NOBILITY HOMES INC - Quarter Report: 2021 January (Form 10-Q)

NOBILITY HOMES INC - Quarter Report: 2021 January (Form 10-Q)

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Form 10-Q

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 January 30, 2021

Commission File number 000-06506

NOBILITY HOMES, INC.

(Exact name of registrant as specified in its charter)

Florida

59-1166102

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

3741 S.W. 7th Street

Ocala, Florida

34474

(Address of principal executive offices)

(Zip Code)

(352) 732-5157

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

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


		Shares Outstanding on
Title of Class		March 16, 2021
Common Stock		3,632,100

NOBILITY HOMES, INC.

INDEX


		Page Number
PART I.	Financial Information

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of January 30, 2021 (Unaudited) and October 31, 2020		3

	Condensed Consolidated Statements of Income for the three months ended January 30, 2021 (Unaudited) and February 1, 2020 (Unaudited)		4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended January 30, 2021 (Unaudited) and February 1, 2020 (Unaudited)		5

	Condensed Consolidated Statements of Cash Flows for the three months ended January 30, 2021 (Unaudited) and February 1, 2020 (Unaudited)		6

	Notes to Condensed Consolidated Financial Statements (Unaudited)		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12

Item 4.	Controls and Procedures		15

PART II.	Other Information

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		16

Item 6.	Exhibits		16

Signatures			17

NOBILITY HOMES, INC.

Condensed Consolidated Balance Sheets


	January 30, 2021			October 31, 2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	32,963,523		$	30,305,902
Certificates of Deposit		3,082,111			4,602,307
Short-term investments		438,916			358,960
Accounts receivable - trade		1,057,086			790,046
Note receivable		29,259			35,997
Mortgage notes receivable		20,776			20,162
Income taxes receivable		—			105,676
Inventories		10,604,393			9,294,677
Pre-owned homes, net		389,679			441,937
Prepaid expenses and other current assets		1,553,057			1,014,849

Total current assets		50,138,800			46,970,513
Property, plant and equipment, net		5,363,841			5,142,714
Pre-owned homes, net		1,346,471			1,077,240
Note receivable, less current portion		6,573			6,573
Mortgage notes receivable, less current portion		226,286			227,509
Other investments		1,743,072			1,729,364
Deferred income taxes		3,598			3,598
Operating lease right of use assets		705,037			715,368
Cash surrender value of life insurance		3,840,452			3,795,902
Other assets		156,287			156,287

Total assets	$	63,530,417		$	59,825,068

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,100,355		$	928,095
Accrued compensation		446,745			670,520
Accrued expenses and other current liabilities		1,113,685			1,383,833
Income taxes payable		230,133			—
Operating lease obligation		27,128			24,192
Customer deposits		7,799,815			5,098,633

Total current liabilities		10,717,861			8,105,273
Operating lease obligation, less current portion		769,869			778,519

Total liabilities		11,487,730			8,883,792

Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.10 par value, 500,000 shares authorized; none issued and outstanding		—			—
Common stock, $.10 par value, 10,000,000 shares authorized; 5,364,907 shares issued; 3,632,446 and 3,631,196 outstanding, respectively		536,491			536,491
Additional paid in capital		10,717,025			10,694,554
Retained earnings		59,041,816			57,976,051
Less treasury stock at cost, 1,732,461 shares in 2021 and 1,733,711 shares in 2020		(18,252,645	)		(18,265,820	)

Total stockholders’ equity		52,042,687			50,941,276

Total liabilities and stockholders’ equity	$	63,530,417		$	59,825,068

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

NOBILITY HOMES, INC.

Condensed Consolidated Statements of Income

(Unaudited)


	Three Months Ended
	January 30,			February 1,
	2021			2020
Net sales	$	9,071,511		$	9,443,852
Cost of sales		(6,574,064	)		(6,554,003	)

Gross profit		2,497,447			2,889,849
Selling, general and administrative expenses		(1,273,381	)		(1,256,144	)

Operating income		1,224,066			1,633,705

Other income:
Interest income		30,656			101,883
Undistributed earnings in joint venture - Majestic 21		13,708			19,872
Proceeds received under escrow arrangement		45,868			83,109
Increase in fair value of equity investment		79,956			—
Miscellaneous		7,320			7,152

Total other income		177,508			212,016

Income before provision for income taxes		1,401,574			1,845,721
Income tax expense		(335,809	)		(445,580	)

Net income	$	1,065,765		$	1,400,141

Weighted average number of shares outstanding:
Basic		3,631,924			3,659,241
Diluted		3,633,493			3,660,638
Net income per share:
Basic	$	0.29		$	0.38
Diluted	$	0.29		$	0.38

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 months ended January 30, 2021 and February 1, 2020

(Unaudited)


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

Balance at November 2, 2019		3,664,070		$	536,491	$	10,687,662	$	55,298,750		$	389,164		$	(17,445,752)		$	49,466,315
Adoption of ASU 2016-01		—			—		—		389,164			(389,164	)		—			—
Adoption of ASU 2016-02		—			—		—		(64,591	)		—			—			(64,591	)
Balance at November 2, 2019		—			—		—		—			—			—			—

as adjusted		3,664,070			536,491		10,687,662		55,623,323			—			(17,445,752	)		49,401,724
Purchase of treasury stock		(14,400	)		—		—		—			—			(345,600	)		(345,600	)
Stock-based compensation		—			—		906		—			—			—			906
Net income		—			—		—		1,400,141			—			—			1,400,141

Balance at February 1, 2020		3,649,670		$	536,491	$	10,688,568	$	57,023,464		$	—		$	(17,791,352	)	$	50,457,171

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

NOBILITY HOMES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended
	January 30,			February 1,
	2021			2020
Cash flows from operating activities:
Net income	$	1,065,765		$	1,400,141
Adjustments to reconcile net income to net cash provide by operating activities:
Depreciation		56,943			39,453
Deferred income taxes		—			26,877
Undistributed earnings in joint venture - Majestic 21		(13,708	)		(19,872	)
(Increase) Decrease in fair market value of equity investments		(79,956	)		10,710
Stock-based compensation		20,521			906
Amortization of operating lease right of use assets		10,331			20,288
Decrease (increase) in:
Accounts receivable - trade		(267,040	)		(482,648	)
Inventories		(1,309,716	)		(34,891	)
Pre-owned homes		(216,973	)		(270,995	)
Prepaid expenses and other current assets		(538,208	)		2,449
Interest receivable		(8,444	)		(48,242	)
Income tax receivables		105,676			—
(Decrease) increase in:
Accounts payable		172,260			(538,411	)
Accrued compensation		(223,775	)		(291,764	)
Accrued expenses and other current liabilities		(270,148	)		(330,909	)
Income taxes payable		230,133			(1,608,214	)
Customer deposits		2,701,182			(529,473	)

Net cash provided by operating activities		1,434,843			(2,654,595	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(278,070	)		(232,649	)
Purchase of certificates of deposit		—			(20,000	)
Proceeds from certicates of deposit		1,500,000			—
Collections on interest receivable		28,640			50,998
Collections on mortgage notes receivable		609			696
Collections on equipment and other notes receivable		6,738			16,252
Increase in cash surrender value of life insurance		(44,550	)		(48,000	)

Net cash provided by (used in) investing activities		1,213,367			(232,703	)

Cash flows from financing activities:
Proceeds from excerise of employee stock option		15,125			—
Purchase of treasury stock		—			(345,600	)
Reduction of operating lease obligation		(5,714	)		(14,503	)

Net cash provided by (used in) financing activities		9,411			(360,103	)

Increase (Decrease) in cash and cash equivalents		2,657,621			(3,247,401	)
Cash and cash equivalents at beginning of year		30,305,902			22,533,965

Cash and cash equivalents at end of quarter	$	32,963,523		$	19,286,564

Supplemental disclosure of cash flows information:
Income taxes paid	$	—		$	2,020,000

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

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 months ended January 30, 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

The unaudited financial information included in this report includes all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods. The results of operations for the three months ended January 30, 2021 are not necessarily indicative of the results of the full fiscal year.

The condensed consolidated financial statements included in this report should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2020.

Note 2 Inventories

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

The Company acquired certain repossessed pre-owned inventory (Buy Back Inventory) in 2011 as part of an Amendment of the Finance Revenue Sharing Agreement with 21^st Mortgage Corporation. This inventory is valued at the Company’s cost to acquire determined on the specific identification method, plus refurbishment costs (any item on the home that needs to be repaired or replaced) incurred to date to bring the inventory to a more saleable state. The Buy Back Inventory amount is reduced where necessary on a unit specific basis by a valuation reserve which management believes results in inventory being valued at market.

Other pre-owned homes are acquired (Repossessions Inventory) as a convenience to the Company’s joint venture partner, 21st Mortgage Corporation. This inventory has been repossessed by 21^st Mortgage Corporation or through mortgage foreclosure. The Company acquired this inventory at the amount of the uncollected balance of the financing at the time of the foreclosure/repossessions by 21st Mortgage Corporation. The Company records this inventory at cost determined on the specific identification method. All of the refurbishment costs are paid by 21^stMortgage 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.

Inventory held at consignment locations by affiliated entities is included in the Company’s inventory on the Company’s condensed consolidated balance sheets. Consigned inventory was $1,385,470 and $1,277,681 as of January 30, 2021 and October 31, 2020, respectively.

Pre-owned homes are also taken as trade-ins on new home sales (Trade-in Inventory). This inventory is recorded at estimated actual wholesale value, which is generally lower than market value, determined on the specific identification method, plus refurbishment costs incurred to date to bring the inventory to a more saleable state. The Trade-in Inventory amount is reduced where necessary on a unit specific basis by a valuation reserve, which management believes results in inventory being valued at market.

Other inventory costs are determined on a first-in, first-out basis. A breakdown of the elements of inventory is as follows:


	January 30,			October 31,
	2021			2020
Raw materials	$	1,263,104		$	1,203,282
Work-in-process		100,935			107,651
Inventory consigned to affiliated entities		1,385,470			1,277,681
Finished homes		7,708,327			6,543,861
Model home furniture		146,557			162,202

Inventories	$	10,604,393		$	9,294,677

Pre-owned homes	$	1,875,477		$	1,686,373
Inventory impairment reserve		(139,327	)		(167,196	)

		1,736,150			1,519,177
Less homes expected to sell in 12 months		(389,679	)		(441,937	)

Pre-owned homes, long-term	$	1,346,471		$	1,077,240

Note	3 Short-term Investments

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


	January 30, 2021
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	270,986	$	—	$	438,916


	October 31, 2020
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	191,030	$	—	$	358,960

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).

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.


	January 30, 2021
	Level 1		Level 2		Level 3
Equity securities in a public company	$	438,916	$	—	$	—


	October 31, 2020
	Level 1		Level 2		Level 3
Equity securities in a public company	$	358,960	$	—	$	—

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. 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
	January 30,		February 1,
	2021		2020
Manufactured housing
Homes sold through Company owned sales centers	$	7,543,182	$	6,758,531
Homes sold to independent dealers		1,203,736		2,153,322
Homes sold through manufactured home parks		218,435		359,742

	$	8,965,353	$	9,271,595
Pre-owned homes		40,187		105,509
Insurance agent commissions		65,971		66,748

Total net sales	$	9,071,511	$	9,443,852

Note 7 Operating Leases

The Company leases the property for several Prestige retail sales centers from various unrelated entities under operating lease agreements expiring through December 2021. The Company also leases certain equipment under unrelated operating leases. These leases have varying renewal options.

Right of use assets are included as a non-current asset in the amount of $705,037, net of amortization in the consolidated Balance Sheet as of January 30, 2021.

Based on the terms of the lease agreements, all of the Company’s leases are classified as operating leases. The weighted average remaining lease term and weighted average discount rate of the operating leases is 8.91 years and 3.0%, respectively.

Minimum rental payments under operating leases are recognized on a straight-line basis over the term of the lease. Individual components of the total lease cost incurred by the Company in the amount of $48,406 for the three months ended January 30, 2021.

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


	Operating Lease
Undiscounted future minimum lease payments:
2021 (9 months remaining)	$	47,447
2022		68,401
2023		74,322
2024		80,955
Thereafter		458,175

Total		817,687
Amount representing imputed interest		(20,690	)

Total operating lease liability		796,997
Current portion of operating lease liability		(27,128	)

Operating lease liability, non-current	$	769,869

Note 8 Subsequent Events

The Board of Directors declared a one-time cash dividend of $1.00 per common share for fiscal year 2020. The cash dividend is payable on March 26, 2021 to stockholders of record as of March 12, 2021.

On February 1, 2021, the Company purchased land in Ocala for a future retail sales center for $1,040,000.

The Company repurchased 346 shares of its common stock in February 2021 at a price per share of $30.50.

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

Results of Operations

Total revenues in the first quarter of 2021 were $9,071,511 compared to $9,443,852 in first quarter 2020. The Company reported net income of $1,065,765 in the first quarter of 2021, compared to a net income of $1,400,141 during the first quarter of 2020. The demand for affordable manufactured housing in Florida has been adversely impacted by COVID-19 and actions taken in response thereto. According to the Florida Manufactured Housing Association, shipments for the industry in Florida for the period from November 2020 through January 2021 were flat from the same period last year. In addition, the lack of lenders in our industry, partly as a result of an increase in government regulations, still adversely affects our results by limiting many affordable manufactured housing buyers from purchasing homes. Since May of 2020 the Company has experienced unprecedented inflation in forest products, with no immediate relief in sight resulting in significant increases to our material costs. The Company is monitoring these costs and have adjusted our selling prices accordingly to help offset the higher costs.

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


	Three Months Ended
	January 30,			February 1,
	2021			2020
New homes sold through Company owned sales centers		82			72
Pre-owned homes sold through Company owned sales centers:		1			2
Homes sold to independent dealers		40			56
Total new factory built homes produced		150			123
Average new manufactured home price - retail	$	88,250		$	95,390
Average new manufactured home price - wholesale	$	47,515		$	44,584
As a percent of net sales:
Gross profit from the Company owned retail sales centers		18	%		20	%
Gross profit from the manufacturing facilities - including intercompany sales		15	%		25	%

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, 2020 the Company celebrated its 53rd 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.

Insurance agent commission revenues in the first quarter of 2021 were $65,971 compared to $66,748 in the first quarter of 2020. Revenues are generated by new and renewal policies being written 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 January 30, 2021 and October 31, 2020.

Gross profit as a percentage of net sales was 28% in first quarter of 2021 compared to 31% for the first quarter of 2020. The gross profit in the first quarter of 2021 was $2,497,447 compared to $2,889,849 in the first quarter of 2020. The gross profit is dependent on the sales mix of wholesale and retail homes and number of pre-owned homes sold. The reduction in gross profit as a percentage of net sales is due to the decrease in sales and primarily due to the significant increases in material costs, primarily as a result of forest based products, which were not offset by additional increases in the sales price of each home manufactured in first quarter 2021.

Selling, general and administrative expenses as a percent of net sales was 14% in first quarter of 2021 compared to 13% in the first quarter of 2020. Selling, general and administrative expenses in first quarter of 2021 was $1,273,381 compared to $1,256,144 in the first quarter of 2020. The increase in expenses in 2021 were due to the increase in variable expenses which were direct results of employee benefits compensation.

We earned interest income of $30,656 for the first quarter of 2021 compared to $101,883 for the first quarter of 2020. The decrease is primarily due to the decrease in the balance and applicable interest rate in the money market accounts and certificates of deposit.

Our earnings from Majestic 21 in the first quarter of 2021 were $13,708 compared to $19,872 for the first quarter 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.

We received distributions of $45,868 in the first quarter of 2021 compared to $83,109 in the first quarter of 2020. The distributions are from an escrow arrangement related to a Finance Revenue Sharing Agreement 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 Company realized pre-tax income in the first quarter of 2021 of $1,401,574 as compared to $1,845,721 in the first quarter of 2020.

The Company recorded an income tax expense in the amount of $335,809 in the first quarter of 2021 as compared to $445,580 in first quarter 2020.

We reported net income of $1,065,765 for the first quarter of 2021 or $0.29 per basic and diluted share, compared to $1,400,141 or $0.38 per basic and diluted share, for the first quarter of 2020.

Liquidity and Capital Resources

Cash and cash equivalents were $32,963,523 at January 30, 2021 compared to $30,305,902 at October 31, 2020. Certificates of deposit were $3,082,111 at January 30, 2021 compared to $4,602,307 at October 31, 2020. Short-term investments were $438,916 at January 30, 2021 compared to $358,960 at October 31, 2020. Working capital was $39,420,939 at January 30, 2021 as compared to $38,865,240 at October 31, 2020. The Company purchased the land for the Tavares retail sales center in January 2021 for $245,000. On February 1, 2021, the Company purchased land in Ocala for a future retail sales center for $1,040,000. 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 no material commitments for capital expenditures.

The Company currently has no line of credit facility and no debt and does not believe that such a facility is currently necessary to its operations. The Company also has approximately $3.8 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 January 30, 2021, the Company continued to report a strong balance sheet which included total assets of approximately $63 million which was funded primarily by stockholders’ equity of approximately $52 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, 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 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.

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 January 30, 2021.

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

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 first quarter ended January 30, 2021.

In September 2020 the Company’s Board of Directors authorized 200,000 shares to be repurchased during fiscal year 2021 in the open market.

Item 6. Exhibits


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

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

32.	(a)	Written Statement of Chief Executive Officer Pursuant to 18 U.S.C. §1350

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

101.		Interactive data filing formatted in XBRL

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: March 16, 2021						By: /s/ Terry E. Trexler
						Terry E. Trexler, Chairman,
						President and Chief Executive Officer

DATE: March 16, 2021						By: /s/ Thomas W. Trexler
						Thomas W. Trexler, Executive Vice President,
						and Chief Financial Officer

DATE: March 16, 2021						By: /s/ Lynn J. Cramer, Jr.
						Lynn J. Cramer, Jr., Treasurer
						and Principal Accounting Officer

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Emerging growth company