Nobility Homes Sales-Earnings 1Q 2024 President Terry Trexler-‘We Expect Challenges Will Continue in 2024’ ‘FMHA Says FL Shipments Drop YoY;’ Value Investor Leland Roach ‘Long on NOBH’-Facts and Analysis
According to their most recent press release, Nobility Homes (NOBH) President Terry Trexler said: “We expect that these challenges will continue throughout 2024.” The specifics of those challenges are disclosed in the firm’s press release. Their press release also stated: “On June 5, 2024, the Company celebrated its 57th anniversary in business specializing in the design and production of quality, affordable manufactured homes. With multiple retail sales centers in Florida for over 34 years and an insurance agency subsidiary, we are the only vertically integrated manufactured home company headquartered in Florida.” The full release by Nobility is found in Part I of this report. As a companion to this report on Nobility are the views of Leland Roach, who is a self-described value investor interested in microcap stocks, apparently including Nobility Homes, which Roach said he is “long” on via an article on Seeking Alpha. Much of Roach’s analysis is found in Part II. Part III will have additional information with more MHProNews’ independent analysis and commentary.
After detailing the company’s history for the last decade and the macro-economic environment, various pros and cons, Roach said: “I believe that Nobility Homes, Inc. is a BUY with a potential to see a 40.82% upside in the price of its stock from $31.00 a share to $43.65 a share.”
Part I
Nobility Homes, Inc. Announces Sales and Earnings for Its First Quarter 2024
Nobility Homes, Inc.
Thu, Jun 6, 2024
OCALA, FL / ACCESSWIRE / June 6, 2024 / Today Nobility Homes, Inc. (OTCQX:NOBH) announced sales and earnings for its first quarter ended February 3, 2024. Sales for the first quarter of 2024 were $14.8 million compared to $17.1 million recorded in the first quarter of 2023. Income from operations for the first quarter of 2024 was $2.7 million versus $3.8 million in the same period a year ago. Net income after taxes was $2.3 million as compared to $3.0 million for the same period last year. Diluted earnings per share for the first quarter of 2024 were $0.71 per share compared to $0.91 per share last year.
Nobility’s financial position during the first quarter 2024 remains strong with cash and cash equivalents, certificates of deposit and short-term investments of $27.4 million and no outstanding debt. Working capital is $41.6 million and our ratio of current assets to current liabilities is 5.2:1. Stockholders’ equity is $55 million and the book value per share of common stock increased to $16.85.
Terry Trexler, President, stated, “Net sales decreased in the first quarter of 2024 as compared to last year primarily because of the interest rates on mortgages, plus we continue to experience limitations on certain key production materials from suppliers. Delay of key components from vendors as well as back orders, price increases and labor shortages also negatively affected sales and earnings. These issues continue to cause delays in the completion of the homes at the Company’s 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 set up homes to customers. We expect that these challenges will continue throughout 2024. The Company also continues to experience inflation in some building products resulting in increases to our material and labor costs which may increase the wholesale and retail selling prices of our homes. Additionally, we believe that potential customers have delayed or deferred purchasing decisions when considering the interest rate environment.
The current demand for affordable manufactured housing in Florida and the U.S. is slowing because of the interest rate environment and increased costs associated with mortgages. According to the Florida Manufactured Housing Association, shipments for the industry in Florida for the period from November 2023 through February 2024 declined by approximately 15% from the same period last year.
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, 2024, the Company celebrated its 57th anniversary in business specializing in the design and production of quality, affordable manufactured homes. With multiple retail sales centers in Florida for over 34 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 121 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 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, 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 insulation, shingles, 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 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.
NOBILITY HOMES, INC.
Condensed Consolidated Balance Sheets
February 3,
November 4,
2024
2023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
15,142,033
$
13,879,358
Certificates of deposit
11,712,706
10,204,287
Short-term investments
578,698
527,899
Accounts receivable – trade
2,269,360
2,864,808
Mortgage notes receivable
4,480
4,391
Income tax receivable
–
–
Inventories
20,061,646
21,518,098
Prepaid expenses and other current assets
1,662,231
1,733,179
Total current assets
51,431,154
50,732,020
Property, plant and equipment, net
8,352,165
8,268,976
Mortgage notes receivable, less current portion
142,628
142,761
Other investments
374,484
1,953,199
Property held for resale
26,590
26,590
Deferred income taxes
90,274
90,274
Cash surrender value of life insurance
4,375,684
4,331,659
Other assets
156,287
156,287
Total assets
$
64,949,266
$
65,701,766
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
684,162
$
819,143
Accrued compensation
978,865
992,622
Accrued expenses and other current liabilities
1,774,322
1,809,335
Income taxes payable
771,353
661,261
Customer deposits
5,652,609
8,703,107
Total current liabilities
9,861,311
12,985,468
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;
3,269,075 and 3,370,912 shares outstanding, respectively
536,491
536,491
Additional paid in capital
11,001,701
10,964,985
Retained earnings
73,308,201
70,969,764
Less treasury stock at cost, 2,095,832 and
1,993,995 shares, respectively
(29,758,438
)
(29,754,942
)
Total stockholders’ equity
55,087,955
52,716,298
Total liabilities and stockholders’ equity
$
64,949,266
$
65,701,766
NOBILITY HOMES, INC.
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended
February 3,
February 4,
2024
2023
Net sales
$
14,767,998
$
17,164,753
Cost of sales
(10,033,652
)
(11,293,157
)
Gross profit
4,734,346
5,871,596
Selling, general and administrative expenses
(2,032,330
)
(2,035,477
)
Operating income
2,702,016
3,836,119
Other income (loss):
Interest income
297,999
140,033
Undistributed earnings in joint venture – Majestic 21
22,174
22,826
Proceeds received under escrow arrangement
–
–
Increase (decrease) in fair value of equity investment
50,799
(17,942
)
Miscellaneous
50,541
7,772
Total other income
421,513
152,689
Income before provision for income taxes
3,123,529
3,988,808
Income tax expense
(785,092
)
(931,841
)
Net income
$
2,338,437
$
3,056,967
Weighted average number of shares outstanding:
Basic
3,268,829
3,370,912
Diluted
3,277,565
3,371,418
Net income per share:
Basic
$
0.72
$
0.91
Diluted
$
0.71
$
0.91
SOURCE: Nobility Homes, Inc. ##
Part II – Leland Roach – Seeking Alpha on Nobility Homes (NOBH)
Leland Roach is an author at Seeking Alpha. The bio/disclosure at the end of this post by him dated 6.20.2024 said the following.
Leland Roach
A value investor that’s interested in post bankruptcy, NAV, and undervalued microcap stocks. I only invest in companies that have layers of value behind them and little to no debt.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of NOBH either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
MHProNews notes that the bulk of what Roach wrote was positive, with the main exception being an encouragement for Nobility to address post-sale service-related comments found online. Per Roach: “I believe that Nobility is specifically set up to handle potential problems like this better than other manufactured housing companies. Nobility owns most of the stores where it sells its homes, and those places do seem to have mostly positive reviews. It sells the rest of its homes to independent dealers and communities. Best of all, none of these other customers make up for more than 10% of Nobility’s total sales figures, which, should to an extent, insulate the company from revenue loss.” In Roach’s view, this is one of the biggest possible risks with investing in Nobility, and most everything that follows are generally positive praise in a company he says he himself is invested in.
With that intro, here is the bulk of Roach’s commentary and analysis.
‘Nobility Homes In Position to Take Advantage Of Florida’s Need For Affordable Housing’
Nobility Homes, Inc. has successfully navigated supply chain bottlenecks and price increases on building materials, leading to increased revenues, profit margins, and net income.
Despite Florida’s slowing population growth, there is still a high demand for affordable housing in the state.
Nobility Homes builds manufactured housing and sells those homes primarily through its Prestige homes centers branded facilities, which are owned by the company.
Note from the Author: Nobility Homes, Inc. (OTC:NOBH) does not trade on a major stock exchange and therefore investors may be subjected to extra risks, including an inability to quickly sell a large position should the company begin to perform poorly. Please carefully consider all of the risks associated with trading over the counter companies before buying into a position. I had previously written a Seeking Alpha article on Nobility Homes, Inc. and recommend the reader also refer to that article for a more complete understanding of NOBH.
I believe that Nobility Homes, Inc. is a BUY with a potential to see a 40.82% upside in the price of its stock from $31.00 a share to $43.65 a share or more. The company had successfully navigated the tough supply chain bottlenecks brought on during COVID, as well as large price increases on the building materials that the company needs to build its manufactured housing. While these problems have remained present in NOBH’s manufacturing process, they have eased greatly. As a result, NOBH has seen increasing revenues, profit margins, and net income. Despite Florida’s population growth showing some signs of slowing, there is still an enormous need for housing in the state. Affordable housing in Florida is especially in short supply and the demand for lower cost housing may still grow as Florida’s house insurance rates are the highest in the nation and have forced some people to sell their homes.
About NOBH
NOBH builds manufactured housing and currently has active production on approximately 100 different house models. Once built, the homes get sold primarily through NOBH’s Prestige brand facilities which are located in Ocala South, Ocala North, Auburndale, Inverness, Tavares, Panama City, Yulee, Punta Gorda, Chiefland, and Hudson, Florida. NOBH owns all of these retail outlets except for the Chiefland and Hudson locations, which are leased. NOBH builds these manufactured houses on a 35.5 acre parcel of land. The company’s main manufacturing facility is adjoined by another two-story building that is home to NOBH’s corporate offices. This parcel of land is also home to a newly built 11,900 square foot facility where the company now builds frames for its manufactured houses.
A Great Fiscal 2023
NOBH saw its net sales increase by 23% from $51.52 million in 2022 to $63.31 million in 2023. Operating income was up 59% from $8.43 million in 2022 to $13.40 million in 2023. This added an additional 51% to the company’s net income, from $7.23 million in 2022 to $10.89 million in 2023.
Income Statement From NOBH’s 2023 10-K
…
The reason for all of this growth can be primarily attributed to NOBH’s supply chain finally easing up quite a bit. In 2022, Nobility had to purchase 153 homes from other manufacturers to complete its orders, in 2023 that figure dropped all of the way down to just 44. In total, the company was able to produce 47 more houses in 2023 than in 2022 at 470 homes versus 423 homes produced.
Homes Sold And Gross Profit Figures From NOBH’s 2023 10-K
…
These supply chain easements, coupled with the macroeconomic developments in the housing market, helped Nobility boost its gross profit from the manufacturing facilities – including intercompany sales from 16% to 24% from 2022 to 2023. Nobility also saw its gross profit from company owned retail centers increase from 20% in 2022 to 23% in 2023. While the wholesale price of Nobility’s manufactured housing didn’t move much between 2022 and 2023 the retail price for one of NOBH’s homes went up 16.7% from $126,438 in 2022 to $147,583 in 2023.
Q1 of 2024
Nobility’s Q1 of their fiscal 2024 has seen a large decline over 2023’s Q1 as would be home buyers struggle with high-interest rates and the concurrent cost increases to their mortgages. NOBH experienced a 13.96% decrease in net sales in Q1 of 2024 compared to Q1 of 2023 from $17.16 million to $14.77 million. This led to a 29.56% decrease in operating income from $3.84 million in Q1 of 2023 to $2.7 million in Q1 of 2024. A 23.5% decrease in net income from $3.06 million to $2.34 million can also be seen from Q1 of 2023 to Q1 of 2024.
Aside from higher costs related to inflation, Nobility also cited that supply chain delays had prevented them from receiving key components necessary to finish building their manufactured houses. This is the reasoning NOBH gives for its decrease in net sales, as they state that due to the delay of certain components they are unable to finish some homes in the factory or complete home set up in the field.
Q1 of 2024 saw another YOY drop in the average wholesale price for a new manufactured home of 9.67% from $75,350 to $68,064. This wholesale price for a new manufactured home figure is just a 6.26% drop from the annual average price tag of $72,612 NOBH had posted on their 2023 10-K. NOBH still managed to see a large increase in the average retail price of its manufactured houses. The company saw a 7.17% increase from an average retail price of $144,178 per home in Q1 of 2023 to $154,513 in Q1 of 2024.
Nobility sold off 143 homes total in Q1 of 2023 versus 127 homes total in Q1 of 2024. On top of selling off 16 fewer homes so far in 2024, Nobility sold 8 more homes at wholesale prices to independent dealers and 25 fewer homes through its company owned sales centers. Sales achieved through NOBH’s sales centers would enable the company to receive full retail value for their houses. Should the next couple of quarters depict a more normal ratio of wholesale to retail sales, than Nobility’s 2024 could still be on track towards positive overall growth in the company’s revenue, operating income, and net income.
In both NOBH’s Q1 sales and earnings announcement and their 10Q from Q1 of 2024, they state that according to the Florida Manufactured Housing Association, from November 2023 through February 2024, shipments for the industry in Florida for the period declined by approximately 15% from the same period one year prior. Over the past couple of years, when NOBH has experienced slowdowns in the total amount of homes sold, it has always made up the difference by the ever-expanding price of buying a home. While NOBH has had its revenue earnings contract this quarter, long term demographic shifts, a continued climb in the price of a house, and Florida’s long-term population growth seem to still all be on NOBH’s side.
Nobility’s Long History Of Positive Growth
Nobility’s Ten Year Stock Price History (Seeking Alpha)
The company’s stock price has made a 181.56% gain over the last decade. Nobility has also managed to steadily grow year after year both its revenues and operating income.
Nobility’s Revenue and Operating Income History From Seeking Alpha
Nobility’s Revenue and Operating Income History (Seeking Alpha)
While NOBH’s net income hasn’t been as consistent from one year to the next as the company’s other figures, it has still shown a long-term trajectory upwards over the course of the past decade. Nobility is making 684.62% more in net income for its TTM average in 2024 than the company made in its fiscal 2014.
Nobility’s Net Income History From Seeking Alpha
Nobility’s Net Income History (Seeking Alpha)
While examples like this aren’t guarantees of future success, it is promising to see evidence that a company is capable of keeping its business running smoothly and showing consistent growth over a long period of time. One of the reasons why I believe Nobility is able to do this is because the company carries no debt and controls its own sales centers. This gives the company more flexibility should unforeseen economic circumstances arise that demand Nobility make some sort of rapid transition or adjustment to their business model.
Florida’s Population Growth Prospects And What That Means For Housing
While Florida’s population growth rate is expected to slow from a 1.61% growth rate in April of 2023 (up 359,000 people) to an estimated 1.18% growth rate in 2028 this still adds roughly 300,000 residents to the state’s population each year. In April of 2023 Florida’s population was estimated to stand at 22,634,867.
All of these new residents are going to be moving into a state that has a larger than average problem with affordable housing. Florida is one of the least affordable places to live in the country, with the price of a house costing 11.4% more than the national average and renters experiencing a disproportionately large rent burden. This leaves the state with a larger than normal demand for affordable housing. Manufactured housing may be the only answer many Floridian’s have to turn towards.
Nobility’s average retail price for one of their manufactured homes is $154,513. Comparatively, the average price of a house in Florida as of April 2024 was $399,807. That’s a 158.75% price increase to buy a traditional site-built house in the state. Even after land price expenses are factored in, manufactured housing comes in significantly cheaper than your average stick – built or block built house in Florida.
Although it appears as if high-interest rates are finally taking a toll on people’s ability to purchase a home, people still need a place to live. Now more than ever people need an affordable place to live, and in expensive places like Florida that need has never been greater. The more interest rates force people to reassess their budget when planning to purchase a home, the more appealing affordable manufactured housing becomes. This should help nudge would be buyers of site-built housing towards companies like NOBH. When we do eventually see a drop in interest rates, the extra cash available to consumers should boost demand for manufactured housing, and Florida’s past inabilities to meet housing demand should keep prices up for years to come.
Discounted Cash Flow
From 2014 to 2023 Nobility experienced a 127.69% growth rate in their total revenues which comes out to 14.18% in average revenue growth a year. From 2019 to 2023 their average revenue growth rate comes out to only 8.8% a year. I took the smaller of these two figures and used it for my discounted cash flow analysis. I also assumed a 17.2% EBIT rate, an average tax rate of 25%, depreciation at $200,000 a year, capital expenditures at 1.8% of revenues, and a change in working capital as a percentage of revenue of 20% to account for the constantly increasing cost of building houses.
Discounted Cash Flow For Nobility By Leland Roach …
Discounted Cash Flow For Nobility (Leland Roach) …
I ran all of these figures through a discounted cash flow analysis where I assumed that 8.8% growth rate figure through 2033 before tapering off to a 3% perpetual growth rate. I also used a 10% weighted average cost of capital based roughly off of a 10.26% average return you’d get from investing in the S&P 500 for the last 30 years. After running the numbers, we get a $43.65 per-share price target versus the current share price of $31.00 a share, a 40.82% upside.
Risks
The major risks to Nobility’s future prosperity are largely more macroeconomic in scale. Florida is experiencing large increases in the cost of home insurance that has forced many to move elsewhere. Florida pays four times as much as the national average for their home insurance and while Florida’s homeowners insurance is only predicted to increase by 7% in 2024, states with severe weather could see rate increases by up to 23% according to an Insurify report on home insurance price projections in 2024. Meteorologists are calling for a particularly hyper active Atlantic hurricane season this year, which would further warrant these insurance rate increases. Six of the top ten most expensive cities for homeowners insurance are located on Florida’s southern coast, and all of these cities have average annual rates of over $11,000 a year.
Florida’s high insurance costs have been listed among the reasons the state is expected to experience a slowdown in growth. With that being said, Florida’s 2028 1.18% growth rate projection is still 151% higher than the 0.47% average median population growth rate experienced across the United States. These rapidly increasing insurance costs, I believe, will force more people into manufactured housing as it will be cheaper to insure a $150,000 house than a $399,000 house, especially when considering how much more rugged modern building standards for these manufactured houses are compared to the manufactured housing of the past. As more and more homeowners get pushed into manufactured housing in an attempt to solve their needs for affordable housing, the added demand will likely continue to allow companies like Nobility to raise the retail prices for their products.
…
When I Would Sell
The likely scenarios in which case I would consider selling NOBH’s stock would all be tied to the risks mentioned above. If macroeconomic events like a major shift in Florida’s population boom were to occur, I would consider selling my NOBH stock. This shift would have to be so great as to change the projections of Florida’s population growth to somewhere near the national average growth rate of 0.47%.
I believe a slowdown of this magnitude would most likely occur under a convergence of factors and not just a single event. An even worse hurricane season than predicted or several hurricane seasons all causing damage beyond what would normally be expected could drastically increase the number of people being priced out of their home due to homeowners insurance related expenses. Unpredictably high insurance rates coupled with an extended period of high-interest rates could potentially price so many people out of their homes that it could cause an exodus from Florida big enough to overcome the influx of residents currently flooding into the state.
Whether or not or to what degree this would negatively affect Nobility’s business model remains to be seen. As a seller of manufactured homes, the company could see business increase as more expensive housing options continue to become increasingly out of reach to more and more Americans. The major questions we have to ask ourselves are… Where is the American consumer’s breaking point on housing costs? Will housing costs in Florida raise to a point where even cheaper housing options become largely unaffordable in Florida’s local economy? The three factors that will play into this the most are Florida’s employment and local economy, inflation reaching the Federal Reserve’s target of 2%, and what the corresponding interest rate environment will be over the course of the next year or so. If interest rates and inflation come down, then the average consumer may be more likely to be able to afford their higher insurance costs, but if the rate of inflation and interest rates stay elevated, the financial pressure on Floridians may become too great. As important as these figures are to every other business in America, inflation and our interest rates are no less important here, and anyone who owns any stock related to Florida’s housing market should constantly have their eyes peeled for any news related to these developments.
Lastly, if Nobility comes under some kind of large public issue concerning its poor customer reviews, this could lead to a large decline in the company’s stock price. Some sort of negative media coverage could bring about a stock price decline short term but, unless such negative press is able to sustain the public’s attention, the price would likely revert back to its normal upward trajectory. If such issues devolve into some sort of legal action being taken against NOBH the ramifications could become much larger in scale for a much more prolonged period of time. While stockholders attempt to navigate the details of such a process, the price of Nobility’s stock would likely become volatile. If an event like this were to occur, I would consider selling my NOBH stock.
Conclusion
I believe that Nobility Homes, Inc. is a BUY with a potential to see a 40.82% upside in the price of its stock from $31.00 a share to $43.65 a share. Nobility has demonstrated prolonged periods of growth in its revenues, operating income, and net income over the past decade. While Nobility’s 2024 Q1 wasn’t exactly a slam dunk, their fiscal 2023 had shown a lot of promise. Nobility’s pricing power on their retail home sales have been impressive to watch, since COVID and Florida’s long-term population growth prospects and unaffordable housing crisis make for a perfect environment to profit handsomely as a manufactured housing company.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks. ##
Part III – Additional Information with More MHProNews Analysis and Commentary
In no particular order of importance are the following items and observations.
1) MHProNews has provided a commentary on Nobility in several reports, the most recent one is linked below.
3) Without necessarily disagreeing with Roach’s points, MHProNews will hereby note what Roach obviously did not delve into. A word search of the copy from Leland shown above reveals no mention of zoning. While mortgage rates are part of Roach’s analysis, he doesn’t tackle the Duty to Serve (DTS) manufactured housing controversy, nor the years of a lack of competitive FHA Title I lending. How those issues might impact Nobility, given other corporate disclosures, is not entirely clear, but in a prior quarterly statement, the firm indicated that for a period of time they contracted with another producer to get the additional product they needed. So presumably, the no debt and strong cash position firm has the ability to pivot to meet increased demand when it arises. Also not mentioned in Roach’s analysis are the Manufactured Housing Institute (MHI), the Manufactured Housing Association for Regulatory Reform (MHARR), or the Manufactured Housing Improvement Act of 2000 (a.k.a.: MHIA, 2000 Reform Act, 2000 Reform Law). A word search of the copy above from Roach via Seeking Alpha also yields no results on the words “image,” “marketing” or “promotion.” That said, aside from those significant oversights, there is a case to be made that Roach is perhaps more in tune with Nobility than others. The fact that he says he is “long” on Nobility, things there is some 40 percent upside potential, and rates NOBH as a “buy” all should be of interest.
To learn more about some of the topics Roach didn’t discuss are the following.
4) Let’s be clear. Manufactured housing ought to be soaring for a variety of reasons that the reports linked in Part III, #3 above go into in greater detail. Roach’s points about the firm’s ability to address consumer remarks online and navigate other challenges are well reasoned, but what Roach and routinely others peering into manufactured housing often fail to grasp (or at least publicly mention) is the granular issues that have been covered time and again by researchers – including Congress. Could, for example, a removable chassis prove useful for boosting manufactured housing acceptance and sales? Yes, of course, so long as the legislative and regulatory risks that involves are carefully navigated. That specific topic of the removable chassis is explored in the report linked below. But it must be said that with a chassis manufactured housing hit sales levels 4x the volume nationally in the late 1990s at a time when the U.S. population was smaller, the internet was younger, and the MHIA, enhanced preemption, and DTS had not yet been made federal law.
5) MHProNews has taken a factual, evidence-based and routinely critical look at MHI for some years, starting while we were still members of that trade group. There is only so much time to cover industry connected topics, and there is ample evidence that no one in MHVille covers more, better, or more accurately than MHProNews does. That said, among the topics that could bear more attention is manufactured housing at the state association level. That MHI appears to be engaged in an arguably illegal scheme to limit the industry’s growth potential so that the industry continues to consolidate has been explored multiple times over the course of several years. MHProNews has offered repeated opportunities for MHI and their dominating brands to respond to those evidence-based allegations. They routinely and repeatedly decline, and in various ways, have ducked out on addressing those concerns directly. With the emergence of readily accessible artificial intelligence (AI) to the public, MHProNews and our MHLivingNews sister site began a series of tests using primarily left-leaning Bing’s AI powered Copilot, typically on its blue or balanced setting. To oversimplify, Copilot has largely confirmed MHProNews’ concerns, has called on MHI to become transparent and to act more consistently with their own statements, and has praised MHARR.
To focus briefly on the role of state associations in the apparently problematic issue of ‘representation’ for smaller firms in manufactured housing, MHProNews has from time to time peered into the example of Florida, which happens to be the base of operations and focus for Nobility Homes.
Our Mission Statement
Florida Manufactured Housing Association is committed to bringing affordable housing options to all Floridians through legislative advocacy and other government channels, by educating consumers on the benefits of manufactured housing and by expanding manufactured housing options as an affordable solution to homeownership.”
Seriously? But if that were 100 percent accurate, rather than posturing and paltering, then why did manufactured housing sales dip in Florida by 15 percent year over year (YoY), as Nobility stated? The HUD Code manufactured home industry is rising nationally, although at an arguably anemic pace compared to its strong potential. But the Jim Ayotte led FMHA staff could, in theory, be doing what MHI isn’t. Ayotte could go to the governor and/or the state attorney general, and say: ‘look, we have a federal law and it isn’t being properly enforced. We want to see this law enforced in Florida.’ Is there any such known effort by Ayotte and the FMHA? In a word, no.
So, while FMHA may be ‘doing’ some things – like “promoting” manufactured housing via its website ‘better’ than MHI, that’s not much of a bar for comparison, is it? Again, see the David Roden and MH2x remarks, linked above.
6) Perhaps Roach’s is totally unaware of these issues, or perhaps he may have some level of awareness, but didn’t feel it would pass muster at Seeking Alpha. In fairness, that is unclear. That noted, the upside for a firm like Nobility, given Roach’s generally (minus the issues being elaborated on herein) cogent, ought to be far more than 40 percent. Nobility has the cash on hand to double production, if they so desired. They have the financial resources to increase distribution, if they so desired. What explains their apparently conservative approach? Perhaps two key topics, with “a” and “b” below are examples of topic 1. The “place to put” or zoning/placement challenge.
a) Much of it comes down to what a similar sized independent and also publicly traded, Legacy Housing (LEGH) has repeatedly said.
b) Bates’ remarks are a point that Legacy co-founder and chairman Curtis “Curt” Hodgson has also previously stated.
“…I’ve indicated for some time, we have a place to put challenge in our industry, particularly in larger metropolitan areas like Dallas, Houston, San Antonio, Atlanta, Denver. And that difficulty is not being remedied, at least not currently.” Hodgson’s Legacy Housing was an MHI member at the time that comment was made during an earnings call, and per an available MHI’s member directory, still is.
c) The other challenge that is often overlooked is the one revealed by the Securities and Exchange Commission (SEC) litigation against Cavco Industries, a higher profile MHI member firm. It will be recalled that during the multi-million-dollar dust up apparently caused by former Cavco executive Joseph “Joe” Stegmayer and some associates, Cavco had an apparent eye on Nobility Homes as a possible target for acquisition. Meaning, if Trexler and company want to stay independent, which given the known history, the firm apparently seeks to want to do, then they may feel that having a strong cash reserve bolsters their independence.
7) But what that often overlooked, but all too real, background drama reflects is the numerous ways that firms, be they public or private, have to ponder in order to stay in the manufactured home business. Consolidation is the dirty little secret hiding in plain sight that is driving much of what has occurred on the production, retail, and community sectors of the industry, to name but three obvious areas impacted. The vaporization of much of the finance sector, post 2000, is another topic that can be explored in part in the report linked below.
8) Manufactured housing ought to be soaring, but it is instead snoring, even in high demand for affordable housing FL. Without a clear-eyed look at topics like zoning, financing, image/promotion, possible antitrust violations and other concerns about purportedly illegal behaviors involving manufactured housing consolidators, it is not possible to grasp what is actually going on behind the curtains. Is Nobility a ‘buy’? MHProNews takes no position in any of the stocks it reports on. But if we were to do so, Nobility would be one of the firms that would be considered for an investment. There is a case to be made that Nobility could double or triple in size in a reasonably short timeframe. Nobility’s stock could soar. For that matter, Legacy or UMH could with some tweaks do the same. Corporate leaders like Trexler are arguably in an unenviable position to have to ponder much more than just interest rates, even though that is what he opted to speak about (see Part I). There are some things that any of the public firms in manufactured housing could be doing differently to improve sales. To learn more, see the linked reports that follow. It may require a dramatic change in federal/state politics to allow for the kind of robust growth potential that manufactured housing ought to be achieving during this affordable housing crisis. Don’t miss the postscript. ##
Postscript. A little over a year ago, on April Fool’s day 2023, MHProNews did a report that was for some time ‘red hot’ (read hot). It painted a picture that apparently resonated with our audience, which of course, is made up mostly of industry professionals, but also includes public officials, attorneys, investors, affordable housing advocates, researchers, and others. It is still apt, as is the one below it. Let’s further note that unlike numbers of writers who weigh in on manufactured housing, many have little or no ‘hands on’ experience in manufactured housing, and fewer still have any experience in dramatically boosting sales and results at the street retail or land-lease communities’ levels. This writer demonstrably has walked the gravel, grown the sales, boosted resident satisfaction, and increased bottom line results all without the drama of allegations of illegal or unethical behavior. The industry has a great product. But there is enough corrupt behavior operating in MHVille (and with numbers of public officials or other professions too) that the traditional methods are not as easily applied now as previously. These too are factors that professionals like Trexler and others that remain independent must ponder and are likely if not doubtlessly aware of in making their decisions. ###
Our son has grown quite a bit since this 12.2019 photo. All on Capitol Hill were welcoming and interested in our manufactured housing industry related concerns. But Congressman Al Green’s office was tremendous in their hospitality. Our son’s hand is on a package that included the Constitution of the United States, bottled water, and other goodies.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing.
For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.
This article reflects the LLC’s and/or the writer’s position and may or may not reflect the views of sponsors or supporters.
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