Noble Roman's Announces Third Quarter 2024 Financial Data

Rhea-AI Summary

Noble Roman's (OTCQB:NROM) reported Q3 2024 financial results with net income of $193,000 and operating income of $417,000. Franchising revenue increased to $1.4 million from $1.3 million in 2023. Company-owned Craft Pizza & Pub restaurants saw same-store sales rise nearly 1% in Q3, with recent weeks showing a 5.2% increase. For the nine-month period, the company reported net income of $164,000 and franchising revenue of $4.3 million, up from $3.7 million in 2023. Ongoing royalty income increased 22.5% to $3.9 million. The company opened approximately 53 new franchise locations with plans for 20 more this year.

Positive

• Q3 2024 net income of $193,000
• Franchising revenue increased 22.5% to $4.3 million for nine months
• Ongoing royalty income up 22.5% to $3.9 million
• 53 new franchise locations opened with 20 more planned
• Recent 6-week sales up 5.2% for company-owned restaurants
• Labor costs in Craft Pizza & Pub decreased from 29.6% to 28.8%

Negative

• Nine-month same-store sales decreased 3.4% for company-owned restaurants
• Cost of sales increased from 19.8% to 21.4% due to higher cheese prices
• Initial franchise fee income decreased from $327,000 to $193,000
• Company-owned non-traditional venue showing operating loss of $51,481 in Q3 2024

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 1^st quarter and soft consumer spending throughout, slightly offset by an approximate 1% same store sales increase in the 3^rd 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 3^rd 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 3^rd 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	)%

View the original press release on accesswire.com

FAQ

What was Noble Roman's (NROM) net income for Q3 2024?

Noble Roman's reported a net income of $193,000 for Q3 2024.

How many new franchise locations did Noble Roman's (NROM) open in 2024?

Noble Roman's opened approximately 53 new franchise locations in 2024, with plans to open approximately 20 additional locations by year-end.

What was Noble Roman's (NROM) franchising revenue for Q3 2024?

Noble Roman's franchising revenue for Q3 2024 was $1.4 million, compared to $1.3 million in Q3 2023.

How did Noble Roman's (NROM) same-store sales perform in Q3 2024?

Noble Roman's company-owned Craft Pizza & Pub restaurants saw same-store sales increase by almost 1% in Q3 2024.