Results of Operations
Total revenues in the third quarter of 2021 increased 34% to $11,778,120
compared to $8,800,410 in the third quarter of 2020. Total net sales for the
first nine months of 2021 increased 25% to $35,592,531 compared to $28,446,764
for the first nine months of 2020. The Company reported net income of $1,050,746
in the third quarter of 2021, compared to a net income of $1,160,138 during the
third quarter of 2020. Net income for the first nine months of 2021 was
$3,841,449 compared to a net income of $4,110,283 for the first nine months of
2020. According to the Florida Manufactured Housing Association, shipments for
the industry in Florida for the period from November 2020 through July 2021 were
up approximately 11% from the same period last year. The lack of lenders in our
industry, still adversely affects our results by limiting many affordable
manufactured housing buyers from purchasing homes. During third quarter of 2021,
our production of homes was impacted due to the challenges 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 incurred shortages in certain building products delaying the
completion of the homes and has continued to experience inflation in most
building products 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               Nine Months Ended
                                             July 31,        August 1,        July 31,        August 1,
                                               2021             2020            2021             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 third quarter of 2021 were $68,294
compared to $72,898 in the third quarter of 2020. Total insurance agent
commission revenues for the first nine months of 2021 were $216,908 compared to
$212,418 for the first nine months of 2020. The increase in insurance agent
commissions in the first nine months of 2021 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 July 31, 2021 and October 31, 2020.
Gross profit as a percentage of net sales was 21% in the third quarter of 2021
compared to 28% for the third quarter of 2020 and was 24% for the first nine
months of 2021 compared to 30% for the first nine months of 2020.  The gross
profit in the third quarter of 2021 was $2,512,744 compared to $2,438,910 in the
third quarter of 2020 and was $8,622,876 for the first nine months of 2021
compared to $8,466,254 for the first nine 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 continued inflation in most building products which
increased the material cost of each home manufactured in all 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 third quarter of 2021 compared to 13% in the third quarter of 2020 and was
12% for the first nine months of 2021 compared to 13% for the first nine months
of 2020. Selling, general and administrative expenses in third quarter of 2021
was $1,320,456 compared to $1,107,850 in the third quarter of 2020 and was
$4,144,350 for the first nine months of 2021 compared to $3,586,622 for the
first nine 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 $62,491 for the third quarter of 2021 compared to
$53,209 for the third quarter of 2020. For the first nine months of 2021,
interest income was $145,621 compared to $239,365 in the first nine 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 third quarter of 2021 were $20,202 compared
to $20,855, for the third quarter of 2020. Earnings from Majestic 21 for the
first nine months of 2021 were $45,959 compared to $61,125 for the first nine
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 distributions in the third quarter of 2021 of $75,156 compared to
$64,053 in the third quarter of 2020 and $121,024 for the first nine months of
2021 compared to $336,447 for the first nine 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 third quarter of 2021 of $1,397,857 as compared to $1,535,603 in
the third quarter of 2020. The
pre-tax
income for the first nine months of 2021 was $5,067,874 as compared to
$5,422,063 in first nine months of 2020.

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The Company recorded an income tax expense in the amount of $347,111 in the
third quarter of 2021 as compared to $375,465 in third quarter 2020. Income tax
expense for the nine months of 2021 was $1,226,425 compared to $1,311,780 for
the nine months of 2020.
We reported net income of $1,050,746 for the third quarter of 2021 or $0.29 per
share, compared to $1,160,138 or $0.32 per share, for the third quarter of 2020.
For the first nine months of 2021 net income was $3,841,449 or $1.06 per share,
compared to $4,110,283 or $1.13 per share, in the first nine months of 2020.
Liquidity and Capital Resources
Cash and cash equivalents were $33,720,078 at July 31, 2021 compared to
$30,305,902 at October 31, 2020. Certificates of deposit were $2,090,910 at
July 31, 2021 compared to $4,602,307 at October 31, 2020. Short-term investments
were $562,270 at July 31, 2021 compared to $358,960 at October 31, 2020. Working
capital was $34,059,497 at 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 $3.9 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 July 31,
2021, the Company continued to report a strong balance sheet which included
total assets of approximately $64 million which was funded primarily by
stockholders' equity of approximately $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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