Market Overview

Nobility Homes, Inc. Announces Sales and Earnings for Its Third Quarter 2017

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OCALA, FL / ACCESSWIRE / September 14, 2017 / Today, Nobility Homes, Inc. (OTCQX: NOBH) announced sales and earnings results for its third quarter ended August 5, 2017. Sales for third quarter 2017 were $8,906,385, as compared to $9,779,621 recorded in third quarter 2016. Sales declined due to a significant amount of rain during the quarter which delayed the completion of construction, ultimately delaying fundings at Prestige. Additionally, the increase in business, industry wide, has placed pressure on the limited capacity of sub-contractors necessary for the site-work portion of the construction of our homes. Our retail sold homes under construction in the field increased 123% over the third quarter last year. Income from operations was $934,864 versus $1,240,492 last year. Net income after taxes was $669,883, as compared to $894,271 last year. In the third quarter of 2017, we received payment under an escrow arrangement related to the finance revenue sharing agreement between 21st Mortgage Corporation and the Company of $72,867. Diluted earnings per share were $0.17, compared to $0.22 per share last year.

For the first nine months of fiscal 2017, sales were up 9% to $27,525,855, as compared to $25,269,511 for the first nine months of 2016. Income from operations was up 3% to $3,267,938 versus $3,170,102 last year. Net income after taxes was $2,480,715, compared to $5,244,553 last year. In the second quarter of 2016, the Company sold its limited partnership interest in CRF III, Ltd. ("Cypress Creek"), a retirement community which resulted in a gain of $3,990,000 and also received revenue of $788,566 under an escrow arrangement related to the Finance Revenue Sharing Agreement between 21st Mortgage Corporation, Prestige Home Centers, Inc., and Majestic Homes, Inc. Diluted earnings per share were $0.62 per share, compared to $1.30 per share last year.

Nobility's financial position for the first nine months of 2017 remains very strong with cash and cash equivalents and short term investments of $26,237,802 and no outstanding debt. Working capital is $35,238,837 and our ratio of current assets to current liabilities is 8.9:1. Stockholders' equity is $46,588,232 and the book value per share of common stock outstanding increased to $11.65.

Terry Trexler, President, stated, "The demand for affordable manufactured housing in Florida and the U.S. continues to improve. According to the Florida Manufactured Housing Association, shipments in Florida for the period from November 2016 through July 2017 were up approximately 7% from the same period last year. Our sales and earnings continue to be affected by the lack of available retail and wholesale financing. Constrained consumer credit and the lack of lenders in the industry, partly as a result of an increase in government regulations, have limited many manufactured housing buyers from purchasing affordable manufactured homes.

Our manufacturing facility was not damaged by Hurricane Irma. In fact, none of our model homes displayed at our Prestige Model Centers suffered any damage; not even the ones in Punta Gorda, near where the storm made landfall on the Florida peninsula. This is another testament to the strength of today's manufactured homes.

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, 2017, the Company celebrated its 50th anniversary in business specializing in the design and production of quality, affordable manufactured homes. With multiple retail sales centers, an insurance agency subsidiary, and an investment in a retirement manufactured home community, we are the only vertically integrated manufactured home company headquartered in Florida.

MANAGEMENT WILL NOT HOLD A CONFERENCE CALL. IF YOU HAVE ANY QUESTIONS, PLEASE CALL TERRY OR TOM TREXLER @ 800-476-6624 EXT 221 OR TERRY@NOBILITYHOMES.COM OR TOM@NOBILITYHOMES.COM.

Certain statements in this report are forward-looking statements within the meaning of the federal securities laws. Although Nobility believes that the 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, competitive pricing pressures at both the wholesale and retail levels, increasing material costs, uncertain economic conditions, 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, possible labor shortages, possible materials shortages, increasing labor cost, cyclical nature of the manufactured housing industry, impact of 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 and any armed conflict involving the United States and the impact of inflation.


NOBILITY HOMES, INC.

Consolidated Balance Sheets

August 5,
November 5,
2017
2016
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$ 25,607,071 $ 24,562,638
Short-term investments
630,731 481,025
Accounts receivable - trade
2,602,610 2,641,763
Note receivable
500,000 500,000
Mortgage notes receivable
12,874 9,717
Inventories
7,917,057 6,969,081
Pre-owned homes, net
1,134,211 1,295,694
Property held for sale
213,437 213,437
Prepaid expenses and other current assets
577,976 638,939
Deferred income taxes
491,270 556,773
Total current assets
39,687,237 37,869,067
Property, plant and equipment, net
4,256,803 4,063,711
Pre-owned homes, net
1,305,408 1,733,610
Interest receivable
89,857 48,376
Note receivable, less current portion
1,030,000 2,030,000
Mortgage notes receivable, less current portion
241,218 174,270
Other investments
1,448,254 1,367,496
Property held for sale
386,018 386,018
Cash surrender value of life insurance
3,265,916 3,085,916
Other assets
156,287 156,287
Total assets
$ 51,866,998 $ 50,914,751
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$ 668,817 $ 835,279
Accrued compensation
469,956 682,815
Accrued expenses and other current liabilities
1,002,843 1,123,698
Income taxes payable
402,351 759,128
Customer deposits
1,904,433 1,706,795
Total current liabilities
4,448,400 5,107,715
Deferred income taxes
830,366 1,140,529
Total liabilities
5,278,766 6,248,244
Commitments and contingent liabilities
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
536,491 536,491
Additional paid in capital
10,668,790 10,663,348
Retained earnings
45,338,260 43,458,271
Accumulated other comprehensive income
415,877 266,171
Less treasury stock at cost, 1,367,338 shares in 2017 and
1,361,300 shares in 2016
(10,371,186 ) (10,257,774 )
Total stockholders' equity
46,588,232 44,666,507
Total liabilities and stockholders' equity
$ 51,866,998 $ 50,914,751

NOBILITY HOMES, INC.

Consolidated Statements of Income and Comprehensive Income

Unaudited

Three Months Ended
Nine Months Ended
Aug 5,
July 30,
Aug 5,
July 30,
2017
2016
2017
2016
Net sales
$ 8,906,385 $ 9,779,621 $ 27,525,855 $ 25,269,511
Cost of goods sold
(6,942,792 ) (7,599,070 ) (21,139,315 ) (19,366,957 )
Gross profit
1,963,593 2,180,551 6,386,540 5,902,554
Selling, general and administrative expenses
(1,028,729 ) (940,059 ) (3,118,602 ) (2,732,452 )
Operating income
934,864 1,240,492 3,267,938 3,170,102
Other income
Interest income
33,543 43,155 105,347 77,246
Undistributed earnings in joint venture - Majestic 21
24,037 28,429 80,758 97,539
Proceeds received under escrow arrangement
72,867 - 298,824 788,566
Gain on sale of investment in retirement community
- - - 3,990,000
Miscellaneous
18,749 5,559 33,411 25,404
Total other income
149,196 77,143 518,340 4,978,755
Income before provision for income taxes
1,084,060 1,317,635 3,786,278 8,148,857
Income tax expense
(414,177 ) (423,364 ) (1,305,563 ) (2,904,304 )
Net income
669,883 894,271 2,480,715 5,244,553
Other comprehensive income (loss)
Unrealized investment gain (loss)
21,081 (13,176 ) 149,706 (40,427 )
Comprehensive income
$ 690,964 $ 881,095 $ 2,630,421 $ 5,204,126
Weighted average number of shares outstanding:
Basic
4,003,096 4,022,311 4,004,058 4,023,689
Diluted
4,004,387 4,023,714 4,005,325 4,024,739
Net income per share:
Basic
$ 0.17 $ 0.22 $ 0.62 $ 1.30
Diluted
$ 0.17 $ 0.22 $ 0.62 $ 1.30

SOURCE: Nobility Homes, Inc.

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