Noble Roman'S Inc

Well, good afternoon, everyone. My name is Scott Mobley, and I'm President and CEO of NOPA Realments. Here with me is Paul Mobley, our Executive Chairman and CFO as well. Paul.

Good afternoon, everyone. Thank you for joining our call. Before we begin, I want to refer you to the Safe Harbor Statement contained in the earnings press release. This conference call will contain forward-looking statements and business assessments the kind referred to in that statement, so those provisions apply to this conference call as well.

Okay, thanks Paul. I assume all of you have studied the press release that went out Thursday afternoon and you've absorbed those details. I'll just list a few of the bullet points again now in case you missed the release or just for the refresher. First, that income before taxes was $490,000 for the quarter versus $56,024. And keep in mind that income before taxes is a very important metric because we have that $3.4 million deferred tax asset. That means we will not be paying income tax for some time. Total revenue is up 4.5% for the quarter versus last year. Same store sales in the craft pizza and pubs were up 4.5%. And that's despite the fact that it was a tight market. Our closest sit-down national competitor, Pizza Hut, for example, was down about 5%. Margins at the craft pizza and pubs also increased from two 13.6% from 11% a year ago. And the margin contribution from our convenience store program segment was up 8.7% to about 1.06 million. The margin rate for that segment increased to 72.5% from 67.9. That's chiefly because expenses in that segment remain relatively stable over a significant revenue range. A key data trend outlined in the press release is also worth repeating today. And that's as it relates to the trailing 12-month EBITDA numbers. If you look at the year-end 2024, it was 3,060,000. Progressing to end of Q1-25, it was 3,135,000. And then now at the end of Q2, it had grown to 3,500,000. So that's significant growth. Looking into the current quarter, the Crap Eats and Pubs maintained same-store sales growth in July. And that's despite the fact that the 4th of July this year was on Friday. And that's typically fairly bad for business. That was a slow weekend. But July sales in total were up 4.8% nonetheless. The first half of August looks about the same. but with back-to-school spending pressures, we saw some discretionary spending tightening over this last weekend. So as of today, we've reverted back to a value promotion from our recent stuffed crust promotion. As noted in the release, the refinancing efforts are proceeding with the new placement agent. There are several interested parties in various stages of discovery. So we'll have more news on that in the not too distant future. So with that, well, Let's jump back a moment and let me say a couple quick things on cost pressures. From an ingredient standpoint, we do have upward pressure on beef-related products and therefore some of our primary toppings. But the biggest headache has been cheese, which through the second quarter is up an average of just about 9% over last year. If you recall, about 50% of the cost of a pizza is in cheese. But the good news is that cheese prices have recently declined. If that holds, we should see some relief as that works itself into the supply chain by late third quarter. In the meantime, we've been successfully dealing with the cost pressures from a marketing and operations standpoint. Labor pressures are mostly coming from salaries for salary management, which are high and still progressing higher. Quality management is hard to come by ever since the pandemic, and I anticipate this being a long-term challenge for operators. well into the future. Hourly labor increases, though, have moderated, so we've helped margins out by transferring some solid responsibilities to hourly positions and by utilizing lower-priced hourly positions for more tasks. Okay, so with that review, we're concluding the introductory comments, and we'll now take questions. If you want to ask a question and you logged in with your full name when you joined the call, Press 5 and the star key on your phone. That will get you queued in line. Again, that's 5 star. When it's your turn to ask a question, you'll hear a voice saying that your line has been unmuted. Hearing that your line has been unmuted, that should go ahead to ask the question. So, again, press 5 star if you have a question, and we'll get started here. So if you have a question and you logged in with your full name, go ahead and ask now. We'll wait here for a question to pop up. Mark, go ahead.