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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