

 

   

 

 

 

   October 31, 2020 
   Cost   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Estimated
Fair Value		 

Equity securities in a public company

  $167,930   $191,030   $—     $358,960 
  

 

 

   

 

 

   

 

 

   

 

 

 

   July 31, 2021 
   Cost   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Estimated
Fair Value		 
Equity securities in a public company
  $167,930   $394,340   $0   $562,270 
   
 
 
   
 
 
   
 
 
   
 
 
 
   October 31, 2020 
   Cost   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Estimated
Fair Value		 
Equity securities in a public company
  $167,930   $191,030   $0     $358,960 
   
 
 
   
 
 
   
 
 
   
 
 
 
The fair values were estimated based on quoted market prices in active markets at each respective period end.

7

8

Note 4 Fair ValueTable of Financial Instruments

Contents

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).

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.

   May 1, 2021 
   Level 1   Level 2   Level 3 

Equity securities in a public company

  $562,719   $—     $—   
  

 

 

   

 

 

   

 

 

 

   July 31, 2021 
   Level 1   Level 2   Level 3 
Equity securities in a public company
  $562,270   $0—   $0— 
   
 
 
   
 
 
   
 
 
 
   October 31, 2020 
   Level 1   Level 2   Level 3 
Equity securities in a public company
  $358,960   $—     $—   
   
 
 
   
 
 
   
 
 
 

Note 5 Net Income per Share

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

Note 6
Revenues by Products and Service
The Company operates in one business segment, which is manufactured housing and ancillary services. The Company considers there to be revenue concentration risks for distribution of its products where net product revenues exceed 10% of consolidated net product revenues. The concentration of the Company’s distribution net product revenues below may have a material adverse effect on the Company’s revenues and results of operations if sales in the respective distribution channels experience difficulties.

8

9

Table of Contents

Revenues by net sales from manufactured housing,
pre-owned
homes and insurance agent commissions are as follows:

   Three Months Ended   Six Months Ended 
   May 1,   May 2,   May 1,   May 2, 
   2021   2020   2021   2020 

Manufactured housing

        

Homes sold through Company owned sales centers

  $12,361,377   $7,863,318   $19,904,559   $14,621,849 

Homes sold to independent dealers

   1,624,113    2,108,226    2,827,849    4,261,548 

Homes sold through manufactured home parks

   431,210    105,017    649,645    464,759 
  

 

 

   

 

 

   

 

 

   

 

 

 
  $14,416,700   $10,076,561   $23,382,053   $19,348,156 

Pre-owned homes

   243,557    53,169    283,744    158,678 

Insurance agent commissions

   82,643    72,772    148,614    139,520 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

  $14,742,900   $10,202,502   $23,814,411   $19,646,354 
  

 

 

   

 

 

   

 

 

   

 

 

 
   Three Months Ended   Nine Months Ended 
   July 31,
2021		   August 1,
2020		   July 31,
2021		   August 1,
2020		 
Manufactured housing
                    
Homes sold through Company owned sales centers
  $ 10,128,706   $ 6,252,906   $ 30,033,265   $ 20,874,755 
Homes sold to independent dealers
   833,904    1,998,720    3,661,753    6,260,268 
Homes sold through manufactured home parks
   458,955    380,875    1,108,600    845,634 
   
 
 
   
 
 
   
 
 
   
 
 
 
   $ 11,421,565   $ 8,632,501   $ 34,803,618   $ 27,980,657 
Pre-owned
homes
   288,261    95,011    572,005    253,689 
Insurance agent commissions
   68,294    72,898    216,908    212,418 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total net sales
  $11,778,120   $8,800,410   $35,592,531   $28,446,764 
   
 
 
   
 
 
   
 
 
   
 
 
 

Note 7 Operating Leases

The Company leases the property for several Prestige retail sales centers from various unrelated entities under operating lease agreements expiring through December 2021. The Company also leases certain equipment under unrelated operating leases. These leases have varying renewal options. To offset expiring leases, theThe Company purchased the land for the Ocala South retail sales center in March 2021 for $500,000 and the Tavares retail sales center in January 2021 for $245,000.

Right of use assets are included as a
non-current
asset in the amount of $694,629, $684,142,
net of amortization in the condensed consolidated Balance Sheet as of May 1,July 31, 2021.

Based on the terms of the lease agreements, all of the Company’s leases are classified as operating leases. The weighted average remaining lease term and weighted average discount rate of the operating leases is 8.658.40 years and 2.94%3.0%, respectively.

Minimum rental payments under operating leases are recognized on a straight-line basis over the term of the lease. Individual components of the total lease cost incurred by the Company in the amount of $98,162$136,872 for the sixnine months ended May 1,July 31, 2021.

10
Table of Contents
The amount of future minimum lease payments under operating leases are as follows:

9

   Operating Lease 
Undiscounted future minimum lease payments:
     
2021 (3 months remaining)
  $16,106 
2022
   68,401 
2023
   74,322 
2024
   80,955 
2025
   88,388 
Thereafter
   458,175 
   
 
 
 
Total
   786,347 
Amount representing imputed interest
   (1,008) 
   
 
 
 
Total operating lease liability
   785,339 
Current portion of operating lease liability
   (33,039) 
   
 
 
 
Operating lease liability,
non-current
  $ 752,300 
   
 
 
 
Note 8 Stockholders’ Equity and Related Party Transaction
During the nine months ended July 31, 2021, the Company repurchased 100,346 shares of its common stock for per share prices ranging from $30.50—$34.68 for an aggregate total of $3,478,553. Of these repurchased shares, 100,000 were from a related party for which the Company paid $34.68 per share.
11
   Operating Lease 

Undiscounted future minimum lease payments:

  

2021 (6 months remaining)

  $31,776 

2022

   68,401 

2023

   74,322 

2024

   80,955 

2025

   88,388 

Thereafter

   458,175 
  

 

 

 

Total

   802,017 

Amount representing imputed interest

   (10,809) 
  

 

 

 

Total operating lease liability

   791,208 

Current portion of operating lease liability

   30,078 
  

 

 

 

Operating lease liability, non-current

  $761,130 
  

 

 

 

10

Table of Contents

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

Results of Operations

Total revenues in the secondthird quarter of 2021 increased 45%34% to $14,742,900$11,778,120 compared to $10,202,502$8,800,410 in the secondthird quarter of 2020. Total net sales for the first sixnine months of 2021 increased 21%25% to $23,814,411$35,592,531 compared to $19,646,354$28,446,764 for the first sixnine months of 2020. The Company reported net income of $1,724,938$1,050,746 in the secondthird quarter of 2021, compared to a net income of $1,550,004$1,160,138 during the secondthird quarter of 2020. Net income for the first sixnine months of 2021 was $2,790,703$3,841,449 compared to a net income of $2,950,145$4,110,283 for the first sixnine months of 2020. According to the Florida Manufactured Housing Association, shipments for the industry in Florida for the period from November 2020 through MayJuly 2021 were up approximately 6%11% from the same period last year. In addition, theThe lack of lenders in our industry, partly as a result of an increase in government regulations, still adversely affects our results by limiting many affordable manufactured housing buyers from purchasing homes. Since MayDuring third quarter of 2020,2021, our production of homes was impacted due to the Companychallenges in hiring additional factory workers and the unpredictable absenteeism of the
COVID-19
quarantine. These factors have continued in the fourth quarter of 2021. Also, production has experienced unprecedentedincurred shortages in certain building products delaying the completion of the homes and has continued to experience inflation in most building products with no immediate relief in sight resulting in significant increases to our material costs and a corresponding decrease in gross profits.

We have continued to focus on increasing production of homes due to the above challenges.

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

   Three Months Ended  Six Months Ended 
   May 1,  May 2,  May 1,  May 2, 
   2021  2020  2021  2020 

New homes sold through Company owned sales centers

   132   90   214   162 

Pre-owned homes sold through Company owned sales centers

   5   2   6   4 

Homes sold to independent dealers

   49   52   89   108 

Total new factory built homes produced

   178   143   328   266 

Average new manufactured home price—retail

  $91,217  $89,135  $90,080  $91,915 

Average new manufactured home price—wholesale

  $47,578  $42,985  $47,549  $43,724 

As a percent of net sales:

     

Gross profit from the Company owned retail sales centers

   15%   20%   15%   20% 

Gross profit from the manufacturing facilities - including intercompany sales

   18%   22%   18%   24% 

   Three Months Ended  Nine Months Ended 
   July 31,
2021		  August 1,
2020		  July 31,
2021		  August 1,
2020		 
New homes sold through Company owned sales centers
   104   70   318   232 
Pre-owned
homes sold through Company owned sales centers
   6   3   12   7 
Homes sold to independent dealers
   26   51   115   159 
Total new factory built homes produced
   120   127   448   393 
Average new manufactured home price—retail
  $ 94,385  $ 91,017  $ 91,488  $ 91,644 
Average new manufactured home price—wholesale
  $51,919  $44,308  $48,720  $43,913 
As a percent of net sales:
     
Gross profit from the Company owned retail
     
sales centers
   17%   19%   17%   19% 
Gross profit from the manufacturing facilities -
     
including intercompany sales
   11%   20%   14%   22% 
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, 2021 the Company celebrated its 54th anniversary in business specializing in the design and production of quality, affordable manufactured homes. With multiple retail sales centers in Florida for over 30 years and an insurance agency subsidiary, we are the only vertically integrated manufactured home company headquartered in Florida.

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Insurance agent commission revenues in the secondthird quarter of 2021 were $82,643$68,294 compared to $72,772$72,898 in the secondthird quarter of 2020. Total insurance agent commission revenues for the first sixnine months of 2021 were $148,614$216,908 compared to $139,520$212,418 for the first sixnine months of 2020. The increase in insurance agent commissions in the first sixnine months of 20202021 were due to more new policies and renewals generated which affects agent commission earned. 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 May 1, 2021andJuly 31, 2021 and October 31, 2020.

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Gross profit as a percentage of net sales was 25%21% in the secondthird quarter of 2021 compared to 31%28% for the secondthird quarter of 2020 and was 26%24% for the first sixnine months of 2021 compared to 31%30% for the first sixnine months of 2020.    The gross profit in the secondthird quarter of 2021 was $3,612,685$2,512,744 compared to $3,137,495$2,438,910 in the secondthird quarter of 2020 and was $6,110,132$8,622,876 for the first sixnine months of 2021 compared to $6,027,344$8,466,254 for the first sixnine months of 2020. The gross profit is dependent on the sales mix of wholesale and retail homes and number of

pre-owned
homes sold. The decrease in gross profit as a percentage of net sales is primarily due to the unprecedentedcontinued inflation in most building products which increased the material cost of each home manufactured in first and second quarterall three quarters of 2021. We are continuing to monitoring this situation and will continue to adjust our selling prices to help offset some of the higher costs on each home.

Selling, general and administrative expenses as a percent of net sales was 11% in secondthird quarter of 2021 compared to 12%13% in the secondthird quarter of 2020 and was 12% for the first sixnine months of 2021 compared to 13% for the first sixnine months of 2020. Selling, general and administrative expenses in secondthird quarter of 2021 was $1,550,513$1,320,456 compared to $1,222,628$1,107,850 in the secondthird quarter of 2020 and was $2,823,894$4,144,350 for the first sixnine months of 2021 compared to $2,478,772$3,586,622 for the first sixnine months of 2020. The increase in expenses in 2021 were due to the increase in variable expenses which were a direct result of employee benefits compensation due to the increase in sales.    

We earned interest income of $52,474$62,491 for the secondthird quarter of 2021 compared to $84,273$53,209 for the secondthird quarter of 2020. For the first sixnine months of 2021, interest income was $83,130$145,621 compared to $186,156$239,365 in the first sixnine months of 2020. The decrease during 2021 is primarily due to the decline in the investment rates and the decrease in the monies invested.

Our earnings from Majestic 21 in the secondthird quarter of 2021 were $12,049$20,202 compared to $20,398,$20,855, for the secondthird quarter of 2020. Earnings from Majestic 21 for the first sixnine months of 2021 were $25,757$45,959 compared to $40,270$61,125 for the first sixnine months of 2020. 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 no distributions in the secondthird quarter of 2021 of $75,156 compared to $189,285$64,053 in the secondthird quarter of 2020 and $45,868$121,024 for the first sixnine months of 2021 compared to $272,394$336,447 for the first sixnine months of 2020. The distributions are from an escrow arrangement related to a Finance Revenue Sharing Agreement (FRSA) between 21
st
Mortgage Corporation and the Company. The distributions from the escrow arrangement, which relates to certain loans financed by 21
st
Mortgage Corporation, are recorded as income by the Company when received. 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 secondthird quarter of 2021 of $2,268,443$1,397,857 as compared to $2,040,739$1,535,603 in the secondthird quarter of 2020. The
pre-tax
income for the first sixnine months of 2021 was $3,670,017$5,067,874 as compared to $3,886,460$5,422,063 in first sixnine months of 2020.

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The Company recorded an income tax expense in the amount of $543,505$347,111 in the secondthird quarter of 2021 as compared to $490,735$375,465 in secondthird quarter 2020. Income tax expense for the sixnine months of 2021 was $879,314$1,226,425 compared to $936,315$1,311,780 for the sixnine months of 2020.

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We reported net income of $1,724,938$1,050,746 for the secondthird quarter of 2021 or $0.47$0.29 per share, compared to $1,550,004$1,160,138 or $0.43$0.32 per share, for the secondthird quarter of 2020. For the first sixnine months of 2021 net income was $2,790,703$3,841,449 or $0.77$1.06 per share, compared to $2,950,145$4,110,283 or $0.81$1.13 per share, in the first sixnine months of 2020.

Liquidity and Capital Resources

Cash and cash equivalents were $33,227,818$33,720,078 at May 1,July 31, 2021 compared to $30,305,902 at October 31, 2020. Certificates of deposit were $2,088,805$2,090,910 at May 1,July 31, 2021 compared to $4,602,307 at October 31, 2020. Short-term investments were $562,719$562,270 at May 1,July 31, 2021 compared to $358,960 at October 31, 2020. Working capital was $36,246,631$34,059,497 at May 1,July 31, 2021 as compared to $38,865,240 at October 31, 2020. During the first nine months of 2021, the Company repurchased an aggregate of 100,346 shares of its common stock for an aggregate of $3,478,553. The Company purchased the land for the Ocala South retail sales center in March 2021 for $500,000, the Tavares retail sales center in January 2021 for $245,000 and land in Ocala for a future retail sales center in February 2021 for $1,040,000. The Company paid a
one-time
cash dividend of $1.00 per common share in March 2021 for $3,632,100. We own the entire inventory for our Prestige retail sales centers which includes new,
pre-owned,
repossessed or foreclosed homes and do not incur any third party floor plan financing expenses. We have a material commitment for a significant capital expenditure. Depending upon when the Company receives the building permit, we plan to build an 11,900 square foot frame shop to manufacture our frames on our current manufacturing plant property on our Ocala Florida property.

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 $3.8$3.9 million of cash surrender value of life insurance which it may be able to access as an additional source of liquidity though the Company has not currently viewed this to be necessary. As of May 1,July 31, 2021, the Company continued to report a strong balance sheet which included total assets of approximately $65$64 million which was funded primarily by stockholders’ equity of approximately $50$48 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 pandemic, competitive pricing pressures at both the wholesale and retail levels, inflation, increasing material costs (including forest based products) or availability of materials due to potential supply chain interruptions (such as current inflation with forest products and supply issues with vinyl siding and PVC piping), changes in market demand, changes in interest rates, availability of financing for retail and wholesale purchasers, consumer confidence, adverse
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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 labor shortage, impact of materials shortage, increasing labor cost, cyclical nature of the manufactured housing industry, impact of rising fuel costs, catastrophic events impacting insurance costs, availability of insurance coverage for various risks to Nobility, market demographics, management’s ability to attract and retain executive officers and key personnel, increased global tensions, market disruptions resulting from terrorist or other attack, any armed conflict involving the United States and the impact of inflation.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures
. The Company’s Chief Executive Officer (principal executive

officer) and Chief Financial Officer (principal financial officer) have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report (the “Evaluation Date”). Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of May 1,July 31, 2021.

Changes in Internal Control over Financial Reporting.
There were no changes in our internal controls over financial reporting that occurred during the secondthird quarter of fiscal 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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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 following table represents information with respect to purchases by the Company of its common stock during the three months ended May 1,July 31, 2021.

Period

  Total
number of
shares
purchased		   Average
price paid
per share		   Total number of shares
purchased as part of
publicly announced plans
or programs*		   Maximum number of
shares that may yet be
purchased under the plans
or programs*		 

Jan 31 – Feb 27, 2021

   346   $30.50    346    199,654 

Feb 28 – Mar 27, 2021

   —      —      —      199,654 

Mar 28 – May 1, 2021

   —      —      —      199,654 

Period
  Total
number of
shares
purchased		  Average
price paid
per share		  Total number of shares
purchased as part of
publicly announced plans
or programs*		  Maximum number of shares
that may yet
be purchased under the plans
or programs*		 
May 2 – May 29, 2021
  0  0  0   199,654 
May 30 – Jun 26, 2021
  0  0  0   199,654 
Jun 27 – Jul 31, 2021
  100,000  $34.68  100,000   99,654 
*

In September 2020 the Company’s Board of Directors authorized 200,000 shares to be repurchased during fiscal year 2021 in the open market. During the first sixnine months ended May 1,July 31, 2021 management has repurchased an aggregate of 346100,346 shares of common stock and is authorized to purchase up to an additional 199,65499,654 shares.

Item 6. Exhibits

 31. (a)

(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

(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)

(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

(b) Written Statement of Chief Financial Officer Pursuant to 18 U.S.C. §1350
 101.

Interactive data filing formatted in XBRL

IXBRL

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  NOBILITY HOMES, INC.
DATE: June 15,September 10, 2021
  
By:

/s/ /s/ Terry E. Trexler

  Terry E. Trexler, Chairman,
  President and Chief Executive Officer
DATE: June 15,September 10, 2021  By:

/s/ /s/ Thomas W. Trexler

  

Thomas W. Trexler, Executive Vice President,


and Chief Financial Officer

DATE: June 15,September 10, 2021
  
By:

/s/ /s/ Lynn J. Cramer, Jr.

  

Lynn J. Cramer, Jr., Treasurer


and Principal Accounting Officer

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