Franklin Covey Company · NYSE:FC

Franklin Covey — Q2 2024 Earnings Presentation

35 slides from Franklin Covey's earnings presentation, Mar 27, 2024

  1. 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

  2. Slide 2: Investor Update Second Quarter Fiscal Year 2024

    Investor Update Second Quarter Fiscal Year 2024 © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL

  3. 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

  4. Slide 4: Enterprise Division

    Enterprise Division Second Quarter and LTM Second Quarter FY24 Unaudited $26.3M Subscription Revenue 62% AAP Multi-Year Contract Value (in North America) $53.1M YTD $104.5M LTM 57% Q2FY23 $128.7M $37.5M Subscription & Subscription Deferred Revenue (Billed & Unbilled) Services Revenue $124.8M Q2FY23

  5. Slide 5: Education Division

    Education Division Second Quarter and LTM Second Quarter FY24 Unaudited $9.5M $9.8M Subscription Revenue Invoiced Amounts $19.3M YTD $18.1M YTD $40.9M LTM $79.7M LTM © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 5

  6. Slide 6: Executable Opportunities

    Executable Opportunities OPPORTUNITY 1 OPPORTUNITY 2 OPPORTUNITY 3 PROJECT PROJECT PROJECT PENETRATION SPEED TO RAMP IMPACT © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 6

  7. Slide 7: Project Penetration: Impact Pod vs. Traditional Client Partner

    Project Penetration Impact Pod vs. Traditional Client Partner $80K Average Subscription 67%+ Service Attach $132K Average $45K Average Client Size Subscription 50% Service 500 bps Better Attach Logo Retention $63K Average Client Size Impact Pod Traditional Pod © FranklinCovey Co. All rights reserved

  8. Slide 8: Executable Opportunities

    Executable Opportunities OPPORTUNITY 1 OPPORTUNITY 2 OPPORTUNITY 3 PROJECT PROJECT PROJECT PENETRATION SPEED TO RAMP IMPACT © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 8

  9. Slide 9: Executable Opportunities

    Executable Opportunities OPPORTUNITY 1 OPPORTUNITY 2 OPPORTUNITY 3 PROJECT PROJECT PROJECT PENETRATION SPEED TO RAMP IMPACT © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 9

  10. Slide 10: Project Impact

    Project Impact © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 10

  11. Slide 11: FranklinCovey Highlights

    FranklinCovey 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 11

  12. Slide 12: Enterprise Division - North America

    Enterprise Division - North America Second Quarter and LTM Second Quarter FY24 Unaudited $34.1M Sales $22.0M Subscription Sales $72.5M YTD $44.5M YTD $150.0M LTM $87.8M LTM $31.5M $116.8M Balance of Deferred Sales Subscription & Subscription Services Sales (billed and unbilled) $66.3M YTD $136.4M LT

  13. Slide 13: Enterprise Division - International

    Enterprise Division - International Second Quarter and LTM Second Quarter FY24 Unaudited $7.2M Revenue – International Direct $2.7M Revenue - International Licensee Partner (4%) YTD $6.1M YTD 5% LTM $11.6M LTM © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 13

  14. Slide 14: Education Division

    Education Division Second Quarter and LTM Second Quarter FY24 Unaudited $14.6M $12.9M Subscription & Revenue Growth Subscription Services Revenue $29.3M YTD $26.1M YTD $70.5M LTM $65.2M LTM $30.1M Balance of Deferred Subscription Revenue (Billed & Unbilled) © FranklinCovey Co. All rights reserved. P

  15. Slide 15: Free Cash Flow

    Free Cash Flow (in thousands) Two Quarters Ended February 29, February 28, 2024 2023 (unaudited and in thousands) 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 4,38

  16. Slide 16: Appendix

    Appendix © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 16

  17. Slide 17: Other Information

    Other Information OTHER INCOME STATEMENT INFORMATION: • Depreciation: $4.3M in FY2023, expected to total approximately $5.0M in FY2024. • Amortization: $4.3M in FY2023, expected to total approximately $4.2M in FY2024. • Net Interest Expense: $.5M in FY2023, expected to total approximately $.2M in FY

  18. Slide 18: FranklinCovey Financial Headlines

    FranklinCovey Financial Headlines (in millions and unaudited) Q2 FY 24 Q2 FY 23 C hg % YTD Q2FY24 YTD Q2FY23 C hg % LTM Q2 FY 24 LTM Q2 FY 23 C hg % Sales $ 61 .3 $ 61 .8 ($0.4) -0.7% $ 1 29.7 $ 1 31 .1 ($1 .4) -1 .1 % $ 279.1 $ 276.1 $ 3.0 1 .1 % Cost of Sales 1 4.5 1 4.5 (0.1 ) -0.4% 30.6 31 .2 (0

  19. Slide 19: FranklinCovey Highlights

    FranklinCovey 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 19

  20. Slide 20: Trends in the Business

    Trends in the Business (in millions and unaudited) © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 20

  21. Slide 21: Sales Information

    Sales Information (in millions and unaudited) FY 2022 FY 2023 FY 2024 Q1 Q2 Q3 Q4 FY2022 Q1 Q2 Q3 Q4 FY2023 Q1 Q2 Sales Reported Net Sales 61.3 56.6 66.2 78.8 262.8 69.4 61.8 71.4 78.0 280.5 68.4 61.3 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) (1.2) Invo

  22. Slide 22: FranklinCovey Contracts Signed

    FranklinCovey Contracts Signed (in millions and unaudited) Enterprise Division Education Division C orporate Total C ompany Second Quarter FY24 FY23 Change % FY24 FY23 Change % FY24 FY23 Change FY24 FY23 Change % Sales 45.7 46.6 (0.9) -1 .9% 14.6 14.2 0.4 2.7% 1.0 1.0 0.1 61.3 61.8 (0.4) -0.7% Chang

  23. Slide 23: 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 Two Quarters Ended February 29, February 28, February 29, February 28, 2024 2023 2024 2023 Reconciliation of net

  24. Slide 24: Additional Financial Information

    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 2,93

  25. Slide 25: Condensed Consolidated Balance Sheets

    Condensed Consolidated Balance Sheets (in thousands and unaudited) Liabilities and Shareholders' Equity Current liabilities: February 29, August 31, Current portion of notes payable $ 3,335 $ 5,835 2024 2023 Current portion of financing obligation 3,718 3,538 Assets Accounts payable 7,734 6,501 Curr

  26. Slide 26: Condensed Consolidated Income Statements

    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 pr

  27. Slide 27: Free Cash Flow

    Free Cash Flow (in thousands) Two Quarters Ended February 29, February 28, 2024 2023 (unaudited and in thousands) 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 4,38

  28. Slide 28: Enterprise Division Financial Summary

    Enterprise Division Financial Summary (in millions and unaudited) Q2 FY 24 Q2 FY 23 C hg % YTD Q2FY24 YTD Q2FY23 C hg % LTM Q2 FY 24 LTM Q2 FY 23 C hg % Sales $ 45.7 $ 46.6 ($0.9) -1 .9% $ 98.3 $ 1 00.0 ($1 .7) -1 .7% $ 203.9 $ 202.2 $ 1 .7 0.9% Cost of Sales 7.8 8.1 (0.2) -3.1 % 1 7.9 1 8.6 (0.8) -

  29. Slide 29: Enterprise Division Financial Summary

    Enterprise Division Financial Summary (in millions and unaudited) © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 29

  30. Slide 30: Enterprise Division AAP & Related Revenue

    Enterprise Division AAP & Related Revenue (in millions and unaudited) LTM Q2FY24 LTM Q2FY23 LTM Q2FY22 Q2FY24 Q1FY24 Q4FY23 Q3FY23 Q2FY23 AAP Sales $104.5 $95.6 $80.9 $26.3 $26.8 $26.1 $25.4 $24.1 AAP Add on Sales* 57.6 58.8 46.0 11.2 14.8 15.6 16.0 11.3 Total AAP and Related 162.1 154.4 126.9 37.5

  31. Slide 31: Education Division Financial Summary

    Education Division Financial Summary (in millions and unaudited) Q2 FY 24 Q2 FY 23 C hg % YTD Q2FY24 YTD Q2FY23 C hg % LTM Q2 FY 24 LTM Q2 FY 23 C hg % Sales $ 1 4.6 $ 1 4.2 $ 0.4 2.7% $ 29.3 $ 28.5 $ 0.8 2.7% $ 70.5 $ 67.6 $ 2.9 4.2% Cost of Sales 6.0 5.8 0.2 3.0% 1 1 .3 1 1 .0 0.4 3.3% 25.7 23.8 1

  32. Slide 32: Education Division Financial Summary

    Education Division Financial Summary (in millions and unaudited) © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL 32

  33. Slide 33: Definitions

    Definitions • “Deferred Subscription Revenue” primarily consists of billings or payments received in advance of revenue being recognized from subscription services. Deferred revenue is recognized as sales as the revenue recognition criteria are met. The Company generally invoices customers in annual

  34. Slide 34: Definitions

    Definitions • “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,” t

  35. Slide 35: franklincovey.com

    franklincovey.com © FranklinCovey Co. All rights reserved. PROPRIETARY AND CONFIDENTIAL

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