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WKN: A0CA31 | ISIN: US6551071003 | Ticker-Symbol:
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ACCESSWIRE
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Noble Romans, Inc.: Noble Roman's Announces Third Quarter 2024 Financial Data

Finanznachrichten News

INDIANAPOLIS, IN / ACCESSWIRE / November 13, 2024 / Noble Roman's, Inc. (OTCQB:NROM), the Indianapolis based franchisor and licensor of Noble Roman's Pizza and Noble Roman's Craft Pizza & Pub ("CPP"), today announced financial data for the third quarter 2024 and other company highlights.

Financial highlights from the 3rd quarter 2024 include:

  • Net Income of $193,000

  • Operating Income of $417,000

  • Franchising Revenue of $1.4 million compared to $1.3 million in 2023

  • Same store sales for company-owned CPP restaurants increased almost 1%

  • Average store sales for company-owned CPP restaurants for the last 6 operational weeks (prior to this release date) increased approximately 5.2% over the same operational weeks in 2023

  • Cost of sales in the Craft Pizza & Pub increased from 19.8% to 21.4% due primarily to elevated cheese prices and the promotion of the company's value-oriented XL Pizza

  • Labor in the Craft Pizza & Pub decreased from 29.6% to 28.8% despite market pressures on management salaries

  • Franchising labor increased from 14.8% to 15.5% reflecting an abnormally low expense rate in 2023

  • Net income for the quarter benefited from the revaluation of the warrant liability by $192 thousand using the Black-Scholes method of calculation

  • The company continues to progress on obtaining new financing to repay its senior note and subordinated notes

Financial highlights from the nine-month period 2024 include:

  • Net Income of $164,000.

  • Operating Income of $1.4 million

  • Franchising Revenue of $4.3 million compared to $3.7 million in 2023

  • Same store sales from company-owned Craft Pizza & Pub restaurants decreased approximately 3.4% primarily due to weather conditions in the 1st quarter and soft consumer spending throughout, slightly offset by an approximate 1% same store sales increase in the 3rd quarter

  • Average store sales for company-owned CPP restaurants for the last 6 operational weeks (prior to this release date) increased approximately 5.2% over the same operational weeks in 2023

  • Cost of sales in the Craft Pizza & Pub increased from 20.5% to 21.1% due primarily to elevated cheese prices and the promotion of the company's value-oriented XL Pizza

  • Labor in the Craft Pizza & Pub remained nearly unchanged at 28.9% compared to 28.8% a year ago despite market pressures on management salaries

  • Franchising labor decreased from 17.7% to 15.9% reflecting the overhead efficiencies inherent in adding new units

  • Franchising ongoing royalty income increased to $3.9 million from $3.2 million, or a 22.5% increase

  • Initial franchise fee income decreased from $327 thousand to $193 thousand as additional franchise fees for new franchise locations now get deferred and amortized over the period of the franchise agreement

  • Comparability of 2024 results to 2023 results for year-to-date is obscured due to the one-time recording of $1.46 million in income during the first quarter of 2023 from ERTC refund recognition

Further details:

The company had a net income for the nine-months ended September 30, 2024 of approximately $164,000 compared to a net income of approximately $1.3 million for the comparable period in 2023. The $164,000 net income was after a $1,800 decrease during the nine months for the market value of the outstanding warrant, a non-cash charge of $29,000 to close out the asset ledger for dormant subsidiary, and a non-cash adjustment for allowance receivables from a prior period of $32,000. Excluding those one-time charges, the company would have reported a net income of approximately $223,000. The comparability of the two nine-month periods of September 30, 2024 and 2023 is reduced because the net income of $1.3 million in 2023 was after recording $1.46 million of income from the ERTC refund. The ERTC refund was expenses and lost revenue, due to COVID restrictions, incurred by the company in periods prior to March 31, 2023. Excluding the ERTC refund recorded in the first quarter of 2023, the company would have reported a net loss of approximately $160,000 for the nine-month period ended September 30, 2023.

The revenue from the non-traditional franchising venue increased to $4.3 million from $3.7 million, or a 22.5% increase. By adding in the $180,000 in deferred initial franchise fees received in the current nine-month period (which were actually received in cash but deferred for future income recognition, which is a different accounting treatment than applied the previous year) and the non-cash adjustments, detailed above, of $61,000, the increase in franchising revenue would have been $930,000, or 25.3%. The company currently has a significant pipeline of prospects for additional franchise sales and a significant number of franchised locations sold but not yet open. The company has opened approximately 53 new franchise locations and has plans to open approximately 20 additional franchise locations this year. The company anticipates that this source of revenue will increase significantly through the rest of 2024 and beyond. Salaries and wages from the franchising venue decreased to 15.9% of revenue from 17.7% of revenue in the comparable period in 2023. The labor was reduced as a percentage of revenue primarily related to the growing number of franchises sold and opened without adding additional staff.

The total revenue from the company-owned restaurants was $7.1 million for the nine months ended September 30, 2024 compared to $7.4 million in the corresponding period in 2023. Same store sales for the CPP restaurants declined during the 9-month period by approximately 3.4% in part due to localized bad weather in the first quarter and sluggish consumer spending throughout. Same store CPP sales in the 3rd quarter increased nearly 1%, and have continued that trend after the quarter-end with the margin also increasing over last year. The company's single company-owned non-traditional operation is located in a hospital which is adding a new wing. During portions of the 3rd quarter, the hospital upgraded infra-structure in the foodservice area as part of the construction process, and the company's operation during that time was heavily restricted to reduced hours and a remote location for grab-n-go service only. The operation has since resumed normal operations and enjoying increased sales to nearly $24,000 per week.

As previously announced, the company is pursuing plans to obtain new financing to repay the Corbel loan prior to its maturity in February 2025 and to repay the subordinated notes as well when the Corbel loan is repaid. Based on the company's credit metrics and conversations currently taking place, the company believes its financing efforts will be successful. The company expects the new financing will result in some reduction in the effective interest rate that it currently pays and will not include equity-dilutive components like those in the current Corbel financing.

The following table sets forth the revenue, expense and margin contribution of the company's Craft Pizza & Pub venue and the percentage relationship to its revenue:

Description

Three months ended September 30,

Nine months ended September 30,

2023

2024

2023

2024

Revenue

$

2,175,219

100

%

$

2,195,167

100

%

$

6,639,213

100

%

$

6,413,242

100

%

Cost of sales

430,826

19.8

469,197

21.4

1,359,126

20.5

1,350,131

21.1

Salaries and wages

643,081

29.6

632,823

28.8

1,913,450

28.8

1,855,157

28.9

Facility cost including rent, common area and utilities

399,684

18.4

410,624

18.7

1,210,276

18.2

1,191,496

18.6

Packaging

71,586

3.3

70,765

3.2

220,694

3.4

199,838

3.1

Third-party delivery fees

26,227

1.2

45,156

2.1

86,444

1.3

146,640

2.3

All other operating expenses

403,230

18.5

393,263

17.9

1,124,658

16.9

1,088,282

16.9

Total expenses

1,974,635

90.8

2,021,828

92.1

5,914,648

89.1

5,831,544

90.9

Margin contribution

$

200,584

9.2

%

$

173,339

7.9

%

$

724,565

10.9

%

$

581,698

9.1

%

The following table sets forth the revenue, expense and margin contribution of the company's franchising venue and the percentage relationship to its revenue:

Description

Three months ended September 30,

Nine months ended September 30,

2023

2024

2023

2024

Royalties and fees franchising

$

1,310,284

100

%

$

1,437,697

100

%

$

3,671,160

100

%

$

4,298,735

100

%

Salaries and wages

193,781

14.8

222,910

15.5

648,342

17.7

685,321

15.9

Franchise promotion expense

44,936

3.4

60,105

4.2

229,056

6.2

180,682

4.2

Travel and auto

37,908

2.9

40,038

2.8

96,057

2.6

122,404

2.8

All other operating expenses (benefit)

119,152

9.1

176,728

12.3

(1,009,710

)

(27.5

)

461,736

10.8

Total expenses

395,777

30.2

499,781

34.8

(36,255

)

(1.0

)

1,450,143

33.7

Margin contribution

$

914,507

69.8

%

$

937,916

65.2

%

$

3,707,415

101

%

$

2,848,592

66.3

%

The following table sets forth the revenue, expense and margin contribution of the company-owned non-traditional venue and the percentage relationship to its revenue:

Description

Three months ended September 30,

Nine months ended September 30,

2023

2024

2023

2024

Revenue

$

247,252

100

%

$

218,193

100

%

$

707,217

100

%

$

693,045

100

%

Total expenses

240,245

97.2

269,674

123.6

566,225

80.1

730,723

105.4

Margin contribution (loss)

$

7,007

2.8

%

$

(51,481

)

(23.6

)%

$

140,992

19.9

%

$

(37,676

)

(5.4

)%

Detail on Corporate Expenses:

Depreciation and amortization remained approximately constant at $96,000 and $289,000 for the three-month and nine-month periods ended September 30, 2023 and 2024. The amount remained largely consistent since there have been no new company locations opened.

General and administrative expenses were $566,000 and $1.7 million for the three-month and nine-month periods ended September 30, 2024 and $519,000 and $1.6 million for the corresponding periods in 2023. The increase in 2024 over 2023 was largely the result of 2023 expenses being decreased by certain amounts of the ERTC refunds recorded in the first quarter 2023, as explained above.

Interest expense increased from $359,000 to $415,000 for the three-month period and from $1.1 million to $1.2 million for the nine-month period ended September 30, 2024 compared to the comparable periods in 2023. The reason for the increase was the addition to principal of the non-cash PIK interest being added to the principal balance of the senior note and the increase in the variable rate, as explained above, which was only partially offset by principal reductions of nearly $2.6 million in the principal amount of the senior note during 2023 and 2024.

The company has recorded the fair market value of the outstanding warrants of $539,000 which resulted in a reduction of valuation during the third quarter of $192,000 and a reduction for the nine-month period ended September 30, 2024 of $1,800.

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 continuing after-effects of the COVID-19 pandemic, the ability of franchisees to timely prepare their units for scheduled openings, the company's ability to maintain adequate staff for new openings, competitive factors and pricing and cost pressures, non-renewal of franchise agreements or the openings contemplated by the development agreement not occurring, shifts in market demand, the success of franchise programs, including the Noble Roman's Craft Pizza & Pub format, general economic conditions, changes in demand for the company's products or franchises, the company's ability to service and finalize refinancing for its loans, the impact of franchise regulation, the success or failure of individual franchisees, other changes in prices or supplies of food ingredients and labor and inflation, as well as the factors discussed under "Risk Factors" contained in this company's Annual Report on Form 10-K for the year ended December 31, 2022. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. If activist stockholder activities ensue, the company's business could be adversely impacted.

FOR ADDITIONAL INFORMATION, CONTACT:

For Media Information: Scott Mobley, President & CEO (smobley@nobleromans.com)
For Investor Relations: Paul Mobley, Executive Chairman (pmobley@nobleromans.com)
Mike Cole, Investor Relations: 949-444-1341 (mike.cole@armaadvisoryservices.com)

Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(Unaudited)

Assets

December 31,
2023

September 30,
2024

Current assets:

Cash

$

872,335

$

551,479

Employee Retention Tax Credit Receivable

507,726

507,726

Accounts receivable - net

1,169,446

782,500

Inventories

965,819

966,285

Prepaid expenses

318,195

162,445

Total current assets

3,833,521

2,970,435

Property and equipment:

Equipment

4,386,430

4,443,018

Leasehold improvements

3,130,430

3,141,101

7,516,860

7,584,119

Less accumulated depreciation and amortization

3,196,993

3,485,627

Net property and equipment

4,319,867

4,098,492

Deferred tax asset

3,374,841

3,374,841

Deferred contract cost

1,403,299

1,403,899

Goodwill

278,466

278,466

Operating lease right of use assets

4,930,014

4,354,294

Other assets including long-term portion of receivables-net

339,817

367,645

Total assets

$

18,479,825

$

16,848,072

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued expenses

$

1,284,210

$

458,811

Current portion of operating lease liability

799,165

852,428

Current portion of Corbel loan payable

1,000,000

6,756,267

Subordinated note payable

-

575,000

Warrant liability

540,650

538,822

Total current liabilities

3,624,025

9,181,328

Long-term obligations:

Term loan payable to Corbel net of current portion

6,133,691

-

Convertible notes payable

575,000

-

Operating lease liabilities - net of short-term portion

4,378,927

3,730,787

Deferred contract income

1,577,299

1,563,718

Total long-term liabilities

12,664,917

5,294,505

Total liabilities

$

16,288,942

$

14,475,833

See Note 9 regarding Contingencies

Stockholders' equity:

Common stock - no par value (40,000,000 shares authorized,
22,215,512 issued and outstanding as of December 31, 2023 and
as of September 30, 2024)



24,840,126



24,857,787

Accumulated deficit

(22,649,243

)

(22,485,548

)

Total stockholders' equity

2,190,883

2,372,239

Total liabilities and stockholders' equity

$

18,479,825

$

16,848,072

Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

Three months ended
September 30,

Nine months ended
September 30,

2023

2024

2023

2024

Revenue:

Restaurant revenue - company-owned restaurants

$

2,175,219

$

2,195,167

$

6,639,213

$

6,413,242

Restaurant revenue - company-owned non-traditional

247,252

218,193

707,217

693,045

Franchising revenue

1,310,284

1,437,664

3,671,160

4,298,703

Administrative fees and other

6,657

29,142

22,068

45,959

Total revenue

3,739,412

3,880,166

11,039,658

11,450,949

Operating expenses:

Restaurant expenses - company-owned restaurants

1,974,635

2,021,828

5,914,648

5,831,544

Restaurant expenses - company-owned
non-traditional


240,245


269,675


566,225


730,723

Franchising expenses

395,777

499,781

(36,255

)

1,450,143

Total operating expenses

2,610,657

2,791,284

6,444,618

8,012,410

Depreciation and amortization

95,517

96,068

286,550

288,634

General and administrative expenses

519,291

566,275

1,564,433

1,713,691

Defense against activist shareholder

-

9,916

-

29,458

Total expenses

3,225,465

3,463,543

8,295,602

10,044,193

Operating income

513,947

416,623

2,744,056

1,406,756

Interest expense

359,431

415,524

1,121,505

1,244,889

(Decrease) in fair value of warrant

-

(192,215

)

-

(1,828

)

Income before income taxes

154,516

193,314

1,622,551

163,695

Income tax expense

-

-

274,190

-

Net income

$

154,516

$

193,314

$

1,348,361

$

163,695

Earnings per share - basic:

Net income before income tax

$

.01

$

.01

$

.07

$

.01

Net income

$

.01

$

.01

$

.06

$

.01

Weighted average number of common shares
outstanding


22,215,512


22,215,512


22,215,512


22,215,512

Diluted earnings per share:

Net income before income tax

$

.01

$

.01

$

.07

$

.01

Net income

$

.01

$

.01

$

.06

$

.01

Weighted average number of common shares
outstanding

23,581,300

24,149,723

23,581,300

24,368,453

SOURCE: Noble Romans, Inc.



View the original press release on accesswire.com

© 2024 ACCESSWIRE
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