On Tuesday, Shares of () inclined 1.03% to $31.33. The stock traded total volume of 15.738K shares lower than the average volume of 29.84K shares.

Franklin Covey Co. () recently stated a loss of $3.50M in its fiscal second quarter.

Financial Overview:

  • Net Sales: Consolidated revenue for the second quarter of fiscal 2019 increased 8% to $50.40M, a boost of $3.80M, contrasts with net sales of $46.50M in the second quarter of fiscal 2018. Excluding the impact of foreign exchange, the Company’s consolidated sales grew 10% contrast with the prior year. Enterprise Division sales increased 8% to $39.30M, a $3.00M increase contrast with $36.30M in last year’s second quarter. Excluding the impact of foreign exchange, Enterprise Division sales grew 10% contrast with the prior year. Enterprise Division sales were favorably influenced by increased 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 $0.50M of new international direct offices revenues and is expected to provide noteworthy future growth opportunities. Education Division revenues also increased 8% to $9.70M, a boost of $0.70M, contrast with $9.00M in the second quarter of fiscal 2018.
  • 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 $23.40M contrast with $20.20M in the second quarter of the prior year. At February 28, 2019, the Company had $64.50M of billed and unbilled deferred subscription revenue, a 36% increase, or $17.00M, over $47.50M 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 $39.60M, a boost of $7.50M contrast with the end of last year’s second quarter. The Company’s balance of unbilled deferred subscription revenue increased to $25.00M at February 28, 2019, which represents a 61% or $9.50M increase 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 increased 8% to $35.40M contrast with $32.70M in the prior year. The increase in gross profit was mainly because of increased 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 increased by $0.80M contrast with the prior 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 increase in SG&A expense was mainly related to increase associate costs resulting from increased 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 $1.60M to $(3.60)M contrast with $(5.10)M in the second quarter of the prior year. Excluding the impact of foreign exchange, the Company’s operating loss improved by $2.00M contrast with the prior year.
  • Adjusted EBITDA: Adjusted EBITDA for the second quarter improved $1.60M to $1.00M, contrast with a loss of $(0.70)M in the second quarter of fiscal 2018. In constant currency, Adjusted EBITDA in the second quarter improved $2.10M contrast to the second quarter of fiscal 2018.
  • Net Income (Loss): The Company stated a second quarter 2019 net loss of $(3.50)M contrast with a net loss of $(2.70)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 increased 43%, or $4.00M, to $13.40M through the first two quarters of fiscal 2019, contrast with $9.40M through the first two quarters of fiscal 2018.
  • Cash and Liquidity Remain Strong: The Company’s balance sheet and liquidity position remained strong with $13.10M of cash at February 28, 2019, contrast with $10.20M at August 31, 2018. At February 28, 2019, the Company had $21.60M of available borrowing on its revolving line of credit facility.
  • Fiscal 2019 Outlook: The Company reaffirms its formerly declared Adjusted EBITDA guidance for fiscal 2019, which is expected to be in the range of $18.0M to $22.0M, excluding the impact of foreign exchange, contrast with $11.90M in fiscal 2018.

Fiscal 2019 Year-to-Date Financial Results:

Consolidated revenue for the first two quarters of fiscal 2019 increased 10% to $104.20M contrast with $94.50M in the first half of fiscal 2018. Excluding the impact of foreign exchange, the Company’s sales grew 11% over the first two quarters of the prior year. Enterprise Division sales increased 10% to $81.50M contrast with $73.80M for the first two quarters of fiscal 2018. Excluding the impact of foreign exchange, Enterprise Division sales increased 12% over the first half of fiscal 2018. Enterprise Division sales were favorably influenced by increased direct office revenues; both domestically and internationally, increased government services sales, and increased international licensee revenues. Education Division revenues also increased 10% to $20.00M contrast with $18.20M in the first two quarters of the prior year. Consolidated gross profit for the first two quarters of fiscal 2019 was $72.10M contrast with $65.60M in the first two quarters of the prior year. Gross margin for the first half of fiscal 2019 was consistent with the prior year at 69.2% contrast with 69.4% in the first half of fiscal 2018.

Selling, general, and administrative expenses for the first two quarters of fiscal 2018 increased $1.60M contrast with the first half of fiscal 2018, but reduced as a percent of revenue to 67.7% contrast with 72.9% in the first two quarters of fiscal 2018. The increase was mainly because of increased commissions on higher sales, new sales and sales related personnel, and personnel at the Company’s new GSA direct office. Depreciation expense increased $1.00M mainly from noteworthy information systems investments in fiscal 2018. The Company’s loss from operations through February 28, 2019 improved to $(4.20)M contrast with a loss of $(8.40)M in the first half of fiscal 2018. Adjusted EBITDA for the two quarters ended February 28, 2019 improved $4.20M to $4.10M contrast with a $(0.10)M loss through the first two quarters of fiscal 2018. Excluding the impact of foreign currency, Adjusted EBITDA for the first half of fiscal 2019 increased $4.80M contrast with the prior year. Net loss for the first two quarters of fiscal 2018 was $(4.90)M, or $(.35) per share, contrast with a $(5.10)M loss, or $(.37) per share, in the first half of fiscal 2018.

FC has the market capitalization of $441.44M and its EPS growth ratio for the past five years was -21.80%. The return on assets ratio of the Company was -2.80% while its return on investment ratio stands at -4.30%. Price to sales ratio was 2.01 while 45.00% of the stock was owned by institutional investors.

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