Mon, 23 Sep 2019

Noble Roman's Announces Second Quarter 2019 Results

ACCESSWIRE
15 Aug 2019, 06:05 GMT+10

INDIANAPOLIS, IN / ACCESSWIRE / August 14, 2019 / Noble Roman's, Inc. (OTCQB:NROM), the Indianapolis based franchisor and licensor of Noble Roman's Pizza and Craft Pizza & Pub, today announced results for the three-month and six-month periods ended June 30, 2019 along with other strategic highlights for the company.

Net income before taxes increased to $580,000, or $.03 per share from $550,000, or $.03 per share, and $1.21 million, or $.06 per share, from $1.09 million, or $.05 per share, for the three-month and six-month periods ended June 30, 2019 compared to the comparable periods in 2018. Net income before tax is significant because the company will not pay any income taxes for approximately the next $15 million in taxable income.

Net income increased to $441,000, or $.02 per share, from $412,000, or $.02 per share, and increased to $917,000, or $.04 per share, from $815,000, or $.04 per share, for the three-month and six-month periods ended June 30, 2019 compared to the comparable periods in 2018. The six-month results were achieved despite the highly unusual, extreme winter weather conditions this year in Indiana during January and February, which significantly curtailed revenue and margins during those months. In addition, the results are after a $21,000 non-cash expense in the six months ended June 30, 2019 from the adoption of the new accounting rules regarding accounting for leases, which became effective January 1, 2019 for publicly reporting entities.

The company also announced that it is continuing its focus on growing its well-established, non-traditional venue as well as its newer Craft Pizza & Pub venue. From January 1, 2019 through August 14, 2019, the company opened 21 new non-traditional franchise locations compared to 17 new non-traditional locations opened during the comparable time period in 2018. In addition, the first two weeks' sales of all non-traditional franchise openings in 2019 have averaged 32.8% higher than openings from previous years. This reflects improvements the company made in kiosk design, operating systems and marketing. During 2019, the company also opened its first franchised Craft Pizza & Pub location with record opening sales, and it currently has two more franchised Craft Pizza & Pub locations under development. The company is in the planning stages for additional company-owned Craft Pizza & Pub locations as well.

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

Description
Three Months ended June 30,
2018 2019
Six Months ended June 30,
2018 2019
Royalties and fees franchising
$ 1,276,978 78.2% $ 1,335,297 82.4% $ 2,387,636 75.2% $ 2,622,475 81.6%
Royalties and fees grocery
356,374 21.8 284,911 17.6 789,595 24.8 590,747 18.4
Total royalties and fees revenue
1,633,352 100.0 1,620,208 100.0 3,175,231 100.0 3,213,222 100.0
Salaries and wages
260,848 16.0 175,789 10.8 528,816 16.7 371,415 11.6
Trade show expense
119,228 7.3 104,906 6.5 240,000 7.5 210,000 6.5
Insurance
74,273 4.5 65,768 4.0 149,022 4.7 175,692 5.5
Travel and auto
56,412 3.4 27,129 1.7 104,245 3.3 54,678 1.7
All other operating expenses
174,381 10.7 171,222 10.6 312,155 9.8 227,741 7.1
Total expenses
685,142 41.9 544,814 33.6 1,334,238 42.0 1,039,526 32.4
Margin contribution
$ 948,210 58.1% $ 1,075,394 66.4% $ 1,840,993 58.0% $ 2,173,696 67.6%

For the three-month period ended June 30, 2019 compared to the three-month period ended June 30, 2018:

  • Total revenue from this venue was $1.6 million compared to approximately the same for the comparable period in 2018. Royalties and fees from franchising grew to $1.34 million compared to $1.28 million for the comparable period in 2018. This increase was partially offset by a decrease in royalties and fees from grocery store take-n-bake, which decreased to $285,000 from $356,000 compared to the comparable period in 2018. The increase in franchise fees and decrease in license fees from grocery stores reflects the change in emphasis on franchising versus licensing to grocery stores to sell take-n-bake pizza because of the stronger economic conditions that exist today.
  • Salaries and wages, trade show expense and other operating costs decreased to $545,000 from $685,000. In January the company undertook an in-depth review of this venue to find ways to further reduce its costs while still accomplishing its objectives. These efforts resulted in the reduction of various operating expenses. It is anticipated that this reduction in operating cost will continue to benefit future quarters as well.
  • Gross margin increased to 66.4% from 58.1% for a margin increasing to $1.1 million from $950,000.

For the six-month period ended June 30, 2019 compared to the six-month period ended June 30, 2018:

  • Total revenue from this venue was $3.21 million compared $3.18 million for the comparable period in 2018. Royalties and fees from franchising grew to $2.62 million compared to $2.39 million for the comparable period in 2018. This increase was partially offset by a decrease in royalties and fees from grocery store take-n-bake, which decreased to $591,000 from $790,000 compared to the comparable period in 2018. The increase in franchise fees and decrease in license fees from grocery stores reflects the change in emphasis on franchising versus licensing to grocery stores to sell take-n-bake pizza because of the stronger economic conditions that exist today.
  • Salaries and wages, trade show expense and other operating costs decreased to $1.04 million from $1.33 million. In January the company undertook an in-depth review of this venue to find ways to further reduce its costs while still accomplishing its objectives. These efforts resulted in the reduction of various operating expenses. This reduction in operating cost is expected to continue to benefit future quarters as well.
  • Gross margin increased to 67.6% from 58.0% or to $2.17 million from $1.84 million.

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

Description
Three Months ended June 30,
2018 2019
Six Months ended June 30,
2018 2019
Revenue
$ 1,245,942 100% $ 1,329,465 100% $ 2,354,365 100% $ 2,472,079 100%
Cost of sales
277,609 22.3 278,048 20.9 522,578 22.2 515,723 20.8
Salaries and wages
377,074 30.2 379,695 28.6 726,198 30.8 745,676 30.2
Facility cost including rent, common area and utilities
156,804 12.6 209,093 15.7 282,340 12.0 409,700 16.6
Packaging
34,642 2.8 35,473 2.7 60,742 2.6 66,790 2.7
All other operating expenses
117,763 9.5 218,625 16.4 237,533 10.1 393,964 15.9
Total expenses
963,892 77.4 1,120,934 84.3 1,829,391 77.7 2,131,853 86.2
Margin contribution
$ 282,050 22.6% $ 208,531 15.7% $ 524,974 22.3% $ 340,226 13.8%

Margin contribution from this venue was decreased $9,331 in the three-month period ended June 30, 2019 and $21,228 in the six-month period ended June 30, 2019, for non-cash expense related to the adoption of ASU 2016-02 accounting for lease which became effective after January 1, 2019 for publicly reporting companies.

For the three-month period ended June 30, 2019 compared to the three-month period ended June 30, 2018:

  • Revenue from this venue increased to $1.33 million from $1.25 million.

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