Nobility Homes : Quarterly Report for Quarter Ending August 6, 2022 (Form 10-Q)

10-Q

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 August 6, 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 (I.R.S. Employer Identification No.)

3741 S.W. 7th Street Ocala, Florida (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 September 19 , 2022
Common Stock		3,370,912

Table of Contents

NOBILITY HOMES, INC.

INDEX

				Page Number
PART I.		Financial Information
Item 1.		Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of August 6, 2022 (Unaudited) and November 6, 2021			2
	Condensed Consolidated Statements of Income for the three and nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited)			3
	Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited)			4
	Condensed Consolidated Statements of Cash Flows for the nine months ended August 6, 2022 (Unaudited) and July 31, 2021 (Unaudited)			5
	Notes to Condensed Consolidated Financial Statements (Unaudited)			6
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations			10
Item 4.		Controls and Procedures			14
PART II.		Other Information
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			15
Item 6.		Exhibits			15
Signatures				16

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NOBILITY HOMES, INC.

Condensed Consolidated Balance Sheets

		August 6, 2022 (Unaudited)			November 6, 2021
Assets
Current assets:
Cash and cash equivalents		$	20,437,309			$	36,126,059
Certificates of deposit			1,946,429				2,093,015
Short-term investments			541,132				621,928
Accounts receivable - trade			775,596				680,228
Note receivable			23,905				32,825
Mortgage notes receivable			15,566				22,589
Inventories			20,385,622				10,394,288
Pre-owned homes, net			662,453				542,081
Prepaid expenses and other current assets			2,314,540				1,821,267
Total current assets			47,102,552				52,334,280
Property, plant and equipment, net			7,569,386				6,847,780
Pre-owned homes, net			-				755,394
Note receivable, less current portion			22,243				38,895
Mortgage notes receivable, less current portion			132,184				222,459
Mobile home park note receivable			201,464				72,731
Other investments			1,829,146				1,788,436
Operating lease right of use assets			-				1,597
Cash surrender value of life insurance			4,095,216				3,966,939
Other assets			156,287				156,287
Total assets		$	61,108,478			$	66,184,798
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	1,329,275			$	939,964
Accrued compensation			832,632				555,222
Accrued expenses and other current liabilities			1,571,351				1,513,967
Income taxes payable			156,918				89,083
Operating lease obligation			-				1,597
Customer deposits			11,984,065				13,671,092
Total current liabilities			15,874,241				16,770,925
Deferred income taxes			65,496				99,568
Total liabilities			15,939,737				16,870,493
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.10par value, 500,000 shares authorized; none issued and outstanding			-				-
Common stock, $.10par 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			10,828,305				10,766,253
Retained earnings			60,708,402				59,742,759
Less treasury stock at cost, 1,993,995 and 1,832,807 shares, respectively			(26,904,457	)			(21,731,198	)
Total stockholders' equity			45,168,741				49,314,305
Total liabilities and stockholders' equity		$	61,108,478			$	66,184,798

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

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NOBILITY HOMES, INC.

Condensed Consolidated Statements of Income

(Unaudited)

		Three Months Ended			Nine Months Ended
		August 6, 2022			July 31, 2021			August 6, 2022			July 31, 2021
Net sales		$	13,846,698			$	11,778,120			$	35,300,014			$	35,592,531
Cost of sales			(9,948,638	)			(9,265,376	)			(25,651,808	)			(26,969,655	)
Gross profit			3,898,060				2,512,744				9,648,206				8,622,876
Selling, general and administrative expenses			(1,653,200	)			(1,320,456	)			(4,448,349	)			(4,144,350	)
Operating income			2,244,860				1,192,288				5,199,857				4,478,526
Other income (loss):
Interest income			62,449				62,491				176,706				145,621
Undistributed earnings in joint venture - Majestic 21			15,488				20,202				40,710				45,959
Proceeds received under escrow arrangement			52,140				75,156				285,639				121,024
(Decrease) increase in fair value of equity investment			(57,022	)			(449	)			(80,796	)			203,310
Gain on disposal of property, plant and equipment			-				-				88,936				-
Miscellaneous			161,157				48,169				187,065				73,434
Total other income			234,212				205,569				698,260				589,348
Income before provision for income taxes			2,479,072				1,397,857				5,898,117				5,067,874
Income tax expense			(594,313	)			(347,111	)			(1,399,498	)			(1,226,425	)
Net income			1,884,759				1,050,746				4,498,619				3,841,449
Weighted average number of shares outstanding:
Basic			3,370,912				3,599,133				3,460,074				3,621,084
Diluted			3,376,711				3,613,187				3,469,769				3,630,216
Net income per share:
Basic		$	0.56			$	0.29			$	1.30			$	1.06
Diluted		$	0.56			$	0.29			$	1.30			$	1.06

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

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NOBILITY HOMES, INC.

Condensed Consolidated Statements of Changes in Stockholders' Equity

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

(Unaudited)

		Common Stock 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
Stock-based compensation			180				-				33,218				-				2,135				35,353
Exercise of employee stock options			966				-				(17,452	)			-				17,452				-
Treasury stock purchase			(270	)			-				-				-				(9,197	)			(9,197	)
Net income			-				-				-				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
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
Stock-based compensation			-				-				21,382				-				-				21,382
Net income			-				-				-				1,884,759				-				1,884,759
Balance at August 6, 2022			3,370,912			$	536,491			$	10,828,305			$	60,708,402			$	(26,904,457	)		$	45,168,741

		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
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

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

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NOBILITY HOMES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

		Nine Months Ended
		August 6, 2022			July 31, 2021
Cash flows from operating activities:
Net income		$	4,498,619			$	3,841,449
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation			129,681				142,224
Deferred income taxes			(34,072	)			90,011
Undistributed earnings in joint venture - Majestic 21			(40,710	)			(45,959	)
Gain on disposal of property, plant and equipment			(88,936	)			-
Decrease (increase) in fair market value of equity investments			80,796				(203,310	)
Stock-based compensation			84,060				53,340
Amortization of operating lease right of use assets			1,597				31,226
Decrease (increase) in:
Accounts receivable - trade			(95,368	)			(344,629	)
Inventories			(9,991,334	)			(134,246	)
Pre-owned homes			635,022				124,292
Prepaid expenses and other current assets			(493,273	)			(355,490	)
Interest receivable			(2,429	)			(16,223	)
Income tax receivable			-				24,414
(Decrease) increase in:
Accounts payable			389,311				(109,865	)
Accrued compensation			277,410				(228,760	)
Accrued expenses and other current liabilities			57,384				44,028
Income taxes payable			67,835				-
Customer deposits			(1,687,027	)			7,251,592
Net cash (used in) provided by operating activities			(6,211,434	)			10,164,094
Cash flows from investing activities:
Purchase of property, plant and equipment			(859,321	)			(1,916,288	)
Purchase certificates of deposit			(1,944,000	)			-
Proceeds from certificates of deposit			2,087,936				2,496,000
Proceeds from disposal of property, plant and equipment			96,970				-
Collections on interest receivable			5,079				31,620
Collections on mortgage notes receivable			97,298				1,692
Collections (issuance of) on equipment and other notes receivable			25,572				(43,661	)
Issuance of mobile home park note receivable			(128,733	)			(72,731	)
Increase in cash surrender value of life insurance			(128,277	)			(133,650	)
Net cash (used in) provided by investing activities			(747,476	)			362,982
Cash flows from financing activities:
Payment of cash dividend			(3,532,976	)			(3,632,100	)
Proceeds from exercise of employee stock option			-				15,125
Purchase of treasury stock			(5,195,267	)			(3,478,553	)
Reduction of operating lease obligation			(1,597	)			(17,372	)
Net cash used in financing activities			(8,729,840	)			(7,112,900	)
(Decrease) increase in cash and cash equivalents			(15,688,750	)			3,414,176
Cash and cash equivalents at beginning of year			36,126,059				30,305,902
Cash and cash equivalents at end of quarter		$	20,437,309			$	33,720,078
Supplemental disclosure of cash flows information:
Income taxes paid		$	1,365,735			$	1,112,000
Noncash exercise of employee stock options		$	(9,197	)		$	-

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

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Nobility Homes, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 Basis of Presentation and Accounting Policies

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

10-Q.

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

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

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

Form 10-K

for the fiscal year ended November 6, 2021.

Note 2 Inventories

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

Other

pre-owned

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

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.

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 $915,683 and $794,766 as of August 6, 2022 and November 6, 2021, respectively.

Pre-owned

homes are also taken as

trade-ins

on new home sales

(Trade-in

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

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The

Trade-in

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

Other inventory costs are determined on a

first-in,

first-out

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

		August 6, 2022			November 6, 2021
Raw materials		$	2,314,299			$	2,225,532
Work-in-process			132,416				97,021
Inventory consigned to affiliated entities			915,683				794,766
Finished homes			16,869,501				7,140,880
Model home furniture			153,723				136,089
Inventories		$	20,385,622			$	10,394,288
Pre-owned homes		$	662,453			$	1,297,475
Less homes expected to sell in 12 months			(662,453	)			(542,081	)
Pre-owned homes, long term		$	-			$	755,394

Note 3 Short-term Investments

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

		August 6, 2022
		Cost			Gross Unrealized Gains			Gross Unrealized Losses			Estimated Fair Value
Equity securities in a public company		$	167,930			$	373,202			$	-			$	541,132

		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.

Note 4 Fair Value of Financial Instruments

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

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

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

•

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

•

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

•

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

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

		August 6, 2022
		Level 1			Level 2			Level 3
Equity securities in a public company		$	541,132			$	-			$	-

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

Note 5 Net Income per Share

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

Note 6 Revenues by Products and Service

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

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Revenues by net sales from manufactured housing,

pre-owned

homes and insurance agent commissions are as follows:

		Three Months Ended			Nine Months Ended
		August 6, 2022			July 31, 2021			August 6, 2022			July 31, 2021
Manufactured housing
Homes sold through Company owned sales centers		$	12,724,766			$	10,128,706			$	31,407,700			$	30,033,265
Homes sold to independent dealers			539,350				833,904				1,472,061				3,661,753
Homes sold through manufactured home parks			249,760				458,955				1,240,110				1,108,600
		$	13,513,876			$	11,421,565			$	34,119,871			$	34,803,618
Pre-owned homes			254,911				288,261				957,745				572,005
Insurance agent commissions			77,911				68,294				222,398				216,908
Total net sales		$	13,846,698			$	11,778,120			$	35,300,014			$	35,592,531

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

Results of Operations

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

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

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

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

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

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

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

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

pre-owned

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

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

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

pre-owned

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

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

We received distributions from 21

st

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

st

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

st

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

The Company realized

pre-tax

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

pre-tax

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

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

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

Liquidity and Capital Resources

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

pre-owned

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

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

Critical Accounting Policies and Estimates

In Item 7 of our Form

10-K,

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

Forward-Looking Statements

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

COVID-19

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

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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 August 6, 2022.

Changes in Internal Control over Financial Reporting.

There were no changes in our internal controls over financial reporting that occurred during the third quarter of fiscal 2022 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 Company did not repurchase any shares of its common stock during the third quarter ended August 6, 2022.

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

Item 6. Exhibits

31. (a)

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule13a-14(a) or15d-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 Rule13a-14(a) or15d-14(a) under the Securities Exchange Act of 1934

32. (a)

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

(b)

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

101.

Interactive data filing formatted in XBRL

104.

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

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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: September 19, 2022				By: /s/ Terry E. Trexler
			Terry E. Trexler, Chairman,
			President and Chief Executive Officer
DATE: September 19, 2022				By: /s/ Thomas W. Trexler
			Thomas W. Trexler, Executive Vice President,
			and Chief Financial Officer
DATE: September 19, 2022				By: /s/ Lynn J. Cramer, Jr.
			Lynn J. Cramer, Jr., Treasurer
			and Principal Accounting Officer

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