We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type |
---|---|---|---|
Franklin Covey Co | NYSE:FC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.30 | 0.81% | 37.45 | 37.91 | 37.02 | 37.40 | 70,153 | 01:00:00 |
Second Quarter Consolidated Revenue Totals $61.3 Million Compared with $61.8 Million in the Prior Year
Second Quarter Subscription and Subscription Services Sales Total $50.3 Million and a Record $227.3 Million for the Rolling Four Quarters Ended February 29, 2024
Cash Flows From Operating Activities Increase to $30.2 Million Compared with $11.2 Million in Fiscal 2023 and Free Cash Flow Through February 29, 2024 Increases to $24.7 Million From $3.3 Million in the First Two Quarters of Fiscal 2023
Liquidity Remains Strong at over $103 Million, with $40.9 Million of Cash and No Drawdowns on the Company’s $62.5 Million Credit Facility
Company Expects to Achieve Adjusted EBITDA of Approximately $54.5 Million in Constant Currency, within its Previously Announced Guidance Range
Franklin Covey Co. (NYSE: FC), a leader in organizational performance improvement that creates, and on a subscription basis, distributes world-class content, training, processes, and tools that organizations and individuals use to achieve systemic changes in human behavior to transform their results, today announced financial results for the second quarter of fiscal 2024, which ended on February 29, 2024.
Introduction
The Company’s consolidated sales for the quarter ended February 29, 2024 totaled $61.3 million compared with $61.8 million in the quarter ended February 28, 2023. Revenue for the rolling four quarters ended February 29, 2024 grew to $279.1 million compared with $276.1 million for the rolling four quarters ended February 28, 2023. The Company’s sales and related performance for the second quarter included the following:
Paul Walker, President and Chief Executive Officer, commented, “We are pleased that our second quarter results met our expectations as we generated $61.3 million of revenue and $7.4 million of Adjusted EBITDA. However, the slower-than-expected rebound of subscription services sales will impact our anticipated sales growth in the third and fourth quarters. Additionally, concern about economic conditions slowed decision-making and created a more difficult selling environment during the first half of fiscal 2024. As a result, we now expect to be at $54.5 million of Adjusted EBITDA (in constant currency) for the year, the low end of our guidance range. Despite these factors, which have weighed on our second quarter results, we are encouraged by expectations that our third and fourth quarters will reach all-time highs in sales, Adjusted EBITDA, and free cash flow in fiscal 2024.”
Walker added, “Our business has remained extremely resilient and we are particularly pleased with this durability in the context of an uncertain economic environment which has negatively impacted many of our clients in both our domestic and international markets. The resiliency of our business model in the second quarter was reflected by strong client retention, strong revenue retention (over 90% in United States and Canada), and strong growth in our deferred subscription revenue as our billed and unbilled deferred subscription revenue grew $13.0 million over the second quarter of fiscal 2023 to a second-quarter record of $158.8 million. In addition, the amount of multi-year contracts continues to grow and 62% of our AAP contracted revenue is now for 2 years or more.”
Walker concluded, “We also believe that there are still tremendous opportunities for growth as economies improve, we ramp up client partners, and increase our market penetration with both existing and new clients. We have been expanding key initiatives which we expect to further accelerate our growth by: (a) increasing the extent to which we can further penetrate existing client accounts; and (b) further increasing the number of new accounts we can reach. We expect the roll-out of these initiatives to our already significant marketing, sales, and servicing capabilities will further expand and accelerate our reach. The strength of our powerful business model—a model that features the combination of increasing revenue per client; high revenue and client retention; high gross margins; upfront invoicing; low capital intensity; and disciplined reinvestment for growth—is driving significant amounts of both Adjusted EBITDA and free cash flow in fiscal 2024 and we expect these to increase significantly in future periods.”
Second Quarter 2024 Financial Overview
The following is a summary of the Company’s financial results for the quarter ended February 29, 2024:
Fiscal 2024 Year-to-Date Financial Results
Consolidated revenue for the first two quarters of fiscal 2024 was $129.7 million compared with $131.1 million in the first two quarters of fiscal 2023. Enterprise Division sales for the first half of fiscal 2024 were $98.3 million, compared with $100.0 million in the first half of the prior year. AAP subscription and subscription services sales increased 5% to $79.1 million compared with $75.0 million in the prior year. For the two quarters ended February 29, 2024, sales through the Company’s foreign direct offices decreased $0.6 million primarily due to weak economies in certain of the countries where the Company operates. International licensee revenues were $6.1 million for the first two quarters of fiscal 2024 compared with $6.2 million in the prior year. Education Division sales grew 3%, or $0.8 million, to $29.3 million compared with $28.5 million in the first two quarters of fiscal 2023. Education Division sales grew primarily due to increased consulting, coaching, and training days delivered during the year, increased international education royalties, and increased recognition of previously deferred revenue related to Leader in Me subscriptions. Consolidated gross profit for the first two quarters of fiscal 2024 was $99.1 million compared with $100.0 million in the first two quarters of fiscal 2023 and reflected the sales performance noted above. Gross margin for the two quarters ended February 29, 2024 remained strong and increased to 76.4% of sales compared with 76.2% in the first half of fiscal 2023.
Operating expenses for the two quarters ended February 29, 2024 increased $1.6 million compared with the first two quarters of the prior year primarily due to $2.3 million of restructuring expenses and a $0.9 million impaired asset charge. These expenses were partially offset by a $1.6 million reduction of stock-based compensation expense resulting from the second quarter 2024 reassessment of long-term incentive plan award shares expected to vest, and decreased depreciation and amortization expense. As a result of these factors, the Company’s income from operations through February 29, 2024 was $6.8 million compared with $9.2 million in the prior year. Adjusted EBITDA for the first two quarters of fiscal 2024 was $18.4 million compared with $19.7 million in the first two quarters of fiscal 2023 and was the second-best start to a fiscal year in recent history. The Company’s net income for the two quarters ended February 29, 2024 was $5.7 million, or $0.42 per diluted share, compared with $6.4 million, or $0.44 per diluted share, for the two quarters ended February 28, 2023.
Fiscal 2024 Guidance and Outlook
Based on the strength of the Company’s business model that features high recurring revenue, high gross margins, and low capital intensity, combined with the continued strength and strategic durability of the All Access Pass and Leader in Me membership subscriptions, the Company looks forward to a strong second half of fiscal 2024. Despite the challenges from the first half of fiscal 2024, the Company expects that its Adjusted EBITDA for fiscal 2024 will be at the lower end of its previously announced guidance range of $54.5 million to $58.0 million in constant currency, which represents 13% growth over the $48.1 million of Adjusted EBITDA achieved in fiscal 2023. The Company expects to achieve this growth despite an uncertain economic environment and while continuing to make additional growth investments. The Company is also confident in the strength of its subscription offerings, which have driven Franklin Covey’s growth across recent years, and which are expected to deliver in fiscal 2024 the highest levels of revenue, Adjusted EBITDA, and Free Cash Flow since the sale of the Company’s consumer products division.
Earnings Conference Call
On Wednesday, March 27, 2024, at 5:00 p.m. Eastern (3:00 p.m. Mountain) Franklin Covey will host a conference call to review its fiscal 2024 second quarter financial results. Interested persons may access a live audio webcast at https://edge.media-server.com/mmc/p/oqgb55wf or may participate via telephone by registering at https://register.vevent.com/register/BI48d1c548f55048e0b4368e6c233ffc82. Once registered, participants will have the option of: 1) dialing into the call from their phone (via a personalized PIN); or 2) clicking the “Call Me” option to receive an automated call directly to their phone. For either option, registration will be required to access the call. A replay of the conference call webcast will be archived on the Company’s website for at least 30 days.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including those statements related to the Company’s future results and profitability and other goals relating to the growth and operations of the Company. Forward-looking statements are based upon management’s current expectations and are subject to various risks and uncertainties including, but not limited to: general macroeconomic conditions; renewals of subscription contracts; growth in and client demand for add-on services; the impact of deferred revenues on future financial results; impacts from geopolitical conflicts; market acceptance of new products or services, including new AAP portal upgrades and content launches; inflation; the ability to achieve sustainable growth in future periods; and other factors identified and discussed in the Company’s most recent Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. Many of these conditions are beyond the Company’s control or influence, any one of which may cause future results to differ materially from the Company’s current expectations, and there can be no assurance that the Company’s actual future performance will meet management’s expectations. These forward-looking statements are based on management’s current expectations and the Company undertakes no obligation to update or revise these forward-looking statements to reflect events or circumstances subsequent to this press release.
Non-GAAP Financial Information
This earnings release includes the concept of Adjusted EBITDA and Free Cash Flow, which are non-GAAP measures. The Company defines Adjusted EBITDA as net income excluding the impact of interest, income taxes, intangible asset amortization, depreciation, stock-based compensation expense, and certain other infrequently occurring items such as restructuring costs and impaired assets. Free Cash Flow is defined as cash flows from operating activities less capitalized expenditures for purchases of property and equipment and curriculum development. The Company references these non-GAAP financial measures in its decision-making because they provide supplemental information that facilitates consistent internal comparisons to the historical operating performance of prior periods and the Company believes they provide investors with greater transparency to evaluate operational activities and financial results. Refer to the attached tables for the reconciliation of the non-GAAP financial measure, Adjusted EBITDA, to consolidated net income, a related GAAP financial measure, and for the calculation of Free Cash Flow.
The Company is unable to provide a reconciliation of the above forward-looking estimate of non-GAAP Adjusted EBITDA to GAAP measures because certain information needed to make a reasonable forward-looking estimate is difficult to obtain and dependent on future events which may be uncertain, or out of the Company’s control, including the amount of AAP contracts invoiced, the number of AAP contracts that are renewed, necessary costs to deliver the Company’s offerings, such as unanticipated curriculum development costs, and other potential variables. Accordingly, a reconciliation is not available without unreasonable effort.
About Franklin Covey Co.
Franklin Covey Co. (NYSE: FC) is a global leadership company with directly owned and licensee partner offices providing professional services in over 160 countries and territories. The Company transforms organizations by partnering with its clients to build leaders, teams, and cultures that achieve breakthrough results through collective action, which leads to a more engaging work experience for their people. Available through the Franklin Covey All Access Pass, the Company’s best-in-class content and solutions, experts, technology, and metrics seamlessly integrate to ensure lasting behavioral change at scale. Solutions are available in multiple delivery modalities in more than 20 languages.
This approach to leadership and organizational change has been tested and refined by working with tens of thousands of teams and organizations over the past 30 years. Clients have included organizations in the Fortune 100, Fortune 500, and thousands of small- and mid-sized businesses, numerous governmental entities, and educational institutions. To learn more, visit www.franklincovey.com, and enjoy exclusive content from Franklin Covey’s social media channels at: LinkedIn, Facebook, Twitter, Instagram, and YouTube.
FRANKLIN COVEY CO. Condensed Consolidated Income Statements (in thousands, except per-share amounts, and unaudited) Quarter Ended Two Quarters Ended February 29, February 28, February 29, February 28,2024
2023
2024
2023
Net sales$
61,336
$
61,756
$
129,736
$
131,125
Cost of sales
14,485
14,546
30,607
31,173
Gross profit
46,851
47,210
99,129
99,952
Selling, general, and administrative
40,771
42,338
84,976
86,350
Restructuring costs
1,726
-
2,307
-
Impaired asset
928
-
928
-
Depreciation
913
951
2,005
2,196
Amortization
1,071
1,093
2,142
2,185
Income from operations
1,442
2,828
6,771
9,221
Interest expense, net
(27
)
(47
)
(80
)
(377
)
Income before income taxes
1,415
2,781
6,691
8,844
Income tax provision
(541
)
(1,042
)
(966
)
(2,438
)
Net income$
874
$
1,739
$
5,725
$
6,406
Net income per common share: Basic
$
0.07
$
0.13
$
0.43
$
0.46
Diluted
0.06
0.12
0.42
0.44
Weighted average common shares: Basic
13,263
13,900
13,253
13,888
Diluted
13,484
14,533
13,560
14,520
Other data: Adjusted EBITDA(1)
$
7,448
$
8,187
$
18,418
$
19,659
(1)
The term Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, stock-based compensation, and certain other items) is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results. For a reconciliation of this non-GAAP measure to a GAAP measure, refer to the Reconciliation of Net Income to Adjusted EBITDA as shown below. FRANKLIN COVEY CO. Reconciliation of Net Income to Adjusted EBITDA (in thousands and unaudited) Quarter Ended Two Quarters Ended February 29, February 28, February 29, February 28,2024
2023
2024
2023
Reconciliation of net income to Adjusted EBITDA: Net income$
874
$
1,739
$
5,725
$
6,406
Adjustments: Interest expense, net
27
47
80
377
Income tax provision
541
1,042
966
2,438
Amortization
1,071
1,093
2,142
2,185
Depreciation
913
951
2,005
2,196
Stock-based compensation
1,368
3,315
4,265
6,050
Restructuring costs
1,726
-
2,307
-
Impaired asset
928
-
928
-
Increase in the fair value of contingent consideration liabilities
-
-
-
7
Adjusted EBITDA
$
7,448
$
8,187
$
18,418
$
19,659
Adjusted EBITDA margin
12.1
%
13.3
%
14.2
%
15.0
%
FRANKLIN COVEY CO. Additional Financial Information (in thousands and unaudited) Quarter Ended Two Quarters Ended February 29, February 28, February 29, February 28,2024
2023
2024
2023
Sales by Division/Segment: Enterprise Division: Direct offices$
42,960
$
43,646
$
92,175
$
93,812
International licensees
2,748
2,935
6,126
6,213
45,708
46,581
98,301
100,025
Education Division
14,579
14,198
29,323
28,549
Corporate and other
1,049
977
2,112
2,551
Consolidated
$
61,336
$
61,756
$
129,736
$
131,125
Gross Profit by Division/Segment: Enterprise Division: Direct offices
$
35,514
$
35,854
$
75,015
$
75,775
International licensees
2,374
2,659
5,426
5,635
37,888
38,513
80,441
81,410
Education Division
8,597
8,392
17,977
17,568
Corporate and other
366
305
711
974
Consolidated
$
46,851
$
47,210
$
99,129
$
99,952
Adjusted EBITDA by Division/Segment: Enterprise Division: Direct offices
$
9,122
$
9,641
$
20,809
$
20,890
International licensees
1,342
1,541
3,238
3,372
10,464
11,182
24,047
24,262
Education Division
(529
)
(622
)
(487
)
(341
)
Corporate and other
(2,487
)
(2,373
)
(5,142
)
(4,262
)
Consolidated$
7,448
$
8,187
$
18,418
$
19,659
FRANKLIN COVEY CO. Condensed Consolidated Balance Sheets (in thousands and unaudited) February 29, August 31,
2024
2023
Assets Current assets: Cash and cash equivalents$
40,904
$
38,230
Accounts receivable, less allowance for doubtful accounts of $3,392 and $3,790
57,153
81,935
Inventories
4,196
4,213
Prepaid expenses and other current assets
20,182
20,639
Total current assets
122,435
145,017
Property and equipment, net
8,708
10,039
Intangible assets, net
38,371
40,511
Goodwill
31,220
31,220
Deferred income tax assets
1,655
1,661
Other long-term assets
19,544
17,471
$
221,933
$
245,919
Liabilities and Shareholders' Equity Current liabilities: Current portion of notes payable
$
3,335
$
5,835
Current portion of financing obligation
3,718
3,538
Accounts payable
7,734
6,501
Deferred subscription revenue
82,365
95,386
Other deferred revenue
22,012
12,137
Accrued liabilities
19,301
28,252
Total current liabilities
138,465
151,649
Notes payable, less current portion
1,577
1,535
Financing obligation, less current portion
2,515
4,424
Other liabilities
7,492
7,617
Deferred income tax liabilities
1,057
2,040
Total liabilities
151,106
167,265
Shareholders' equity: Common stock
1,353
1,353
Additional paid-in capital
225,776
232,373
Retained earnings
105,527
99,802
Accumulated other comprehensive loss
(1,075
)
(987
)
Treasury stock at cost, 13,801 and 13,974 shares
(260,754
)
(253,887
)
Total shareholders' equity
70,827
78,654
$
221,933
$
245,919
FRANKLIN COVEY CO. Condensed Consolidated Free Cash Flow (in thousands and unaudited) Two Quarters Ended February 29, February 28,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES Net income$
5,725
$
6,406
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
4,146
4,381
Amortization of capitalized curriculum costs
1,501
1,648
Impairment of assets
928
-
Stock-based compensation
4,265
6,050
Deferred income taxes
(978
)
1,130
Change in fair value of contingent consideration liabilities
-
7
Amortization of right-of-use operating lease assets
403
411
Changes in working capital
14,222
(8,825
)
Net cash provided by operating activities
30,212
11,208
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment
(1,716
)
(2,644
)
Curriculum development costs
(3,770
)
(5,277
)
Net cash used for investing activities
(5,486
)
(7,921
)
Free Cash Flow
$
24,726
$
3,287
View source version on businesswire.com: https://www.businesswire.com/news/home/20240327505434/en/
Investor Contact: Franklin Covey Boyd Roberts 801-817-5127 investor.relations@franklincovey.com
Media Contact: Franklin Covey Debra Lund 801-817-6440 Debra.Lund@franklincovey.com
1 Year Franklin Covey Chart |
1 Month Franklin Covey Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions