Quarterly Report for Quarter Ending August 1, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Total net sales in the third quarter of 2026 were $12,138,230 compared to $12,021,194 in the third quarter of 2025. Total net sales for the first nine months of 2026 were $35,051,636 compared to $39,020,273 for the first nine months of 2025. The Company reported net income of $1,896,342 in the third quarter of 2026, compared to a net income of $1,825,271 in the third quarter of 2025 and net income was $5,284,095 for the first nine months of 2026 compared to $6,098,013 for the first nine months of 2025. Total net sales decreased during the first nine months of 2026 as compared to same period in 2025 due to a decrease in the number of new retail homes sold in our Company owned retail sales centers (137 homes versus 195 homes) partially offset by an increase in the number of homes sold to independent dealers (184 homes versus 129 homes) which sales have lower margins.

We believe that potential customers continue to delay or defer purchasing decisions, or are generally opting to purchase lower cost homes, when considering the higher interest rate environment and the uncertainty of the economy, which continue to negatively impact sales. There also remain delays in the receipt of certain key production materials from suppliers, as well as back orders, price increases, tariffs and labor shortages which continue to cause delays in the completion of the homes at our manufacturing facility. We also continue to experience inflation in several building products resulting in increases in our material costs. We expect these challenges will continue throughout fiscal years 2026 and 2027 and potentially beyond.

According to the Florida Manufactured Housing Association, shipments for the manufacturing housing industry in Florida for the period from November 2025 through July 2026 increased by approximately 6% from the same period last year.

The following table summarizes certain key sales statistics and percentage of gross profit for the three and nine months ended August 1, 2026 and August 2, 2025

Maintaining our strong financial position is vital for future growth and success. 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, 2026, we celebrated our 59th anniversary in business specializing in the design and production of quality, affordable manufactured and modular homes. With multiple retail sales centers in Florida for over 35 years and an insurance agency subsidiary, we are the only vertically integrated manufactured home company headquartered in Florida.

Insurance agent commission revenues in the third quarter of 2026 were $56,741 compared to $101,684 in the third quarter of 2025. Insurance agent commission revenues for the nine months of 2026 were $204,393 compared to $237,487 for the first nine months of 2025. Revenues are generated by new and renewal policies being written which affect agent commissions 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 August 1, 2026 and November 1, 2025.

Gross profit as a percentage of net sales was 29% in the third quarter of 2026 compared to 32% in the third quarter of 2025 and was 30% for the first nine months of 2026 compared to 32% for the first nine months of 2025. The gross profit in the third quarter of 2026 was $3,491,989 compared to $3,848,186 in the third quarter of 2025 and was $10,319,292 for the first nine months of 2026 compared to $12,450,387 for the first nine months of 2025. The gross profit is dependent on the sales mix of wholesale and retail homes and number of pre-owned homes sold. The gross profit as a percentage of net sales decreased due to a decrease in the number of homes sold at our Company owned retail sales centers that generate higher margins partially offset by an increase in the number of homes sold to independent dealers, which have lower margins than retail sales.

Selling, general and administrative expenses as a percent of net sales was 11% in the third quarter of 2026 compared to 14% for the third quarter of 2025 and was 12% for the first nine months of 2026 compared to 13% for the first nine months of 2025. Selling,

general and administrative expenses in the third quarter of 2026 was $1,384,120 compared to $1,670,585 in the third quarter of 2025 and was $4,286,486 for the first nine months of 2026 compared to $5,236,432 for the first nine months of 2025. The dollar decrease in selling, general and administrative expenses for the first nine months of 2026 versus 2025 were due to decrease in the number of new home sold at our Company owned retail sales centers.

We earned interest income of $213,928 for the third quarter of 2026 compared to $270,139 for the third quarter of 2025. For the first nine months of 2026, interest income was $687,383 compared to $853,735 in the first nine months of 2025. The amount of interest income is primarily a function of interest rates and the amount invested.

Our earnings from Majestic 21 in the third quarter of 2026 were $16,684 compared to $25,624, for the third quarter of 2025. The earnings for the first nine months of 2026 were $57,665 compared to $72,893 for the first nine months of 2025. 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 vary quarter to quarter, but overall, the earnings will continue to decrease due to the amortization, maturity and payoff of the loans.

We received distributions from 21st Mortgage Corporation in the third quarter of 2026 of $13,565 compared to $36,094 in the third quarter of 2025 and $71,879 for the first nine months of 2026 compared to $116,312 for the first nine months of 2025. 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, relating 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 vary quarter to quarter, but will continue to decrease due to the amortization and payoff of the loans.

The Company realized pre-tax income in the third quarter of 2026 of $2,494,456 as compared to $2,493,117 in the third quarter of 2025. The pre-tax income for the first nine months of 2026 was $7,032,332 as compared to $8,168,256 in the first nine months of 2025.

The Company recorded an income tax expense in the amount of $598,114 in the third quarter of 2026 as compared to $667,846 in the third quarter of 2025. Income tax expense for the nine months of 2026 was $1,748,237 compared to $2,070,243 for the nine months of 2025.

We reported net income of $1,896,342 for the third quarter of 2026 or $0.60 per share, compared to $1,825,271 or $0.56 per share, for the third quarter of 2025. For the first nine months of 2026 net income was $5,284,095 or $1.66 per share compared to $6,098,013 or $1.87 (diluted $1.86) per share in the first nine months of 2025.

Liquidity and Capital Resources

Cash and cash equivalents were $13,417,420 at August 1, 2026 compared to $13,230,504 at November 1, 2025. Certificates of deposit were $11,697,609 at August 1, 2026 compared to $13,109,325 at November 1, 2025. Short-term investments were $684,503 at August 1, 2026 compared to $583,128 at November 1, 2025. Working capital was $44,363,660 at August 1, 2026 as compared to $46,866,425 at November 1, 2025. A cash dividend was paid from our cash reserves in April 2026 in the amount of $1.50 per share ($4,730,497). In January 2026, the Company repurchased 100,000 shares of common stock from our President at $29.70 per share ($2,970,000). Prestige new home inventory was $16,237,801 at August 1, 2026 compared to $16,605,049 at November 1, 2025. 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.

The Company currently has no line of credit facility and no debt and does not believe that such a facility is currently necessary for its operations. The Company also has approximately $5.0 million of cash surrender value of life insurance which it would be able to access as an additional source of liquidity though the Company has not currently viewed this to be necessary. As of August 1, 2026, the Company continued to report a strong balance sheet which included total assets of approximately $65.4 million which was funded primarily by stockholders' equity of approximately $58.4 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 competitive pricing pressures at both the wholesale and retail levels, inflation, tariffs, 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, the impact of higher interest rates on mortgage financing, 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 attacks, or other events such as a pandemic, any armed conflict involving the United States and the impact of inflation.