INDIANAPOLIS, IN / ACCESSWIRE / August 14, 2017 / Noble Roman's, Inc. (OTCQB: NROM), the Indianapolis based franchisor and licensor of Noble Roman's Pizza, today issued an important reiteration of its primary opportunities for future revenue growth. Additionally, the company announced the first six-months operating results for its initial Noble Roman's Craft Pizza & Pub location, as well as overall corporate financial results for the quarterly and six-month periods ended June 30, 2017.
Strategic Overview of Growth Opportunities
In a brief statement outlining the company's growth strategy, A. Scott Mobley, the company's President and Chief executive Officer, said:
"As everyone has an opportunity to study the results of the initial six months of operation of our first flagship Noble Roman's Craft Pizza & Pub (CPP), it will become apparent that this is potentially the company's most valuable growth opportunity. Accordingly, CPP will take a priority position in management's long-term strategic development planning. Initially, this will take the form of constructing three additional CPP units to be company owned and operated, for a total of four company units. Additionally, the company is initializing an effort to franchise CPP with experienced operators in and around the state of Indiana to exploit the marketing synergies of concentric development. One such franchised location is already approaching potential construction stage. At the same time, the company will continue to grow its franchised non-traditional segment, concentrating on growth in convenience stores and entertainment facilities. The non-traditional segment of the company has been a tremendously valuable and reliable producer and, with the recent modernization in kiosk design, stands to be a critically important, on-going growth opportunity as well. Lastly, the company will continue to exploit current opportunities in the grocery segment. The grocery take-n-bake market, which was originally targeted during the Great Recession, presents not only a valuable current revenue source, but as a home meal replacement alternative to dining out, it represents potential additional opportunity in any future economic contraction."
Noble Roman's Craft Pizza & Pub
The first unit of the company's CPP concept continues to exceed management's pre-opening expectations by over 50%. For the six months that the unit has been open (February thru July), sales were $935,492 net of discounts and promotions, with a net income from operations of $259,558, representing an operating margin of 27.7%. According to Mr. Mobley, "Outside of Easter and spring break weekends, the CPP sales have maintained or exceeded grand opening levels throughout the six months."
The first CPP unit opened in 4,200 square feet of the newly constructed Monon Marketplace on Main Street/Highway 32 in Westfield, Indiana, a prosperous and growing community on the northwest side of Indianapolis. The pizzeria concept has a hint of nostalgia with a modern flair and substantial new innovations. The CPP harkens back to the company's early history when it was known simply as "Pizza Pub." Like then, for fast and efficient service that is easy to staff and manage, ordering takes place at the counter and food runners deliver orders to the dining room for dine-in guests. The CPP features many exciting enhancements over the current competitive landscape, particularly when compared to the fast-casual segment from which it differs greatly. As the name implies, the restaurant features two styles of hand-crafted, made-from-scratch pizzas with a selection of over 40 different toppings, cheeses and sauces from which to choose. The pizza offerings feature Noble Roman's traditional hand-crafted thinner crust as well as its signature deep-dish Sicilian crust. Beer and wine is also featured, with 16 different beers on tap including both national and local craft selections.
CPP features fast and efficient service, but it is a full-featured, family-friendly pizzeria rather than a more limited, fast-casual concept. New technology and extensive R&D are bringing amazingly fast cook times, with oven speeds running only 2.5 minutes for traditional pies and 5.75 minutes for Sicilian pies. And not just individual pizzas, as with the more menu-limited fast casual chains, but medium and full-sized large pizzas as well – an essential component, the company believes, to offer that full-fledged pizzeria experience where dinner time meals are a shared experience. Traditional pizza favorites such as pepperoni are obvious options on the menu, but also offered is a fun selection of original creations such as "Pig in the Apple Tree," a pizza featuring bacon, diced apples, candied walnuts, and gorgonzola cheese. The menu also features a selection of contemporary and fresh, made-to-order salads such as "Avocado Chicken Caesar," and fresh-cooked pasta like "Chicken Fettuccine Alfredo." Baked subs, hand-sauced wings, a selection of desserts and, of course, Noble Roman's famous Breadsticks with Spicy Cheese Sauce also make the menu.
Additional enhancements include a glass enclosed "Dough Room" where Noble Roman's Dough Masters hand make all pizza and breadstick dough from scratch in customer view. Also in the dining room is a "Dusting & Drizzle Station" where guests can customize their pizzas after they are baked with a variety of toppings and drizzles, such as rosemary infused olive oil, honey and Italian spices. Kids and adults alike enjoy Noble Roman's root beer tap, which is also part of a special menu for customers 12 and younger. Throughout the dining room and the bar area are thirteen large and giant screen TV monitors for sports and the nostalgic black & white shorts featured in Noble Roman's earlier days.
Financial Results for the Six-Month Period ended June 30, 2017 Compared to the Comparable Period Ended in 2016
- Total revenue was $4.7 million, compared to $3.7 million (a 27.0% increase).
- Operating income was $1.4 million, compared to $1.5 million.
- Net income before taxes was $1.1 million, compared to $617,000.
- Net income was $774,000, or $.04 per basic share, compared to a net income of $381,000, or $.02 per basic share.
- Upfront franchisee fees and commissions were $140,000, compared to $139,000.
- Royalties and fees less upfront fees were $3.2 million, compared to $3.5 million. The decrease was a result of retiring the stand-alone take-n-bake concept. This loss in revenue was more than offset by the additional revenue of $776,000 from the new Craft Pizza & Pub location.
- Royalties and fees from non-traditional franchises other than grocery stores were $2.15 million, compared to $2.11 million.
- Royalties and fees from grocery store take-n-bake locations were $891,000, compared to $1.0 million.
- Royalties and fees from stand-alone take-n-bake locations were $32,000, compared to $211,000, as a result of discontinuing franchising in the stand-alone take-n-bake venue.
Financial Results for the Three-Month Period ended June 30, 2017 Compared to the Comparable Period Ended in 2016
- Total revenue was $2.5 million, compared to $1.9 million (a 31.6% increase).
- Operating income was $740,000, compared to $880,000.
- Net income before taxes was $755,000, compared to $47,000.
- Net income was $581,000, or $.03 per basic share, compared to a net income of $31,000, or $.00 per basic share.
- Upfront franchise fees and commissions were $76,000, compared to $83,000.
- Royalties and fees less upfront fees were $1.6 million, compared to $1.8 million. The decrease was a result of retiring the stand-alone take-n-bake concept. This loss in revenue was more than offset by the additional revenue of $460,000 from the new Craft Pizza & Pub location.
- Royalties and fees from non-traditional franchises other than grocery stores were $1.13 million compared to $1.11 million.
- Royalties and fees from grocery store take-n-bake locations were $429,000, compared to $530,000.
- Royalties and fees from stand-alone take-n-bake locations were $15,000, compared to $88,000, as a result of discontinuing franchising in the stand-alone take-n-bake venue.
Balance Sheet Summary
Current assets totaled $3.9 million and current liabilities totaled $2.9 million as of June 30, 2017, compared to total current assets of $4.6 million and current liabilities of $2.1 million as of December 31, 2016. The primary reason for this decrease in the company's current ratio was from reclassifying the current portion of the deferred tax assets to long-term assets in accordance with the Financial Accounting Standards Board's recently issued Accounting Standards Update as a part of its Simplification Initiative. In addition, since the company's term loan with the bank matures on March 31, 2018, it was reclassified to current liabilities. Total stockholders' equity as of June 30, 2017 was $14.8 million compared to $14.0 million as of December 31, 2016.
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 completion of its proposed refinancing, competitive factors and pricing pressures, non-renewal of franchise agreements, shifts in market demand, the success of new franchise programs, including the new Noble Roman's Craft Pizza & Pub format, the company's ability to successfully operate an increased number of company-owned restaurants, 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. 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.
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
December 31,
2016
|
June 30,
2017
|
||||||
|
Current assets:
|
||||||||
|
Cash
|
$ | 477,928 | $ | 223,192 | ||||
|
Accounts receivable - net
|
1,828,534 | 2,191,043 | ||||||
|
Inventories
|
754,418 | 744,233 | ||||||
|
Prepaid expenses
|
568,386 | 765,108 | ||||||
|
Deferred tax asset - current portion
|
925,000 | - | ||||||
|
Total current assets
|
4,554,266 | 3,923,576 | ||||||
|
Property and equipment:
|
||||||||
|
Equipment
|
1,963,957 | 2,238,470 | ||||||
|
Leasehold improvements
|
88,718 | 271,697 | ||||||
|
Construction and equipment in progress
|
351,533 | - | ||||||
|
|
2,404,208 | 2,510,167 | ||||||
|
Less accumulated depreciation and amortization
|
1,194,888 | 1,280,116 | ||||||
|
Net property and equipment
|
1,209,320 | 1,230,051 | ||||||
|
Deferred tax asset (net of current portion)
|
8,696,870 | 9,329,392 | ||||||
|
Goodwill
|
278,466 | 278,466 | ||||||
|
Other assets including long-term portion of receivables - net
|
5,159,937 | 5,740,129 | ||||||
|
Total assets
|
$ | 19,898,859 | $ | 20,501,614 | ||||
|
Liabilities and Stockholders' Equity
|
||||||||
|
Current liabilities:
|
||||||||
|
Current portion of term loan payable to bank
|
$ | 655,725 | $ | 1,038,591 | ||||
|
Current portion of loan payable to Super G
|
1,130,765 | 1,483,270 | ||||||
|
Accounts payable and accrued expenses
|
339,125 | 354,010 | ||||||
|
Total current liabilities
|
2,125,615 | 2,875,871 | ||||||
|
Long-term obligations:
|
||||||||
|
Term loan payable to bank (net of current portion)
|
710,729 | - | ||||||
|
Loan payable to Super G (net of current portion)
|
718,175 | - | ||||||
|
Notes payable to officers
|
310,000 | 910,000 | ||||||
|
Notes payable to Kingsway America
|
600,000 | - | ||||||
|
Convertible notes payable
|
769,835 | 956,427 | ||||||
|
Derivative warrant liability
|
210,404 | 344,178 | ||||||
|
Derivative conversion liability
|
435,671 | 613,224 | ||||||
|
Total long-term liabilities
|
3,754,814 | 2,823,829 | ||||||
|
Stockholders' equity:
|
||||||||
|
Common stock - no par value (40,000,000 shares authorized, 20,783,032 issued and outstanding as of December 31, 2016 and June 30, 2017)
|
24,308,297 | 24,318,165 | ||||||
|
Accumulated deficit
|
(10,289,867 | ) | (9,516,251 | ) | ||||
|
Total stockholders' equity
|
14,018,430 | 14,801,914 | ||||||
|
Total liabilities and stockholders' equity
|
$ | 19,898,859 | $ | 20,501,614 | ||||
Condensed Consolidated Statements of Operations
(Unaudited)
|
Three-Months Ended
June 30,
|
Six-Months Ended
June 30,
|
|||||||||||||||
|
2016
|
2017
|
2016
|
2017
|
|||||||||||||
|
Revenue:
|
||||||||||||||||
|
Royalties and fees
|
$ | 1,874,235 | $ | 1,715,674 | $ | 3,590,546 | $ | 3,328,594 | ||||||||
|
Administrative fees and other
|
10,635 | 11,871 | 21,709 | 23,941 | ||||||||||||
|
Restaurant revenue - Craft Pizza & Pub
|
- | 459,907 | - | 766,217 | ||||||||||||
|
Restaurant revenue - non-traditional
|
55,554 | 279,034 | 107,047 | 560,352 | ||||||||||||
|
Total revenue
|
1,940,424 | 2,466,486 | 3,719,302 | 4,679,104 | ||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Salaries and wages
|
232,601 | 242,187 | 483,909 | 481,894 | ||||||||||||
|
Trade show expense
|
130,441 | 123,456 | 258,877 | 245,112 | ||||||||||||
|
Travel expense
|
34,407 | 48,134 | 95,674 | 108,428 | ||||||||||||
|
Broker commissions
|
21,821 | - | 21,821 | - | ||||||||||||
|
Other operating expenses
|
179,971 | 229,044 | 375,284 | 427,734 | ||||||||||||
|
Restaurant expenses - Craft Pizza & Pub
|
- | 341,971 | - | 555,117 | ||||||||||||
|
Restaurant expenses - non-traditional
|
44,173 | 275,023 | 89,905 | 548,396 | ||||||||||||
|
Depreciation and amortization
|
31,675 | 59,870 | 61,087 | 111,763 | ||||||||||||
|
General and administrative
|
384,666 | 407,615 | 790,475 | 812,087 | ||||||||||||
|
Total expenses
|
1,059,755 | 1,727,300 | 2,177,032 | 3,290,531 | ||||||||||||
|
Operating income
|
880,669 | 739,186 | 1,542,270 | 1,388,573 | ||||||||||||
|
Interest
|
82,735 | 298,759 | 137,941 | 619,753 | ||||||||||||
|
Loss on restaurant discontinued
|
- | - | 36,776 | - | ||||||||||||
|
Adjust valuation of receivables
|
750,659 | - | 750,659 | - | ||||||||||||
|
Change in fair value of derivatives
|
- | (314,900 | ) | - | (297,273 | ) | ||||||||||
|
Income before income taxes
|
47,275 | 755,327 | 616,894 | 1,066,093 | ||||||||||||
|
Income tax expense
|
15,877 | 174,255 | 235,699 | 292,477 | ||||||||||||
|
Net income
|
$ | 31,398 | $ | 581,072 | $ | 381,195 | $ | 773,616 | ||||||||
|
Earnings per share - basic:
|
||||||||||||||||
|
Net income
|
$ | .00 | $ | .03 | $ | .02 | $ | .04 | ||||||||
|
Weighted average number of common shares outstanding
|
20,483,091 | 20,783,032 | 20,780,727 | 20,783,032 | ||||||||||||
|
Diluted earnings per share:
|
||||||||||||||||
|
Net income
|
$ | .00 | $ | .02 | $ | .02 | $ | .03 | ||||||||
|
Weighted average number of common shares outstanding
|
20,974,419 | 25,774,314 | 20,972,114 | 25,569,895 | ||||||||||||
FOR ADDITIONAL INFORMATION, CONTACT:
For Media Information: Scott Mobley, President& CEO 317/634-3377
For Investor Relations: Paul Mobley, Executive Chairman 317/634-3377
SOURCE: Noble Roman's, Inc.