Noble Roman’s, Inc. (OTC:NROM) Q3 2025 Earnings Call Transcript

Noble Roman’s, Inc. (OTC:NROM) Q3 2025 Earnings Call Transcript November 17, 2025

A. Mobley: Well, good afternoon, everyone. My name is Scott Mobley, and I’m President and CEO of Noble Roman’s. Also here with me is Paul Mobley, our Executive Chairman and CFO. Before we begin, I want to refer you to the safe harbor statement contained in the summary press release that came out Friday. This conference call will contain forward-looking statements and business assessments of the kind referred to in that statement. So those provisions applied to this conference call as well. Okay. Well, I assume all of you have studied the press release that went out Friday afternoon and that you’ve absorbed all of those details. Keep in mind that we’re holding on releasing the 10-Q for the new auditors to finish with the delay at the moment being the evaluation of that warrant liability.

That’s sort of a black box calculation that has to do with warrant and derivative valuation modeling. And so that’s a valuation firm specializing in those complex formularies. So we’ll get the Q out just as soon as we can. In case you did miss the release or you need a refresher, here are a few of the highlights. Net income before taxes was $578,918 for the quarter versus $193,314 in 2024. And keep in mind that income before tax is an important metric because we have that $3.2 million deferred tax asset, which means, of course, that we’ll not be paying income tax for quite some time. Total revenue was up 6.8% for the quarter versus last year. Same-store sales in the Craft Pizza & Pub were up 4.2%, and that’s despite continuing concerns with consumer sentiment.

Margins at the CPPs also increased 12.8% from 7.9% a year ago. The margin contribution from our convenience store program was up 14.8% over 2024 to about $1.1 million. And the margin rate for that segment increased to 73.4% from 65.2% chiefly because expenses in that segment remain relatively stable over a long period of time. A key data trend outlined in the press release is also worth repeating this time around today, and that relates to the trailing 12-month adjusted EBITDA at the year-end 2024, it was a little over $3 million, at the end of Q1 2025 is $3,135,000, at the end of Q2, it was $3,501,000. And now at the end of Q3, it is up to approximately $3,825,000. Our convenience store program continues to build on our backlog franchises sold but not yet open.

Our current expectations call for about 27 additional new units during the entirety of the fourth quarter. Of course, that’s always hard to predict with exactness as those time lines depend on a number of factors with the underlying convenience store business rather than with us. The psychology around some of the tariff negotiations, particularly with India, as well as the government shutdown had an impact on openings for a while, but things moving along very well at the moment. In fact, we have three brand new locations opening this week. Muncie, Indiana, Lawrence, Michigan, and Harrogate, Tennessee. Some of the same challenges impacted the Craft Pizza & Pubs, mostly as it relates to consumer spending and consumer sentiment. As I’m sure you heard a few days ago according to the recent University of Michigan survey, consumer sentiment has dropped to a 3-year low down 29.9% versus last year.

We’ve had to maintain a value-oriented marketing approach most of the year particularly recently, which is obviously not our preference. For the same reasons, we’ve not taken a price increase this year. And I don’t see doing so in the fourth quarter either. We’ll see what the manufacturers have in store at the beginning of the year as far as price escalations, and we’ll evaluate consumer sentiment at that time as well. For now, as was mentioned in the press release, we have two products waiting for introduction. One is another value-oriented play off our successful XL pizza launch, and the other is a premium-priced product, a spicy Buffalo Chicken Pizza. I see both running simultaneously at some point here soon with the 2XL party pizza being our primary value promotion and the Buffalo Chicken Pizza being passively marketed in-store and online to grease up margins.

Q&A Session

Finally, as we noted in the release, the refinancing efforts are proceeding with some accelerating and hopeful developments, but not yet anything we can announce or discuss, conversations and negotiations are ongoing. I know everyone would like to hear more on that, but that is really all we can say at the moment until such time as we have something definitive now. Okay. Well, with that brief review, we’re concluding our introductory comments, and we’ll now take your questions.

A. Mobley: [Operator Instructions] Roger, go ahead.

Unknown Analyst: Good afternoon. Very nice quarter. You can’t really finance — talk about the refinancing, but can you tell us how much still owned to Corbel?

Paul Mobley: Approximately $6,000.

A. Mobley: $6 million.

Unknown Analyst: I’m sorry, how much?

A. Mobley: $6 million approximately.

Unknown Analyst: And you say in the press release that you opened an additional 9 more franchise units this year so far than you did last year, but what is the actual number opened?

A. Mobley: No, that was actually saying that our backlog, Roger, had increased by 9. So we’re anticipating opening about 57 to maybe 60 on the high end for the year with maybe, what, 14 more yet for the rest of the quarter.

Paul Mobley: We’ve already 15 in this quarter.

A. Mobley: Yes. We’ve already — I don’t know if you caught that, Roger, but we’ve opened 13 already this quarter.

Unknown Analyst: Right. And can you update us with those franchise numbers. Can you tie that in and update us on the status of the Majors agreement to open 100 units and also have the been any more follow-up agreements for additional units with Majors?

A. Mobley: We’ve not entered into any agreement to add to their development plan yet. I wouldn’t foresee that happening for a while. We have been opening additional units. We opened a couple more for them here recently, and they’re continuing to put more in the line, and they — well, progression. So they’re done here next year.

Unknown Analyst: And last, can you comment on cheese and commodity prices?

A. Mobley: Sure. So good news is cheese right now is about at the 10-year long-term average. So that’s better than some of the high prices we had, especially through a lot of last year and into the first part of this year. How long that will last? I don’t know, but we did just receive some — forgot what it was, 22,500 pounds at a pretty good price. So that will carry us through for a good month. Other prices have been fluctuating up and down Meat prices obviously have not been favorable. It’s impacted a couple of our different toppings but nothing extraordinary. There continues to be spot shortages with chicken products due to calling it the avian flu. And it’s the avian flu that’s actually been causing a lot of the beef pricing problems in addition to some of the tariffs. Mark, go ahead.

Unknown Analyst: Congratulations on a great quarter. My question, it seems like you’ve done a really good job navigating the current environment. We’ve seen a lot of like fast casual kind of get hit. And I don’t know, it seems as if the value promotion is — I don’t know how much that has affected it. And if so, it’s kind of exciting, you’re kind of adding on to that. But I guess with the numbers, it appears to not really — we haven’t seen the cost of goods for the month, but it doesn’t really seem to be affecting that too badly. And just kind of add some color on that. Are you seeing add-on sales things like that? And how much of the XL is being purchased?

A. Mobley: So we’ve taken kind of a double track on that. I try to — I don’t try, follow the numbers very closely every single day, and I try to parse out what we’re seeing in terms of guest counts, average check add-ons. And our strategy, first of all, with the consumer sentiment, the way that it’s been. Obviously, we have to be value-oriented not our preferred playing field, but that’s the playing field we’re on. So rather than trying to discount our existing products, we created a whole new product that we could offer at a value price and have a reason for offering it at that price, and that’s sort of how the XL pizza evolved. But simultaneous with that, we’ve been running product specials that have higher margins. For example, I mentioned the Spicy Buffalo Chicken Pizza that we’ll probably be launching here yet this quarter.

Previously, we launched the Stuffed Crust Pizza. All of those are done at regular menu pricing. And most of those are being marketed on site at the restaurant passively. So as people come in, we’re working on upselling to exciting products like that. So all that is to say that we try to bring in the value-oriented customer and at the same time, offer exciting new products that are premium priced for those that are willing to pay that price.

Paul Mobley: Your question about cost of sales was 20.8% third quarter this year compared to 21.4% third quarter last year and 20.7% for the 9 months ended September 30 compared to 21.1% for the same 9 months last year. So we’re ahead in cost of sales by a good half percent.

Unknown Analyst: Yes. That’s excellent considering the environment. How are you seeing same-store sales for the first, like, say, six weeks of Q4?

A. Mobley: Well, Q4 started off with a little bit of a roller coaster here and there because of the — oddly enough, the Charlie Kirk assassination had an impact for a few days on sales and then the government shutdown had an impact on sales here and there with various announcements. But then outside of those periods, we’ve had some good same-store sales increases. So if the market trends back now that the government is back open and all that pessimism is past us, then hopefully, I know Sunday we are up quite a lot. I don’t have all the numbers handy here, but it’s — we’re hoping for a return to normality here.

Unknown Analyst: Okay. I know you can’t really — don’t want to talk too much about refinancing. But just you’re doing — being very aggressive in paying down the debt. It just seems like even in the current terms, you’d almost have it paid off in 3 to 4 years if you wanted to. And we never have to hear the word refinance ever again. But with you — I’m sure you’d be sorry to hear that. But is that kind of what you would prefer? Would you continue? It seems like you’re able to handle that $91,000 payment, especially with over the last quarter fairly easily? Are you still looking to pay it off aggressively like that?

A. Mobley: Well, if I never heard the term refi again, I would be very, very happy. But yes, our goal is to secure refinancing that obviously, we can continue to pay down on rapidly likely have been.

Paul Mobley: We have those terms already signed until June of ’26.

A. Mobley: With our current finance.

Paul Mobley: With our current loan. So we’ll continue that. And we’re doing that without losing any cash flow. We’re gaining a little cash all the time. So that’s — we’re handling that just fine, and we could continue to handle it. The situation is that Corbel, while they’re happy and they go along with us and we have a good relationship with them. They have closed — or they’re trying to close out that fund that has financed us and we’ve agreed that we will continue to aggressively try to find an acceptable financing source to pay them off. But the bottom line is we have an agreement for their current deal until June ’26, end of June ’26.

Unknown Analyst: Yes. And like I said, that’s — I think each quarter, you’re knocking off like 5% of the principal. So just working — right. Okay. Thank you very much.

A. Mobley: All right. Any additional questions? I’ll give it just a second here. All right. Well, I don’t see any additional questions. So we’ll go ahead and call it an afternoon. And we’ll be back in touch very soon and talk to you then. Thanks very much for participating today.