Franklin Covey(US:FC)2024-07-08 19:23Financial Performance - Consolidated revenue for the quarter ended May 31, 2024, increased to $73.4 million, up from $71.4 million in the prior year, representing a growth of 2.8%[30] - Gross profit for the quarter ended May 31, 2024, was $56.2 million, compared to $54.2 million in the same quarter of fiscal 2023, with a gross margin increase to 76.6% from 75.9%[31] - Adjusted EBITDA for the quarter ended May 31, 2024, was $13.9 million, an increase from $11.9 million in the prior year, reflecting a growth of 16.8%[55] - Subscription and subscription services revenues reached $60.8 million, a 6% increase over the third quarter of fiscal 2023, with deferred subscription revenue increasing 15% to $83.8 million[60] - For the quarter ended May 31, 2024, Direct Office segment revenue totaled $49.3 million, a decrease from $50.4 million in fiscal 2023, while AAP subscription revenue grew 4% year-over-year to $42.6 million[64] - Education Division revenue increased by 8%, or $3.8 million, compared to the first three quarters of fiscal 2023, driven by classroom and training materials, membership subscriptions, and international royalties[72] Cash Flow and Liquidity - Cash flows from operating activities for the first three quarters of fiscal 2024 increased to $38.4 million, compared to $25.9 million in the same period of fiscal 2023, marking a 48.5% increase[32] - Cash provided by operating activities increased by $12.4 million to $38.4 million in the first three quarters of fiscal 2024, compared to $25.9 million in the prior year, attributed to strong collections of accounts receivable[76] - As of May 31, 2024, the company had nearly $100 million in available liquidity, consisting of $36.6 million in cash and an undrawn $62.5 million line of credit[62] Margins and Expenses - Direct Office gross margin improved to 81.4% of sales compared to 80.6% in the prior year, driven by a favorable mix of services and products sold[40] - Education Division gross margin improved to 65.6% of sales, up from 64.0% in the prior year, due to better margins on classroom materials and a favorable mix of services[67] - SG&A expenses for the Education Division decreased by $1.8 million compared to the prior year, reflecting cost management efforts[71] Taxation - The effective income tax rate for the third quarter of fiscal 2024 was 31.6%, slightly higher than the 30.7% in fiscal 2023, primarily due to nondeductible expenses[61] - The effective tax rate for the third quarter of fiscal 2024 was 31.6%, compared to 30.7% in fiscal 2023, primarily due to non-deductible expenses[69] Other Factors - International licensees' revenue decreased by 3% during the first three quarters of fiscal 2024, attributed to a 3% decrease in royalty revenues[41] - Amortization expense for the first three quarters of fiscal 2024 was $3.2 million, a slight decrease from $3.3 million in the prior year[43] - AAP subscription revenue retention levels remained strong at over 90% during the third quarter[64] - The fluctuation of foreign exchange rates had a $0.3 million adverse impact on Direct Office revenue for the quarter ended May 31, 2024[64] - The company anticipates strong cash flows from operating activities to continue for the remainder of fiscal 2024[76]