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Franklin Covey Co. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: January 10, 2013 07:03PM
Franklin Covey Co. (FC) filed Quarterly Report for the period ended 2012-12-01. Franklin Covey Company has a market cap of $236.7 million; its shares were traded at around $13.0185 with a P/E ratio of 28.7 and P/S ratio of 1.3.
Highlight of Business Operations:Our first fiscal quarter includes the months of September, October, and November. The first quarter of fiscal 2013, which ended on December 1, 2012, was the strongest first quarter ever for our current business model, and continued the growth and favorable momentum that we experienced during fiscal 2012 as sales increased in all of our major delivery channels compared with the prior year. Our consolidated sales increased to $44.1 million in the first quarter of fiscal 2013 compared with $39.5 million in the first quarter of fiscal 2012. Our income from operations for the quarter improved to $5.3 million compared with $3.7 million in the first quarter of fiscal 2012 and our income before income taxes also increased to $4.7 million compared with $3.1 million in the prior year. These improvements flowed through to net income, which increased to $2.9 million, or $.15 per diluted share, compared with $1.7 million, or $.09 per diluted share, in the first quarter of fiscal 2012.
Selling, General and Administrative – Our selling, general, and administrative (SG&A) expenses increased $1.6 million compared to the prior year as we continue to make investments in the business that we believe will improve our financial results in future periods. However, as a percent of sales, SG&A expenses decreased to 52.1 percent of sales in the first quarter of fiscal 2013 compared with 54.1 percent of sales in the prior year. The increase in SG&A expenses was primarily due to 1) a $2.3 million increase in associate costs primarily related to the addition of new sales-related personnel and increased commissions on higher sales; and 2) a $0.3 million increase in advertising and promotional costs that were primarily related to new strategic initiatives that we believe had a favorable impact on the current quarter s sales. These increases were partially offset by a $0.7 million decrease in non-cash share-based compensation, due to the full amortization of awards granted in prior periods, and decreases in various other expense categories.
Considering the foregoing, we anticipate that our existing capital resources should be adequate to enable us to maintain our operations for at least the upcoming twelve months. However, our ability to maintain adequate capital for our operations in the future is dependent upon a number of factors, including sales trends, macroeconomic activity, our ability to contain costs, levels of capital expenditures, collection of accounts receivable, and other factors. Some of the factors that influence our operations are not within our control, such as general economic conditions and the introduction of new curriculums and technology by our competitors. We will continue to monitor our liquidity position and may pursue additional financing alternatives, as described above, to maintain sufficient resources for future growth and capital requirements. However, there can be no assurance such financing alternatives will be available to us on acceptable terms, or at all.
Stocks Discussed: FC,