Results of Operations



Total revenues in the second quarter of 2021 increased 45% to $14,742,900
compared to $10,202,502 in the second quarter of 2020. Total net sales for the
first six months of 2021 increased 21% to $23,814,411 compared to $19,646,354
for the first six months of 2020. The Company reported net income of $1,724,938
in the second quarter of 2021, compared to a net income of $1,550,004 during the
second quarter of 2020. Net income for the first six months of 2021 was
$2,790,703 compared to a net income of $2,950,145 for the first six months of
2020. According to the Florida Manufactured Housing Association, shipments for
the industry in Florida for the period from November 2020 through May 2021 were
up approximately 6% 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 most building products, with
no immediate relief in sight resulting in significant increases to our material
costs and a corresponding decrease in gross profits.

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



                                                  Three Months Ended             Six Months Ended
                                                May 1,          May 2,         May 1,         May 2,
                                                 2021            2020           2021           2020
New homes sold through Company owned sales
centers                                              132             90            214            162
Pre-owned homes sold through Company owned
sales centers                                          5              2              6              4
Homes sold to independent dealers                     49             52             89            108
Total new factory built homes produced               178            143            328            266

Average new manufactured home price-retail $ 91,217 $ 89,135

   $ 90,080       $ 91,915
Average new manufactured home
price-wholesale                                $  47,578       $ 42,985       $ 47,549       $ 43,724
As a percent of net sales:
Gross profit from the Company owned retail
sales centers                                         15 %           20 %           15 %           20 %
Gross profit from the manufacturing
facilities - including intercompany sales             18 %           22 %           18 %           24 %


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, 2021 the Company celebrated its 54th 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 second quarter of 2021 were $82,643
compared to $72,772 in the second quarter of 2020. Total insurance agent
commission revenues for the first six months of 2021 were $148,614 compared to
$139,520 for the first six months of 2020. The increase in insurance agent
commissions in the first six months of 2020 were due to more new policies and
renewals generated 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 May 1, 2021and October 31, 2020.



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Gross profit as a percentage of net sales was 25% in the second quarter of 2021
compared to 31% for the second quarter of 2020 and was 26% for the first six
months of 2021 compared to 31% for the first six months of 2020. The gross
profit in the second quarter of 2021 was $3,612,685 compared to $3,137,495 in
the second quarter of 2020 and was $6,110,132 for the first six months of 2021
compared to $6,027,344 for the first six months of 2020. The gross profit is
dependent on the sales mix of wholesale and retail homes and number of pre-owned
homes sold. The decrease in gross profit as a percentage of net sales is
primarily due to the unprecedented inflation in most building products which
increased the material cost of each home manufactured in first and second
quarter 2021. We are monitoring this situation and will continue to adjust our
selling prices to help offset the higher costs on each home.

Selling, general and administrative expenses as a percent of net sales was 11%
in second quarter of 2021 compared to 12% in the second quarter of 2020 and was
12% for the first six months of 2021 compared to 13% for the first six months of
2020. Selling, general and administrative expenses in second quarter of 2021 was
$1,550,513 compared to $1,222,628 in the second quarter of 2020 and was
$2,823,894 for the first six months of 2021 compared to $2,478,772 for the first
six months of 2020. The increase in expenses in 2021 were due to the increase in
variable expenses which were a direct result of employee benefits compensation
due to the increase in sales.

We earned interest income of $52,474 for the second quarter of 2021 compared to
$84,273 for the second quarter of 2020. For the first six months of 2021,
interest income was $83,130 compared to $186,156 in the first six months of
2020. The decrease is primarily due to the decline in the investment rates and
the decrease in the monies invested.

Our earnings from Majestic 21 in the second quarter of 2021 were $12,049
compared to $20,398, for the second quarter of 2020. Earnings from Majestic 21
for the first six months of 2021 were $25,757 compared to $40,270 for the first
six months 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. The earnings from the Majestic 21 loan portfolio will continue to
decrease due to the amortization, maturity and payoff of the loans.

We received no distributions in the second quarter of 2021 compared to $189,285
in the second quarter of 2020 and $45,868 for the first six months of 2021
compared to $272,394 for the first six months of 2020. The distributions are
from an escrow arrangement related to a Finance Revenue Sharing Agreement (FRSA)
between 21st Mortgage Corporation and the Company. The distributions from the
escrow arrangement, relates to certain loans financed by 21st Mortgage
Corporation, are recorded as income by the Company when received. 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 second quarter of 2021 of $2,268,443
as compared to $2,040,739 in the second quarter of 2020. The pre-tax income for
the first six months of 2021 was $3,670,017 as compared to $3,886,460 in first
six months of 2020.

The Company recorded an income tax expense in the amount of $543,505 in the
second quarter of 2021 as compared to $490,735 in second quarter 2020. Income
tax expense for the six months of 2021 was $879,314 compared to $936,315 for the
six months of 2020.



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We reported net income of $1,724,938 for the second quarter of 2021 or $0.47 per
share, compared to $1,550,004 or $0.43 per share, for the second quarter of
2020. For the first six months of 2021 net income was $2,790,703 or $0.77 per
share, compared to $2,950,145 or $0.81 per share, in the first six months of
2020.

Liquidity and Capital Resources



Cash and cash equivalents were $33,227,818 at May 1, 2021 compared to
$30,305,902 at October 31, 2020. Certificates of deposit were $2,088,805 at
May 1, 2021 compared to $4,602,307 at October 31, 2020. Short-term investments
were $562,719 at May 1, 2021 compared to $358,960 at October 31, 2020. Working
capital was $36,246,631 at May 1, 2021 as compared to $38,865,240 at October 31,
2020. The Company purchased the land for the Ocala South retail sales center in
March 2021 for $500,000, the Tavares retail sales center in January 2021 for
$245,000 and land in Ocala for a future retail sales center in February 2021 for
$1,040,000. The Company paid a one-time cash dividend of $1.00 per common share
in March 2021 for $3,632,100. 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 a
material commitment for a significant capital expenditure. Depending upon when
the Company receives the building permit, we plan to build an 11,900 square foot
frame shop to manufacture our frames on our current manufacturing plant
property.

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 May 1,
2021, the Company continued to report a strong balance sheet which included
total assets of approximately $65 million which was funded primarily by
stockholders' equity of approximately $50 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.



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