Franklin Covey(US:FC)2022-01-06 16:00Financial Performance - Consolidated sales for the first quarter of fiscal 2022 increased 27% to $61.3 million compared to $48.3 million in fiscal 2021[57] - All Access Pass and related sales increased 27% to $33.1 million in the first quarter of fiscal 2022[57] - Education Division revenues grew 56% due to increased Leader in Me subscription sales and related services[59] - Gross profit for the first quarter of fiscal 2022 was $47.6 million, with a gross margin improvement to 77.7% from 75.3% in the prior year[64] - Net income for the first quarter of fiscal 2022 was $3.8 million, or $0.27 per diluted share, compared to a net loss of $(0.9) million in the prior year[67] - Adjusted EBITDA for the first quarter increased 167% to $9.9 million compared to $3.7 million in the prior year[67] - Deferred subscription revenue increased 19% to $67.8 million compared to the prior year[63] - Direct Office segment revenue increased 23% to $45.1 million, driven by strong performance in the U.S. and Canada[69] - International licensee revenues increased 15% due to improving economic conditions in many licensee countries[58] Cash Flow and Expenditures - Cash flows from operating activities were strong at $10.2 million for the quarter, with $51.3 million in cash and no borrowings[68] - Cash and cash equivalents as of November 30, 2021, totaled $51.3 million, with no borrowings on the $15 million revolving credit facility[83] - Cash provided by operating activities was $10.2 million, slightly down from $10.9 million in the first quarter of fiscal 2021[86] - Cash used for investing activities was $0.8 million, primarily for property and equipment purchases[87] - The company expects capital expenditures for fiscal 2022 to total approximately $4.8 million, including $5 million for curriculum development[88][89] Education Division Performance - Education Division sales for the quarter ended November 30, 2021, were $11.7 million, a 56% increase from $7.5 million in the same quarter of the previous year[76] - Gross profit for the Education Division increased to $7.86 million, representing a gross margin of 67.2%, up from 53.2% in the prior year[76][78] - SG&A expenses rose to $7.63 million, accounting for 65.2% of sales, compared to 83.6% in the previous year[76][79] - Adjusted EBITDA improved to $235,000, a significant recovery from a loss of $2.29 million in the same quarter last year[76] Tax and Interest Rates - The effective income tax rate for the quarter was 25.5%, with a provision of $1.3 million compared to $0.2 million in the prior year[82] - The effective interest rate on term loans and the line of credit facility was 2.4% as of November 30, 2021[106] - A 1% increase in the effective interest rate on term loans would result in approximately $0.1 million of additional interest expense over the next 12 months[106] - The financing obligation has a fixed interest rate of 7.7%[106] Market and Operational Risks - The market price of the common stock has been volatile, influenced by quarter-to-quarter variations in revenues and earnings[104] - The company faces risks related to competition, consumer acceptance of new products, and potential cybersecurity threats[103] - Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially[105] - The company has long-term obligations primarily consisting of term loans, a long-term lease agreement, and contingent consideration from acquisitions[106] - The company anticipates potential lingering effects from the COVID-19 pandemic on its business operations[101] - The company expects to maintain adequate capital for operations for at least the upcoming 12 months[101] Program Utilization - The Leader in Me program is currently utilized in nearly 3,000 schools across the United States and Canada, indicating strong market penetration[77]