SOURCE: Noble Roman's, Inc.

August 11, 2015 16:01 ET

Noble Roman's Announces Continued Profitability in Second Quarter; Achieves Significant Progress on Accelerated Growth Plans

7.4% Growth in Ongoing Royalties and Fees Drives Continued Profitability; Quarterly Operating Income Increases 7.4%

INDIANAPOLIS, IN--(Marketwired - Aug 11, 2015) - Noble Roman's, Inc. (OTCQB: NROM), the Indianapolis based franchisor and licensor of Noble Roman's Pizza and Tuscano's Italian Style Subs, today announced results for the second quarter of 2015.

At the end of the second quarter of 2015, the company previously announced that it was carrying out plans to position itself for more rapid, broad-based growth and substantial progress has already been made on executing those plans. In early July, the company hired a veteran supermarket executive to assume the newly created role of Vice President of Supermarket Development, Procurement and Distribution. Also in early July, the company hired an experienced sales person to expand the company's ability to sign up new franchisees and licensees. Finally, in late July, the company engaged the services of a respected national franchise broker. Management expects to hire one more experienced sales professional by the end of August, further bolstering the expanded sales initiative. These accomplishments, plus the ongoing stocking of additional grocery distributors with Noble Roman's products, with a large number of potential grocery locations for potential growth for Noble Roman's, should result in more rapid growth for the remainder of this year and beyond. 

"These are exciting and significant events and we are looking forward to the potential positive impact on the remainder of 2015 and beyond," said Scott Mobley, President and Chief Executive Officer. "We believe the company has created a diversified platform for profitable future growth. We are encouraged by the strong response from grocery store distributors and the number of their customers adding Noble Roman's. We continue to experience solid progress with our selected venues, demonstrating the strength of our brand and validating our confidence in the diversified platform we have created. Based on the progress in all of our venues to date and especially with grocery store distributors, we are expecting double digit revenue growth in 2016."

Financial Highlights for the Second Quarter Ended June 30, 2015Compared to the Second Quarter of 2014.

  • Total revenue was $2.15 million compared to $2.09 million.
  • Operating income was $918,000 compared to $855,000.
  • Adjustment for valuation of receivables including Heyser case was $600,000 compared to none, even though the company currently believes all of its receivables are collectible.
  • Net income before taxes was $276,000, or $0.01 per basic share, compared to $808,000, or $0.03 per basic share. The company will pay no income taxes on approximately the next $22 million in net income. Excluding the adjustment for valuation of receivables, net income before taxes would have been $876,000, or $0.04 per share.
  • Net income was $170,000, or $0.01 per basic share, compared to $503,000, or $0.03 per basic share. Excluding the adjustment for valuation of receivables, net income would have been $540,000, or $0.03 per share.
  • Operating margin was 42.8% of revenue compared to 40.9%. 
  • Upfront franchisee fees and commissions were $37,000 compared to $116,000. 
  • Royalties and fees less upfront fees were $2.0 million compared to $1.8 million.
  • Royalties and fees from non-traditional franchises other than grocery stores were $1.25 million compared to $1.19 million.
  • Royalties and fees from grocery store take-n-bake locations were $487,000 compared to $373,000.
  • Royalties and fees from stand-alone take-n-bake locations were $189,000 compared to $221,000.
  • Royalties and fees from traditional locations were $68,000 compared to $74,000.
  • Total operating expenses plus interest were $1.27 million compared to $1.28 million.

Financial Highlights for the Six Months Ended June 30, 2015 Compared to the Six Months Ended June 30, 2014

  • Total revenue was $4.01 million compared to $4.00 million.
  • Operating income was $1.58 million compared to $1.63 million.
  • Adjustment for valuation of receivables including Heyser case was $600,000 compared to none, even though the company currently believes all of its receivables are collectible.
  • Net income before taxes was $894,000,or $0.04 per basic share, compared to $1.5 million, or $0.08 per basic share. The company will pay no income taxes on approximately the next $22 million in net income. Excluding the adjustment for valuation of receivables, net income before taxes would have been $1.5 million, or $0.07 per share.
  • Net income was $550,000, or $0.03 per basic share, compared to $942,000, or $0.05 per basic share. Excluding the adjustment for valuation of receivables, net income before taxes would have been $920,000, or $0.05 per share.
  • Operating margin was 39.4% of revenue compared to 40.8%. 
  • Upfront franchisee fees and commissions were $103,000 compared to $166,000. 
  • Royalties and fees less upfront fees were $3.7 million compared to $3.6 million.
  • Royalties and fees from non-traditional franchises other than grocery stores were $2.3 million compared to $2.4 million.
  • Royalties and fees from grocery store take-n-bake locations were $888,000 compared to $717,000.
  • Royalties and fees from stand-alone take-n-bake locations were $425,000 compared to $400,000.
  • Royalties and fees from traditional locations were $134,000 compared to $146,000.
  • Total operating expenses plus interest were $2.52 million compared to $2.47 million.

The Company made the decision to create a valuation allowance of $600,000 against its receivables including receivables from the Heyser case, even though at the current time the company believes that all of its receivables are collectible.

As previously stated, the company continues to focus on growth in three primary venues: non-traditional franchises and licenses other than grocery stores, the sale of take-n-bake pizzas through grocery deli departments and stand-alone take-n-bake franchised locations. The company anticipates continued growth in all three venues in this and future years while maintaining relatively stable operating costs, as has been the company's history for the past several years. 

Balance Sheet Summary

Current assets totaled $4.8 million and current liabilities totaled $2.3 million as of June 30, 2015 compared to total current assets of $4.4 million and current liabilities of $2.1 million as of December 31, 2014. Total bank debt was $2.6 million as of June 30, 2015 compared to $3.3 million as of December 31, 2014. Total stockholders' equity as of June 30, 2015 was $14.6 million compared to $13.8 million as of December 31, 2014.

Conference Call - Management will conduct a live teleconference to discuss its financial results Tuesday, August 11, 2015 at 4:30 p.m. ET. Anyone interested should call 1-877-407-0778 if calling within the United States or 1-201-689-8565 if calling internationally. A replay will be available until September 11, 2015 by dialing 1-877-660-6853 if calling within the United States or 1-201-612-7415 if calling internationally and referencing replay pin number 13617167. A live webcast is available at http://www.investorcalendar.com/IC/CEPage.asp?ID=174268.

About Noble Roman's

Noble Roman's, Inc. sells and services franchises and licenses for non-traditional foodservice operations under the trade names "Noble Roman's Pizza,""Noble Roman's Take-n-Bake," and "Tuscano's Italian Style Subs." The Company has awarded franchise and/or license agreements in all 50 states plus Washington, D.C., Puerto Rico, the Bahamas, Italy, Canada and the Dominican Republic.

The statements contained in this press release concerning the company's future revenues, profitability, financial resources, market demand and product development are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) relating to the company that are based on the beliefs of the management of the company, as well as assumptions and estimates made by and information currently available to the company's management. The company's actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the company's operations and business environment, including, but not limited to, competitive factors and pricing pressures, non-renewal of franchise agreements, shifts in market demand, the success of new franchise programs with limited operating history including the stand-alone take-n-bake locations, general economic conditions, changes in purchases of or demand for the company's products, licenses or franchises, the success or failure of individual franchisees and licensees, changes in prices or supplies of food ingredients and labor, and dependence on continued involvement of current management and the performance of the recently added sales staff and a franchise broker. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may differ materially from those described herein as anticipated, believed, estimated, expected or intended. The company undertakes no obligations to update the information in this press release for subsequent events.

   
Noble Roman's, Inc. and Subsidiaries  
Condensed Consolidated Balance Sheets  
(Unaudited)  
   
Assets   December 31,
2014
    June 30,
2015
 
Current assets:                
  Cash   $ 200,349     $ 280,697  
  Accounts receivable - net     1,687,954       1,766,038  
  Inventories     381,400       382,163  
  Prepaid expenses     467,721       659,602  
  Deferred tax asset - current portion     1,675,000       1,675,000  
    Total current assets     4,412,424       4,763,500  
                 
Property and equipment:                
  Equipment     1,383,380       1,391,137  
  Leasehold improvements     88,718       88,718  
      1,472,098       1,479,855  
  Less accumulated depreciation and amortization     1,041,951       1,077,843  
    Net property and equipment     430,147       402,012  
Deferred tax asset (net of current portion)     7,899,497       7,555,851  
Other assets including long-term portion of receivables-net     5,015,931       5,292,586  
      Total assets   $ 17,757,999     $ 18,013,949  
                 
Liabilities and Stockholders' Equity                
Current liabilities:                
  Current portion of long-term notes payable to bank   $ 1,469,028     $ 1,449,583  
  Accounts payable and accrued expenses     676,386       824,923  
      Total current liabilities     2,145,414       2,274,506  
                 
Long-term obligations:                
  Notes payable to bank - net of current portion     1,846,736       1,121,944  
      Total long-term liabilities     1,846,736       1,121,944  
                 
Stockholders' equity:                
  Common stock - no par value (25,000,000 shares authorized, 20,095,087 issued and outstanding as of December 31, 2014 and 20,702,660 issued and outstanding as of June 30, 2015)    

23,970,654
     

24,272,316
 
  Accumulated deficit     (10,204,805 )     (9,654,817 )
      Total stockholders' equity     13,765,849       14,617,499  
        Total liabilities and stockholders' equity   $ 17,757,999     $ 18,013,949  
                 
 
Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
 
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2014   2015   2014   2015
Royalties and fees   $ 1,969,378   $ 2,026,510   $ 3,783,443   $ 3,799,082
Administrative fees and other     20,807     14,885     41,493     26,633
Restaurant revenue     98,768     104,411     175,720     187,759
    Total revenue     2,088,953     2,145,806     4,000,656     4,013,474
                         
Operating expenses:                        
  Salaries and wages     265,664     292,357     525,558     571,874
  Trade show expense     140,161     136,470     266,422     262,585
  Travel expense     61,979     58,407     109,097     114,553
  Other operating expenses     219,432     193,964     408,018     401,590
  Restaurant expenses     104,892     112,345     196,320     218,473
Depreciation and amortization     27,821     26,354     55,642     52,708
General and administrative     413,638     407,669     807,646     809,827
    Total expenses     1,233,587     1,227,566     2,368,703     2,431,610
    Operating income     855,366     918,240     1,631,953     1,581,864
                         
Interest and other expense     46,954     42,193     97,007     88,229
Adjust for valuation of receivables     -     600,000     -     600,000
    Income before income taxes     808,412     276,047     1,534,946     893,635
                         
Income tax expense     305,016     106,154     592,795     343,647
    Net income   $ 503,396   $ 169,893   $ 942,151   $ 549,988
                         
                         
                         
Earnings per share - basic:                        
  Net income   $ .03   $ .01   $ .05   $ .03
Weighted average number of common shares outstanding     19,801,087     20,483,091     19,786,507     20,291,653
                         
                         
Diluted earnings per share:                        
  Net income   $ .02   $ .01   $ .04   $ .03
Weighted average number of common shares outstanding     21,082,553     21,844,981     21,067,973     21,653,543
                         

Contact Information

  • FOR ADDITIONAL INFORMATION, CONTACT:
    For Media Information:
    Scott Mobley
    President & CEO
    317/634-3377

    For Investor Relations:
    Paul Mobley
    Executive Chairman
    317/634-3377

    Brett Maas
    Hayden IR
    646/536-7331
    brett@haydenir.com