NOBLE ROMANS INC (NROM)
Noble Roman’s, Inc. (NROM) reported $15.15 million in revenue for 2024, a tiny net loss of $3 K (essentially breakeven), and $897 K in operating cash flow. Growth came from non-traditional franchise expansion (68 new units), offset by flat same-store sales at nine Craft Pizza & Pub locations. Deb...
Noble Roman’s (NROM) 2024 10-K Review
TL;DR: Noble Roman’s, Inc. (NASDAQ OTCQB: NROM) reported $15.15 million in 2024 revenue, a breakeven net loss of just $3 K, and operating cash flow of $897 K. Franchising non-traditional pizza outlets is driving growth, but heavy debt and thin margins limit upside. Our investment score: 4.0/10.
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1. Business Overview (Item 1)
- Founded: 1972 in Indiana
- Segments:
- Noble Roman’s Craft Pizza & Pub (9 company-owned full-service units)
- Non-Traditional Franchises (in convenience stores, hospitals, entertainment venues)
- Company-Owned Non-Traditional (1 hospital location)
- Franchise brands: “Craft Pizza & Pub,” “Noble Roman’s Pizza,” “Take-N-Bake,” “Tuscano’s Italian Style Subs.”
- Key growth driver: Non-traditional franchised locations, backed by a 100-unit agreement with Majors Management (2023–2026).
Business Strategy
- Sell more non-traditional franchises in high-traffic venues (convenience stores, travel plazas).
- Maintain Craft Pizza & Pub base while franchising the concept in new markets.
- Manage corporate overhead while expanding royalty revenue streams.
2. Financial Highlights (Items 7, 8)
| Metric | 2023 | 2024 | Change |
|---|---|---|---|
| Total Revenue | $14.37 M | $15.15 M | +5.5% |
| - Craft Pizza & Pub (company-owned) | $ 8.74 M | $ 8.58 M | -1.9% |
| - Non-Traditional Franchise Royalties & Fees | $ 4.67 M | $ 5.54 M | +18.8% |
| - Company-Owned Non-Traditional | $ 0.93 M | $ 0.95 M | +2.0% |
| Operating Income | $ 3.44 M | $ 1.48 M | -57% |
| Net Income (Loss) | $ 1.46 M (incl. $1.46 M ERC grant) | ||
| $ | |||
| -0.003 M (loss) | N/M | ||
| Operating Cash Flow | $ 1.57 M | $ 0.90 M | -42.9% |
| Capital Expenditures | $ 0.01 M | $ 0.09 M | +1,235% |
| Debt (Senior & Subordinated) Outstanding | $ 7.1 M | $ 6.5 M + $0.58 M | - |
| Cash & Cash Equivalents | $ 0.87 M | $ 0.71 M | -18.4% |
| Current Ratio | 1.10× | 0.91× | - |
Net Loss: $ 3,174 (essentially breakeven), versus a $1.46 million gain in 2023 driven by ERC grants.
Segment Profitability
- Craft Pizza & Pub: Margin contribution fell from 10.7% to 9.1%, pressured by food inflation and labor costs.
- Franchising Royalties: Margin contribution declined from 95% to 69% after booking incremental support costs and general overhead (not including ERC credit in 2023).
- Company-Owned Non-Traditional: Turned slightly unprofitable this year due to a temporary relocation and limited menu during a hospital remodel.
3. Cash Flow & Liquidity
- Positive operating cash flow of $897 K.
- Modest capital spend ($88 K) re: equipment and restaurant maintenance.
- Debt service: Senior note payments of $0.89 M in principal; interest burdens of $1.64 M.
- Running current ratio below 1.0; liquidity is tight ($0.71 M cash vs. $3.32 M current liabilities).
4. Capital Structure & Warrants
- Senior Secured Note (Corbel): $6.5 M principal; SOFR+9% interest; $91K/mo. principal. Matures 6/30/26.
- Subordinated Convertible Notes: $575 K at 10% interest, due May 2025 (subject to Corbel’s repayment).
- Warrants: Corbel holds warrants to buy 3.0 M shares at $0.10/share – highly dilutive.
5. Risk Factors (Item 1A)
- High leverage limits financial flexibility.
- Thinly traded stock; activist campaigns (BT Brands v. NROM) can disrupt management focus.
- Franchisee performance risk: royalties depend on third-party operators.
- Competitive pizza landscape: national chains vs. niche craft pubs.
- Regulatory & operational risks: labor, food costs, supply chain.
6. Corporate Governance & Controls (Items 9, 9A)
- Audit firms: 2023—Somerset CPAs, 2024—Assurance Dimensions & Sassetti.
- Internal control weaknesses in expense approval, balance reconciliations, and policy documentation.
- Directors: 5 members; 3 independent.
7. Investment Thesis
Pros:
- Proven franchise model with recurring royalties.
- Non-traditional franchise demand recovering post-COVID.
- Cash flow positive, minimal capex needs.
- Low net loss run-rate.
Cons:
- High debt & interest expense: cash flow mainly servicing debt.
- Dilutive warrants: potential surge in share count.
- Thin profitability: limited margin cushion.
- Corporate overhead: general & admin spiked in 2024.
Outlook:
- Continued non-traditional franchise growth and backlog of prospects.
- Possible franchise rollout of Craft Pizza & Pub concept.
- Liquidity strain until debt is reduced or refinanced.
Score: 4.0/10 – Low margin of safety, modest growth potential, high balance sheet risk.
This review is based solely on Noble Roman’s, Inc.’s 2024 Form 10-K and is for informational purposes. It is not financial advice.