Noble Roman's Continues Growth; Enhances Stand-Alone and Grocery Take-N-Bake Concepts 55 Stand-Alone Take-n-Bake Franchises Signed; 22 Opened, 33 Under Development; Grocery Take-n-Bake Program Continues to Expand with Approximately 1,775 License Agreements; 56 New Non-Traditional Franchise Agreements Signed Since Beginning of 2013

INDIANAPOLIS, March 12, 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 annual and quarterly periods  ended December 31, 2013. 

Financial and Operational Highlights for 2013 Compared to 2012

For purposes of comparing current operating results, the 2012 amounts below were adjusted, where appropriate, for the $400,000 reduction in reserve for collectability of receivables from the Heyser plaintiffs, and the $500,000 adjustment to reduce the valuation of the Heyser case which resulted in a net decrease in the net income from continuing operations before taxes, all relating to units no longer operating.  In 2013, there was a $1.21 million adjustment to the valuation of the Heyser plaintiff  receivables which resulted in a decrease to net income from continuing operations before taxes relating to units no longer operating. Details regarding the adjustments for the reserve are provided in the company's Form 10-K filed with the Securities and Exchange Commission.

  • Net income before taxes from continuing operations was $2.65 million, or $0.14 per share, compared to $2.0 million, or $0.10 per share. The company will pay no income taxes on approximately the next $25 million in net income.
  • Net income from continuing operations was $1.6 million, or $0.08 per share, compared to $1.21 million, or $0.06 per share.
  • Operating margin was 38.0% of revenue compared to 35.0%.
  • Total revenue was $7.5 million, up 9.1% compared to $6.9 million.
  • Upfront franchisee fees and commissions were $883,000 compared to $374,000.
  • Royalties and fees less upfront fees were $6.2 million compared to $6.0 million.
  • Royalties and fees from non-traditional franchises other than grocery stores were $4.3 million compared to $4.4 million
  • Royalties and fees from grocery store take-n-bake locations were unchanged at $1.3 million.
  • Royalties and fees from traditional locations were $313,000 compared to $307,000.
  • Royalties and fees from stand-alone take-n-bake locations were $310,000 compare to $10,000.

Fourth Quarter 2013 Financial and Operational Highlights Compared to Fourth Quarter 2012

For purposes of comparing current operating results for the fourth quarter 2013 to the fourth quarter 2012, the 2012 amounts below were adjusted, where appropriate, for the $500,000 reduction in the receivables from the Heyser plaintiffs and the 2013 amounts were adjusted, where appropriate, for the $1.1 million reduction in the receivables from the Heyser plaintiffs. Details regarding the adjustment for the reduction of receivables from the Heyser plaintiffs are provided in the company's Form 10-K filed with the Securities and Exchange Commission.

  • Net income before taxes from continuing operations was $496,000, or $0.03 per share, compared to $566,000, or $0.03 per share. The company will pay no income taxes on approximately the next $25 million in net income.
  • Net income from continuing operations was $300,000, or $0.02 per share, compared to $342,000, or $0.02 per share.
  • Operating margin was 32% of revenue compared to 36%.
  • Total revenue was approximately the same for both the fourth quarter 2013 and 2012 at $1.72 million.
  • Upfront franchisee fees and commissions were $147,000 compared to $63,000.
  • Royalties and fees less upfront fees were $1.5 million compared to $1.6 million.
  • Royalties and fees from non-traditional franchises other than grocery stores were $1 million compared to $1.2 million.
  • Royalties and fees from grocery store take-n-bake locations were $257,000 compared to $313,000.
  • Royalties and fees from traditional locations were $74,000 compared to $67,000.
  • Royalties and fees from stand-alone take-n-bake locations were $146,000 compared to $10,000.

In both the fourth quarter and the year 2013, the company recorded a loss on discontinued operations of $780,000 compared to $525,000 in the fourth quarter and year 2012. The loss on discontinued operations for 2013 consisted of $178,000 in legal and settlement costs relating to a restaurant that was closed in conjunction with the business activity discontinued in 1999 and later damaged by a tornado, $147,000 for legal and other costs related to the Heyser case, plus $257,000 in receivables and $199,000 in obsolete support materials, all relating to the operations discontinued in 2008. These are further discussed in the company's Form 10-K filed with the Securities and Exchange Commission. Management believes that the company is at or very near the end of any further losses related to the discontinued operations, as all assets related to those operations have now been charged off. Less than 50% of this loss was actual cash payments which was down considerably from prior years. The remainder was from the charge off of now obsolete assets related to the operations discontinued in 2008.

The company finally received a ruling on its long-standing counterclaims against former plaintiffs in the Heyser case.  On February 13, 2014, judgment was entered by the Hamilton Superior Court in favor of Noble Roman's and against two plaintiffs/counter-defendants in the 2008 lawsuit in the amount of $1.35 million plus court costs and interest at 8% per annum. The attorney for the plaintiffs/counter-defendants have indicated they intend to appeal the judgment.  On March 6, 2014, the company filed a motion to require plaintiffs/counter-defendants to post an appeals bond of $1.5 million each.

Starting in December 2013 and continuing into March, the company's revenues have declined, which management believes to be a result of the very severe winter weather in most  of the country.

Paul Mobley, Noble Roman's Chairman and CEO commented, "Interest remains high in our take-n-bake concept, though the severe weather has had a short-term impact on our results. We are committed to continually improving consumer response to our offerings. For the grocery store take-n-bake locations, we have introduced new packaging and will now be displaying our pizzas in bakable, treated aluminum pans with a clear plastic top. Consumers use the pan to bake the pizzas in, and the anodized treatment on the bottom is designed to increase home baking performance, drawing in more heat to make the pizza crispy on the bottom but soft in the middle. The clear plastic top allows the entire pizza to be visible and appealing. In addition, we have added a gluten-free crust to appeal to a growing segment of the population. We also added three 14-inch mega-topped pizzas which are called the 'Mile High Extra Meat Pizza,' the 'Extra Cheese Four Cheese Pizza,' and the 'Double Topped Pepperoni Pizza.' The 14-inch mega-topped pizzas in the new packaging are very appealing in the display case and are offered at a recommended value price of $9.99. All of the new products and the new packaging were displayed recently at the National Grocers Association Show and drew lots of attention, including creating interest with some distributors much larger than any of our current distributors."

Mr. Mobley added "To further enhance our stand-alone take-n-bake stores, next week we are initiating a 3-unit test of our new, in-store baking service, 'You Bake or We Bake!'.  In addition to broadening consumer appeal in general, it is anticipated that this service will expand our take-n-bake daypart earlier into the day, as we can now offer hot pizzas and other menu items for lunch in these three test stores." The new baking service requires no substantial change in unit layouts, square footage requirement or labor requirements, and can easily be incorporated into existing operations as well as new ones.

The company has entered into agreements for 55 stand-alone take-n-bake locations and is currently in discussions with many other prospects. The first stand-alone take-n-bake pizza location opened in October 2012 and, to date, a total of 22 have been opened with 33 under development. The company's stand-alone take-n-bake program features the chain's popular traditional Hand-Tossed Style pizza, Deep-Dish Sicilian pizza, SuperThin pizza, all with a choice of three different types of sauce, all in a convenient cook-at-home format.  Additional menu items include Noble Roman's famous breadsticks with spicy cheese sauce, fresh salads, cookie dough, cinnamon rounds, bake-able pasta and more. 

"Our marketing initiatives to attract potential take-n-bake franchisees continue to be successful in generating a significant number of leads," said Mr. Mobley. "Our initial goal was to sign 30 locations in 2013, which we exceeded. Late in the year 2013, we expanded our advertising efforts by increasing the use of web-based franchise referral systems, which we began using in late January 2013, from three portals to five portals. In addition, we initiated web-based advertising utilizing Google's pay-per-click and remarketing systems. Take-n-bake continues to be one of the fastest growing segments of the pizza industry, and Noble Roman's is leveraging this growth opportunity with our economical concept, our reputation for fine quality products, and our proven ability to support our franchisee base."

Since the beginning of 2013, the company has signed 56 additional new franchise/license agreements for non-traditional locations 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 by 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.

Balance Sheet Summary

Cash totaled approximately $158,000 as of December 31, 2013 compared to $144,000 as of December 31, 2012.  Total bank debt was $3.85 million as of December 31, 2013 compared to $4.3 million as of December 31, 2012.  Total stockholders' equity as of December 31, 2013 was approximately $11.7 million compared to $12.4 million as of December 31, 2012.  The company's bank debt was $4.3 million as of December 31, 2012 and made principal payments on that debt during 2013 of $1.24 million and borrowed $825,000 to repurchase all of the outstanding shares of its Series B Preferred stock which increased the bank debt and reduced the equity. The holders of the Preferred shares had been receiving a 12% dividend. Each Preferred share was convertible into the company's common stock at a conversion price of $2.25 per share. The repurchase of the Preferred shares therefore eliminated the otherwise future dilution of 366,666 shares to the common shareholders.

Teleconference

Management will conduct a live teleconference to discuss its financial results at 4:30 p.m. ET on Wednesday, March 12, 2014. Anyone interested in participating should call 1-877-941-1427 if calling from the United States, or 1-480-629-9664 if dialing internationally. A replay will be available until March 19, 2014, which can be accessed by dialing 1-877-870-5176 within the United States and 1-858-384-5517 if dialing internationally. Please use passcode 4673307 to access the replay. In addition, the call will be webcast and will be available on the Company's website at www.nobleromans.com or by visiting http://public.viavid.com/index.php?id=108215.

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.

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, 646/536-7331 or brett@haydenir.com


             

Consolidated Balance Sheets

Noble Roman's, Inc. and Subsidiaries



December 31,

Assets

2012

2013

Current assets:



   Cash

$ 144,354

$ 157,787

   Accounts receivable - net

1,080,362

1,268,788

   Inventories

460,839

337,822

   Assets held for resale

259,579

-

   Prepaid expenses

379,669

472,065

   Deferred tax asset - current portion

1,400,000

1,250,000

           Total current assets

3,724,803

3,486,462




Property and equipment:



   Equipment

1,166,103

1,361,205

   Leasehold improvements

12,283

88,718


1,178,386

1,449,923

   Less accumulated depreciation and amortization

905,376

962,502

          Net property and equipment

273,010

487,421

Deferred tax asset (net of current portion)

9,238,536

9,332,024

Other assets including long-term portion of accounts receivable - net

3,924,404

3,067,754

                      Total assets       

$ 17,160,753

$ 16,373,661

Liabilities and Stockholders' Equity



Current liabilities:



   Current portion of long-term notes payable to bank

$  1,250,000

$  1,216,250

   Accounts payable and accrued expenses

510,710

818,803

                Total current liabilities

1,760,710

2,035,053




Long-term obligations:



   Notes payable to bank (net of current portion)

3,020,833

2,635,208

                Total long-term liabilities

3,020,833

2,635,208




Stockholders' equity:



   Common stock – no par value (25,000,000 shares authorized, 19,516,589

      issued and outstanding as of December 31, 2012 and 19,585,089  as of 

      December 31, 2013)

 

 

23,366,058

 

 

23,498,401

   Preferred stock (5,000,000 shares authorized, 20,625 issued and

      outstanding as of December 31, 2012 and none outstanding as of

      December 31, 2013)

 

800,250

 

-

   Accumulated deficit

(11,787,098)

(11,795,001)

                Total stockholders' equity

12,379,210

11,703,400

                      Total liabilities and stockholders' equity

$ 17,160,753

$ 16,373,661

See accompanying notes to consolidated financial statements.


 

    

 

Consolidated Statements of Operations

Noble Roman's, Inc. and Subsidiaries



Year Ended December 31,


2011

2012

2013

Royalties and fees

$ 6,813,946

$ 6,823,811

$ 7,082,548

Administrative fees and other

44,448

19,872

24,138

Restaurant revenue

517,679

456,449

420,753

                Total revenue

7,376,073

7,300,132

7,527,439





Operating expenses:




     Salaries and wages

970,966

979,447

1,056,790

     Trade show expense

351,907

498,951

514,570

     Travel expense

191,695

183,316

207,572

     Other operating expenses

687,519

685,836

747,914

     Restaurant expenses

507,838

427,127

390,507

Depreciation and amortization

124,009

116,287

113,607

General and administrative

1,619,778

1,593,646

1,646,993

              Total expenses

4,453,712

4,484,610

4,677,953

              Operating income

2,922,361

2,815,522

2,849,486





Interest and other expense

390,858

413,334

201,381

Adjust valuation of receivables – Heyser case

-

500,000

1,208,162

         Income before income taxes from

                   continuing operations

2,531,503

1,902,188

1,439,943

Income tax expense

1,002,729

753,457

568,406

         Net income from continuing operations

1,528,774

1,148,731

871,537





Loss from discontinued operations net of tax benefit

   of $465,570 for 2011, $344,079 for  2012 and

   $511,893 for 2013

 

 

(709,816)

 

 

(524,588)

 

 

(780,440)

          Net income

818,958

624,143

91,097

Cumulative preferred dividends

99,000

99,271

99,000

          Net  income (Loss) available to common

             stockholders

 

$   719,958

 

$  524,872

 

$ (7,903)

Earnings per share - basic:




    Net income from continuing operations

$      .08

$        .06

$        .05

    Net loss from discontinued operations net of tax

       benefit

 

$    (.04)

 

$      (.03)

 

$      (.04)

    Net income

$      .04

$        .03

$        .01

    Net income available to common

       stockholders

 

$      .04

 

$        .03

 

$            -

Weighted average number of common shares

    outstanding

 

19,457,810

 

19,497,638

 

19,533,201





Diluted earnings per share:




    Net income from continuing operations

$       .08

$       .06

$       .05

    Net loss from discontinued operations net of tax benefit    

$     (.04)

$     (.03)

$     (.04)

    Net income

$       .04

$       .03

$       .01

Weighted average number of common shares

    outstanding

 

20,112,278

 

20,077,910

 

20,0472,908

See accompanying notes to consolidated financial statements.

SOURCE Noble Roman's, Inc.



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