10-Q 1 fc-20240531x10q.htm 10-Q fc-20240531x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2024

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-11107

Logo

Description automatically generated

FRANKLIN COVEY CO.

(Exact name of registrant as specified in its charter)



Utah		87-0401551
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)

2200 West Parkway Boulevard		84119-2099
Salt Lake City, Utah		(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number,		(801) 817-1776
Including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.05 Par Value	FC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes T No £

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes T No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	£	Accelerated Filer	T
Non-accelerated Filer	£	Smaller Reporting Company	£
Emerging Growth Company	£

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No T

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock as of the latest practicable date:

13,094,424 shares of Common Stock, $0.05 par value per share, as of June 30, 2024
‎

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FRANKLIN COVEY CO.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per-share amounts)



		May 31,		August 31,
		2024		2023
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	36,574	$	38,230
Accounts receivable, less allowance for doubtful accounts of $3,111 and $3,790		60,424		81,935
Inventories		4,644		4,213
Prepaid expenses and other current assets		18,389		20,639
Total current assets		120,031		145,017

Property and equipment, net		8,631		10,039
Intangible assets, net		38,808		40,511
Goodwill		31,220		31,220
Deferred income tax assets		1,636		1,661
Other long-term assets		20,645		17,471
	$	220,971	$	245,919

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of notes payable	$	2,085	$	5,835
Current portion of financing obligation		3,810		3,538
Accounts payable		6,185		6,501
Deferred subscription revenue		80,092		95,386
Customer deposits		22,204		12,137
Accrued liabilities		22,215		28,252
Total current liabilities		136,591		151,649

Notes payable, less current portion		761		1,535
Financing obligation, less current portion		1,533		4,424
Other liabilities		8,076		7,617
Deferred income tax liabilities		1,847		2,040
Total liabilities		148,808		167,265

Shareholders’ equity:
Common stock, $0.05 par value; 40,000 shares authorized, 27,056 shares issued		1,353		1,353
Additional paid-in capital		228,612		232,373
Retained earnings		111,248		99,802
Accumulated other comprehensive loss		(1,250)		(987)
Treasury stock at cost, 13,969 shares and 13,974 shares		(267,800)		(253,887)
Total shareholders’ equity		72,163		78,654
	$	220,971	$	245,919

See notes to condensed consolidated financial statements

‎

FRANKLIN COVEY CO.

CONDENSED CONSOLIDATED INCOME STATEMENTS AND STATEMENTS

OF COMPREHENSIVE INCOME

(in thousands, except per-share amounts)



		Quarter Ended			Three Quarters Ended
		May 31,		May 31,		May 31,		May 31,
		2024		2023		2024		2023
		(unaudited)				(unaudited)

Revenue	$	73,373	$	71,441	$	203,109	$	202,565
Cost of revenue		17,167		17,208		47,773		48,380
Gross profit		56,206		54,233		155,336		154,185

Selling, general, and administrative		45,110		45,641		130,088		131,991
Restructuring costs		701		-		3,008		-
Impairment of asset		-		-		928		-
Depreciation		990		934		2,994		3,131
Amortization		1,062		1,086		3,204		3,270
Income from operations		8,343		6,572		15,114		15,793

Interest income		268		362		857		804
Interest expense		(247)		(354)		(916)		(1,173)
Income before income taxes		8,364		6,580		15,055		15,424
Income tax provision		(2,643)		(2,017)		(3,609)		(4,455)
Net income	$	5,721	$	4,563	$	11,446	$	10,969

Net income per share:
Basic	$	0.43	$	0.33	$	0.87	$	0.79
Diluted		0.43		0.32		0.85		0.76

Weighted average number of common shares:
Basic		13,160		13,621		13,222		13,799
Diluted		13,378		14,273		13,499		14,437


COMPREHENSIVE INCOME
Net income	$	5,721	$	4,563	$	11,446	$	10,969
Foreign currency translation adjustments,
net of income taxes of $0, $0, $0, and $0		(175)		(139)		(263)		(123)
Comprehensive income	$	5,546	$	4,424	$	11,183	$	10,846

See notes to condensed consolidated financial statements
‎

FRANKLIN COVEY CO.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



	Three Quarters Ended
		May 31,		May 31,
		2024		2023
		(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	11,446	$	10,969
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		6,198		6,401
Amortization of capitalized curriculum costs		2,340		2,385
Impairment of asset		928		-
Stock-based compensation		7,092		9,357
Deferred income taxes		(169)		2,399
Change in fair value of contingent consideration liabilities		-		7
Amortization of right-of-use operating lease assets		596		633
Changes in assets and liabilities:
Decrease in accounts receivable, net		21,436		17,071
Increase in inventories		(434)		(1,050)
Decrease in prepaid expenses and other assets		2,032		3,415
Decrease in accounts payable and accrued liabilities		(8,305)		(12,615)
Decrease in deferred revenue and customer deposits		(5,154)		(11,901)
Increase (decrease) in income taxes payable		628		(621)
Decrease in other long-term liabilities		(249)		(503)
Net cash provided by operating activities		38,385		25,947

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(2,618)		(3,545)
Curriculum development costs		(5,195)		(6,841)
Net cash used for investing activities		(7,813)		(10,386)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from term notes payable		-		7,500
Principal payments on notes payable		(4,585)		(12,085)
Principal payments on financing obligation		(2,618)		(2,366)
Purchases of common stock for treasury		(25,844)		(29,672)
Payment of contingent consideration liabilities		-		(736)
Cash paid to obtain new credit agreement		-		(393)
Proceeds from sales of common stock held in treasury		1,077		1,162
Net cash used for financing activities		(31,970)		(36,590)
Effect of foreign currency exchange rates on cash and cash equivalents		(258)		(159)
Net decrease in cash and cash equivalents		(1,656)		(21,188)
Cash and cash equivalents at the beginning of the period		38,230		60,517
Cash and cash equivalents at the end of the period	$	36,574	$	39,329

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	2,962	$	2,452
Cash paid for interest		931		1,158

Non-cash investing and financing activities:
Purchases of property and equipment financed by accounts payable	$	111	$	21
Acquisition of right-of-use operating lease assets for operating lease liabilities		1,042		504
Acquisition of content rights financed by accrued liabilities		1,500		-

See notes to condensed consolidated financial statements
‎

FRANKLIN COVEY CO.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands and unaudited)

Accumulated

Common

Additional

Other

Treasury

Stock

Paid-In

Retained

Comprehensive

Stock

Amount

Capital

Earnings

Loss

Amount

Balance at August 31, 2023

27,056

1,353

232,373

99,802

(987)

(13,974)

(253,887)

Issuance of common stock from

treasury

(10,569)

601

10,925

Purchases of common shares

for treasury

(409)

(16,308)

Stock-based compensation

2,897

Cumulative translation

FRANKLIN COVEY CO [FC] Filings
10-Q	[2024-07-08]
10-Q	[2024-04-05]
10-Q	[2024-01-09]
10-K	[2023-11-13]
10-Q	[2023-07-07]
10-Q	[2023-04-05]
10-Q	[2023-01-09]
10-K	[2022-11-14]
10-Q	[2022-07-07]
10-Q	[2022-04-06]
10-Q	[2022-01-07]
10-K	[2021-11-12]
10-Q	[2021-07-08]
10-Q	[2021-04-08]
10-Q	[2021-01-08]
10-K	[2020-11-16]
10-Q	[2020-07-10]
10-Q	[2020-04-09]
10-Q	[2020-01-09]
10-K	[2019-11-14]
10-Q	[2019-07-09]
10-Q	[2019-04-09]
10-Q	[2019-01-09]
10-K	[2018-11-14]
10-Q	[2018-07-10]
10-Q	[2018-04-09]
10-Q	[2018-01-09]
10-K	[2017-11-14]
10-Q	[2017-07-10]
10-Q	[2017-04-07]
10-Q	[2017-01-05]
10-K	[2016-11-14]
10-Q	[2016-07-07]
10-Q	[2016-04-07]
10-Q	[2016-01-07]
10-K	[2015-11-13]
10-Q	[2015-07-09]
10-Q	[2015-04-09]
10-Q	[2015-01-08]
10-K	[2014-11-14]
10-Q	[2014-07-10]
10-Q	[2014-04-10]
10-Q	[2014-01-09]
10-K	[2013-11-14]
10-Q	[2013-07-11]
10-Q	[2013-04-11]
10-Q	[2013-01-10]
10-K	[2012-11-14]
10-Q	[2012-07-03]
10-Q	[2012-04-04]
10-Q	[2012-01-05]

FRANKLIN COVEY CO [FC] Filings

FORM 10-Q

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED INCOME STATEMENTS AND STATEMENTS

OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY