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Noble Roman's Announces Continued Growth, Profitability for Third Quarter 2012
First Stand-Alone Take-n-Bake Location Opens, Representing Additional Growth Engine
By: PR Newswire
Nov. 8, 2012 05:00 PM
INDIANAPOLIS, Nov. 8, 2012 /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 September 30, 2012.
Third Quarter 2012 Financial and Operational Highlights
Nine Months Year-to-Date 2012 Financial and Operational Highlights
"We continue to successfully leverage the opportunities we see for increasing unit growth and revenue within our non-traditional venues, while adding additional growth engines through our Take-n-Bake initiative," said Paul Mobley, Chairman and CEO of Noble Roman's, Inc. "This success is reflected in our positive operating metrics and by the increase in franchise agreements we've signed for new, non-traditional locations other than grocery stores as well as for additional grocery store take-n-bake locations. In addition, subsequent to the quarter end, we opened our first stand-alone take-n-bake franchise that taps into this fast growing segment of the pizza industry with our high-quality, great tasting pizza offerings adapted for this market, and we already have six more take-n-bake locations under agreement and in various stages of development and construction."
Third Quarter 2012 Financial Results
Total operating income was $726,176, or 39.4% operating margin, compared to $641,444, or 36.3% operating margin in the year-ago period.
Net income was $401,573, or $0.02 per share, compared to $11,581, or $0.00 per share for the same period in 2011, which included a $316,022 loss from discontinued operations, net of tax benefit. Net income from continuing operations was $401,572 compared to $327,603 in 2011 or $0.02 per share in the same period in 2011. The increase in net income was primarily the result of the growth in total revenue in addition to the reduced interest expense as a result of the company's re-financing of its debt during the second quarter resulting in a lower effective interest rate. Net income before taxes was $664,965, or $0.03 per share, compared to $542,479, or $0.03 per share. Although the company provides for income tax expense in its financial statements, it is currently not paying any income tax as a result of its deferred tax credits and will not pay any income tax on the next $25 million of net income.
Year-to-Date 2012 Financial Results
Operating income was $2.2 million, or 39.3% operating margin, compared to $2.1 million, or 38.4% operating margin, in the same period last year.
Net income was $1.1 million, or $0.06 per share, compared to $768,518, or $0.04 per share in the same period in 2011, which included a $316,022 loss from discontinued operations, net of tax benefit. Net income from continuing operations was $1.1 million or $0.06 per share, compared to $1.1 million, or $0.06 per share, in the year-ago period. The increase in net income was primarily the result of the increase in total revenue partially offset by an increase in interest expense. The increase in interest expense was primarily the result of the company expensing $93,000 for the unamortized loan closing costs from the origination of the former bank loan at the time the loan was repaid and recording expense of $30,000 to terminate the former interest rate swap agreement related to the loan which was repaid, partially offset by the lower effective interest rate during the third quarter on the refinanced loan. Net income before taxes was $1.8 million, or $0.09 per share, compared to $1.8 million, or $0.09 per share, in the same period in 2011. Although the company provides for income tax expense in its financial statements, it is currently not paying any income tax as a result of its deferred tax credits and will not pay any income tax on approximately the next $25 million of net income.
Mr. Mobley concluded, "The credit agreement we entered into in May, 2012 has had the effect of reducing our interest rate on debt to approximately 4.25% from approximately 8%, which is reflected in the decrease to our interest expense this quarter and positively affected net income compared to last year."
The company has entered into agreements with three existing independent franchisees for seven stand-alone take-n-bake locations. The first stand-alone take-n-bake location opened in Greenwood, Indiana, a suburb of Indianapolis, on October 29, 2012 and the other six are under various stages of development. The company uses the same high-quality pizza ingredients for its take-n-bake pizzas as with its standard pizza, with slight modifications to portioning for increased home baking performance. The company's stand-alone take-n-bake pizza program features the chain's popular traditional Hand-Tossed Style pizza, Deep-Dish Sicilian pizza, SuperThin pizza and Noble Roman's famous breadsticks with spicy cheese sauce, all in a convenient cook-at-home format. Additional menu items include such items as fresh salads, cookie dough, cinnamon rounds, bake-able pasta and more.
In 2012, the company has signed franchise agreements for 34 new non-traditional locations other than grocery stores including 12 locations with Huck's, a 110-unit convenience store chain located in five states, plus an agreement with The Pantry, Inc., a convenience store chain of more than 1,650 locations. Management is in discussions with several other significant convenience store chains. In 2012, the company has signed supply agreements for 411 additional grocery store take-n-bake locations. Since the company introduced take-n-bake pizza in grocery store chains in late 2009 through November 6, 2012, the company has signed agreements for 1,350 grocery store locations to operate the take-n-bake pizza program and has opened the take-n-bake pizza program in approximately 1,010 of these locations. In addition, the company has 14 distributors under contract to distribute take-n-bake pizzas to grocery stores, a sequential increase of 2 compared to the 12 as of the end of the second quarter.
"Consumers continue to embrace the convenience of our Take-n-Bake offering, which allows busy families to enjoy a hot, great-tasting meal in the comfort of their home at an affordable price," Mr. Mobley continued. "Our take-n-bake offerings taste better and are ready more quickly than a delivery pizza, and this message is resonating with groceries, convenience stores and now, franchisees, as evidenced by the opening of our first stand-alone take-n-bake store. Take-n-bake is a fast growing segment of the pizza industry, and with Noble Roman's brand reputation and a growing network of locations consumers can visit to purchase a take-n-bake meal, we believe this initiative will provide an additional growth engine for the company."
Balance Sheet Summary
Update on Litigation:
The Court granted summary judgment in favor of the Company and against all of the Plaintiffs in a long-running lawsuit filed in Superior Court Hamilton County, Indiana in June 2008. Plaintiffs filed numerous motions and an appeal to the Indiana Court of Appeals, in an attempt to reverse the December 23, 2010 summary judgment. All of the motions failed and the Indiana Court of Appeals dismissed the appeal with prejudice. The fraud charges against the Company and certain of its officers are dismissed entirely and the Plaintiffs have no appeal rights remaining. The Company has also been granted partial summary judgment as to liability on the Company's counter claims against the Plaintiffs in excess of $5 million. The Court determined that the Plaintiffs/Counterclaim-Defendants were liable to the Company for direct damages and consequential damages, including future royalties for breach of their franchise agreements. In addition, the Court determined that, as a matter of law, the Company was entitled to recover attorney's fees associated with obtaining preliminary injunctions, fees resulting from the prosecution of the Company's counterclaims and fees for defending against the fraud claims. The amount of the award is to be determined at trial, which is proceeding currently.
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.
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SOURCE Noble Roman's, Inc.
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