Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Nov. 30, 2023 | Dec. 31, 2023 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --08-31 | |
Document Fiscal Year Focus | 2024 | |
Document Quarterly Report | true | |
Document Period End Date | Nov. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-11107 | |
Entity Registrant Name | FRANKLIN COVEY CO. | |
Entity Incorporation, State or Country Code | UT | |
Entity Tax Identification Number | 87-0401551 | |
Entity Address, Address Line One | 2200 West Parkway Boulevard | |
Entity Address, City or Town | Salt Lake City | |
Entity Address, State or Province | UT | |
Entity Address, Postal Zip Code | 84119-2099 | |
City Area Code | 801 | |
Local Phone Number | 817-1776 | |
Title of 12(b) Security | Common Stock, $0.05 Par Value | |
Trading Symbol | FC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 13,286,172 | |
Amendment Flag | false | |
Entity Central Index Key | 0000886206 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Nov. 30, 2023 | Aug. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 33,959 | $ 38,230 |
Accounts receivable, less allowance for doubtful accounts of $3,753 and $3,790 | 59,860 | 81,935 |
Inventories | 4,117 | 4,213 |
Prepaid expenses and other current assets | 19,306 | 20,639 |
Total current assets | 117,242 | 145,017 |
Property and equipment, net | 9,517 | 10,039 |
Intangible assets, net | 39,443 | 40,511 |
Goodwill | 31,220 | 31,220 |
Deferred income tax assets | 1,679 | 1,661 |
Other long-term assets | 19,721 | 17,471 |
Total assets | 218,822 | 245,919 |
Current liabilities: | ||
Current portion of notes payable | 4,585 | 5,835 |
Current portion of financing obligation | 3,627 | 3,538 |
Accounts payable | 5,667 | 6,501 |
Deferred subscription revenue | 83,484 | 95,386 |
Other deferred revenue | 16,023 | 12,137 |
Accrued liabilities | 21,300 | 28,252 |
Total current liabilities | 134,686 | 151,649 |
Notes payable, less current portion | 1,556 | 1,535 |
Financing obligation, less current portion | 3,478 | 4,424 |
Other liabilities | 7,590 | 7,617 |
Deferred income tax liabilities | 1,011 | 2,040 |
Total liabilities | 148,321 | 167,265 |
Shareholders’ equity: | ||
Common stock, $.05 par value; 40,000 shares authorized, 27,056 shares issued | 1,353 | 1,353 |
Additional paid-in capital | 224,701 | 232,373 |
Retained earnings | 104,653 | 99,802 |
Accumulated other comprehensive loss | (936) | (987) |
Treasury stock at cost, 13,782 shares and 13,974 shares | (259,270) | (253,887) |
Total shareholders’ equity | 70,501 | 78,654 |
Total liabilities and shareholders' equity | $ 218,822 | $ 245,919 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Nov. 30, 2023 | Aug. 31, 2023 |
Condensed Consolidated Balance Sheets [Abstract] | ||
Allowance for doubtful accounts | $ 3,753 | $ 3,790 |
Common stock, par value | $ 0.05 | $ 0.05 |
Common stock, shares authorized | 40,000 | 40,000 |
Common stock, shares issued | 27,056 | 27,056 |
Treasury stock, shares | 13,782 | 13,974 |
Condensed Consolidated Income S
Condensed Consolidated Income Statements And Statements Of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Nov. 30, 2023 | Nov. 30, 2022 | |
Condensed Consolidated Income Statements And Statements Of Comprehensive Income [Abstract] | ||
Net sales | $ 68,399 | $ 69,369 |
Cost of sales | 16,122 | 16,627 |
Gross profit | 52,277 | 52,742 |
Selling, general, and administrative | 44,786 | 44,012 |
Depreciation | 1,091 | 1,246 |
Amortization | 1,071 | 1,092 |
Income from operations | 5,329 | 6,392 |
Interest income | 288 | 81 |
Interest expense | (341) | (410) |
Income before income taxes | 5,276 | 6,063 |
Income tax provision | (425) | (1,396) |
Net income | $ 4,851 | $ 4,667 |
Net income per share: | ||
Basic | $ 0.37 | $ 0.34 |
Diluted | $ 0.36 | $ 0.32 |
Weighted average number of common shares: | ||
Basic | 13,244 | 13,877 |
Diluted | 13,636 | 14,507 |
COMPREHENSIVE INCOME | ||
Net income | $ 4,851 | $ 4,667 |
Foreign currency translation adjustments, net of income taxes of $0 and $0 | 51 | (130) |
Comprehensive income | $ 4,902 | $ 4,537 |
Condensed Consolidated Income_2
Condensed Consolidated Income Statements And Statements Of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2023 | Nov. 30, 2022 | |
Condensed Consolidated Income Statements And Statements Of Comprehensive Income [Abstract] | ||
Foreign currency translation adjustments, income taxes | $ 0 | $ 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2023 | Nov. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 4,851 | $ 4,667 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 2,162 | 2,338 |
Amortization of capitalized curriculum costs | 691 | 843 |
Stock-based compensation | 2,897 | 2,735 |
Deferred income taxes | (1,048) | 393 |
Change in fair value of contingent consideration liabilities | 7 | |
Amortization of right-of-use operating lease assets | 199 | 203 |
Changes in assets and liabilities: | ||
Decrease in accounts receivable, net | 22,097 | 15,144 |
Decrease in inventories | 100 | 38 |
Decrease in prepaid expenses and other assets | 996 | 2,306 |
Decrease in accounts payable and accrued liabilities | (7,984) | (14,098) |
Decrease in deferred revenue | (7,981) | (11,501) |
Increase in income taxes payable | 557 | 31 |
Decrease in other long-term liabilities | (99) | (89) |
Net cash provided by operating activities | 17,438 | 3,017 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (1,072) | (1,240) |
Curriculum development costs | (2,668) | (974) |
Net cash used for investing activities | (3,740) | (2,214) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Principal payments on notes payable | (1,250) | (1,250) |
Principal payments on financing obligation | (855) | (774) |
Purchases of common stock for treasury | (16,308) | (835) |
Payment of contingent consideration liabilities | (429) | |
Proceeds from sales of common stock held in treasury | 356 | 367 |
Net cash used for financing activities | (18,057) | (2,921) |
Effect of foreign currency exchange rates on cash and cash equivalents | 88 | (247) |
Net decrease in cash and cash equivalents | (4,271) | (2,365) |
Cash and cash equivalents at the beginning of the period | 38,230 | 60,517 |
Cash and cash equivalents at the end of the period | 33,959 | 58,152 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | 822 | 836 |
Cash paid for interest | 337 | 372 |
Non-cash investing and financing activities: | ||
Purchases of property and equipment financed by accounts payable | 45 | 213 |
Acquisition of right-of-use operating lease assets for operating lease liabilities | $ 121 | $ 128 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements Of Changes In Shareholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Treasury Stock [Member] | Total |
Beginning balance, shares at Aug. 31, 2022 | 27,056,000 | |||||
Beginning balance at Aug. 31, 2022 | $ 1,353 | $ 220,246 | $ 82,021 | $ (542) | ||
Beginning balance, shares, Treasury at Aug. 31, 2022 | (13,203,000) | |||||
Beginning balance, Treasury at Aug. 31, 2022 | $ (220,264) | |||||
Issuance of common stock from treasury, shares | 56,000 | |||||
Issuance of common stock from treasury | (568) | $ 935 | ||||
Purchases of common shares for treasury, shares | (18,000) | |||||
Purchases of common shares for treasury | $ (835) | |||||
Stock-based compensation | 2,735 | |||||
Cumulative translation adjustments | (130) | $ (130) | ||||
Net income | 4,667 | 4,667 | ||||
Ending balance, shares at Nov. 30, 2022 | 27,056,000 | |||||
Ending balance at Nov. 30, 2022 | $ 1,353 | 222,413 | 86,688 | (672) | ||
Ending balance, shares, Treasury at Nov. 30, 2022 | (13,165,000) | |||||
Ending balance, Treasury at Nov. 30, 2022 | $ (220,164) | |||||
Beginning balance, shares at Aug. 31, 2023 | 27,056,000 | |||||
Beginning balance at Aug. 31, 2023 | $ 1,353 | 232,373 | 99,802 | (987) | $ 78,654 | |
Beginning balance, shares, Treasury at Aug. 31, 2023 | (13,974,000) | (13,974,000) | ||||
Beginning balance, Treasury at Aug. 31, 2023 | $ (253,887) | |||||
Issuance of common stock from treasury, shares | 601,000 | 600,717 | ||||
Issuance of common stock from treasury | (10,569) | $ 10,925 | ||||
Purchases of common shares for treasury, shares | (409,000) | (409,000) | ||||
Purchases of common shares for treasury | $ (16,308) | $ (16,308) | ||||
Stock-based compensation | 2,897 | |||||
Cumulative translation adjustments | 51 | 51 | ||||
Net income | 4,851 | 4,851 | ||||
Ending balance, shares at Nov. 30, 2023 | 27,056,000 | |||||
Ending balance at Nov. 30, 2023 | $ 1,353 | $ 224,701 | $ 104,653 | $ (936) | $ 70,501 | |
Ending balance, shares, Treasury at Nov. 30, 2023 | (13,782,000) | (13,782,000) | ||||
Ending balance, Treasury at Nov. 30, 2023 | $ (259,270) |
Basis Of Presentation
Basis Of Presentation | 3 Months Ended |
Nov. 30, 2023 | |
Basis Of Presentation [Abstract] | |
Basis Of Presentation | NOTE 1 – BASIS OF PRESENTATION Franklin Covey Co. (hereafter referred to as us, we, our, or the Company) is a global company focused on organizational performance improvement. Our mission is to “enable greatness in people and organizations everywhere,” and our global structure is designed to help individuals and organizations achieve sustained superior performance through changes in human behavior. We are fundamentally a content and solutions company, and we believe that our offerings and services create the connection between capabilities and results. We have a wide range of content delivery options, including: the All Access Pass (AAP) subscription, the Leader in Me membership, and other intellectual property licenses; digital online learning; onsite training; training led through certified facilitators; blended learning; and organization-wide transformational processes, including consulting and coaching. We believe our investments in digital delivery modalities over the past few years have enabled us to deliver our content to clients in a high-quality learning environment whether those clients are working remotely or meeting in a centralized location. We believe that our clients are able to utilize our content to create cultures whose hallmarks are high-performing, collaborative individuals, led by effective, trust-building leaders who execute with excellence and deliver measurably improved results for all of their key stakeholders. We have some of the best-known offerings in the training industry, including a suite of individual-effectiveness and leadership-development training content based on the best-selling books, The 7 Habits of Highly Effective People , The Speed of Trust , The Leader in Me , The 4 Disciplines of Execution , and Multipliers , and proprietary content in the areas of Leadership, Execution, Productivity, Educational Improvement, and Sales Performance. Our offerings are described in further detail at www.franklincovey.com . The information posted on our website is not incorporated into this report. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and results of operations of the Company as of the dates and for the periods indicated. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2023. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the quarter ended November 30, 2023 are not necessarily indicative of results expected for the entire fiscal year ending August 31, 2024, or for any future periods. |
Inventories
Inventories | 3 Months Ended |
Nov. 30, 2023 | |
Inventories [Abstract] | |
Inventories | NOTE 2 – INVENTORIES Inventories are stated at the lower of cost or net realizable value, cost being determined using the first-in, first-out method, and were comprised of the following (in thousands): November 30, August 31, 2023 2023 Finished goods $ 4,109 $ 4,204 Raw materials 8 9 $ 4,117 $ 4,213 |
Purchases Of Common Stock For T
Purchases Of Common Stock For Treasury | 3 Months Ended |
Nov. 30, 2023 | |
Purchases Of Common Stock For Treasury [Abstract] | |
Purchases Of Common Stock For Treasury | NOTE 3 – PURCHASES OF COMMON STOCK FOR TREASURY Our purchases of common stock during the first quarter of fiscal 2024 were comprised of shares withheld on stock-based compensation awards and open market purchases. Our stock-based compensation plans allow shares to be withheld to cover statutory income taxes if so elected by the award recipient. These shares are valued at the market price on the date the shares are withheld. Shares purchased during the first quarter of fiscal 2024 consisted of the following (in thousands): Shares Cost Shares withheld for taxes on stock- based compensation awards 252 $ 10,333 Open market purchases 157 5,975 409 $ 16,308 On February 14, 2023, our Board of Directors approved a new plan to purchase up to $ 50.0 million of our outstanding common stock. The previously existing common stock purchase plan was canceled, and the new common share purchase plan does not have an expiration date. The actual timing, number, and value of common shares purchased under our board-approved plan will be determined at our discretion and will depend on a number of factors, including, among others, general market and business conditions, the trading price of common shares, and applicable legal requirements. We have no obligation to purchase any of our common shares under the authorization, and the purchase plan may be suspended, discontinued, or modified at any time for any reason. On November 30, 2023, we had $ 9.8 million remaining on this Board approved purchase plan. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Nov. 30, 2023 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | NOTE 4 – REVENUE RECOGNITION Contract Balances Our deferred revenue totaled $ 103.3 million at November 30, 2023 and $ 111.2 million at August 31, 2023, of which $ 3.8 million and $ 3.7 million were classified as components of other long-term liabilities at November 30, 2023, and August 31, 2023, respectively. The amount of deferred revenue that was generated from subscription offerings totaled $ 87.2 million at November 30, 2023 and $ 99.0 million at August 31, 2023. During the quarter ended November 30, 2023, we recognized $ 36.6 million of previously deferred subscription revenue. Deferred subscription revenue primarily consists of billings or payments received in advance of revenue being recognized from subscription services. Deferred revenue is recognized in sales as the applicable revenue recognition criteria are met. We generally invoice customers in annual installments upon execution of a contract. With the Leader in Me offering, the contract includes both a subscription membership and onsite consulting which can be invoiced to the client in one lump sum. In this circumstance, the entire lump sum is included in deferred subscription revenue. The deferred subscription revenue related to the Leader in Me membership is recognized as revenue over the life of the contract whereas the consulting is recognized when the service takes place. Remaining Performance Obligations Whenever possible, we enter into multi-year non-cancellable contracts which are invoiced either upon execution of the contract or at the beginning of each annual contract period. Remaining transaction price represents contracted revenue that has not yet been recognized, including unearned revenue and unbilled amounts that will be recognized as revenue in future periods. Transaction price is influenced by factors such as inflation, the average length of the contract term, and the ability of the Company to continue to enter into multi-year non-cancellable contracts. At November 30, 2023, we had $ 169.7 million of remaining performance obligations, including our deferred subscription revenue. The remaining performance obligation does not include other deferred revenue, as amounts included in other deferred revenue contain items such as deposits that are generally refundable at the client’s request prior to the satisfaction of the obligation. Disaggregated Revenue Information Refer to Note 7, Segment Information , to these condensed consolidated financial statements for our disaggregated revenue information. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Nov. 30, 2023 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | NOTE 5 – STOCK-BASED COMPENSATION Our stock-based compensation was comprised of the following for the periods presented (in thousands): Quarter Ended November 30, November 30, 2023 2022 Long-term incentive awards $ 2,464 $ 2,339 Strive acquisition compensation 195 166 Unvested stock awards 180 165 Employee stock purchase plan 58 65 $ 2,897 $ 2,735 During the quarter ended November 30, 2023, we issued 600,717 shares of our common stock under various stock-based compensation arrangements, including our employee stock purchase plan (ESPP). Fiscal 2024 Long-Term Incentive Plan Award On October 6, 2023, the Compensation Committee granted a new Long-Term Incentive Plan (the 2024 LTIP) award to our executive officers and members of senior management. The fiscal 2024 LTIP award has two tranches, one with a time-based vesting condition and one with a performance-based vesting condition as described below: Time-Based Award Shares – Twenty-five percent of the 2024 LTIP award shares vest to participants on August 31, 2026. The number of shares that may be earned by participants at the end of the service period totals 28,272 shares. The number of shares awarded in this tranche does not fluctuate based on the achievement of financial measures. Performance-Based Award Shares – The remaining shares of the fiscal 2024 LTIP award are earned based on the highest rolling four-quarter level of qualified Adjusted EBITDA achieved in the three-year measurement period ending on August 31, 2026. The number of shares that will vest to participants for this tranche is variable and may be 50 % of the award (minimum award threshold) or up to 200 % of the participant’s award (maximum threshold) depending on the level of qualified Adjusted EBITDA achieved. The number of shares that may be earned for achieving 100 % of the performance-based objective totals 84,784 shares. The maximum number of shares that may be awarded in connection with the performance-based tranche of the 2024 LTIP totals 169,568 shares. Annual Long-Term Incentive Performance and Retention Plan In fiscal 2023, we introduced a new long-term equity incentive plan for client partners, managing directors, and certain other associates that we believe are critical to our long-term success. These awards are generally based on the achievement of specified sales goals, are granted following the completion of the fiscal year, and one-third of the shares vest on August 31 of each year following the grant. We granted a total of 48,740 unvested share units in the first quarter of fiscal 2024 to participants in this long-term incentive plan for achievements in fiscal 2023, which will vest over the next three years . The compensation cost of these awards is included in the long-term incentive awards category in the preceding table. Employee Stock Purchase Plan We have an employee stock purchase plan that offers qualified employees the opportunity to purchase shares of our common stock at a price equal to 85 % of the average fair market value of our common stock on the last trading day of each fiscal quarter. During the quarter ended November 30, 2023, we issued 9,697 shares of our common stock to participants in the ESPP. |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Nov. 30, 2023 | |
Net Income Per Share [Abstract] | |
Net Income Per Share | NOTE 6 – NET INCOME PER SHARE The following schedule shows the calculation of net income per share for the periods presented (in thousands, except per-share amounts). Quarter Ended November 30, November 30, 2023 2022 Numerator for basic and diluted income per share: Net income $ 4,851 $ 4,667 Denominator for basic and diluted income per share: Basic weighted average shares outstanding 13,244 13,877 Effect of dilutive securities: Stock-based compensation awards 392 630 Diluted weighted average shares outstanding 13,636 14,507 EPS Calculations: Net income per share: Basic $ 0.37 $ 0.34 Diluted 0.36 0.32 |
Segment Information
Segment Information | 3 Months Ended |
Nov. 30, 2023 | |
Segment Information [Abstract] | |
Segment Information | NOTE 7 – SEGMENT INFORMATION Segment Information Our sales are primarily comprised of training and consulting services and our internal reporting and operating structure is currently organized around two divisions: the Enterprise Division, which consists of our Direct Office and International Licensee segments and the Education Division, which is comprised of our Education practice. Based on the applicable guidance, our operations consist of three reportable segments and one corporate services group. The following is a brief description of our reportable segments: Direct Offices – Our Direct Office segment has a depth of expertise in helping organizations solve problems that require changes in human behavior, including leadership, productivity, execution, trust, and sales performance. We have a variety of principle-based offerings that help build winning and profitable cultures. This segment includes our sales personnel that serve the United States and Canada; our international direct sales offices; our government services sales channel; and our book and audio sales. International Licensees – Our independently owned international licensees provide our offerings and services in countries where we do not have a directly-owned office. These licensee partners allow us to expand the reach of our services to large multinational organizations as well as smaller organizations in their countries. This segment’s sales are primarily comprised of royalty revenues received from these licensees. Education Practice – Centered around the principles found in The Leader in Me , the Education practice is dedicated to helping educational institutions build a culture that will produce great results. We believe these results are manifested by increases in student performance, improved school culture, decreased disciplinary issues, and increased teacher engagement and parental involvement. This segment includes our domestic and international Education practice operations, which are focused on sales to educational institutions such as elementary schools, high schools, and colleges and universities . Corporate and Other – Our corporate and other information includes leasing operations, shipping and handling revenues, royalty revenues from Franklin Planner Corp., and the cost of certain administrative functions. We have determined that the Company’s chief operating decision maker is the Chief Executive Officer, and the primary measurement tool used in business unit performance analysis is Adjusted EBITDA, which may not be calculated as similarly titled amounts disclosed by other companies. Adjusted EBITDA is a non-GAAP financial measure. For reporting purposes, our consolidated Adjusted EBITDA may be calculated as net income excluding interest, income taxes, depreciation expense, intangible asset amortization expense, stock-based compensation, and certain other charges such as restructuring costs. We reference this non-GAAP financial measure in our decision making because it provides supplemental information that facilitates consistent internal comparisons to the historical operating performance of prior periods and we believe it provides investors with greater transparency to evaluate operational activities and financial results. Our operations are not capital intensive and we do not own any manufacturing facilities or equipment. Accordingly, we do not allocate assets to the reportable segments for analysis purposes. Interest expense and interest income are primarily generated at the corporate level and are not allocated. Income taxes are likewise calculated and paid on a corporate level (except for entities that operate in foreign jurisdictions) and are not allocated for analysis purposes. We account for the following segment information on the same basis as the accompanying condensed consolidated financial statements (in thousands). Sales to Quarter Ended External Adjusted November 30, 2023 Customers Gross Profit EBITDA Enterprise Division: Direct offices $ 49,215 $ 39,501 $ 11,687 International licensees 3,378 3,052 1,896 52,593 42,553 13,583 Education practice 14,744 9,380 42 Corporate and eliminations 1,062 344 ( 2,656 ) Consolidated $ 68,399 $ 52,277 $ 10,969 Quarter Ended November 30, 2022 Enterprise Division: Direct offices $ 50,167 $ 39,921 $ 11,250 International licensees 3,278 2,977 1,831 53,445 42,898 13,081 Education practice 14,350 9,175 281 Corporate and eliminations 1,574 669 ( 1,890 ) Consolidated $ 69,369 $ 52,742 $ 11,472 A reconciliation of our consolidated Adjusted EBITDA to consolidated net income is provided below (in thousands). Quarter Ended November 30, November 30, 2023 2022 Segment Adjusted EBITDA $ 13,625 $ 13,362 Corporate expenses ( 2,656 ) ( 1,890 ) Consolidated Adjusted EBITDA 10,969 11,472 Stock-based compensation ( 2,897 ) ( 2,735 ) Restructuring ( 581 ) - Increase in the fair value of contingent consideration liabilities - ( 7 ) Depreciation ( 1,091 ) ( 1,246 ) Amortization ( 1,071 ) ( 1,092 ) Income from operations 5,329 6,392 Interest income 288 81 Interest expense ( 341 ) ( 410 ) Income before income taxes 5,276 6,063 Income tax provision ( 425 ) ( 1,396 ) Net income $ 4,851 $ 4,667 Revenue by Category The following table presents our revenue disaggregated by geographic region (in thousands). Quarter Ended November 30, November 30, 2023 2022 Americas $ 56,357 $ 56,743 Asia Pacific 7,221 7,458 Europe/Middle East/Africa 4,821 5,168 $ 68,399 $ 69,369 The following table presents our revenue disaggregated by type of service (in thousands). Quarter Ended Services and Leases and November 30, 2023 Products Subscriptions Royalties Other Consolidated Enterprise Division: Direct offices $ 22,126 $ 26,498 $ 591 $ - $ 49,215 International licensees 231 332 2,815 - 3,378 22,357 26,830 3,406 - 52,593 Education practice 3,734 9,757 1,253 - 14,744 Corporate and eliminations - - 313 749 1,062 Consolidated $ 26,091 $ 36,587 $ 4,972 $ 749 $ 68,399 Quarter Ended November 30, 2022 Enterprise Division: Direct offices $ 26,217 $ 23,490 $ 460 $ - $ 50,167 International licensees 143 352 2,783 - 3,278 26,360 23,842 3,243 - 53,445 Education practice 4,500 9,183 667 - 14,350 Corporate and eliminations - - 315 1,259 1,574 Consolidated $ 30,860 $ 33,025 $ 4,225 $ 1,259 $ 69,369 |
Basis Of Presentation (Policy)
Basis Of Presentation (Policy) | 3 Months Ended |
Nov. 30, 2023 | |
Basis Of Presentation [Abstract] | |
General | Franklin Covey Co. (hereafter referred to as us, we, our, or the Company) is a global company focused on organizational performance improvement. Our mission is to “enable greatness in people and organizations everywhere,” and our global structure is designed to help individuals and organizations achieve sustained superior performance through changes in human behavior. We are fundamentally a content and solutions company, and we believe that our offerings and services create the connection between capabilities and results. We have a wide range of content delivery options, including: the All Access Pass (AAP) subscription, the Leader in Me membership, and other intellectual property licenses; digital online learning; onsite training; training led through certified facilitators; blended learning; and organization-wide transformational processes, including consulting and coaching. We believe our investments in digital delivery modalities over the past few years have enabled us to deliver our content to clients in a high-quality learning environment whether those clients are working remotely or meeting in a centralized location. We believe that our clients are able to utilize our content to create cultures whose hallmarks are high-performing, collaborative individuals, led by effective, trust-building leaders who execute with excellence and deliver measurably improved results for all of their key stakeholders. We have some of the best-known offerings in the training industry, including a suite of individual-effectiveness and leadership-development training content based on the best-selling books, The 7 Habits of Highly Effective People , The Speed of Trust , The Leader in Me , The 4 Disciplines of Execution , and Multipliers , and proprietary content in the areas of Leadership, Execution, Productivity, Educational Improvement, and Sales Performance. Our offerings are described in further detail at www.franklincovey.com . The information posted on our website is not incorporated into this report. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and results of operations of the Company as of the dates and for the periods indicated. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2023. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the quarter ended November 30, 2023 are not necessarily indicative of results expected for the entire fiscal year ending August 31, 2024, or for any future periods. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Nov. 30, 2023 | |
Inventories [Abstract] | |
Components Of Inventories | November 30, August 31, 2023 2023 Finished goods $ 4,109 $ 4,204 Raw materials 8 9 $ 4,117 $ 4,213 |
Purchases Of Common Stock For_2
Purchases Of Common Stock For Treasury (Tables) | 3 Months Ended |
Nov. 30, 2023 | |
Purchases Of Common Stock For Treasury [Abstract] | |
Purchases Of Common Stock | Shares Cost Shares withheld for taxes on stock- based compensation awards 252 $ 10,333 Open market purchases 157 5,975 409 $ 16,308 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Nov. 30, 2023 | |
Stock-Based Compensation [Abstract] | |
Total Cost Of Stock-Based Compensation | Quarter Ended November 30, November 30, 2023 2022 Long-term incentive awards $ 2,464 $ 2,339 Strive acquisition compensation 195 166 Unvested stock awards 180 165 Employee stock purchase plan 58 65 $ 2,897 $ 2,735 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Nov. 30, 2023 | |
Net Income Per Share [Abstract] | |
Computation Of Net Income Per Share | Quarter Ended November 30, November 30, 2023 2022 Numerator for basic and diluted income per share: Net income $ 4,851 $ 4,667 Denominator for basic and diluted income per share: Basic weighted average shares outstanding 13,244 13,877 Effect of dilutive securities: Stock-based compensation awards 392 630 Diluted weighted average shares outstanding 13,636 14,507 EPS Calculations: Net income per share: Basic $ 0.37 $ 0.34 Diluted 0.36 0.32 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Nov. 30, 2023 | |
Segment Information [Abstract] | |
Schedule Of Segment Operations | Sales to Quarter Ended External Adjusted November 30, 2023 Customers Gross Profit EBITDA Enterprise Division: Direct offices $ 49,215 $ 39,501 $ 11,687 International licensees 3,378 3,052 1,896 52,593 42,553 13,583 Education practice 14,744 9,380 42 Corporate and eliminations 1,062 344 ( 2,656 ) Consolidated $ 68,399 $ 52,277 $ 10,969 Quarter Ended November 30, 2022 Enterprise Division: Direct offices $ 50,167 $ 39,921 $ 11,250 International licensees 3,278 2,977 1,831 53,445 42,898 13,081 Education practice 14,350 9,175 281 Corporate and eliminations 1,574 669 ( 1,890 ) Consolidated $ 69,369 $ 52,742 $ 11,472 |
Reconciliation Of Adjusted EBITDA | Quarter Ended November 30, November 30, 2023 2022 Segment Adjusted EBITDA $ 13,625 $ 13,362 Corporate expenses ( 2,656 ) ( 1,890 ) Consolidated Adjusted EBITDA 10,969 11,472 Stock-based compensation ( 2,897 ) ( 2,735 ) Restructuring ( 581 ) - Increase in the fair value of contingent consideration liabilities - ( 7 ) Depreciation ( 1,091 ) ( 1,246 ) Amortization ( 1,071 ) ( 1,092 ) Income from operations 5,329 6,392 Interest income 288 81 Interest expense ( 341 ) ( 410 ) Income before income taxes 5,276 6,063 Income tax provision ( 425 ) ( 1,396 ) Net income $ 4,851 $ 4,667 |
Schedule Of Revenue Disaggregated By Category | The following table presents our revenue disaggregated by geographic region (in thousands). Quarter Ended November 30, November 30, 2023 2022 Americas $ 56,357 $ 56,743 Asia Pacific 7,221 7,458 Europe/Middle East/Africa 4,821 5,168 $ 68,399 $ 69,369 The following table presents our revenue disaggregated by type of service (in thousands). Quarter Ended Services and Leases and November 30, 2023 Products Subscriptions Royalties Other Consolidated Enterprise Division: Direct offices $ 22,126 $ 26,498 $ 591 $ - $ 49,215 International licensees 231 332 2,815 - 3,378 22,357 26,830 3,406 - 52,593 Education practice 3,734 9,757 1,253 - 14,744 Corporate and eliminations - - 313 749 1,062 Consolidated $ 26,091 $ 36,587 $ 4,972 $ 749 $ 68,399 Quarter Ended November 30, 2022 Enterprise Division: Direct offices $ 26,217 $ 23,490 $ 460 $ - $ 50,167 International licensees 143 352 2,783 - 3,278 26,360 23,842 3,243 - 53,445 Education practice 4,500 9,183 667 - 14,350 Corporate and eliminations - - 315 1,259 1,574 Consolidated $ 30,860 $ 33,025 $ 4,225 $ 1,259 $ 69,369 |
Inventories (Components Of Inve
Inventories (Components Of Inventories) (Details) - USD ($) $ in Thousands | Nov. 30, 2023 | Aug. 31, 2023 |
Inventories [Abstract] | ||
Finished goods | $ 4,109 | $ 4,204 |
Raw materials | 8 | 9 |
Inventories | $ 4,117 | $ 4,213 |
Purchases Of Common Stock For_3
Purchases Of Common Stock For Treasury (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Nov. 30, 2023 | Feb. 14, 2023 | |
Equity [Line Items] | ||
Shares withheld for taxes on stock-based compensation awards, Shares | 252 | |
Shares withheld for taxes on stock-based compensation awards, Value | $ 10,333 | |
Stock repurchased during period, shares | 157 | |
Stock repurchased during period, value | $ 5,975 | |
Purchase of treasury shares, shares | 409 | |
Purchase of treasury shares, cost | $ 16,308 | |
Remaining approved purchase amount | $ 9,800 | |
Maximum [Member] | ||
Equity [Line Items] | ||
Amount authorized under common stock repurchase plan | $ 50,000 |
Revenue Recognition (Narrative)
Revenue Recognition (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Nov. 30, 2023 | Aug. 31, 2023 | |
Deferred revenue | $ 103.3 | $ 111.2 |
Other long-term liabilities | 3.8 | 3.7 |
Remaining performance obligations | 169.7 | |
Subscription Offerings [Member] | ||
Deferred revenue | 87.2 | $ 99 |
Subscription [Member] | ||
Deferred revenue recognized | $ 36.6 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) | 3 Months Ended |
Nov. 30, 2023 item shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock issued from treasury stock | 600,717 |
Fiscal 2024, Long-Term Equity Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of tranches | item | 2 |
Annual Long-Term Incentive Performance And Retention Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period of awards | 3 years |
Shares issued under terms of the award | 48,740 |
Time-Based Award [Member] | Fiscal 2024, Long-Term Equity Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percent of performance award to be granted | 25% |
Shares may be awarded | 28,272 |
Number of tranches | item | 1 |
Performance Award [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares issued under terms of the award | 84,784 |
Performance Award [Member] | Fiscal 2024, Long-Term Equity Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of tranches | item | 1 |
Vesting period of awards | 3 years |
Percent of performance-based objectives | 100% |
Employee Stock Purchase Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Price of common stock as a percent of the average fair market value | 85% |
Shares issued to employee stock purchase plan participants | 9,697 |
Vest August 31 Of Each Year Following Grant [Member] | Annual Long-Term Incentive Performance And Retention Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percent of award shares vest | 33.30% |
Tranche One and Two [Member] | Performance Award [Member] | Fiscal 2024, Long-Term Equity Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares may be awarded | 169,568 |
Tranche One and Two [Member] | Performance Award [Member] | Minimum [Member] | Fiscal 2024, Long-Term Equity Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percent of performance award to be granted | 50% |
Tranche One and Two [Member] | Performance Award [Member] | Maximum [Member] | Fiscal 2024, Long-Term Equity Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percent of performance award to be granted | 200% |
Stock-Based Compensation (Total
Stock-Based Compensation (Total Cost Of Stock-Based Compensation) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2023 | Nov. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost | $ 2,897 | $ 2,735 |
Long-Term Incentive Awards [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost | 2,464 | 2,339 |
Strive Acquisition Compensation [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost | 195 | 166 |
Unvested Stock Awards [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost | 180 | 165 |
Employee Stock Purchase Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost | $ 58 | $ 65 |
Net Income Per Share (Computati
Net Income Per Share (Computation Of Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Nov. 30, 2023 | Nov. 30, 2022 | |
Numerator for basic and diluted income per share: | ||
Net income | $ 4,851 | $ 4,667 |
Denominator for basic and diluted income per share: | ||
Basic weighted average shares outstanding | 13,244 | 13,877 |
Effect of dilutive securities: | ||
Stock-based compensation awards | 392 | 630 |
Diluted weighted average shares outstanding | 13,636 | 14,507 |
EPS Calculations: | ||
Net income per share: Basic | $ 0.37 | $ 0.34 |
Net income per share: Diluted | $ 0.36 | $ 0.32 |
Segment Information (Narrative)
Segment Information (Narrative) (Details) | 3 Months Ended |
Nov. 30, 2023 item segment | |
Segment Information [Abstract] | |
Number of divisions | 2 |
Number of operating reportable segments | segment | 3 |
Number of corporate services group | 1 |
Segment Information (Schedule O
Segment Information (Schedule Of Segment Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2023 | Nov. 30, 2022 | |
Segment Reporting Information [Line Items] | ||
Sales to External Customers | $ 68,399 | $ 69,369 |
Gross Profit | 52,277 | 52,742 |
Adjusted EBITDA | 10,969 | 11,472 |
Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Adjusted EBITDA | 13,625 | 13,362 |
Operating Segments [Member] | Enterprise Division [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales to External Customers | 52,593 | 53,445 |
Gross Profit | 42,553 | 42,898 |
Adjusted EBITDA | 13,583 | 13,081 |
Operating Segments [Member] | Education Practice [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales to External Customers | 14,744 | 14,350 |
Gross Profit | 9,380 | 9,175 |
Adjusted EBITDA | 42 | 281 |
Operating Segments [Member] | Direct Offices [Member] | Enterprise Division [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales to External Customers | 49,215 | 50,167 |
Gross Profit | 39,501 | 39,921 |
Adjusted EBITDA | 11,687 | 11,250 |
Operating Segments [Member] | International Licensees [Member] | Enterprise Division [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales to External Customers | 3,378 | 3,278 |
Gross Profit | 3,052 | 2,977 |
Adjusted EBITDA | 1,896 | 1,831 |
Corporate And Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales to External Customers | 1,062 | 1,574 |
Gross Profit | 344 | 669 |
Adjusted EBITDA | $ (2,656) | $ (1,890) |
Segment Information (Reconcilia
Segment Information (Reconciliation Of Adjusted EBITDA) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2023 | Nov. 30, 2022 | |
Segment Reporting Information [Line Items] | ||
Consolidated Adjusted EBITDA | $ 10,969 | $ 11,472 |
Stock-based compensation | (2,897) | (2,735) |
Increase in the fair value of contingent consideration liabilities | (7) | |
Restructuring | (581) | |
Depreciation | (1,091) | (1,246) |
Amortization | (1,071) | (1,092) |
Income from operations | 5,329 | 6,392 |
Interest income | 288 | 81 |
Interest expense | (341) | (410) |
Income before income taxes | 5,276 | 6,063 |
Income tax provision | (425) | (1,396) |
Net income | 4,851 | 4,667 |
Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Consolidated Adjusted EBITDA | 13,625 | 13,362 |
Corporate And Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Consolidated Adjusted EBITDA | $ (2,656) | $ (1,890) |
Segment Information (Schedule_2
Segment Information (Schedule Of Revenue Disaggregated By Geographic Region) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2023 | Nov. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 68,399 | $ 69,369 |
Americas [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 56,357 | 56,743 |
Asia Pacific [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 7,221 | 7,458 |
Europe/Middle East/Africa [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 4,821 | $ 5,168 |
Segment Information (Schedule_3
Segment Information (Schedule Of Revenue Disaggregated By Type Of Service) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2023 | Nov. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 68,399 | $ 69,369 |
Services And Products [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 26,091 | 30,860 |
Subscriptions [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 36,587 | 33,025 |
Royalties [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 4,972 | 4,225 |
Leases And Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 749 | 1,259 |
Operating Segments [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 52,593 | 53,445 |
Operating Segments [Member] | Education Practice [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 14,744 | 14,350 |
Operating Segments [Member] | Direct Offices [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 49,215 | 50,167 |
Operating Segments [Member] | International Licensees [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 3,378 | 3,278 |
Operating Segments [Member] | Services And Products [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 22,357 | 26,360 |
Operating Segments [Member] | Services And Products [Member] | Education Practice [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 3,734 | 4,500 |
Operating Segments [Member] | Services And Products [Member] | Direct Offices [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 22,126 | 26,217 |
Operating Segments [Member] | Services And Products [Member] | International Licensees [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 231 | 143 |
Operating Segments [Member] | Subscriptions [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 26,830 | 23,842 |
Operating Segments [Member] | Subscriptions [Member] | Education Practice [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 9,757 | 9,183 |
Operating Segments [Member] | Subscriptions [Member] | Direct Offices [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 26,498 | 23,490 |
Operating Segments [Member] | Subscriptions [Member] | International Licensees [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 332 | 352 |
Operating Segments [Member] | Royalties [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 3,406 | 3,243 |
Operating Segments [Member] | Royalties [Member] | Education Practice [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 1,253 | 667 |
Operating Segments [Member] | Royalties [Member] | Direct Offices [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 591 | 460 |
Operating Segments [Member] | Royalties [Member] | International Licensees [Member] | Enterprise Division [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 2,815 | 2,783 |
Corporate And Eliminations [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 1,062 | 1,574 |
Corporate And Eliminations [Member] | Royalties [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 313 | 315 |
Corporate And Eliminations [Member] | Leases And Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 749 | $ 1,259 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2023 | Nov. 30, 2022 | |
Pay vs Performance Disclosure [Line Items] | ||
Net loss | $ 4,851 | $ 4,667 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Nov. 30, 2023 | |
Insider Trading Arrangements [Line Items] | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |