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Noble Roman's Announces Continued Growth for Second Quarter 2014

Continues Focus on Growth In All Three Targeted Expansion Venues

INDIANAPOLIS, Aug. 11, 2014 /PRNewswire/ -- Noble Roman's, Inc. (OTC/BB: NROM), the Indianapolis based franchisor and licensor of Noble Roman's Pizza and Tuscano's Italian Style Subs, today announced results for the quarterly period ended June 30, 2014.

Second Quarter 2014 Financial and Operational Highlights Compared to Second Quarter 2013

  • Net income before taxes was $808,000, or $0.04 per share, compared to $754,000, or $0.04 per share.  The company will pay no income taxes on approximately the next $25 million in net income.
  • Net income was $503,000, or $0.03 per share, compared to $431,000, or $0.02 per share.
  • Total revenue was $2.09 million compared to $1.99 million.
  • Upfront franchisee fees and commissions were $116,000 compared to $242,000
  • Royalties and fees less upfront fees were $1.85 million compared to $1.62 million.
  • Royalties and fees from non-traditional franchises other than grocery stores were $1.19 million compared to $1.11 million.
  • Royalties and fees from grocery store take-n-bake locations were $373,000 compared to $374,000.
  • Royalties and fees from stand-alone take-n-bake locations were $221,000 compared to $53,000.
  • Royalties and fees from traditional locations were $74,000 compared to $81,000.
  • Operating margin was 40.9% compared to 40.5%.

Financial and Operational Highlights for the First Six-Months in 2014 Compared to Comparable Period in 2013

  • Net income before taxes was $1.53 million, or $0.08 per share, compared to $1.45 million, or $0.07 per share.  The company will pay no income taxes on approximately the next $25 million in net income.
  • Net income was $942,000, or $0.05 per share, compared to $874,000, or $0.04 per share.
  • Operating margin was 40.8% of revenue compared to 40.0%. 
  • Total revenue was $4.00 million compared to $3.88 million.
  • Upfront franchisee fees and commissions were $166,000 compared to $365,000
  • Royalties and fees less upfront fees were $3.62 million compared to $3.27 million.
  • Royalties and fees from non-traditional franchises other than grocery stores were $2.36 million compared to $2.27 million.
  • Royalties and fees from grocery store take-n-bake locations were $717,000 compared to $771,000.
  • Royalties and fees from traditional locations were $146,000 compared to $158,000.
  • Royalties and fees from stand-alone take-n-bake locations were $400,000 compare to $77,000.

The company continues to focus on growth in its three primary venues, which are non-traditional franchises/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 for the remainder of 2014 and future years while maintaining stable operating costs, as has been the company's history for the past several years. 

"Interest in the grocery store take-n-bake locations has increased very significantly after displaying the new packaging and new products at the National Grocers Association show in February, the International Dairy-Deli Bakery Association show and the Food Marketing Institute show in June, and at various distributor food shows," said Paul Mobley, Chairman and CEO of Noble Roman's, Inc. "We are currently in ongoing discussions with a number of grocery store chains representing nearly 6,000 possible additional grocery store locations."

The grocery store take-n-bake pizzas are now displayed in bakeable, treated aluminum pans with a clear plastic top. Consumers bake the pizzas in these pans and the anodized treatment on the bottom is designed to increase home baking performance, drawing in more heat to make the pizzas crispy on the bottom but soft in the middle. The clear plastic top allows the entire pizza to be visible and appealing. The new products include a gluten-free crust designed to appeal to a growing segment of the population and three varieties of 14-inch mega-topped pizzas, designed for tremendous value appeal, which are called "Mile-High Extra Meat Pizza", "Extra Cheese Four Cheese Pizza" and "Double-Topped Pepperoni Pizza".

Mr. Mobley added, "The interest shown at these shows by larger grocery chains and some new distributors is a very positive sign for additional growth in this venue for the remainder of 2014 and even greater financial impact on 2015."

Thus far in 2014, the company has signed 24 additional new franchise/license agreements for non-traditional locations other than grocery stores and is in discussion with numerous other convenience store chains and entertainment facilities for additional non-traditional locations. The primary source of growth in this segment comes from existing franchisees and exhibiting in various industry trade shows including the National Association of Convenience Stores, Western Petroleum Marketers Association, International Association of Amusement Parks and Attractions, and selected state convenience store associations.

Mr. Mobley stated that "during the second quarter we signed agreements, with a chain of approximately 300 convenience stores, for six locations, all of which are to open in August and September of this year. The chain has targeted 21 additional locations which it intends to sign agreements for shortly after the six are opened with development continuing thereafter until they have put Noble Roman's Pizza in nearly all of their locations."

The company has entered into agreements for 61 stand-alone take-n-bake locations and is currently in discussions with several other prospects. The company continues to tightly screen all applicants for a stand-alone take-n-bake franchise and declines a high percentage of the applicants.   

Mr. Mobley stated, "Our stand-alone take-n-bake development is still relatively new and we are continuing to look at further enhancements to improve sales and to make the operation even more appealing. During the second quarter we added an in-store baking service called 'You Bake or We Bake!' which is resulting in improved sales. In addition to broadening consumer appeal in general, this service has expanded our take-n-bake daypart earlier into the day, as we now offer hot pizzas and other menu items for lunch. The new baking service requires no substantial change in unit layouts, square footage or labor requirements, and can easily be incorporated into existing operations as well as new ones. Approximately 50% of existing franchises have added that service,  others are considering adding the service and this service is part of the concept for all new locations going forward. Also, during the second quarter, we made the decision to focus our efforts on adding new locations in markets where existing franchises have already been sold to aid in market penetration for more affordable mass marketing efforts which should further increase unit volumes. Further enhancements to this venue will be ongoing. Our marketing initiatives to attract potential take-n-bake franchisees continues to be successful in generating a significant number of leads, however we are being highly selective in the approval process."    

Balance Sheet Summary

Current assets totaled $4.4 million and current liabilities totaled $2.1 million as of June 30, 2014 compared to total current assets of $3.5 million and current liabilities of $2.0 million as of December 31, 2013. Total bank debt was $3.2 million as of June 30, 2014 compared to $3.85 million as of December 31, 2013. Total stockholders' equity as of June 30, 2014 was $12.67 million compared to $11.70 million as of December 31, 2013.

2014 Outlook

Management provided the following revenue outlook for 2014 during its annual shareholder meeting. 

  • Revenue growth of 5% to 7% for royalties and fees from non-traditional franchises
  • Revenue growth of 10% to 15% for royalties and fees from grocery take-n-bake locations
  • Revenue growth of 300% to 350% for royalties and fees from stand-alone take-n-bake franchises

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, 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 the success or failure of its recently developed stand-alone take-n-bake operation.  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,

 2013

        June 30,

            2014

Current assets:



   Cash

$     157,787

$    278,381

   Accounts receivable - net

1,268,788

1,988,843

   Inventories

337,822

338,688

   Prepaid expenses

472,065

566,344

   Deferred tax asset - current portion

1,250,000

1,250,000

           Total current assets

3,486,462

4,422,256




Property and equipment:



   Equipment

1,361,205

1,369,753

   Leasehold improvements

88,718

88,719


1,449,923

1,458,472

   Less accumulated depreciation and amortization

962,502

1,000,232

          Net property and equipment

487,421

458,240

Deferred tax asset (net of current portion)

9,332,024

8,739,228

Other assets including long-term portion of receivables - net

3,067,754

3,203,979

                      Total assets       

$ 16,373,661

$ 16,823,703




Liabilities and Stockholders' Equity



Current liabilities:



   Current portion of long-term notes payable to bank

$   1,216,250

$ 1,216,250

   Accounts payable and accrued expenses

818,803

913,818

                Total current liabilities

2,035,053

2,130,068




Long-term obligations:



   Notes payable to bank – net of current portion

2,635,208

2,027,083

               Total long-term liabilities

2,635,208

2,027,083




Stockholders' equity:



   Common stock – no par value (25,000,000 shares authorized, 19,585,089

       issued and outstanding as of December 31, 2013 and 19,801,087

       issued and outstanding as of June 30, 2014)

23,498,401

23,519,402

   Accumulated deficit

(11,795,001)

(10,852,850)

                Total stockholders' equity

11,703,400

12,666,552

                      Total liabilities and stockholders' equity

$  16,373,661

$ 16,823,703




This statement should be read in conjunction with the footnotes contained in the Company's Form 10-Q.

 



Noble Roman's, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)



Three Months Ended

June 30,

Six Months Ended

June 30,


2013

2014

2013

2014

Royalties and fees

$ 1,857,503

$ 1,969,378

$3,639,809

$ 3,783,443

Administrative fees and other

7,600

20,807

8,876

41,493

Restaurant revenue

122,275

98,768

229,431

175,720

                Total revenue

1,987,378

2,088,953

3,878,116

4,000,656






Operating expenses:





     Salaries and wages

262,827

265,664

512,030

525,558

     Trade show expense

129,991

140,161

259,540

266,422

     Travel expense

55,240

61,979

99,555

109,097

     Other operating expenses

182,957

219,432

364,320

408,018

     Restaurant expenses

109,742

104,892

214,850

196,320

Depreciation and amortization

28,343

27,821

56,689

55,642

General and administrative

413,564

413,638

820,548

807,646

              Total expenses

1,182,664

1,233,587

2,327,532

2,368,703

              Operating income

804,714

855,366

1,550,584

1,631,953






Interest and other expense

50,247

46,954

103,404

97,007

              Income before income taxes

754,467

808,412

1,447,180

1,534,946






Income tax expense

298,845

305,016

573,228

592,795

              Net income

455,622

503,396

873,952

942,151






              Cumulative preferred dividends

24,411

-

49,364

-






              Net income available to common

                   stockholders

$431,211

$503,396

$  824,588

$  942,151











Earnings per share – basic:





     Net income  

$          .02

$          .03

$         .04

$         .05

     Net income available to common stockholders

$          .02

$          .03

$         .04

$         .05

Weighted average number of common shares

      outstanding

19,516,589

19,801,087

19,516,589

19,786,507











Diluted earnings per share:





     Net income

$          .02

$          .02

$         .04

$         .04

     Net income  available to common

          stockholders

$          .02

$          .02

$         .04

$         .04

Weighted average number of common shares

     outstanding

20,290,932

21,082,553

20,290,932

21,067,973






This statement should be read in conjunction with the footnotes contained in the Company's Form 10-Q.

FOR ADDITIONAL INFORMATION, CONTACT:
For Media Information: Scott Mobley, President 317/634-3377
For Investor Relations: Paul Mobley, Chairman &CEO 317/634-3377
or Brett Maas, Hayden IR, 646/536-7331or [email protected]

SOURCE Noble Roman's, Inc.

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