Services Stock Review Report: Franklin Covey Co. (NYSE:FC)

(NYSE-FC) has 13.96M of outstanding shares and 437.759M shares were floated in the market. Franklin Covey Co. (FC) moved with change of +0.06% to $31.35 with the total traded volume of 21,055 shares in recent session versus to an average volume of 30,073. After opening the first trading session at $31.37, it registered a day’s high of $31.81 and touched a day’s low of $30.74.

Franklin Covey Co. (FC) recently reported financial results for its second quarter of fiscal 2019, which ended on February 28, 2019.

Financial Overview

The following is a summary of key financial results for the quarter ended February 28, 2019:

  • Net Sales: Consolidated revenue for the second quarter of fiscal 2019 raised 8% to $50.4M, an raise of $3.8M, contrast with net sales of $46.5M in the second quarter of fiscal 2018. Not Including the impact of foreign exchange, the Company’s consolidated sales grew 10% contrast with the previousyear. Enterprise Division sales raised 8% to $39.3M, a $3.0M raise contrast with $36.3M in last year’s second quarter. Not Including the impact of foreign exchange, Enterprise Division sales grew 10% contrast with the previous year. Enterprise Division sales were favorably influenced by raised direct office revenues, both domestically and internationally, as well as by growth in its government services revenues. The second quarter acquisition of the licensee that served Germany, Switzerland, and Austria (GSA) added $0.5M of new international direct offices revenues and is predictable to provide important future growth opportunities. Education Division revenues also raised 8% to $9.7M, an raise of $0.7M, contrast with $9.0M in the second quarter of fiscal 2018.
  • Adoption of ASC 606: On September 1, 2018, the Company adopted the new revenue recognition rules found in Accounting Standards Codification (ASC) Topic 606. The adoption of this standard raised stated sales by $0.5M, primarily in the Education Division, and reduced the loss from operations by $0.4M during the quarter ended February 28, 2019. The financial statement results referenced in this press release include the impact of the adoption of ASC Topic 606.
  • Deferred Subscription Revenue and Unbilled Deferred Revenue: During the second quarter of fiscal 2019, the Company’s subscription and subscription-related revenue grew 16% to $23.4M contrast with $20.2M in the second quarter of the previous year. At February 28, 2019, the Company had $64.5M of billed and unbilled deferred subscription revenue, a 36% raise, or $17.0M, over $47.5M at the end of last year’s second quarter. The Company’s balance of deferred subscription revenue (billed) grew 23% in the second quarter to $39.6M, an raise of $7.5M contrast with the end of last year’s second quarter. The Company’s balance of unbilled deferred subscription revenue raised to $25.0M at February 28, 2019, which represents a 61%, or $9.5M raise over unbilled deferred revenue at the end of last year’s second quarter. Unbilled deferred revenue represents business that is contracted but unbilled and excluded from the Company’s balance sheet.
  • Gross profit: Second quarter 2019 gross profit raised 8% to $35.4M contrast with $32.7M in the previous year. The raise in gross profit was primarily Because of raised sales as described above. The Company’s gross margin for the quarter ended February 28, 2019 remained strong at 70.2 percent of sales contrast with 70.3 percent in the second quarter of fiscal 2018.
  • Operating Expenses: Although the Company’s selling, general, and administrative (SG&A) expenses for the quarter raised by $0.8M contrast with the previous year, as a percentage of revenue, SG&A expenses improved to 71.3% contrast with 75.4% in the second quarter of fiscal 2018. The raise in SG&A expense was primarily related to raised associate costs resulting from raised commissions on higher sales and the addition of GSA personnel, who were formerly employed by a licensee.
  • Operating Income (Loss): The Company stated a loss from operations for the second quarter, but its loss improved by $1.6M to $(3.6)M contrast with $(5.1)M in the second quarter of the previous year. Not Including the impact of foreign exchange, the Company’s operating loss improved by $2.0M contrast with the previous year.
  • Adjusted EBITDA: Adjusted EBITDA for the second quarter improved $1.6M to $1.0M, contrast with a loss of $(0.7)M in the second quarter of fiscal 2018. In constant currency, Adjusted EBITDA in the second quarter improved $2.1M contrast to the second quarter of fiscal 2018.
  • Income Taxes: The lower tax benefit rate in the second quarter of fiscal 2019 was primarily Because of changes resulting from the 2017 Tax Act, and included a reduced U.S. statutory rate, tax expense from Global Intangible Low-taxed Income, nondeductible expenses, and effective foreign tax rates which were importantly higher than the U.S. federal statutory rate. In addition, the Company recorded a one-time income tax benefit of $1.2M during the second quarter of fiscal 2018 as a provisional estimate of the effects of the 2017 Tax Act.
  • Net Income (Loss): The Company stated a second quarter 2019 net loss of $(3.5)M contrast with a net loss of $(2.7)M in the second quarter of fiscal 2018, reflecting the sharply reduced income tax benefit described above.
  • Cash Flows from Operating Activities: The Company’s cash flows from operating activities raised 43%, or $4.0M, to $13.4M through the first two quarters of fiscal 2019, contrast with $9.4M through the first two quarters of fiscal 2018.
  • Cash and Liquidity Remain Strong: The Company’s balance sheet and liquidity position remained strong with $13.1M of cash at February 28, 2019, contrast with $10.2M at August 31, 2018. At February 28, 2019, the Company had $21.6M of accessible borrowing on its revolving line of credit facility.
  • Fiscal 2019 Outlook: The Company reaffirms its before reported Adjusted EBITDA guidance for fiscal 2019, which is predictable to be in the range of $18M to $22M, not including the impact of foreign exchange, contrast with $11.9M in fiscal 2018.

The stock price is going above to its 52 week low with 52.77% and lagging behind from its 52 week high with -4.33%. Net profit margin of the firm was recorded at -2.60% and operating profit margin was calculated at 0.40% while gross profit margin was measured as 71.50%. Beta factor, which measures the riskiness of the security, was registered at 0.80.

Leave a Reply

Your email address will not be published. Required fields are marked *