Nobility Homes, Inc. Announces Sales and Earnings for Its Third Quarter 2020
Nobility Homes (OTCQX:NOBH) reported a decline in sales and earnings for Q3 2020, with sales of $8.8 million, down from $11.8 million in Q3 2019. Net income fell to $1.16 million from $2.54 million, and diluted EPS decreased from $0.67 to $0.32 year-over-year. For the first nine months, sales reached $28.4 million compared to $35.6 million last year. Despite these challenges, the company maintains a strong financial position with $29.5 million in cash, no debt, and a working capital ratio of 7.8:1.
- Strong cash position of $29.5 million with no outstanding debt.
- Stockholders' equity of $49.1 million and a book value per share of $13.51.
- Management's focus on maintaining financial stability amid challenges.
- Sales declined 25.5% year-over-year in Q3 2020.
- Net income decreased 54.4% year-over-year in Q3 2020.
- Unprecedented inflation in forest products increasing material costs.
- COVID-19 adversely impacting customer traffic and demand for affordable housing.
OCALA, FL / ACCESSWIRE / September 11, 2020 / Today Nobility Homes, Inc. (OTCQX:NOBH) announced sales and earnings for its third quarter ended August 1, 2020. Sales for the third quarter of 2020 were
For the first nine months of fiscal 2020, sales were
Nobility's financial position for the first nine months of 2020 remains very strong with cash and cash equivalents, certificates of deposit and short term investments of
Terry Trexler, President, stated, "The coronavirus ("COVID-19") pandemic has resulted in government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns. Although we were deemed an essential business and never closed our manufacturing plant or retail sales centers, these measures had a negative impact on customer traffic (and corresponding sales) within our centers and the operations of our business partners. While our manufacturing operations have continued, an outbreak in our manufacturing facility would adversely impact our ability to produce new homes. There is considerable uncertainty regarding the impact, and expected duration, of such measures and potential future measures, which could cause disruptions to our business in the future. Since May of 2020 the Company has experienced unprecedented inflation in forest products, with no immediate relief in sight. The rapid increases have resulted in increases to our material costs. Recently, Hurricane Laura damaged some of the plants that supply the resin used in residential vinyl siding and PVC piping, which is currently threatening our supply chain. The Company is monitoring these issues daily and have adjusted our selling prices accordingly to help offset the higher costs.
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 in Florida for the period from November 2019 through July 2020 were down approximately
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.
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 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 coronavirus or other health pandemic, competitive pricing pressures at both the wholesale and retail levels, increasing material costs or availability of materials due to potential supply chain interruptions, continued excess retail inventory, increase in repossessions, 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 and any armed conflict involving the United States and the impact of inflation.
NOBILITY HOMES, INC.
Condensed Consolidated Balance Sheets
August 1, | November 2, | |||||||
2020 | 2019 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20,911,248 | $ | 22,533,965 | ||||
Certificates of Deposit | 8,192,314 | 10,153,575 | ||||||
Short-term investments | 355,315 | 521,283 | ||||||
Accounts receivable - trade | 713,358 | 1,351,838 | ||||||
Note receivable | 49,089 | 83,231 | ||||||
Mortgage notes receivable | 19,742 | 17,896 | ||||||
Inventories | 10,637,620 | 10,616,778 | ||||||
Pre-owned homes, net | 253,060 | 331,103 | ||||||
Prepaid expenses and other current assets | 1,062,244 | 1,217,762 | ||||||
Total current assets | 42,193,990 | 46,827,431 | ||||||
Property, plant and equipment, net | 5,156,732 | 5,005,644 | ||||||
Pre-owned homes, net | 1,271,768 | 808,128 | ||||||
Note receivable, less current portion | 11,693 | 43,769 | ||||||
Mortgage notes receivable, less current portion | 228,706 | 232,148 | ||||||
Other investments | 1,710,398 | 1,649,273 | ||||||
Deferred income taxes | 27,267 | 80,405 | ||||||
Operating lease right of use assets | 727,180 | - | ||||||
Cash surrender value of life insurance | 3,761,974 | 3,617,974 | ||||||
Other assets | 156,287 | 156,287 | ||||||
Total assets | $ | 55,245,995 | $ | 58,421,059 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 653,332 | $ | 1,111,216 | ||||
Accrued compensation | 451,891 | 748,626 | ||||||
Accrued expenses and other current liabilities | 1,172,806 | 2,055,952 | ||||||
Income taxes payable | - | 2,016,132 | ||||||
Operating lease obligation | 21,381 | - | ||||||
Customer deposits | 3,091,885 | 3,022,818 | ||||||
Total current liabilities | 5,391,295 | 8,954,744 | ||||||
Operating lease obligation, less current portion | 787,745 | - | ||||||
Total liabilities | 6,179,040 | 8,954,744 | ||||||
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; | ||||||||
3,631,196 and 3,664,070 outstanding, respectively | 536,491 | 536,491 | ||||||
Additional paid in capital | 10,693,648 | 10,687,662 | ||||||
Retained earnings | 56,102,636 | 55,298,750 | ||||||
Accumulated other comprehensive income | - | 389,164 | ||||||
Less treasury stock at cost, 1,733,711 shares in 2020 and | ||||||||
1,700,837 shares in 2019 | (18,265,820) | (17,445,752) | ||||||
Total stockholders' equity | 49,066,955 | 49,466,315 | ||||||
Total liabilities and stockholders' equity | $ | 55,245,995 | $ | 58,421,059 | ||||
NOBILITY HOMES, INC.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
August 1, | August 3, | August 1, | August 3, | |||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net sales | $ | 8,800,410 | $ | 11,785,366 | $ | 28,446,764 | $ | 35,567,828 | ||||||||
Cost of sales | (6,361,500) | (8,139,910) | (19,980,510) | (25,506,957) | ||||||||||||
Gross profit | 2,438,910 | 3,645,456 | 8,466,254 | 10,060,871 | ||||||||||||
Selling, general and administrative expenses | (1,107,850) | (1,352,315) | (3,586,622) | (3,860,173) | ||||||||||||
Operating income | 1,331,060 | 2,293,141 | 4,879,632 | 6,200,698 | ||||||||||||
Other income (loss): | ||||||||||||||||
Interest income | 53,209 | 134,526 | 239,365 | 431,995 | ||||||||||||
Undistributed earnings in joint venture - Majestic 21 | 20,855 | 19,800 | 61,125 | 60,555 | ||||||||||||
Proceeds received under escrow arrangement | 64,053 | 76,734 | 336,447 | 289,341 | ||||||||||||
Market value of equity investment | 21,475 | - | (159,051) | - | ||||||||||||
Gain on sale of assets | 32,041 | 864,887 | 32,041 | 880,129 | ||||||||||||
Miscellaneous | 12,910 | 10,834 | 32,504 | 33,714 | ||||||||||||
Total other income | 204,543 | 1,106,781 | 542,431 | 1,695,734 | ||||||||||||
Income before provision for income taxes | 1,535,603 | 3,399,922 | 5,422,063 | 7,896,432 | ||||||||||||
Income tax expense | (375,465) | (856,818) | (1,311,780) | (1,997,797) | ||||||||||||
Net income | 1,160,138 | 2,543,104 | 4,110,283 | 5,898,635 | ||||||||||||
Other comprehensive income (loss) | ||||||||||||||||
Unrealized investment income net of tax effect | - | (96,120) | - | (40,408) | ||||||||||||
Comprehensive income | $ | 1,160,138 | $ | 2,446,984 | $ | 4,110,283 | $ | 5,858,227 | ||||||||
Weighted average number of shares outstanding: | ||||||||||||||||
Basic | 3,631,089 | 3,807,357 | 3,641,048 | 3,848,936 | ||||||||||||
Diluted | 3,632,420 | 3,808,617 | 3,642,397 | 3,850,169 | ||||||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.32 | $ | 0.67 | $ | 1.13 | $ | 1.53 | ||||||||
Diluted | $ | 0.32 | $ | 0.67 | $ | 1.13 | $ | 1.53 | ||||||||
SOURCE: Nobility Homes, Inc.
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