Franklin Covey Co. (FC) Reports Solid Start to Fiscal 2024 with Record Subscription Sales
Consolidated Sales: $68.4 million for Q1 FY24, slightly below Q1 FY23.
Subscription Sales: Record $54.8 million for Q1 and $224.7 million for the rolling four quarters.
Deferred Subscription Revenue: Increases 12% to $169.7 million year-over-year.
Operating Cash Flow: Surges to $17.4 million from $3.0 million in Q1 FY23.
Share Repurchase: 408,596 shares bought back for $16.3 million in Q1 FY24.
Liquidity: Remains robust with over $96 million, including $34.0 million in cash.
Earnings Guidance: Affirmed for FY24 with Adjusted EBITDA expected between $54.5 million and $58 million.
On January 4, 2024, Franklin Covey Co (NYSE:FC) released its 8-K filing, announcing financial results for the first quarter of fiscal year 2024, which ended on November 30, 2023. The global company, known for its organizational performance improvement solutions, reported consolidated sales of $68.4 million for the quarter, marginally down from $69.4 million in the same period last year. Despite the slight dip in overall sales, the company achieved a record $54.8 million in subscription and subscription services sales for the quarter, contributing to a record $224.7 million for the rolling four quarters.
Financial Performance and Operational Highlights
Franklin Covey Co (NYSE:FC) experienced a robust increase in its operating cash flow, which rose to $17.4 million in Q1 FY24 from $3.0 million in the prior year's first quarter. This significant improvement reflects the company's efficient cash management and operational effectiveness. Additionally, the sum of billed and unbilled deferred subscription revenue grew by 12% to $169.7 million compared with $151.6 million at the end of Q1 FY23, indicating a healthy pipeline of future recognized revenue.
The company also continued its share repurchase program, buying back 408,596 shares for $16.3 million during the quarter, demonstrating confidence in its business model and commitment to delivering shareholder value. With over $96 million in liquidity, including $34.0 million of cash and no drawdowns on its $62.5 million credit facility, Franklin Covey Co (NYSE:FC) maintains a strong financial position to support its growth initiatives and navigate market conditions.
Strategic Outlook and Management Commentary
President and CEO Paul Walker expressed satisfaction with the company's performance, noting that revenue and Adjusted EBITDA exceeded forecasts. He highlighted the growth in deferred subscription revenue and invoiced subscription revenue as positive indicators for the second half of fiscal 2024. Walker also pointed to the expected improvement in subscription services attachment rates and the launch of refreshed and new offerings as drivers of future growth.
"Our first quarter results are reflective of the three key strengths we have been building for years. First, is the strength of our strategic position in the marketplace which we believe is unique... Our second key strength is the power of our revenue generating engine... The third key strength is that of our powerful business model..." - Paul Walker, President and CEO
Walker's comments underscore the company's strategic focus on delivering high-quality content and services that drive systemic changes in human behavior, leading to transformative results for organizations.
Financial Statements and Key Metrics
Franklin Covey Co (NYSE:FC) reported a net income of $4.85 million, or $0.36 per diluted share, for Q1 FY24, compared to $4.67 million, or $0.32 per diluted share, for the same period last year. The company's Adjusted EBITDA for the quarter was $10.97 million, slightly below the $11.47 million reported in Q1 FY23. The Adjusted EBITDA margin was 16.0%, compared to 16.5% in the prior year.
Financial Metrics | Q1 FY24 | Q1 FY23 |
|---|---|---|
Net Sales | $68.4 million | $69.4 million |
Net Income | $4.85 million | $4.67 million |
Adjusted EBITDA | $10.97 million | $11.47 million |
The company's balance sheet remains solid, with total assets of $218.8 million and total liabilities of $148.3 million as of November 30, 2023. Shareholders' equity stood at $70.5 million.
Conclusion and Forward Outlook
Franklin Covey Co (NYSE:FC) has affirmed its earnings guidance for fiscal 2024, projecting Adjusted EBITDA to increase to between $54.5 million and $58.0 million. This outlook reflects the company's confidence in the continued strength and strategic durability of its subscription offerings, which have been key drivers of growth in recent years.
With a comprehensive suite of solutions available in more than 20 languages and a global reach extending to over 160 countries and territories, Franklin Covey Co (NYSE:FC) is well-positioned to continue its leadership in the organizational performance improvement space and deliver value to its clients and shareholders alike.
Explore the complete 8-K earnings release (here) from Franklin Covey Co for further details.
This article first appeared on GuruFocus.