Franklin Covey Company · NYSE:FC
Franklin Covey — Q3 2024 Earnings Presentation
32 slides from Franklin Covey's earnings presentation, Jun 26, 2024
Slide 1: Greatness Starts Here
Greatness Starts Here We transform organizations by building exceptional leaders, teams, and cultures that get results. © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL
Slide 2: Investor Update Third Quarter Fiscal Year 2024
Investor Update Third Quarter Fiscal Year 2024 © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL
Slide 3: Forward-Looking Statements/Non-GAAP
Forward-Looking Statements/Non-GAAP This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon management’s current expectations and are subject to various risks and uncertainties includi
Slide 4: Franklin Covey Third Quarter and LTM Highlights
Franklin Covey Third Quarter and LTM Third Quarter FY24 Unaudited $73.4M $13.9M $30.6M $153.2M Revenue Adjusted EBITDA YTD Free Cash Flow Billed & Unbilled Deferred Revenue $71.4 Q3FY23 $11.9 Q3FY23 $15.6M YTD Q3FY23 $140.9M Q3FY23 © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIA
Slide 5: Drivers of Growth and Value
Drivers of Growth and Value Driver 1 Driver 2 ADDRESSING CLIENT’S STRONG LEADING MISSION INDICATORS OF CRITICAL FUTURE GROWTH CHALLENGES Driver 3 Driver 4 INVEST CASH AT STRENGTH OF HIGH RATES OF BUSINESS MODEL RETURN © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 5
Slide 6: Leading Indicators of Future Growth
Leading Indicators of Future Growth Third Quarter and LTM Third Quarter FY24 Unaudited $83.8M $69.4M Deferred Revenue Unbilled Deferred Revenue $72.7M Q3FY23 $68.2M Q3FY23 © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 6
Slide 7: Share Repurchases
Share Repurchases Third Quarter and LTM Third Quarter FY24 Unaudited $25.8M $7.4M $61.4M $50M YTD Value of Shares Q3 Value of Shares Last 2 Yrs Value of Shares New Board Stock Repurchase Repurchased Repurchased Repurchased Authorization 649K Shares 188K Shares © FranklinCovey Co. All rights reserved
Slide 8: Franklin Covey Revenue and Adjusted EBITDA
Franklin Covey Third Quarter and LTM Third Quarter FY24 Unaudited Revenue Adjusted EBITDA Q3FY22 Q3FY23 Q3FY24 YTD YTD YTD LTM LTM LTM Q3FY22 Q3FY23 Q3FY24 YTD YTD YTD LTM LTM LTM Q3FY22 Q3FY23 Q3FY24 Q3FY22 Q3FY23 Q3FY24 Q3FY22 Q3FY23 Q3FY24 Q3FY22 Q3FY23 Q3FY24 © FranklinCovey Co. All rights reser
Slide 9: Enterprise Division - North America
Enterprise Division - North America Third Quarter and LTM Third Quarter FY24 Unaudited $39.0M $22.0M $35.9M Revenue Subscription Revenue Subscription & Subscription Services Revenue $111.4M YTD $66.5M YTD $102.2M YTD $149.8M LTM $88.5M LTM $137.3M LTM $111.6M 60% Deferred Revenue AAP Multi-Year Cont
Slide 10: Enterprise Division - International
Enterprise Division - International Third Quarter and LTM Third Quarter FY24 Unaudited $8.5M $2.7M Revenue – International Direct Revenue - International Licensee Partners $24.4M YTD $8.8M YTD $33.9M LTM $11.4M LTM © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 10
Slide 11: Education Division
Education Division Third Quarter and LTM Third Quarter FY24 Unaudited $20.1M $18.9M $18.2M $28.9M Revenue Invoiced Amounts Subscription Revenue Deferred Revenue (Billed & Unbilled) $49.4M YTD $37.0M YTD $44.3M YTD $73.5M LTM $82.3M LTM $67.3M LTM $20.3M Q3FY23 © FranklinCovey Co. All rights reserved
Slide 12: Free Cash Flow
Free Cash Flow (In Thousands) Three Quarters Ended M ay 31, M ay 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 cap
Slide 13: Appendix
Appendix © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 13
Slide 14: Other Information
Other Information OTHER INCOME STATEMENT INFORMATION: • Depreciation: $4.3M in FY2023, expected to total approximately $4.4M in FY2024. • Amortization: $4.3M in FY2023, expected to total approximately $4.3M in FY2024. • Net Interest Expense: $.5M in FY2023, expected to total approximately $.2M in FY
Slide 15: Franklin Covey Financial Headlines
Franklin Covey Financial Headlines (in millions and unaudited) Q3 FY 24 Q3 FY 23 C hg % YTD Q3FY24 YTD Q3FY23 C hg % LTM Q3 FY 24 LTM Q3 FY 23 C hg % Revenue $ 73.4 $ 71 .4 $ 1 .9 2.7% $ 203.1 $ 202.6 $ 0.5 0.3% $ 281 .1 $ 281 .4 ($0.3) -0.1 % Cost of Sales 1 7.2 1 7.2 (0.0) -0.2% 47.8 48.4 (0.6) -1
Slide 16: Franklin Covey Highlights
Franklin Covey Highlights (in millions and unaudited) Note: Adjusted EBITDA and Operating SG&A are non-GAAP financial measures; please see Appendix for additional information. Amounts may not total due to rounding. © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 16
Slide 17: Trends in the Business
Trends in the Business (in millions and unaudited) © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 17
Slide 18: Revenue Information
Revenue Information (in millions and unaudited) FY 2022 FY 2023 FY 2024 Q1 Q2 Q3 Q4 FY2022 Q1 Q2 Q3 Q4 FY2023 Q1 Q2 Q3 Revenue Reported Revenue 61.3 56.6 66.2 78.8 262.8 69.4 61.8 71.4 78.0 280.5 68.4 61.3 73.4 Change in Deferred Revenue (9.3) 2.6 (1.8) 19.5 11.0 (11.4) (0.6) (3.4) 26.3 11.0 (11.9)
Slide 19: Franklin Covey Contracts Signed
Franklin Covey Contracts Signed (in millions and unaudited) Notes: • Please compare this information to the Segment Information footnote in Form 10-K. • Please refer to Definitions in the Appendix for the definition of Deferred Revenue and Unbilled Deferred Revenue. • May not total due to rounding.
Slide 20: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA (in thousands and unaudited) FRANKLIN COVEY CO. Reconciliation of Net Income to Adjusted EBITDA (in thousands and unaudited) Quarter Ended Three Quarters Ended May 31, May 31, May 31, May 31, 2024 2023 2024 2023 Reconciliation of net income to Adjusted
Slide 21: Additional Financial Information
Additional Financial Information (in thousands and unaudited) Quarter Ended Three Quarters Ended May 31, May 31, May 31, May 31, 2024 2023 2024 2023 Sales by Division/Segment: Enterprise Division: Direct offices $ 49,334 $ 50,382 $ 141,509 $ 144,194 International licensees 2,701 2,835 8,826 9,048 52
Slide 22: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets (in thousands and unaudited) May 31, August 31, May 31, August 31, 2024 2023 2024 2023 Assets Liabilities and Shareholders' Equity Current assets: Current liabilities: Cash and cash equivalents $ 36,574 $ 38,230 Current portion of notes payable $ 2,085 $ 5,835 A
Slide 23: Condensed Consolidated Income Statements
Condensed Consolidated Income Statements (in thousands, except per-share amounts, and unaudited) Quarter Ended Three Quarters Ended May 31, May 31, May 31, May 31, 2024 2023 2024 2023 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
Slide 24: Free Cash Flow
Free Cash Flow (in thousands) Three Quarters Ended M ay 31, M ay 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 cap
Slide 25: Enterprise Division Financial Summary
Enterprise Division Financial Summary (in millions and unaudited) Q3 FY 24 Q3 FY 23 C hg % YTD Q3FY24 YTD Q3FY23 C hg % LTM Q3 FY 24 LTM Q3 FY 23 C hg % Revenue $ 52.0 $ 53.2 ($1 .2) -2.2% $ 1 50.3 $ 1 53.2 ($2.9) -1 .9% $ 202.8 $ 205.4 ($2.6) -1 .3% Cost of Sales 9.4 1 0.2 (0.8) -8.0% 27.3 28.9 (1
Slide 26: Enterprise Division Financial Summary
Enterprise Division Financial Summary (in millions and unaudited) © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 26
Slide 27: Enterprise Division AAP & Related Revenue
Enterprise Division AAP & Related Revenue (in millions and unaudited) © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 27
Slide 28: Education Division Financial Summary
Education Division Financial Summary (in millions and unaudited) Q3 FY 24 Q3 FY 23 C hg % YTD Q3FY24 YTD Q3FY23 C hg % LTM Q3 FY 24 LTM Q3 FY 23 C hg % Sales $ 20.1 $ 1 7.1 $ 3.0 1 7.5% $ 49.4 $ 45.6 $ 3.8 8.3% $ 73.5 $ 70.3 $ 3.2 4.6% Cost of Sales 6.9 6.2 0.7 1 2.1 % 1 8.2 1 7.1 1 .1 6.5% 26.4 25.
Slide 29: Education Division Financial Summary
Education Division Financial Summary (in millions and unaudited) * * During Q3FY24 the Company invoiced $4.9M related to a new state-wide initiative of which included $1.4M of classroom and training materials which was recognized as revenue during the quarter. © FranklinCovey Co. All rights reserved
Slide 30: Definitions
Definitions 1. “Deferred Subscription Revenue” primarily consists of billings or payments received in advance of revenue being recognized from subscription services. Deferred revenue is recognized as Revenue as the revenue recognition criteria are met. The Company generally invoices customers in ann
Slide 31: Definitions
Definitions 1. “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. A reconciliation of “Adjusted EBITDA,”
Slide 32: franklincovey.com
franklincovey.com © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL
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