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~~

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

For the quarterly period ended ~~February 5,~~May 7, 2022

Commission File number

000-06506

NOBILITY HOMES, INC.

(Exact name of registrant as specified in its charter)


Florida ~~(State or other jurisdiction of~~ ~~incorporation or organization)~~		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)		~~34474~~ (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.


Title of Class		Shares Outstanding on June ~~March~~ 2221 , 2022
Common Stock		~~3,532,976~~3,370,912

Table of Contents

NOBILITY HOMES, INC.

INDEX


		Page Number

PART I.	~~Financial Information~~	Financial Information

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of ~~February 5,~~May 7, 2022 (Unaudited) and November 6, 2021		3

	Condensed Consolidated Statements of Income for the three and six months ended ~~February 5,~~May 7, 2022 (Unaudited) and ~~January 30,~~May 1, 2021 (Unaudited)		4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended ~~February 5,~~May 7, 2022 (Unaudited) and ~~January 30,~~May 1, 2021 (Unaudited)		5

	Condensed Consolidated Statements of Cash Flows for the ~~three~~six months ended ~~February 5,~~May 7, 2022 (Unaudited) and ~~January 30,~~May 1, 2021 (Unaudited)		6

	Notes to Condensed Consolidated Financial Statements (Unaudited)		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11

~~Item 4.~~	~~Controls and Procedures~~		14	10

~~PART II.~~ 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~~	Exhibits		15

Signatures					16

Table of Contents

NOBILITY HOMES, INC.

Condensed Consolidated Balance Sheets

   February 5,
2022 November 6,
2021
   (Unaudited)
Assets

Current assets:

Cash and cash equivalents
   $ 38,932,257 $ 36,126,059
Certificates of deposit
   0   2,093,015
Short-term investments
   617,835 621,928
Accounts receivable - trade
   493,504 680,228
Note receivable
   23,905 32,825
Mortgage notes receivable
   23,291 22,589
Inventories
   10,902,578 10,394,288
Pre-owned
homes, net
   982,496 542,081
Prepaid expenses and other current assets
   1,618,570 1,821,267


Total current assets
   53,594,436 52,334,280
Property, plant and equipment, net
   6,923,336 6,847,780
Pre-owned
homes, net
   0   755,394
Note receivable, less current portion
   33,372 38,895
Mortgage notes receivable, less current portion
   221,130 222,459
Mobile home park note receivable
   136,509 72,731
Other investments
   1,800,993 1,788,436
Operating lease right of use assets
   0   1,597
Cash surrender value of life insurance
   4,009,698 3,966,939
Other assets
   156,287 156,287


Total assets
   $ 66,875,761 $ 66,184,798


Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable
   $ 998,869 $ 939,964
Accrued compensation
   592,998 555,222
Accrued expenses and other current liabilities
   1,435,056 1,513,967
Income taxes payable
   458,479 89,083
Operating lease obligation
   0   1,597
Customer deposits
   12,793,296 13,671,092


Total current liabilities
   16,278,698 16,770,925
Deferred income taxes
   99,568 99,568


Total liabilities
   16,378,266 16,870,493


Commitments and contingencies
   0 0
Stockholders’ equity:
   0 0
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; 3,532,976 and 3,532,100 outstanding, respectively
   536,491 536,491
Additional paid in capital
   10,782,019 10,766,253
Retained earnings
   60,899,793 59,742,759
Less treasury stock at cost, 1,831,931 shares in 2022 and 1,832,807 shares in 2021
   (21,720,808 ) (21,731,198 )


Total stockholders’ equity
   50,497,495 49,314,305


Total liabilities and stockholders’ equity
   $ 66,875,761 $ 66,184,798


	May 7, 2022			November 6, 2021
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	26,530,111		$	36,126,059
Certificates of deposit		—			2,093,015
Short-term investments		598,154			621,928
Accounts receivable—trade		807,197			680,228
Note receivable		23,905			32,825
Mortgage notes receivable		24,291			22,589
Income tax receivable		42,792			—
Inventories		15,999,026			10,394,288
Pre-owned homes, net		802,149			542,081
Prepaid expenses and other current assets		2,283,654			1,821,267

Total current assets		47,111,279			52,334,280
Property, plant and equipment, net		7,305,133			6,847,780
Pre-owned homes, net		—			755,394
Note receivable, less current portion		27,849			38,895
Mortgage notes receivable, less current portion		219,772			222,459
Mobile home park note receivable		136,509			72,731
Other investments		1,813,658			1,788,436
Operating lease right of use assets		—			1,597
Cash surrender value of life insurance		4,052,457			3,966,939
Other assets		156,287			156,287

Total assets	$	60,822,944		$	66,184,798

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,819,257		$	939,964
Accrued compensation		777,649			555,222
Accrued expenses and other current liabilities		1,627,284			1,513,967
Income taxes payable		—			89,083
Operating lease obligation		—			1,597
Customer deposits		13,285,127			13,671,092

Total current liabilities		17,509,317			16,770,925
Deferred income taxes		51,027			99,568

Total liabilities		17,560,344			16,870,493

Commitments and contingencies		0			0
Stockholders’ equity:		0			0
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; 3,370,912 and 3,532,100 shares outstanding, respectively		536,491			536,491
Additional paid in capital		10,806,923			10,766,253
Retained earnings		58,823,643			59,742,759
Less treasury stock at cost, 1,993,995 and 1,832,807 share s , respectively		(26,904,457	)		(21,731,198	)

Total stockholders’ equity		43,262,600			49,314,305

Total liabilities and stockholders’ equity	$	60,822,944		$	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
   February 5,
2022 January 30,
2021
Net sales
   $ 10,808,270 $ 9,071,511
Cost of sales
   (8,080,042 ) (6,574,064 )


Gross profit
   2,728,228 2,497,447
Selling, general and administrative expenses
   (1,416,543 ) (1,273,381 )


Operating income
   1,311,685 1,224,066


Other income (loss):

Interest income
   74,680 30,656
Undistributed earnings in joint venture - Majestic 21
   12,557 13,708
Proceeds received under escrow arrangement
   118,045 45,868
(Decrease) increase in fair value of equity investment
   (4,093 ) 79,956
Miscellaneous
   13,556 7,320


Total other income
   214,745 177,508


Income before provision for income taxes
   1,526,430 1,401,574
Income tax expense
   (369,396 ) (335,809 )


Net income
   $ 1,157,034 $ 1,065,765


Weighted average number of shares outstanding:

Basic
   3,532,803 3,631,924
Diluted
   3,544,467 3,633,493
Net income per share:

Basic
   $ 0.33 $ 0.29
Diluted
   $ 0.33 $ 0.29


	Three Months Ended						Six Months Ended
	May 7, 2022			May 1, 2021			May 7, 2022			May 1, 2021
Net sales	$	10,645,046		$	14,742,900		$	21,453,316		$	23,814,411
Cost of sales		(7,623,128	)		(11,130,215	)		(15,703,170	)		(17,704,279	)

Gross profit		3,021,918			3,612,685			5,750,146			6,110,132
Selling, general and administrative expenses		(1,378,606	)		(1,550,513	)		(2,795,149	)		(2,823,894	)

Operating income		1,643,312			2,062,172			2,954,997			3,286,238

Other income (loss):
Interest income		39,577			52,474			114,257			83,130
Undistributed earnings in joint venture—Majestic 21		12,665			12,049			25,222			25,757
Proceeds received under escrow arrangement		115,454			—			233,499			45,868
(Decrease) increase in fair value of equity investment		(19,681	)		123,803			(23,774	)		203,759
Gain on disposal of property, plant and equipment		88,936			—			88,936			—
Miscellaneous		12,352			17,945			25,908			25,265

Total other income		249,303			206,271			464,048			383,779

Income before provision for income taxes		1,892,615			2,268,443			3,419,045			3,670,017
Income tax expense		(435,789	)		(543,505	)		(805,185	)		(879,314	)

Net income		1,456,826			1,724,938			2,613,860			2,790,703

Weighted average number of shares outstanding:
Basic		3,476,508			3,632,195			3,504,655			3,632,060
Diluted		3,487,516			3,642,501			3,515,994			3,638,140
Net income per share:
Basic	$	0.42		$	0.47		$	0.75		$	0.77
Diluted	$	0.42		$	0.47		$	0.74		$	0.77

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

NOBILITY HOMES, INC.

Condensed Consolidated Statements of Changes in Stockholders’

Equity

For the three and six months ended ~~February 5, 2021~~May 7, 2022 and ~~January 30, 2021~~May 1, 202

(Unaudited)


	Common Stock Shares			Common Stock		Additional Paid-in-Capital			Retained Earnings		Treasury Stock			Total			Common Stock Shares			Common Stock		Additional Paid-in-Capital			Retained Earnings			Treasury Stock			Total
Balance at November 6, 2021		3,532,100		$	536,491	$	10,766,253		$	59,742,759	$	(21,731,198	)	$	49,314,305			3,532,100		$	536,491	$	10,766,253		$	59,742,759		$	(21,731,198	)	$	49,314,305
Stock-based compensation		180			—		33,218			—		2,135			35,353			180			—		33,218			—			2,135			35,353
Exercise of employee stock options		966			—		(17,452	)		—		17,452			—			966			—		(17,452	)		—			17,452			—
Treasury stock purchase		(270	)		—		—			—		(9,197	)		(9,197	)		(270	)		—		—			—			(9,197	)		(9,197	)
Net income		—			—		—			1,157,034		—			1,157,034			—			—		—			1,157,034			—			1,157,034

Balance at February 5, 2022		3,532,976		$	536,491	$	10,782,019		$	60,899,793	$	(21,720,808	)	$	50,497,495			3,532,976		$	536,491	$	10,782,019		$	60,899,793		$	(21,720,808	)	$	50,497,495


Cash dividend																		—			—		—			(3,532,976	)		—			(3,532,976	)
Purchase of treasury stock																		(162,300	)		—		—			—			(5,186,070	)		(5,186,070	)
Stock-based compensation																		236			—		24,904			—			2,421			27,325
Net income																		—			—		—			1,456,826			—			1,456,826

Balance at May 7, 2022																		3,370,912		$	536,491	$	10,806,923		$	58,823,643		$	(26,904,457	)	$	43,262,600

   Common
Stock Shares    Common
Stock    Additional
Paid-in-Capital
   Retained
Earnings    Treasury
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


	Common Stock Shares			Common Stock		Additional Paid-in-Capital		Retained Earnings			Treasury 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

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)


	Three Months Ended						Six Months Ended
	February 5, 2022			January 30, 2021			May 7, 2022			May 1, 2021
Cash flows from operating activities:
Net income	$	1,157,034		$	1,065,765		$	2,613,860		$	2,790,703
Adjustments to reconcile net income to net cash provide by operating activities:
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		43,227			56,943			86,454			94,815
Undistributed earnings in joint venture - Majestic 21		(12,557	)		(13,708	)
Decrease (Increase) in fair market value of equity investments		4,093			(79,956	)
Deferred income taxes								(48,541	)		19,182
Undistributed earnings in joint venture—Majestic 21								(25,222	)		(25,757	)
Gain on disposal of property, plant and equipment								(88,936	)		—
Decrease (increase) in fair market value of equity investments								23,774			(203,759	)
Stock-based compensation		35,353			20,521			62,678			36,930
Amortization of operating lease right of use assets		1,597			10,331			1,597			20,739
Decrease (increase) in:
Accounts receivable - trade		186,724			(267,040	)
Accounts receivable—trade								(126,969	)		(1,027,542	)
Inventories		(508,290	)		(1,309,716	)		(5,604,739	)		(884,425	)
Pre-owned homes		314,979			(216,973	)		495,327			(69,794	)
Prepaid expenses and other current assets		202,697			(538,208	)		(462,387	)		(622,655	)
Interest receivable		—			(8,444	)		—			(14,118	)
Income tax receivables		—			105,676			(42,792	)		105,676
(Decrease) increase in:
Accounts payable		58,905			172,260			879,293			357,411
Accrued compensation		37,776			(223,775	)		222,427			36,216
Accrued expenses and other current liabilities		(88,108	)		(270,148	)		104,120			100,709
Income taxes payable		369,396			230,133			(89,083	)		219,456
Customer deposits		(877,796	)		2,701,182			(385,965	)		5,047,191

Net cash provided by operating activities		925,030			1,434,843
Net cash (used in) provided by operating activities								(2,375,907	)		5,980,978

Cash flows from investing activities:
Purchase of property, plant and equipment		(118,783	)		(278,070	)		(551,841	)		(1,870,893	)
Proceeds from certificates of deposit		2,087,936			1,500,000			2,087,936			2,496,000
Proceeds from disposal of property, plant and equipment								96,970			—
Collections on interest receivable		5,079			28,640			5,079			31,620
Collections on mortgage notes receivable		627			609			985			1,363
Collections on equipment and other notes receivable		14,443			6,738			19,966			13,460
Issuance of mobile home park note receivable		(63,778	)		—			(63,778	)		(2,481	)
Increase in cash surrender value of life insurance		(42,759	)		(44,550	)		(85,518	)		(89,100	)

Net cash provided by investing activities		1,882,765			1,213,367			1,509,799			579,969

Cash flows from financing activities:
Payment of cash dividend								(3,532,976	)		(3,632,100	)
Proceeds from exercise of employee stock option		—			15,125			—			15,125
Purchase of treasury stock								(5,186,070	)		(10,553	)
Reduction of operating lease obligation		(1,597	)		(5,714	)		(1,597	)		(11,503	)

Net cash (used in) provided by financing activities		(1,597	)		9,411
Net cash used in financing activities								(8,729,840	)		(3,639,031	)

Increase in cash and cash equivalents		2,806,198			2,657,621
(Decrease) increase in cash and cash equivalents								(9,595,948	)		2,921,916
Cash and cash equivalents at beginning of year		36,126,059			30,305,902		$	36,126,059		$	30,305,902

Cash and cash equivalents at end of quarter	$	38,932,257		$	32,963,523		$	26,530,111		$	33,227,818

Supplemental financing activity:
Supplemental disclosure of cash flows information:
Income taxes paid							$	1,060,735		$	535,000


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

Note 1 Basis of Presentation and Accounting Policies

The accompanying unaudited condensed ~~consolidated~~ financial statements for the three and six months ended ~~February 5,~~May 7, 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 six months ended ~~February 5,~~May 7, 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~~

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 ~~$718,439~~$642,019 and $794,766 as of ~~February 5,~~May 7, 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.

Table of Contents

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.

~~Table of Contents~~

Other inventory costs are determined on a

first-in,

first-out

basis.

A breakdown of the elements of inventory is as follows:

   February 5,    November 6,
   2022    2021
Raw materials
   $ 2,087,472    $ 2,225,532
Work-in-process
   131,317    97,021
Inventory consigned to affiliated entities
   718,439    794,766
Finished homes
   7,837,409    7,140,880
Model home furniture
   127,941    136,089




Inventories
   $ 10,902,578    $ 10,394,288




Pre-owned
homes
   $ 982,496    $ 1,297,475
Less homes expected to sell in 12 months
   (982,496 )    (542,081 )




Pre-owned
homes, long-term
   $ 0      $ 755,394


	May 7, 2022			November 6, 2021
Raw materials	$	2,331,385		$	2,225,532
Work-in-process		115,134			97,021
Inventory consigned to affiliated entities		642,019			794,766
Finished homes		12,792,772			7,140,880
Model home furniture		117,716			136,089

Inventories	$	15,999,026		$	10,394,288



Pre-owned homes	$	802,149		$	1,297,475
Less homes expected to sell in 12 months		(802,149	)		(542,081	)

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

~~Note 3~~

Note 3 Short-term Investments

The following is a summary of short-term investments ~~(available~~ (

available

for sale):

   February 5, 2022
   Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Estimated
Fair Value
Equity securities in a public company
   $ 167,930    $ 449,905    $ 0      $ 617,835


	May 7, 2022
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	430,224	$	—	$	598,154

   November 6, 2021
   Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Estimated
Fair Value
Equity securities in a public company
   $ 167,930    $ 453,998    $ 0      $ 621,928


	November 6, 2021
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	453,998	$	—	$	621,928

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

~~Table of Contents~~

~~Note 4~~

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

Table of Contents

Level ~~2 -~~ 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 -~~ 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.

   February 5, 2022
   Level 1    Level 2    Level 3
Equity securities in a public company
   $ 617,835    $ 0      $ 0


	May 7, 2022
	Level 1		Level 2		Level 3
Equity securities in a public company	$	598,154	$	—	$	—

   November 6, 2021
   Level 1    Level 2    Level 3
Equity securities in a public company
   $ 621,928    $ 0      $ 0


	November 6, 2021
	Level 1		Level 2		Level 3
Equity securities in a public company	$	621,928	$	—	$	—

~~Note 5~~

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.

~~Table of Contents~~

~~Note 6~~

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.

Revenues by net sales from manufactured housing,

pre-owned

homes and insurance agent commissions are as follows:


	Three Months Ended				Six Months Ended
	May 7, 2022		May 1, 2021		May 7, 2022		May 1, 2021
Manufactured housing
Homes sold through Company owned sales centers	$	9,492,596	$	12,361,377	$	18,682,934	$	19,904,559
Homes sold to independent dealers		351,999		1,624,113		932,711		2,827,849
Homes sold through manufactured home parks		515,390		431,210		990,350		649,645

	$	10,359,985	$	14,416,700	$	20,605,995	$	23,382,053
Pre-owned homes		207,561		243,557		702,834		283,744
Insurance agent commissions		77,500		82,643		144,487		148,614

Total net sales	$	10,645,046	$	14,742,900	$	21,453,316	$	23,814,411

   Three Months Ended
   February 5,    January 30,
   2022    2021
Manufactured housing

Homes sold through Company owned sales centers
   $ 9,179,988    $ 7,543,182
Homes sold to independent dealers
   580,712    1,203,736
Homes sold through manufactured home parks
   474,960    218,435




   $ 10,235,660    $ 8,965,353
Pre-owned
homes
   505,622    40,187
Insurance agent commissions
   66,988    65,971




Total net sales
   $ 10,808,270    $ 9,071,511

Item 2.

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

Results of Operations

Total net sales in ~~first~~second quarter of 2022 ~~increased 19% to $10,808,270~~was $10,645,046 compared to ~~$9,071,511~~$14,742,900 in second quarter of 2021. Total net sales for the first ~~quarter~~six months of 2022 was $21,453,316 compared to $23,814,411 for the first six months of 2021. The Company reported net income of ~~$1,157,034~~$1,456,826 in ~~first~~second quarter of 2022, compared to a net income of ~~$1,065,765~~$1,724,938 in second quarter 2021. Net income for the first ~~quarter~~six months of 2022 was $2,613,860 compared to $2,790,703 for the first six months of 2021. According to the Florida Manufactured Housing Association, shipments for the industry in Florida for the period from November 2021 through ~~January~~April 2022 were up approximately ~~24%~~23% from the same period last year. ~~During first quarter of~~Net sales decreased during the three and six months ended May 7, 2022 ~~we continued~~as compared to the same period last year. We continue 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. ~~Production~~These supply chain issues has ~~incurred shortages~~caused delays in ~~many building products, which has limited production and delayed the~~ completion of the homes ~~both~~ at the manufacturing ~~plant~~facility and the set up process of retail homes in the ~~field. In addition, we have continued to experience record inflation in most building products,~~field, resulting in ~~increases~~decreased net sales due to our ~~material~~inability to timely complete and ~~labor costs and a corresponding decrease in gross profits.~~deliver homes to customers. We expect that these challenges will continue for ~~much~~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
	February 5,			January 30,			Three Months Ended						Six Months Ended
	2022			2021			May 7, 2022			May 1, 2021			May 7, 2022			May 1, 2021
New homes sold through Company owned sales centers		87			82			77			132			164			214
Pre-owned homes sold through Company owned sales centers		6			1			3			5			9			6
Homes sold to independent dealers		10			40			5			49			15			89
Total new factory built homes produced		92			150			113			178			205			328
Average new manufactured home price - retail	$	107,281		$	88,250
Average new manufactured home price - wholesale	$	63,781		$	47,515
Average new manufactured home price—retail							$	124,855		$	91,217		$	115,533		$	90,080
Average new manufactured home price—wholesale							$	73,561		$	47,578		$	69,172		$	47,549
As a percent of net sales:
Gross profit from the Company owned retail sales centers		18	%		18	%		19	%		18	%		19	%		18	%
Gross profit from the manufacturing facilities - including intercompany sales		13	%		15	%		13	%		15	%		13	%		15	%

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~~2022 the Company celebrated its ~~54th~~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.

1110

Insurance agent commission revenues in ~~first~~the second quarter of 2022 were ~~$66,988~~$77,500 compared to ~~$65,971~~$82,643 in ~~first~~the second quarter of 2021. ~~Revenues are generated by new and renewal policies being written which affects~~Total insurance agent commission ~~earned.~~revenues for the first six months of 2022 were $144,487 compared to $148,614 for the first six 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 ~~February 5,~~May 7, 2022 and November 6, 2021.

Gross profit as a percentage of net sales was ~~25%~~28% in ~~first~~the second quarter of 2022 compared to ~~28%~~25% for the second quarter of 2021 and was 27% for the first ~~quarter~~six months of 2022 compared to 26% for the first six months of 2021. The gross profit in ~~first~~the second quarter of 2022 was ~~$2,728,228~~$3,021,918 compared to ~~$2,497,447~~$3,612,685 in the second quarter of 2021 and was $5,750,146 for the first ~~quarter~~six months of 2022 compared to $6,110,132 for the first six 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 ~~reduction~~increase in gross profit as a percentage of net sales is ~~primary~~primarily due to increases in our selling prices to offset the higher inflation costs of building products and labor on each home. The decrease in gross profit dollar amount is primarily due to the ~~continued inflation,~~decrease in sales due to shortages in ~~certain~~many building products, ~~labor shortages~~which has limited production and ~~increased labor cost.~~delayed the completion of the homes both at the manufacturing plant and the set up process in the field, resulting in decreased net sale due to our inability to timely complete and deliver homes to customers.

Selling, general and administrative expenses as a percent of net sales was 13% in ~~first~~second quarter of 2022 compared to ~~14%~~11% in the second quarter of 2021 and was 13% for the first ~~quarter~~six months of 2022 compared to 12% for the first six months of 2021. Selling, general and administrative expenses in ~~first~~second quarter of 2022 was ~~$1,416,543~~$1,378,606 compared to ~~$1,273,381~~$1,550,513 in the second quarter of 2021 and was $2,795,149 for the first ~~quarter~~six months of 2022 compared to $2,823,894 for the first six months of 2021. The dollar ~~increase~~decrease in expenses in the three and six months of 2022 ~~were~~compared to the ~~direct results of increases to variable employee benefits compensation~~same period last year were due to reduction of the ~~increase in~~variable expenses related to the decreased sales.

We earned interest income of ~~$74,680~~$39,577 for ~~first~~the second quarter of 2022 compared to ~~$30,656~~$52,474 for ~~first~~the second quarter of 2021. For the first six months of 2022, interest income was $114,257 compared to $83,130 in the first six months of 2021. The increase in interest income for the first six 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. When~~Corporation in the ~~home is sold, the Company retains an interest factor on the cost~~first quarter of ~~the homes from the sales proceeds.~~2022.

Our earnings from Majestic 21 in ~~first~~the second quarter of 2022 were ~~$12,557~~$12,665 compared to ~~$13,708~~$12,049, for the second quarter of 2021. Earnings from Majestic 21 for the first ~~quarter~~six months of 2022 were $25,222 compared to $25,757 for the first six 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 in the second quarter of ~~$118,045~~2022 of $115,454 compared to no distributions in the second quarter of 2021 and $233,499 for the first ~~quarter~~six months of 2022 compared to $45,868 infor the first ~~quarter~~six months of 2021. The increase in distributions in the first six months of 2022 is due to the timing of the reserve balances. 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 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 ~~first~~the second quarter of 2022 of ~~$1,526,430~~$1,892,615 as compared to ~~$1,401,574~~$2,268,443 in the second quarter of 2021. The

pre-tax

income for the first six months of 2022 was $3,419,045 as compared to $3,670,017 in first ~~quarter~~six months of 2021.

The Company recorded an income tax expense in the amount of ~~$369,396~~$435,789 in ~~first~~the second quarter of 2022 as compared to ~~$335,809~~$543,505 in ~~first~~second quarter 2021. Income tax expense for the six months of 2022 was $805,185 compared to $879,314 for the six months of 2021.

We reported net income of ~~$1,157,034~~$1,456,826 for ~~first~~the second quarter of 2022 or ~~$0.33~~$0.42 per ~~basic and diluted~~ share, compared to ~~$1,065,765~~$1,724,938 or ~~$0.29~~$0.47 per ~~basic and diluted~~ share, for ~~first~~the second quarter of 2021.

For the first six months of 2022 net income was $2,613,860 or $0.75 per share ($0.74 diluted), compared to $2,790,703 or $0.77 per share, in the first six months of 2021.

Liquidity and Capital Resources

Cash and cash equivalents were ~~$38,932,257~~$26,530,111 at ~~February 5,~~May 7, 2022 compared to $36,126,059 at November 6, 2021. Certificates of deposit were $0 at ~~February 5,~~May 7, 2022 compared to $2,093,015 at November 6, 2021. Short-term investments were ~~$617,835~~$598,154 at ~~February 5,~~May 7, 2022 compared to $621,928 at November 6, 2021. Working capital was ~~$37,315,738~~$29,601,962 at ~~February 5,~~May 7, 2022 as compared to $35,563,355 at November 6, 2021. During the first six 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). 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 ~~February 5,~~May 7, 2022 the Company has incurred approximately ~~$112,000~~$531,906 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 ~~$4.0~~4.1 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 ~~February 5,~~May 7, 2022, the Company continued to report a strong balance sheet which included total assets of approximately ~~$66.9~~$60.8 million which was funded primarily by stockholders’ equity of approximately ~~$50.5~~43.3 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 ~~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~~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.~~

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

The following table represents information with respect to purchases by the Company of ~~Equity Securities and Use of Proceeds.~~

~~In September 2021 the Company’s Board of Directors authorized 200,000 shares to be repurchased during fiscal year 2022 in the open market. No shares were repurchased~~its common stock during the ~~first quarter~~three months ended ~~February 5,~~May 7, 2022.

~~Item 6. Exhibits~~


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*
Feb 6 – Mar 5, 2022		0		0		0		200,000
Mar 6 – Apr 2, 2022		62,300	$	30.90		62,300		137,700
Apr 3 – May 7, 2022		100,000	$	32.61		100,000		100,000

The Company’s Board of Directors authorized 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 six months ended May 7, 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 ~~IXBRL~~XBRL

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


	NOBILITY HOMES, INC.

~~DATE: March 22, 2022~~	~~By:~~	~~/s/ Terry E. Trexler~~
	~~Terry E. Trexler, Chairman,~~
	~~President and Chief Executive Officer~~

DATE: ~~March 22,~~June 21, 2022	By: /s/ Terry E. Trexler		~~/s/ Thomas W. Trexler~~
	~~Thomas W.~~Terry E. Trexler, ~~Executive Vice President,~~Chairman,
	President and Chief ~~Financial~~Executive Officer

DATE: ~~March 22,~~June 21, 2022	By: /s/ Thomas W. Trexler		~~/s/ Lynn J. Cramer, Jr.~~
	~~Lynn J. Cramer, Jr., Treasurer~~Thomas W. Trexler, Executive Vice President,
	and Chief Financial Officer

DATE: June 21, 2022	By: /s/ Lynn J. Cramer, Jr.
	Lynn J. Cramer, Jr., Treasurer
	and Principal Accounting Officer


	February 5,			November 6,
	2022			2021
Raw materials	$	2,087,472		$	2,225,532
Work-in-process		131,317			97,021
Inventory consigned to affiliated entities		718,439			794,766
Finished homes		7,837,409			7,140,880
Model home furniture		127,941			136,089

Inventories	$	10,902,578		$	10,394,288

Pre-owned homes	$	982,496		$	1,297,475
Less homes expected to sell in 12 months		(982,496	)		(542,081	)

Pre-owned homes, long-term	$	0		$	755,394


	February 5, 2022
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	449,905	$	0	$	617,835