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.

Hi, yeah, congratulations on a great quarter. First thing, I've got a few here. First thing is administrative expenses you've cut by over $300,000 the first half of the year. What would you attribute that to, and do you see that being sustainable for the time being and still be able to meet your goals?

It will be partially sustainable. Partially is because we had moved positions around and we had not filled one or two positions until late in the quarter. And that will be itching back up, but not to where it was. It will be sustainable for part of that decrease.

Okay. And, uh, you stated at the beginning of the year that the goal was, uh, 69 traditional, uh, units for the year. How confident are you in that still at this point?

Well, we're sold about 30 at this point and we've got quite a few on the opening schedule and we've got a pretty good pipeline. So we're still, this is coming into peak season for that. So we're feeling pretty confident.

Okay, great. You continue to open units. But we haven't quite seen the same, that being the non-traditional. We haven't seen kind of the robust growth in sales that we saw last year with like 20%. Is there a reason behind that? What do you see in the future?

Yeah, there is a reason behind it. In last year, we took in a lot of fees in advance. from Majors Management and we opened some stores pretty rapidly at the very beginning too. So both of those things increased our revenue and it's not going away. It just will not be repetitive in that volume as now the revenue off of those fees came in or just the amortization of those fees over a 10 year period. Counting wise, it's kind of confusing because the revenue comes in and then the fees get deferred and they get amortized in over a period of 10 years. So it doesn't build up as rapidly. It's still there. It's still already in the bank. It just gets amortized in the income over a period of 10 years.

Okay. I think that's all I have. Thank you.

All right. Thanks, Mark. Go ahead, Roger.

Yeah, the number of units being opened was – you just answered that part of my question, so I guess I will just ask again the sort of elephant in the room here is the refinancing. Can you give us any more –

color on uh on what to expect there or what no roger can't give you any color on that we're working on it we've got prospects as scott mentioned we're not releasing that information and but we have active prospects working on getting together term sheets so it's not a lack of risk of anything that we're willing to share with the public.

Okay. Thank you. That's all I have.

All right. Thanks, Roger. Todd, go ahead.

Hey, Paul and Scott. Congratulations on a strong quarter there. I was just wanting to update on the accounting firm situation. I know we don't want any more late. in the future and just was seeing if you had any color on how close we are to getting another accountant signed.

We don't have any accountants lined up at this point. We have accumulated some lists of eligible. There's kind of a lack of supply in eligible accountants that are approved by the APOC. be that are qualified to do issuer audits and that are interested in doing issuer audits, except the real large firms, which want to charge a lot more than we're used to paying. So it'll happen. It'll happen slowly over time. Hopefully, we will not be late filing anymore. I think maybe we have that under control.

OK. That's all I have. Thank you. Congratulations again.

All right. Thanks, Todd.

Hey, Mark, you had another question?

Yeah, one thing that just came up. I thought of the $507,000 receivable. I thought I read something in there that the IRS might be starting something with that. Is there any update on that?

Well, the latest update was I got a piece of paper from the IRS that said quoted that amount and said that it had been approved and it was in line and we should see payment in the next three to four weeks. So it's already been eight weeks after that and we still don't have payment. So if you could answer for me how quickly IRS writes checks for money they owe, I could tell you when we're going to get it.

Yeah. Okay. Yeah. I guess that'd be a great cash infusion for the company right now. So yeah, just seeing that on there for probably close to two years now. Okay, thank you.

Keep in mind that we filed ten amended returns, and we got our money from nine of the ten, so we're waiting on a tenth one. Now, obviously, the tenth one was the biggest, so they're the slowest.

All right, any other questions? Wait here a second. Alright, well, I am not seeing any additional questions on the board. So if we don't have any additional questions, so I guess that concludes our time today. Thanks again, everyone for participating and joining in on the call. And I hope you have a great evening. We'll be terminating the connection now. Thanks again.