Noble Roman's Announces Second Quarter 2011 Earnings
INDIANAPOLIS, Aug. 10, 2011 (GLOBE NEWSWIRE) -- Noble Roman's, Inc. (OTCBB:NROM), the Indianapolis based franchisor of Noble Roman's Pizza and Tuscano's Italian Style Subs, today announced results for the quarterly period ended June 30, 2011. Net income was $388,919 or $.02 per share basic and diluted on weighted average number of common shares outstanding of 19.5 million and diluted weighted average shares of 20.2 million. This compares to net income of $374,673 for the quarterly period ended June 30, 2010, or $.02 per share basic and diluted on weighted average number of common shares outstanding of 19.4 million and diluted weighted average shares of 20.1 million. Total revenues for the quarterly period ended June 30, 2011 were $1.9 million compared to total revenues of $1.8 million for the comparable period in 2010.
For the six-month period ended June 30, 2011, the company reported a net income of $756,933, or $.04 per share basic and diluted on weighted average number of common shares outstanding of 19.4 million and diluted weighted average shares of 20.2 million. This compares to net income of $726,339 for the six-month period ended June 30, 2010, or $.04 per share basic and diluted on weighted average number of common shares outstanding of 19.4 million and diluted weighted average shares of 20.1 million. Total revenues for the six-month period ended June 30, 2011 were $3.7 million compared to $3.6 million for the corresponding period in 2010. The company's pre-tax income for the six-month period was $1,253,411 compared to $1,202,748 for the corresponding period in 2010.
As stated above, the total revenue increased from $1.8 million to $1.9 million and from $3.6 million to $3.7 million for the three-month and six-month periods ended June 30, 2011 compared to the corresponding periods in 2010. One-time fees, franchisee fees and equipment commissions decreased from $83,408 to $83,339 and from $207,092 to $145,963 for the three-month and six-month periods ended June 30, 2011 compared to the corresponding periods in 2010. Royalties and fees, minus upfront fees, increased from $1,595,367 to $1,648,462 and from $3,107,339 to $3,260,626 for the three-month and six-month periods in 2011 compared to 2010. Of this increase, for the three-month and six-month periods in 2011 compared to the corresponding periods in 2010, $196,354 and $434,575 resulted from an increase in fees from grocery store locations and $50,549 and $105,777 was an increase in royalties and fees from non-traditional franchises. These increases were partially offset by a decrease in royalties and fees from traditional franchises in the amount of $193,807 and $387,066.
In September 2009, the company introduced a take-n-bake version of its pizza as an addition to its menu offerings. The take-n-bake pizza is designed primarily as a stand-alone offering for grocery stores but also as an add-on component for new and existing convenience store franchises.
As of June 30, 2011, the company had signed agreements for 700 grocery store locations to operate the take-n-bake pizza program, 537 of which were open at that time. As of August 5, 2011, the company had signed agreements for 778 grocery store locations to operate the take-n-bake pizza program, 586 of which were open at that time. Following the hot, picnic season of middle summer when deli departments are otherwise occupied, the rate of openings are expected to accelerate in August and into fall and winter, which are prime seasons for pizza sales. The company is currently in discussions with numerous additional grocery store owners regarding signing agreements for their locations.
At the start of 2011, to supplement the take-n-bake pizza offering and expand merchandising space, the company introduced five carton-to-shelf retail items that require no assembly at the grocery store and help expand the merchandising visibility of the Noble Roman's brand. These five items are Noble Roman's Pasta Sauce, Noble Roman's Flavor-Aged Parmesan Cheese, Noble Roman's Deep-Dish Lasagna with Italian Sausage, Noble Roman's Spicy Cheese Sauce and Noble Roman's Cheesy Stix. Beginning in August 2011, the company introduced six new "Signature Specialty Take-N-Bake Pizza" combinations to its current standard offerings. These pizzas feature unique, fun combinations of ingredients with proven customer appeal in other company venues, and include Hawaiian Pizza, Four Cheese Pizza, BBQ Pork Pizza, BBQ Chicken Pizza, Hoppin' Jalapeno Pizza and Parmesan Tomato Pizza. The company's strategy with these new combinations is to secure more shelf space in existing locations, add appeal to the program to attract new locations and to generally increase sales of the company's products. Interest in the company's new pizza combinations has been very high in recent trade shows where they have been presented.
In an attempt to accelerate the growth of take-n-bake pizza in grocery stores, the company has been focusing on signing agreements with various grocery store distributors to market the take-n-bake pizza program to the distributors' current customer bases. On July 19, 2010, the company signed an agreement with a grocery store distributor headquartered in California and the company now has 196 take-n-bake agreements with their customers. On October 13, 2010, the company signed an agreement with a grocery store distributor in Wisconsin, however, they did not stock their warehouse until February 1, 2011. The company now has 25 take-n-bake agreements with their customers. On January 13, 2011, the company signed an agreement with a grocery store distributor headquartered in Connecticut. The company now has 63 take-n-bake agreements with their customers. On March 28, 2011, the company signed an agreement with a grocery store distributor in Oklahoma. The company now has 82 take-n-bake agreements with their customers. On March 30, 2011, the company signed an agreement with a grocery store distributor in Utah. The company now has 68 take-n-bake agreements with their customers. On April 12, 2011, the company signed an agreement with a grocery store distributor in Pennsylvania. The company now has 25 take-n-bake agreements with their customers. On May 20, 2011, the company signed an agreement with a grocery store distributor in New Hampshire. The company now has two take-n-bake agreements with their customers. On August 2, 2011, the company signed an agreement with a grocery store distributor in Indiana. The company now has 10 take-n-bake agreements with their customers. The company is currently in discussion with a number of other grocery store distributors.
Lack of access to capital in recent years by many small to medium sized businesses, which make up the larger base of the company's pool of franchise prospects for its non-traditional franchise program, has slowed the company's rate of growth in these venues. However, recent activity in the last few months may suggest that the company will see a better rate of growth in the non-traditional franchise program other than grocery stores for the remainder of this year and into next year.
As previously reported, in an Order dated December 23, 2010, the Superior Court in Hamilton County, Indiana granted summary judgment in favor of the company and against all of the plaintiffs in a long-running lawsuit styled Kari Heyser, Fred Eric Heyser, Meck Enterprises, LLC, et al vs. Noble Roman's, Inc., et al, filed in Superior Court Hamilton County, Indiana on June 19, 2008. As a result, the plaintiff's allegations of fraud against the company and certain of its officers were determined to be without merit. In addition to the fraud claim, one group of franchisee plaintiffs asserted a separate claim under the Indiana Franchise Act. The court denied summary judgment on this claim finding the existence of a genuine issue of material facts which had to be determined rather than decided as a matter of law, but did not render any opinion on the merits of that claim. The plaintiffs filed a motion with the court asking it to correct errors and reconsider the order for summary judgment. Since the Judge did not rule on the motion to reconsider within 30 days from the hearing on that motion, the motion was deemed denied on April 25, 2011. Plaintiffs' deadline for filing a notice of appeal passed on May 25, 2011 and none was filed. Since that time, the Plaintiffs have filed numerous other motions in an attempt to get the court to reconsider or to get an appeal in the Court of Appeals. Those motions are still pending and the company has opposed all of them.
The company's counterclaims against the defendants in the approximate amount of $3.6 million plus attorney fees, cost of collection and prejudgment interest, as well as punitive damages in certain instances, continue to be pending. The company intends to prosecute the counterclaims and execute on any judgments against all counterclaim defendants. On June 10, 2011, the court granted permission for the company to file summary judgment motions on the company's counterclaims against the plaintiffs as opposed to a jury trial.
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, market acceptance of recently introduced products, competitive factors and pricing pressures, the current litigation with certain former traditional franchisees, non-renewal of franchise agreements, shifts in market demand, compliance with the terms of the company's bank credit agreement, general economic conditions and other factors including, but not limited to, changes in demand for the company's products or franchises, the success or failure of individual franchisees and changes in prices or supplies of food ingredients and labor as well. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary 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.
CONTACT: For media information: Scott Mobley, President 317/634-3377 For investor relations: Paul Mobley, Chairman & CEO 317/634-3377
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