INDIANAPOLIS, IN / ACCESSWIRE / August 14, 2019 / Noble Roman's, Inc. (OTCQB:NROM), the Indianapolis based franchisor and licensor of Noble Roman’s Pizza and Craft Pizza & Pub, today announced results for the three-month and six-month periods ended June 30, 2019 along with other strategic highlights for the company.
Net income before taxes increased to $580,000, or $.03 per share from $550,000, or $.03 per share, and $1.21 million, or $.06 per share, from $1.09 million, or $.05 per share, for the three-month and six-month periods ended June 30, 2019 compared to the comparable periods in 2018. Net income before tax is significant because the company will not pay any income taxes for approximately the next $15 million in taxable income.
Net income increased to $441,000, or $.02 per share, from $412,000, or $.02 per share, and increased to $917,000, or $.04 per share, from $815,000, or $.04 per share, for the three-month and six-month periods ended June 30, 2019 compared to the comparable periods in 2018. The six-month results were achieved despite the highly unusual, extreme winter weather conditions this year in Indiana during January and February, which significantly curtailed revenue and margins during those months. In addition, the results are after a $21,000 non-cash expense in the six months ended June 30, 2019 from the adoption of the new accounting rules regarding accounting for leases, which became effective January 1, 2019 for publicly reporting entities.
The company also announced that it is continuing its focus on growing its well-established, non-traditional venue as well as its newer Craft Pizza & Pub venue. From January 1, 2019 through August 14, 2019, the company opened 21 new non-traditional franchise locations compared to 17 new non-traditional locations opened during the comparable time period in 2018. In addition, the first two weeks’ sales of all non-traditional franchise openings in 2019 have averaged 32.8% higher than openings from previous years. This reflects improvements the company made in kiosk design, operating systems and marketing. During 2019, the company also opened its first franchised Craft Pizza & Pub location with record opening sales, and it currently has two more franchised Craft Pizza & Pub locations under development. The company is in the planning stages for additional company-owned Craft Pizza & Pub locations as well.
The following table sets forth the revenue, expense and margin contribution of the Company's franchising venue and the percent relationship to its revenue:
Description | Three Months ended June 30, 2018 2019 | Six Months ended June 30, 2018 2019 | ||||||||||||||||||||||||||||||
Royalties and fees franchising | $ | 1,276,978 | 78.2 | % | $ | 1,335,297 | 82.4 | % | $ | 2,387,636 | 75.2 | % | $ | 2,622,475 | 81.6 | % | ||||||||||||||||
Royalties and fees grocery | 356,374 | 21.8 | 284,911 | 17.6 | 789,595 | 24.8 | 590,747 | 18.4 | ||||||||||||||||||||||||
Total royalties and fees revenue | 1,633,352 | 100.0 | 1,620,208 | 100.0 | 3,175,231 | 100.0 | 3,213,222 | 100.0 | ||||||||||||||||||||||||
Salaries and wages | 260,848 | 16.0 | 175,789 | 10.8 | 528,816 | 16.7 | 371,415 | 11.6 | ||||||||||||||||||||||||
Trade show expense | 119,228 | 7.3 | 104,906 | 6.5 | 240,000 | 7.5 | 210,000 | 6.5 | ||||||||||||||||||||||||
Insurance | 74,273 | 4.5 | 65,768 | 4.0 | 149,022 | 4.7 | 175,692 | 5.5 | ||||||||||||||||||||||||
Travel and auto | 56,412 | 3.4 | 27,129 | 1.7 | 104,245 | 3.3 | 54,678 | 1.7 | ||||||||||||||||||||||||
All other operating expenses | 174,381 | 10.7 | 171,222 | 10.6 | 312,155 | 9.8 | 227,741 | 7.1 | ||||||||||||||||||||||||
Total expenses | 685,142 | 41.9 | 544,814 | 33.6 | 1,334,238 | 42.0 | 1,039,526 | 32.4 | ||||||||||||||||||||||||
Margin contribution | $ | 948,210 | 58.1 | % | $ | 1,075,394 | 66.4 | % | $ | 1,840,993 | 58.0 | % | $ | 2,173,696 | 67.6 | % |
For the three-month period ended June 30, 2019 compared to the three-month period ended June 30, 2018:
For the six-month period ended June 30, 2019 compared to the six-month period ended June 30, 2018:
The following table sets forth the revenue, expense and margin contribution of the company's Craft Pizza & Pub venue and the percent relationship to its revenue:
Description | Three Months ended June 30, 2018 2019 | Six Months ended June 30, 2018 2019 | ||||||||||||||||||||||||||||||
Revenue | $ | 1,245,942 | 100 | % | $ | 1,329,465 | 100 | % | $ | 2,354,365 | 100 | % | $ | 2,472,079 | 100 | % | ||||||||||||||||
Cost of sales | 277,609 | 22.3 | 278,048 | 20.9 | 522,578 | 22.2 | 515,723 | 20.8 | ||||||||||||||||||||||||
Salaries and wages | 377,074 | 30.2 | 379,695 | 28.6 | 726,198 | 30.8 | 745,676 | 30.2 | ||||||||||||||||||||||||
Facility cost including rent, common area and utilities | 156,804 | 12.6 | 209,093 | 15.7 | 282,340 | 12.0 | 409,700 | 16.6 | ||||||||||||||||||||||||
Packaging | 34,642 | 2.8 | 35,473 | 2.7 | 60,742 | 2.6 | 66,790 | 2.7 | ||||||||||||||||||||||||
All other operating expenses | 117,763 | 9.5 | 218,625 | 16.4 | 237,533 | 10.1 | 393,964 | 15.9 | ||||||||||||||||||||||||
Total expenses | 963,892 | 77.4 | 1,120,934 | 84.3 | 1,829,391 | 77.7 | 2,131,853 | 86.2 | ||||||||||||||||||||||||
Margin contribution | $ | 282,050 | 22.6 | % | $ | 208,531 | 15.7 | % | $ | 524,974 | 22.3 | % | $ | 340,226 | 13.8 | % |
Margin contribution from this venue was decreased $9,331 in the three-month period ended June 30, 2019 and $21,228 in the six-month period ended June 30, 2019, for non-cash expense related to the adoption of ASU 2016-02 accounting for lease which became effective after January 1, 2019 for publicly reporting companies.
For the three-month period ended June 30, 2019 compared to the three-month period ended June 30, 2018:
For the six-month period ended June 30, 2019 compared to the six-month period ended June 30, 2018:
The following table sets forth the revenue, expense and margin contribution of the Company-owned non-traditional venue and the percent relationship to its revenue:
Description | Three Months ended June 30, 2018 2019 | Six Months ended June 30, 2018 2019 | ||||||||||||||||||||||||||||||
Revenue | $ | 291,526 | 100 | % | $ | 160,020 | 100 | % | $ | 579,642 | 100 | % | $ | 330,522 | 100 | % | ||||||||||||||||
Cost of sales | 100,831 | 34.6 | 62,741 | 39.2 | 199,596 | 34.4 | 126,688 | 38.3 | ||||||||||||||||||||||||
Salaries and wages | 78,699 | 27.0 | 54,041 | 33.8 | 200,387 | 34.6 | 107,833 | 32.6 | ||||||||||||||||||||||||
Rent | 29,595 | 10.1 | 15,163 | 9.5 | 58,594 | 10.1 | 31,329 | 9.5 | ||||||||||||||||||||||||
Packaging | 9,965 | 3.4 | 4,629 | 2.9 | 19,165 | 3.3 | 9,508 | 2.9 | ||||||||||||||||||||||||
All other operating expenses | 69,741 | 23.9 | 16,535 | 10.3 | 94,945 | 16.4 | 31,460 | 9.5 | ||||||||||||||||||||||||
Total expenses | 288,831 | 99.0 | 153,109 | 95.7 | 572,687 | 98.8 | 306,818 | 92.8 | ||||||||||||||||||||||||
Margin contribution | $ | 2,695 | 1.0 | % | $ | 6,911 | 4.3 | % | $ | 6,955 | 1.2 | % | $ | 23,704 | 7.2 | % |
Gross revenue from this venue decreased to $160,000 and $331,000 from $292,000 and $580,000 for the respective three-month and six-month periods ended June 30, 2019 compared to the comparable periods in 2018. The primary reason for this decrease was the company operating three non-traditional locations in the three-month and six-month periods ended June 30, 2018 compared to one location in the three-month and six-month periods ended June 30, 2019. The two locations vacated in December 2018 were locations that the company was only operating to the end of their contract terms. The company does not intend to operate any more company-owned non-traditional locations except the one location that it is currently operating.
The following bullet points discuss other financial highlights from the quarter:
With a focus on development in the company’s non-traditional venue combined with the new catalyst for growth represented by Craft Pizza & Pub, the company believes it is potentially entering the most exciting expansion phase it has experienced in its 47-year history. In support of this growth opportunity, the company believes it may soon have financing in place to repay all existing debt and have additional capital for the development of another five company-owned Craft Pizza & Pub locations, all at considerably lower rates of interest than is currently being paid.
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 indicated by the forward-looking statements due to risks and uncertainties that exist in the company’s operations and business environment, including, but not limited to: the ability of the company to refinance its debt as currently planned, competitive factors, pricing pressures, non-renewal of franchise agreements, shifts in market demand, the success of new franchise programs, including Noble Roman’s Craft Pizza & Pub format, the company’s ability to successfully operate and manage costs of an increased number of company-owned restaurants, general economic conditions, changes in demand for the company's products 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. 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.
FOR ADDITIONAL INFORMATION, CONTACT:
For Media Information: Scott Mobley, President& CEO 317/634-3377
For Investor Relations: Paul Mobley, Executive Chairman 317/634-3377
Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
Assets | December 31, 2018 | June 30, 2019 | ||||||
Current assets: | ||||||||
Cash | $ | 76,194 | $ | 231,824 | ||||
Accounts receivable - net | 1,573,600 | 1,784,207 | ||||||
Inventories | 962,783 | 909,173 | ||||||
Prepaid expenses | 688,259 | 680,409 | ||||||
Total current assets | 3,300,836 | 3,605,613 | ||||||
Property and equipment: | ||||||||
Equipment | 2,872,494 | 2,884,824 | ||||||
Leasehold improvements | 1,180,050 | 1,180,637 | ||||||
Construction and equipment in progress | 119,340 | 150,564 | ||||||
4,171,844 | 4,216,025 | |||||||
Less accumulated depreciation and amortization | 1,399,435 | 1,540,817 | ||||||
Net property and equipment | 2,772,449 | 2,675,208 | ||||||
Deferred tax asset | 4,817,309 | 4,527,604 | ||||||
Deferred contract cost | 698,935 | 698,936 | ||||||
Goodwill | 278,466 | 278,466 | ||||||
Operating lease right of use assets | - | 4,384,022 | ||||||
Other assets including long-term portion of receivables - net | 3,808,957 | 4,130,173 | ||||||
Total assets | $ | 15,676,952 | $ | 20,300,022 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Current portion of term loan payable to bank | $ | 871,429 | $ | 871,429 | ||||
Accounts payable and accrued expenses | 523,315 | 108,824 | ||||||
Current portion of operating lease liability | - | 333,763 | ||||||
Total current liabilities | 1,394,744 | 1,314,016 | ||||||
Long-term obligations: | ||||||||
Term loans payable to bank (net of current portion) | 3,898,733 | 3,512,425 | ||||||
Convertible notes payable | 1,539,204 | 1,529,270 | ||||||
Operating lease liabilities - net of short-term portion | - | 4,176,871 | ||||||
Deferred contract income | 698,935 | 698,936 | ||||||
Total long-term liabilities | 6,136,872 | 9,917,502 | ||||||
Stockholders' equity: | ||||||||
Common stock - no par value (40,000,000 shares authorized, 21,583,032 issued and outstanding as of December 31, 2018 and 21,915,413 as of June 30, 2019) | 24,739,482 | 24,797,569 | ||||||
Accumulated deficit | (16,594,146 | ) | (15,729,065 | ) | ||||
Total stockholders' equity | 8,145,336 | 9,068,504 | ||||||
Total liabilities and stockholders' equity | $ | 15,676,952 | $ | 20,300,022 | ||||
Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2018 | 2019 | 2018 | 2019 | |||||||||||||
Revenue: | ||||||||||||||||
Restaurant revenue - company-owned Craft Pizza & Pub | $ | 1,245,942 | $ | 1,329,465 | $ | 2,354,365 | $ | 2,472,079 | ||||||||
Restaurant revenue - company-owned non-traditional | 291,526 | 160,020 | 579,642 | 330,522 | ||||||||||||
Franchising revenue | 1,633,352 | 1,620,208 | 3,175,231 | 3,213,222 | ||||||||||||
Administrative fees and other | 6,384 | 11,112 | 20,629 | 27,731 | ||||||||||||
Total revenue | 3,177,204 | 3,120,805 | 6,129,867 | 6,043,554 | ||||||||||||
Operating expenses: | ||||||||||||||||
Restaurant expenses - company-owned Craft Pizza & Pub | 963,892 | 1,120,934 | 1,829,391 | 2,131,853 | ||||||||||||
Restaurant expenses - company-owned non-traditional | 288,831 | 153,109 | 572,687 | 306,818 | ||||||||||||
Franchising expenses | 685,142 | 544,814 | 1,334,238 | 1,039,526 | ||||||||||||
Total operating expenses | 1,937,865 | 1,818,857 | 3,736,316 | 3,478,197 | ||||||||||||
Depreciation and amortization | 100,253 | 76,446 | 172,756 | 170,045 | ||||||||||||
General and administrative expenses | 436,044 | 424,793 | 818,324 | 841,042 | ||||||||||||
Total expenses | 2,474,162 | 2,298,869 | 4,727,396 | 4,489,284 | ||||||||||||
Operating income | 703,042 | 800,709 | 1,402,471 | 1,554,270 | ||||||||||||
Interest expense | 153,365 | 220,268 | 313,653 | 347,171 | ||||||||||||
Income before income taxes | 549,677 | 580,441 | 1,088,818 | 1,207,099 | ||||||||||||
Income tax expense | 137,529 | 139,305 | 274,121 | 289,703 | ||||||||||||
Net income | $ | 412,148 | $ | 441,136 | $ | 814,697 | $ | 917,396 | ||||||||
Earnings per share - basic: | ||||||||||||||||
Net income before income tax | $ | .03 | $ | .03 | $ | .05 | $ | .06 | ||||||||
Net income | $ | .02 | $ | .02 | $ | .04 | $ | .04 | ||||||||
Weighted average number of common shares outstanding | 21,156,658 | 21,742,291 | 21,013,971 | 21,707,300 | ||||||||||||
Diluted earnings per share: | ||||||||||||||||
Net income before income tax | $ | .02 | $ | .02 | $ | .04 | $ | .05 | ||||||||
Net income | $ | .02 | $ | .02 | $ | .03 | $ | .04 | ||||||||
Weighted average number of common shares outstanding | 26,377,773 | 25,663,140 | 26,377,773 | 25,633,674 |
SOURCE: Noble Romans, Inc.