Small Cap Updates & New Recommendations for May 10, 2014

This week we have updates on Noble Roman’s (NROM) and Ironclad Performance Wear (ICPW).

Noble Roman’s, Inc. (NROM – $1.45), the Indianapolis based franchisor and licensor of Noble Roman’s Pizza and Tuscano’s Italian Style Subs announced a slight increase in both sales and earnings for the first quarter of this year compared to the comparable quarter last year.

This is a remarkable achievement, knowing that because of the extreme winter weather during this quarter new openings were delayed and many locations faced weather-related closings.

Total revenues for the quarter ended March 31, 2014 were $1.91 million, compared to $1.89 million in the first quarter of 2013, an increase of 1%. Net income was $$438,755 or $.02 per share for the quarter ended March 31, 2014 compared to $418,330 or $.02 per share for the comparable period last year, an increase of 5%. Operating margin was 40.7% compared to 39.4%.

Mr. Paul Mobley, Chairman and CEO of Noble Roman’s said: “Interest in the grocery store take-n-bake locations has increased significantly after displaying the new packaging and new products at the National Grocers Association show in February and at distributor food shows during the first quarter. The grocery store take-n-bake pizzas are now displayed in bakeable, treated aluminum pans with a clear plastic top. Consumers bake the pizzas in these pans and the anodized treatment on the bottom is designed to increase home baking performance, drawing in more heat to make the pizzas crispy on the bottom but soft in the middle. The clear plastic top allows the entire pizza to be visible and appealing.”

The company has entered into agreements for 57 stand-alone take-n-bake locations and is currently in discussions with many other prospects. The first stand-alone take-n-bake pizza location opened in October 2012 and, to date, a total of 26 have been opened.
Mr. Mobley added, “Our stand-alone take-n-bake concept is still relatively new and we are continuing to look at further enhancements to improve sales and to make the concept even more appealing. We just completed a three-unit test of our new, in-store baking service called ‘You Bake or We Bake!’ which is resulting in improved sales. In addition to broadening consumer appeal in general, this service has expanded our take-n-bake daypart earlier into the day, as we now offer hot pizzas and other menu items for lunch.“
Moreover, so far in 2014, the company has signed 15 additional new franchise/license agreements for non-traditional locations and is in discussion with numerous other convenience store chains and entertainment facilities for additional non-traditional locations.

Noble Roman’s continues to be an attractive company because of its steady grow even in very tough circumstances. Profile Page

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Also Ironclad Performance Wear Corporation (ICPW – $0.18), a manufacturer of high-performance task-specific work gloves, reported financial results for the first quarter ended March 31, 2014.

The Company reported net sales for the first quarter of 2014 of $5.1 million, a decrease of 4.5% percent from the first quarter total of $5.3 million for 2013. Net loss for the first quarter of 2014 was $491,000, or $0.01 per share, as compared to a loss of $122,000, or $0.01 per share, in the same period last year.

The decline in sales primarily resulted from reduced sales to ORR Safety in the industrial/safety segment and AutoZone in the retail automotive segment. As disclosed in the prior quarter, the decline with ORR Safety occurred as it completed an inventory rationalization that began during 2013. The Company expects sales to ORR Safety to rebound during the 2nd quarter of 2014. The decline with AutoZone was due to the wind down of Ironclad’s Snap-on license branded program.

Positive is that the ICPW’s gross profit in its private label business more than doubled for the first quarter, all of which was attributable to the increase in private label sales volume. However, private label doesn’t generate the margins achieved in with industrial or international segments.

Ironclad’s Chief Executive Officer, Jeffrey Cordes, commented: “The 2014 first quarter performance simply calls out the ups and downs that smaller companies like Ironclad are susceptible to where significant customer concentrations often create dramatic highs and lows quarter to quarter. This is why for the remainder of 2014 we are so focused on expanding our base of distributors and retailers.

While hidden by the quarter’s top and bottom line totals, there were actually solid wins this quarter in new business landed, initial shipments on new programs, and recoveries from prior year declines by other key customers. Our international business was up more than 90% and our private label business increased more than 120%.”

Mr. Cordes added: “We believe the decline of revenues with ORR Safety this quarter is primarily timing related and will be recovered during the next three quarters. We are excited that we are beginning to roll out this quarter our new KONG glove for Quanta Services. This is a major new KONG program that ORR Safety and Ironclad worked together on. While the loss of the Snap-on business at AutoZone was unfortunate, the fact remains that we have a good opportunity to build our retail business going forward with AutoZone and many additional customers.

In other new, Ironclad announced that it hired William Aisenberg as its Executive Vice President and Chief Financial Officer, and Scott Furash as Vice President of Global Sourcing.

Mr. Aisenberg, a Certified Public Accountant, brings more than 30 years of financial executive experience in apparel, consumer products, and the public accounting field. Most recently Mr. Aisenberg served as Executive Vice President and Chief Financial Officer at Walls Industries, a leading company in work, sporting and safety apparel. Prior to Walls, Mr. Aisenberg served as Vice President and Corporate Controller at Strategic Equipment and Supply Corporation. Mr. Aisenberg also has acquired cross functional experience working with other companies, including The Brinkmann Corporation, Pinnacle Trading Card Company, The Foster Grant Group and Arthur Andersen & Co.

Mr. Furash, as the head of global sourcing, brings more than twenty years of executive experience in sourcing and development of safety apparel and textiles. Most recently Mr. Furash served as the Senior Global Sourcing Leader for Honeywell Safety Products. Mr. Furash’s management experience also includes domestic and overseas positions with Standard Textile, The Blumenthal Inc., and Caterpillar Apparel.

Ironclad has been on our radar screen for many years now and we hope that the new management team can turn the Company around once and for all. We continue to believe in the demand for high performance gloves, and Ironclad is clearly one of the leaders in the field, so it’s time to get the story out. Profile Page

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