Franklin Covey Co. (FC) on Q3 2021 Results - Earnings Call Transcript

Company Representatives: Bob Whitman - Chairman, Chief Executive Officer Steve Young - Chief Financial Officer Paul Walker - President, Chief Operating Officer Sean Merrill Covey - President, Franklin Covey Education Jen Colosimo - President, Enterprise Division Derek Hatch - Corporate Controller Operator: Welcome to the Q3, 2021 Franklin Covey Earnings Conference Call. My name is Adrienne and I’ll be your operator for today’s call. . Please note this conference is being recorded. I’ll now turn the call over to Derek Hatch, Corporate Controller. Derek Hatch, you may begin. Derek Hatch: Thank you, Adrienne. Good afternoon, ladies and gentlemen. On behalf of Franklin Covey, I would like to welcome you to our conference call to discuss the third quarter of fiscal 2021 financial results and hope everyone is having a great summer. Bob Whitman: Thanks very much, Derek. Good afternoon, everyone. We are happy to have the opportunity to talk with you today. Really appreciate you joining us. We’re pleased to report, as you saw in the press release that our third quarter results were strong, and even stronger than expected. And we believe this again reflects the strength, power, quality and durability of our customer value proposition and of the high growth, durable subscription business model that we have created. Just some highlights. As shown on slide three, revenue was up 58% in the quarter and it was also greater than fiscal ‘19’s strong third quarter. Gross margin percentage was up 587 basis points. Our operating SG&A as a percentage of sales improved to 63.6%. Adjusted EBITDA increased $12.2 million in the quarter to $8.6 million. Our net cash from operating activities increased 65% to $30.9 million, and we ended the quarter with $51 million in liquidity even after making a major investment in the acquisition of Strive. Steve Young: Hey! Thank you, Bob, and good afternoon everyone. It’s nice to be with you, so I’ll just jump right in. As shown in slide 12 and as Bob talked about, our performance for the third quarter was stronger than expected and showed positive momentum on almost every front. As you know, our adjusted EBITDA for the third quarter was $8.6 million, an increase of $12.2 million compared to last year’s third quarter of negative $3.6 million and the amount substantially exceeding our expectation of adjusted EBITDA of between $4 million and $4.5 million. Importantly, this $8.6 million in adjusted EBITDA is also significantly higher than the $3.1 million of adjusted EBITDA achieved in the strong third quarter of FY ‘19. As also shown, both year-to-date and last 12 months adjusted EBITDA substantially exceeded that achieved in both FY ‘20 and FY ’19, and our last 12 months adjusted EBITDA of $26.3 million, as Bob said, it substantially exceeds our full year guidance of $20 million to $22 million for FY ‘21. Our cash flow and liquidity position also increased significantly. As you can see on slide 13, our net cash generated year-to-date through the third quarter was $11 million. This was $23.2 million higher than the negative $12.2 million of net cash generated in the last year’s third quarter and was also higher than the negative $4.8 million in net cash generated in FY ‘19 and this negative $7.2 million generated in FY ‘18. This increase in net cash generated reflects strong growth in adjusted EBITDA, and that our balance of billed and unbilled deferred revenue increased by almost $17.1 million or 25% to $96.6 million in the third quarter. Also as shown in slide 14, our cash flows from operating activities year-to-date for the three quarters ended in May 31, 2021 increased $12.1 million or 65% to $30.9 million compared to $18.6 million last year – or $18.7 million last year, $18.6 million through the third quarter of ‘19 and $8.6 million through the third quarter of ‘18. This strong cash flow reflects an additional benefit of our subscription model, specifically that we invoice upfront and collect the cash from invoice amounts even faster than we recognize all of the revenue. When there’s strong cash flow, we ended the quarter with $51 million in total liquidity compared to $36 million – which is comprised of cash of $36 million and $15 million of our revolving credit facility still undrawn and available, even after as Bob also said, paying the $10.6 million during this quarter related to the acquisition of Strive. This overall good performance was driven by first strong revenue growth. As shown in slide 15, our third quarter revenue was $58.7 million was not only higher than the $37.1 million in last year’s third quarter, but also higher than the $56 million of revenue achieved in the third quarter of FY ‘19. This strong revenue growth was driven in-part by very strong performance in our North American operations, driven by the continued outstanding performance of the All Access Pass. Additionally, as shown in chart one of slide 16, companywide All Access Pass subscription sales grew 17% in the third quarter, 15% year-to-date and 14% even during the last 12 months pandemic period. And in addition to the All Access Pass subscription revenue recognized in the quarter, chart two shows that we also achieved a very strong increase in our balance of All Access Pass deferred revenue which grew 26% or $9.1 million to $44.2 million in the third quarter. Our balance of All Access Pass deferred revenue not only grew substantially compared to last year’s third quarter, but consistent with many other measures was also 37% or $11.8 million higher than that achieved in the third quarter of FY ‘19 pre-pandemic. This All Access Pass deferred revenue will be recognized in future periods and help to accelerate our growth. This significant growth in All Access Pass deferred revenue resulted from: One, strong All Access Pass sales to new logos; two, a continued quarterly and last 12 months revenue retention rate of greater than 90% as shown in chart three; and a large number of All Access Pass expansions; and as shown in chart four, a significant volume of multiyear All Access Passes. Sales of All Access Pass subscription sales shown in slide 16 were also strong in the third quarter growing 136% compared to last year’s third quarter and up 37% compared to the third quarter of FY ‘19. Then second, as shown in slide 17, our strong All Access Pass sales drove significant growth in our gross margin percentage again in the third quarter. As shown, our gross margin percentage increased 587 basis points in the third quarter to 78.2%, up from 72.3% in the third quarter of FY ‘20 and up from 70.8% in the third quarter of FY ‘19. As also shown, year-to-date our gross margin percentage increased 514 basis points and has increased 489 basis points for the last 12 months. In the Enterprise Division, driven by the significant growth in the All Access Pass and related sales, our gross margin percentage increased to 81.5% compared to 78.1% in last year’s third quarter, an increase of 340 basis points and an increase of 713 basis points from the 74.3% in gross margin percentage achieved in the third quarter of FY ‘19. Third, as shown in slide 17, our operating SG&A in the third quarter was only 63.6% of revenue. This is a level significantly lower than the 82.1% of revenue in the prior year and also lower than the 65.3% of revenue in the third quarter of FY ‘19. Finally, the combination of these factors resulted in SG&A growing $8.6 million in the third quarter, an increase like we said of $12.2 million. This is a level significantly higher than the expectation of adjusted EBITDA of $4 million to $5 million for the quarter. The strong third quarter also resulted in adjusted EBITDA for the first nine months of FY ‘21 of $17.4 million and for the last 12 months of $26.3 million. As you noticed, in all of these we not only compared to FY ’20, but FY ’19, because FY ‘19 was such a good pre-pandemic year. I just wanted to show that we’re not only just rebounding from the pandemic, but also growing compared to pre-pandemic numbers. Importantly, as noted our balance sheet of billed and unbilled deferred revenue, which will add to and be recognized in future quarters, increased to $96.6 million, reflecting growth of $19.3 million or 25% compared to our balance of $77.3 million at the end of last year’s third quarter. This large balance of billed and unbilled deferred revenue will help us provide significant stability of and visibility into our future performance. This strong combination of factors continue to drive our expectation that we’ll achieve high rates of growth and adjusted EBITDA and cash flow in FY ‘21, FY ‘22 on an ongoing basis thereafter. So we’re very pleased with the result of the third quarter that is broad based in almost every area doing a little bit better or better than we expected. So Bob, I’ll turn it back over to you. Bob Whitman: Thanks Steve; Just a couple of points on looking forward. As we’ve discussed, substantially all our growth has been driven by growth in All Access Pass subscription and subscription services sales and the strong growth has continued throughout the pandemic. So we’ve shown and we expect All Access Pass to continue to drive in the future. So driven, we expect really that substantially all of the company’s sales will be subscription and subscription services within three to four years as we mentioned last quarter. Thought we’d give you a little background as the three bullet points as to why we think that’ll be the case. First, the growth, we expect All Access Pass subscriptions and subscription sales to continue to increase in our Enterprise Division in North America where those sales already account for 82%. As shown in slide 18, All Access Pass subscription and subscription services sales represented only 13% or $13.7 million of total sales in North America in 2016 when we first introduced the All Access Pass. Dramatic sustained compounded growth since then is really in All Access Pass and subscription services sales increasing to $103.2 million for the latest 12 months through this year’s third quarter. From reports that have been sent to us by others achieving $100 million in subscription and service revenue in only five years, it places us among a relatively elite group of SaaS companies actually with the media and time for those who actually make it to $100 million being around nine years. And as shown on slide 19, All Access Pass subscription and service sales now accounts for 82% of sales in North America with the continued expectation of double digit growth in All Access Pass revenue, and with legacy sales now at very low levels and expect it to remain flat or even decline a bit further, we expect All Access Pass and subscription services to increase to more than 90% of total North America enterprise sales over the next few years, so that’s the first big engine. The second major driver to having the business become almost totally subscription and subscription services, the expected conversion of the majority of our international operations to All Access Pass and subscription in the coming years. In addition, to the 82% in North America which were already there, we’ve also progressed rapidly in our English speaking direct offices. As you can see on slide 19 from having no subscription sales at all in these offices just five years ago, All Access Pass subscription and subscription service sales for the latest 12 months now accounts for 72% of total sales in the U.K. and 72% in Australia. Both these offices are well on their way toward the same 90% penetration we expect to achieve in North America. As you know, our largest international direct offices in China and Japan, both of which are in the early stages of conversion to All Access Pass, but importantly Japan this year will have a third of its sales of All Access Pass subscription and subscription services, and China has now begun selling new contracts, has entered some new large All Access Pass contracts and will start to be recognized. So I think we expect again, international will get to that same level. And finally the Education Division which represents as you know 22% of total sales, reported subscription sales already account for 65% of sales for the latest 12 months and we expect both K-12 and higher Ed to continue to advance toward 90% in subscription and subscription services in the coming years. So with the combination of all these, we expect the vast majority of the business to reflect the same high growth, high margin, high retention properties of our subscription operations in the coming few years and that’s really encouraging. Now, I’d just like to turn the time to Paul Walker to touch on three factors that we expect will continue to drive this growth and kind of the puts underlying it. Paul. Paul Walker: Thanks Bob and hello everyone. Good afternoon. I’ll briefly describe these three factors and then go into just a bit of depth on each. The first factor that we expect will continue to drive this significant growth in our subscription sales and profitability is that the already significant lifetime customer value of our All Access Pass holding organizations will continue to increase. The second factor is that as we continue to aggressively grow our salesforce and our licensee network, the volume of new high lifetime value All Access Pass logos will accelerate. And third, the recent acquisitions of Strive and then Jhana, which you’ll recall that we acquired in mid-2017. Together, they’re accelerating our ability to address larger and larger populations inside new and existing All Access Pass clients, further helping to accelerate the growth of the pass inside those organizations, and so just briefly discussing and describing these three in a bit more detail. First, All Access Pass and subscription services revenue will continue to climb and that will drive increasing lifetime customer value. As shown in slide 20, in our North American operations All Access Pass has first, a relatively large and continually increasing average pass size now at $43,000, which is up from $37,000 just a year ago. Second, an annual retention rate greater than 90%, which has been true all the way through the pandemic; and third, a subscription services attach rate of 48%, up from just 70% a few years ago. The combination of revenue from the All Access Pass subscription itself and from attached subscription services totaled approximately $61,000 per Pass holding customer in the third quarter, which was up 13% from $54,000 just a year ago. The blended gross margin on all of this continues to be greater than 85%, and these strong economics are driving a very significant lifetime customer value. And additionally, as Bob mentioned and Steve alluded to earlier, in North America more than 40% of passes is representing 52% of subscription revenue are now under a multiyear contract. And stepping back from that, just to think about that for a minute from where we were a number of years ago, that amount of revenue under contract is set to come in. It is a significant thing for us and for our client partners as well. The second point, the second factor. As we’ve discussed in the past and is shown in slide 21, we have a lot of headroom for a continued client-partner growth. We expect that the continued addition of at least 30 net new client partners each year will help drive significant subscription and subscription services growth, since almost all these new people have the sale as All Access Pass or in the case of education, Leader in Me subscriptions. Additionally, we expect significant growth to come from the approximately 120 existing client partners that we’ve hired over the past few years, who are still in the ramp process. As you will recall, each new client partner that we hire is expected to generate annual revenues in their first year of $200,000, then their second year $500,000, then $800,000 going to $1.1 million and then $1.3 million over their first five years with us. And we define $1.3 million as being fully ramped, and then we of course expect their revenues will continue to grow thereafter. Today, we have approximately 120 client partners in our North American Enterprise and Education divisions, who depending on their year of hire over the past four years fall somewhere along this ramp curve. And the natural ramp of these client partners, even net of attrition, normal attrition that we might expect to see would result in tens of millions of additional dollars of revenue growth in the coming years. And so the combination of ramping those we have and hiring the net 30 a year, we believe will generate significant subscription revenue growth for us. And then the third point that I’ll touch on briefly is the recent acquisition of Strive, coupled with Jhana is accelerating our ability to address larger and larger populations. During the third quarter we were pleased to complete the acquisition of Strive, which will add meaningfully to our technology platform, our strategic capabilities and overall impact. A key benefit resulting from Strive is that it will increase our ability to address ever larger client populations. The unique combination of Strive’s platform, coupled with Franklin Covey’s best-in-class content and subscription services will accelerate our ability to help clients predictably achieve employee behavior change at scale. Strive’s intuitive social learning platform will enable seamless integration and deployment of Franklin Covey’s best-in-class content, our services, technology and metrics to provide a highly engaging and impactful learning experiences with maximum impact. When combined with Jhana, a push-based, just-in-time digital coach for leaders and individual contributors, the All Access Pass platform is taking a significant leap forward in its ability to support large scale impact journey roll out for entire organizations, while simultaneously allowing individual learners to focus on their own skill development. And so it’s for these three reasons and others that we feel very positive about the future of our ability to continue to grow our subscription and subscription services business. And with that, I’ll turn it back to you Bob. Bob Whitman: And Paul, thanks so much, and I’ll turn it to Steve to talk about our guidance and outlook. Steve Young: Okay, thank you again. So as you know, in the past quarters we have confirmed our guidance that we expected to generate adjusted EBITDA of between $20 million and $22 million this year. Based on the strong performance in the third quarter and year-to-date and our expectations of a strong fourth quarter, we’re glad to now be in a position to adjust that guidance upward. Our new guidance is that we expect adjusted EBITDA for FY ‘21 to be between $24.5 million and $26.5 million. The middle of this range would reflect adjusted EBITDA growth of more than 75% compared to the $14.4 million of adjusted EBITDA achieved in last year FY ‘20. With our last 12 months adjusted EBITDA through the third quarter already at $26.3 million, if our fourth quarter result is at least the same as last year’s strong fourth quarter, our results to the fourth quarter would already be at the, near the top end of that range, and we do expect to achieve strong growth in revenue in the fourth quarter. However, we’re also making some significant growth investments and will incur other costs in the fourth quarter that will partially offset the adjusted EBITDA growth we could otherwise expect from our expected growth in revenue. These growth investments include the hiring of a significant number of new client partners to position ourselves for strong growth in FY ‘22 and beyond. Two, some new strategic marketing investments that we expect will broaden our reach. Three, costs associated with the acquisition of Strive. Four, and some other growth investments. We also expect that there will be some extra site coming out of the pandemic cost, including some increased travel and profit-based compensation which will impact cost in the fourth quarter. These additional investments notwithstanding, we still expect the fourth quarter to be a very strong quarter. As for our outlook for FY ‘22, ‘23 and beyond, in the past quarters we have said that we expected adjusted EBITDA in FY ‘22 to increase to approximately $30 million and adjusted EBITDA in FY ‘23 to increase further to approximately $40 million. Based on the strong performance in FY ‘21 to-date and expected through the fourth quarter, we now expect the trajectory of our results in FY ‘22 and FY ‘23 will also be somewhat higher than our previous outlook. We expect it to increase and provide more detail on our outlook for future years when we report year end results in November. So Bob, that’s guidance and outlook. We’re excited about the future. Bob Whitman: Great, thanks so much Steve. We feel great about our momentum; pleased to be in a position to increase our guidance and really excited about the business. Just before we turn to Q&A, I’d like to thank our absolutely tremendous associates around the world for their continued and unwavering commitment to our mission, to our clients and the excellence in all they do, they are amazing. I would also like to recognize and thank our great leaders. Our top leadership roles are all filled by extremely talented, experienced and committed individuals who have the combination of a long tenure, and yet because of the relatively young age many years of strong service still ahead of them. They lead in a way that engages their teams and predictably grows their operations and our overall business strategically, culturally and financially. I’m thrilled that given the strong results, trends and strategic position of Franklin Covey’s business, we are now prepared to make some key promotions on the executive team that will help to further accelerate our progress. I’m really excited about each of these. Our executive team has functioned as a true partnership for many years and our goal has been to have each leader continue to increase his or her responsibilities while still keeping all members of our executive team kind of on the playing field and contributing in both old and new ways, even as the rules change. That will continue to be the case following the key leadership promotions that will take place effective September 1. First, over the past couple of years Paul Walker has overseen substantially all our day-to-day operations, and I have focused the majority of my efforts working closely with Paul, Steve and the executive team on our key strategic initiatives, our innovation strategy and agenda and on capital transactions. I’m excited personally to now move over one chair at the table in addition to serving as Chairman of the Board, become Executive Chairman of the company effective September 1. As Executive Chairman I will continue to work in these same strategic areas in which I have focused over the past few years, and as Chairman I will spend even more time working to ensure that the tremendous capabilities of our remarkable Board are fully utilized. I am thrilled to announce that Paul Walker will become our new CEO effective September 1. The Board, the executive team and I, all have tremendous confidence and trust in Paul. He’s fully prepared for this expanded role. Paul is a completely trusted partner who has tremendous capabilities, instincts and drive and engages everyone to come to the best decisions. He also executes with excellence. The idea that Paul could only become our next CEO has been something the Board and I began discussing nearly 10 years ago. With that potential in mind, Paul was first given responsibility for running our central region, then for simultaneously overseeing the central region and our operations in the U.K. and Ireland, then from the all North American operations to the Enterprise Division, then serving as President of the entire Enterprise division, which has been such a strong growth engine and most recently as the company’s Chief Operating Officer where he has done an absolutely incredible job, including all the way through the pandemic. Over the past six years, Paul and I have worked hand-in-hand every day and most evenings together with the other members of the executive teams launch and grow All Access Pass from what was just an idea to it now generating more than $100 million of subscriptions service revenue, on the way to having all Access Pass in the Enterprise Division and leaders in the membership and the Education Division represent substantially all of the company’s revenues and operations in the next few years. During this time, Paul led the execution of our strategy to increase client partner hiring, served on all our strategic committees and assumed essentially all other key operational responsibilities. And since September 1, 2020 in his role as Chief Operating Officer, Paul has effectively been running the business day-to-day. So making this transition to CEO was largely a recognition of what he has already been doing and the transition will be seamless. Some additional great news: Steve Young will remain CFO for at least the next several years, continue to provide that tremendous and consistent knowledge of leadership and influence we all count on. Jennifer Colosimo, President of the Enterprise Division will now assume full responsibility for overseeing the entire Enterprise Division, including not only the U.S. and Canada operations which achieved tremendous growth under her leadership, but all the Enterprise Division’s international operations, and we’re really excited about Jen’s expanded leadership role and have full confidence in her ability. She is an amazing person and an amazing leader. Sean Covey will also continue to lead and serve as President of the Education Division which he has done and continues to do so brilliantly and effectively, and really our top 30 other leaders will continue – at least the top 30. Well, all the top 30 will continue in their roles. So in conclusion, I’d just say I’ve had the privilege of being associated with the company one role or another since I joined the Board of the company leadership center in ‘93, became Chairman of the Board of Franklin Covey in ’99, following the merger and then was asked to sort of as both Chairman of the Board and as CEO, which I’ve done for the past 21 years. In my ongoing role as Chairman of the Board and as a large shareholder, and I don’t intend to sell any shares, my new role as Executive Chairman, I’ll remain involved in our most important strategic decisions, key financial matters and the acquisitions and the capital transactions. Mainly, I’ll do everything I can to help Paul and to help Franklin Covey continue to win in any other way that we can think of and I’m excited to remain in close partners with Paul and the executive team for many years to come. These changes along with the strong momentum of the business make it really an exciting time for Franklin Covey. We feel great about our strategy, our business model, our financial position and our leadership bench strength. I love this company. I love my government, our people, our shareholders, our clients and our mission, and I look forward to continuing this involvement to appreciate our than 1,000 associates and partners around the world and appreciate each of you and your ongoing commitment to Franklin Covey. So with that long thing, I’ll – we’re excited about these changes. I’ll now open the time for question and answers. Operator: Thank you. And our first question comes from Andrew Nicholas from William Blair. Your line is open. Andrew Nicholas: Hi, thank you. Good afternoon and congratulations to each of you; Jen, Bob and Paul on the new roles. I guess to start, in terms of the guidance and the guidance change, you touched on the increased spending in the fourth quarter. So I was hoping you could spend a little bit more time on exactly what those investments are. I know Steve you listed them, but if we could get maybe a few examples of what those spending initiatives look like. And then relatedly, is there any way to quantify that spend and should we view that as kind of a one-time set of initiatives or are these kind of a multi-quarter spend that you’re kind of leaning into growth with? Bob Whitman: Thanks Andrew, I’ll try to give you a little more context and then invite Paul and Steve to add on. I think there is some in both categories. The general ones that we always do are the continued investment in client partners. It’s a little bit more back-end loaded this year, because we didn’t hire as many in the first half and therefore we’re adding more in this back half. So we have more of those folks coming on in the fourth quarter than we might normally have. We are also kind of a one-time expenditure in some marketing initiatives. We’ve been working with some firms and these aren’t big dollar amounts, I mean but incrementally the combination of the marketing which is maybe $0.5 million of extra and involve – really increasing our footprint around the world in thought leadership and some things that we’ll be announcing later this year, these are really kind of the outsourced work that we’ve been doing. Our client partners incrementally are adding maybe $0.5 million or so in the fourth quarter. I think the ones that are just more one-time or is it – in last year’s fourth quarter we had reserved a bunch for compensation and profit sharing and so forth, so the – most of our compensation is tied to results and because of the overall results for the year, we’re going to be lower because of the pandemic. We reversed some of those things in the fourth quarter this year. The offers will be true and so that’s a more meaningful couple of million dollars swing between those two and I think those are the primary things. We also have some travel coming back, you know not a lot, but there is some coming back as offices open and clients expect you to be there and see them and so those expenses will come back a little more than they were in last year’s fourth quarter and that will be somewhat ongoing. But basically the thought is that it’s possible that the fourth quarter could be higher than the end of our top of our range, but we do have some expenses relating to those areas that we’re talking about in the fourth quarter. Is that helpful at all? Andrew Nicholas: Yes, very much so, thank you. Maybe for my follow-up, switching gears a little bit. I know you touched on it in your prepared remarks, but I was hoping we could spend a little bit more time on Strive. I think more specifically you mentioned the ability to target large groups. Can you flush that out a little bit further? And then maybe bigger picture question. If you could just kind of go through the top one or two things that Strive brings Franklin Covey that maybe you’re most excited about. Bob Whitman: Sure. Paul, would you like to take that? Paul Walker: Sure. Hi Andrew! So I guess at the beginning, in addition to some of the increases, the costs that we’ll pick up in the fourth quarter that Bob mentioned, there are some costs related to the integration of Strive as well and getting prepared to come out in our next fiscal year with Strive in a big way. But to answer your question specifically, so we’re very excited about Strive. Strive is a platform upon which we think more effectively distributed administer provides access to our solutions to clients, and so if you think in the past, we’ve had a great platform with All Access Pass, and on that platform we pull in from disparate pieces. We pull in our ability to tap people experienced content, our assessment capability, we pulled Jhana into that and there is a constellation of resources and services that we provided clients on that platform. With Strive, they’ve been out there in the last few years as a start-up focused primarily in the leadership space, and they weren’t a content company first, they were a platform company first and they created a platform that’s even better than what we’ve had just inside the All Access Pass portal, where users – administrators can deploy content to larger populations. Their focus was on driving behavior change through technology. Our focus is on driving behavior change through the great content solutions we have, and so we marry these two things together and our clients now can say what are the one or two things. It’s really the user experience and the outcomes that organizations will achieve as our content now runs on the Strive platform. It will be easier, it will be even more digestible; we’ll be able to provide metrics in real time; the engagement will be even higher. Both when organizations are trying to deploy something to thousands and also when individuals themselves are going in, working on their own skill development. So think of it as, in a way kind of like what Peloton did, combining the bike, the instructor, the live sessions, the metrics, the social aspect of that all into one seamless system, Strive is going to help us bring all of that together in our use case, which is around learning and driving behavior change at scale. Andrew Nicholas: Perfect! Well, thanks very much and again, congrats on the new role! Paul Walker: Thank you. Bob Whitman: Thanks Andrew. Operator: And your next question comes from Jeff Martin from ROTH Capital Partners. Your line is open. Jeff Martin: Thanks. Good afternoon guys. And Paul, congratulations! Bob Whitman: Hey Jeff! Jeff Martin: Well deserved! And Bob, that was a nice way to introduce that too, and so compliments to you on what you put together there. Bob Whitman: Thanks Jeff. It’s always good to be in partnership, so. Jeff Martin: I wanted to jump in here. You know third quarter was an impressive quarter to start out. Was there any particular areas that were stronger than what you had thought, maybe new logos, may be higher average customer spend. You know what were things that you know surprised you to the upside in the quarter and what does that implicate for the future? Bob Whitman: Paul, do you want to take that? Paul Walker: I’ll share one or two and then Jen, please jump in and Education to Sean. So Jeff, I think a couple of things that were pleasantly surprising, and we had high expectations already, but even came in higher. One was new logos. That metric continues to climb forth every quarter. You would recall during the pandemic we reported that actually new logos, that was an area where I wasn’t quite sure what was going to happen, in the darkest days of the pandemic and new logos really hung in there quite well and we’re seeing an acceleration there. And the other as we mentioned, we had a fantastic subscription service this quarter. And I’ve had – the more we get into this, the more I think even as we come out of the pandemic and certainly some of our clients will want to go back and have us come on-site again in person. I think the fact that the world has shifted and we can do both, we can do live online and live in-person, I think it’s going to continue to lead to greater demand for services overall, and so I think there’s some of that driving the increase in services business. And then the third leg of that stool is client expansion or retention was great also in the quarter. So the combination of those things really helped on the revenue side, and of course that business as we talked about is it’s a high margin business. So we’re continually as more and more of the business converts to All Access Pass with the high margins, that flows through to the bottom line and is driving both revenue and EBITDA. Those would be at least three. Jen, anything you would add to that on Enterprise and then maybe Sean ought to say a word or two about Ed. Jen Colosimo: Sure. I think from an Enterprise Division Jeff, one of the – Paul mentioned the expansion as clients stay with us and they expand and that makes sense and it came definitely to play in this quarter, and that typically a client will hire us to do a particular large scale behavior change. And as they complete that, start to see some results, they have the opportunity to work with our implementation specialists, which is very unique in the industry, in the way that we provide them to our clients. They work with our implementation specialists to uncover either additional populations to go after the same job to be done or they work at, they see other opportunities that they could utilize what was in their past, and so we are seeing significant expansion and we did as Paul mentioned, have an increase in new logo. In addition, I think our team, our Franklin Covey team, all individual contributors are firing on all cylinders. As Paul mentioned, we have a significant opportunity with those that are in ramp and we are seeing newer client partners find success quicker, our sales enablement. So I would also attribute a lot to our people, but also our value proposition of all that’s in the All Access Pass and how that leads to expansion. Jeff Martin: Great! That’s very helpful. Sean Covey: Yes, hi Jeff. This is Sean. Jeff Martin: Hey Sean! Sean Covey: Yeah. Hi! Should I – you want me to share a little bit about what’s going on in Ed? Jeff Martin: That would be great. Sean Covey: Yeah, so just to follow up with what Paul and Jen shared, similar in education. Retention is stronger than we supposed and not only the number of schools that we’re retaining, but also the dollars per retained score, the average amount is increasing. I think a lot of this is because the market is back to normal. I think people are making decisions again. There’s a lot of pent-up demand and people have been kind of waiting on the sidelines and see how things are going to turn out, but because everyone feels like things are going to be largely back to normal come fall decisions are being made. So we have got a lot of new schools coming on, a lot higher than last year, new districts. If you recall, a few sessions ago we talked about Leader in Me 4.0 and how it’s more district friendly, but we’re seeing the results of that now and we’re bringing on some really sizable districts. Many of them all over the country that may be a few years ago we weren’t prepared to do and those are coming in starting in the third quarter, so that’s helping us quite a bit as well. So between retention new schools and new districts that we’re getting to, I think that’s what’s caused the increase in the third quarter. Jeff Martin: And is Strive something that will be applied to the Education Division and not just Enterprise, just curious. Sean Covey: Yeah. Ultimately, I think it’s going to start more on the Enterprise side, but it we’ll start. I think all the innovations there, we will be able to be fully utilized at some point in education as well. Paul Walker: Okay. This is Paul. I’ll just say one of the great things with Strive is also the great people that are adding to our team and we’re grateful for that and there’s some very, very strong technology oriented people and great people all the way through, so. Jeff Martin: Great! I look forward to seeing them on that soon. Then my other question centers around kind of your high level growth outlook. I think in the past you’ve articulated pretty clearly that you view yourself as kind of an 8% perpetual growth business, at least for the foreseeable future where subscription sales and add-on sales in the high teens to low 20% growth rate, and as we get to critical mass, it seems like that growth rate is somewhat conservative. You add a technology platform of Strive that addresses a larger population. What’s your outlook or what’s your view on growth acceleration from that 8% level going forward? Bob Whitman: You know I think you’ve identified the factors that would argue for a higher growth rate in the future. I think the combination, you know in the past we knew that the growth of subscription was being offset partially by the decline in the legacy business. Now that that has largely flattened out, even the same growth we’ve been already achieving would mean that it was less drag you’d be a bit higher. So I think we’re thinking going forward that we can move into that low, I mean call it 10% anyway that we can grow 10% or so, we still have some conversion in our international operations that will create some – you know add more in deferred revenue. But I think it’s natural that with the growth rate of our subscription the things you mentioned. It will tend to edge up a bit going forward. Jeff Martin: Great! Thanks for the time and congratulations on a really strong quarter. Bob Whitman: Thanks so much, Jeff. Operator: And your next question comes from Marco Rodriguez with Stonegate Capital. Your line is open. Marco Rodriguez: Good afternoon, everybody. Thanks for taking my questions. Bob Whitman: Hi Marco! Thank you. Marco Rodriguez: Once again, congratulations to everybody with all the promotions and the movements, all very well deserved. I had a couple of quick follow-ups here. Just coming back on the Strive acquisition, the integration aspects, maybe if you can talk a little bit about that as far as the complexity levels and when you expect to have that fully integrated. Bob Whitman: Paul, would you? Paul Walker: You want me to talk about that, Bob? Sure. Bob Whitman: Yeah, it would be great. Paul Walker: Hi Marco! So Bob mentioned this team, the team that came with Strive, they came with – they were the inventors of it. This is an amazing team. In fact, it would be fun to do a demo and have you have a chance to meet some of the key people on that team. So Strive for us will power kind of three use cases if you want to think of them this way. One is when a client has a job done, say developing first level leaders and they want to take them through our six critical practices content. We’ll do that now on this Strive platform which will do all the things I’ve talked about a minute ago and I was explaining to Andrew how Strive will benefit the client. So the first thing we’re doing right now is we’re making all of our content Striveable if you will. So we’ve been getting it ready, so that the assessments all tied together and everything’s on that platform. We expect that work to largely be done and be ready to go in January. The second use case for them, so that’s when Franklin Covey, when our people are delivering services and we’re guiding a client through that. They’ve hired us not only for our content, but they want our expertise in delivering the training and doing the coaching. The second use case that will follow that first use case is equipping our client facilitators to implement our content like they can today, but benefiting from this Strive platform as well. So it’s another reason why you want to have the All Access Pass, because even if you’re not purchasing subscription services from us, you’ll get the benefit of an All Access Pass holder from the technology that’s there inside Strive, which will be inside of our portal. And then the third use case which will come along, kind of alongside those is this ability for even when you’re not on a company-sponsored journey, you know when I haven’t been asked by Bob to go through with a cohort of people, a leadership development experience, I may have a skill that I feel like I need to address or that my assessment has told me I need to work on, public speaking or platform skills. But we have content in the past around more effectively presenting and I can go in and on the Strive platform, I can work on those skills myself and rather than just watching a video or page turning some online content, the Strive experience will be, it will be back to the Peloton example, much more engaging and much more focused and has the pieces in there to make sure that even if I’m going through it by myself, my behavior is more likely to change. There is more accountability built-in, there’s social aspects built-in, and so over the coming months and quarters, Strive needs to be able to do that across all of our content, so that’s the primary programing and engineering that goes behind that is getting Franklin Covey content into the Strive platform. I would say it’s not a difficult dive, it won’t happen overnight. It will happen over the next number of months and we’ll start to be able to really come out to our clients in January-ish. We’re doing some pilot testing with clients in fact right now. Just you know we were ready to go right since we acquired them and we’re off on our way on to pilots. Marco Rodriguez: Understood, and then just kind of confirming here, you know obviously you brought up the integration cost that will be there for Strive. I’m just trying to understand if those costs will be stripped out of your adjusted EBITDA and then obviously your guidance or is it inclusive? Steve Young: They are included, Marco. Marco Rodriguez: Got it, okay. And then a last quick question for me, just kind of a higher level. It sounds like obviously confidence levels are rising, performance is very good here. Maybe if you can talk a little bit about looking out in the next 12 months, what do you think are the greatest opportunities for you to achieve and accelerate growth? And then at the same time, what is the greatest risk that you see out there that you might need to manage? Bob Whitman: I could start and then have everybody else join in. The big opportunity we’ve seen, I mean people have been a part. They are now coming back together whether that’s office or they are in their new way of working, and there is a lot to most organizations have to do to get – there is a lot to do, and particularly in building their teams and building their leaders, etc. It’s more difficult for them during this period of time, and so I think the big opportunity is as organizations take on big new opportunities of their own for execution, prices that we’re trying to build leaders and really get all their teams together, they tend to look for things that where they – we play where there’s collective behavioral changes needed among leaders, building trust in the new environment and new work environment, unconscious bias overcoming that, and all these different ways of working I think is one big opportunity as a category that has lots of dimensions. I think that’s a big thing. Also you’re trying to make a break, an operational breakthrough in a new world. We’ve always done well coming out of a period of disruption in execution and other things and people say, ‘Gosh, I really want to pick something narrow and achieve it big, the big opportunity.’ So on opportunity side, I’d say those, Jen or Paul what else would you add to that. Jen Colosimo: Bob, I’ll speak to that. I think Bob really spoke to where we have the biggest opportunity with clients as they think about place and location and as well as the space, the behavior change and the things that they need for their people. The other one that’s been mentioned and Steve mentioned it and we talked about that is, I think we have a great opportunity in terms of our thought leadership and our market and our positioning, further strengthened by our work of integration of Strive, but many, many opportunities for – especially as we look for new logos to soften the beaches and have a new and distinctive message around who we are and what we do and how we can help you with those operational breakthroughs in moving a metric or obtaining collective behavior change. So I’m excited both about what client opportunity is, but also what we have to go after that from a marketing standpoint. Bob Whitman: Right, Jen. I think on the challenge side, let me ask Paul were you going to add anything to the opportunity side? Paul Walker: No Bob, go ahead. Sean Covey: I’ll just add Bob on the opportunity side. Sorry… Bob Whitman: Thank you, Sean. Sean Covey: Yeah, sure. Yeah. I think the opportunity in Education is huge right now, because Social Emotional Learning, SEL is more popular than ever because of all the mental wellness issues that have come up during COVID, mental health for students and teachers have become big issue. We addressed that so well and later in May. Combined with the stimulus money, the $200 billion on top of the $50 billion the federal government normally spends, this $200 billion will be in the marketplace for two and a half years. So it’s a great opportunity and runway for new clients to join us. So we think there’s a real bright future for education because of these trends. Bob Whitman: Great! And then Marco, on your question, was that helpful on the one side, on the opportunity side? Marco Rodriguez: Yeah, that was great. Bob Whitman: Great! I think on the challenge right now, I mean you can worry about a lot of things, but the thing we are spending most of our time worrying about is how do we as an organization take advantage of that opportunity in a funny way, because everybody, every organization in the world has those challenges that we just talked about. We’ve got great distribution, great content, etc., but how can we scale it, both in terms of delivering bigger and bigger we’ve talked about that with Strive, but also how do we get the word out and how do we make sure that every person who is in that position can only think, Gosh, if I need behavioral changes of scale or I need to accomplish something that requires collective action, how do we make it more automatic for them, not just our salespeople to call them and then let them know, but how do we actually help people understand that actually we got this capability at a bigger scale and that’s part of what we’re investing it in this fourth quarter in some new market. I think it’s really getting out there and taking advantage of what is really huge opportunity is – you know again we’ve got the scale and we’ve got the capabilities, but I think we need to – we’re trying to figure how to scale it more quickly. Marco Rodriguez: Understood, I appreciate the time. Guys, that’s all I have. Thanks. Bob Whitman: Thanks so much, Marco. Operator: And that concludes our question-and-answer session. I’ll turn the call back over to Bob Whitman for final remarks. Bob Whitman: Alright, well again, we thank each of you for your great support, guidance and advice. We hope to continue to receive that and we really hope you have, all have a great force and we look forward to doing a good job here in the fourth quarter and ending up with a good year. So, thank you so much to everyone. Operator: Thank you ladies and gentlemen. This concludes today’s conference call. Thank you for participating and you may now disconnect.
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Franklin Covey Co. (NYSE:FC) Showcases Impressive Financial Metrics

Franklin Covey Co. (NYSE:FC) is a global company specializing in organizational performance improvement. It offers training and consulting services to help businesses enhance productivity and leadership. In the competitive landscape, Franklin Covey stands out with its impressive financial metrics, particularly in terms of Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC).

Franklin Covey Co. boasts a ROIC of 45.44% and a WACC of 10.07%, resulting in a ROIC to WACC ratio of 4.51. This indicates that the company is generating returns significantly above its cost of capital, showcasing efficient capital utilization. Such a strong ratio reflects the company's ability to manage its investments effectively and generate substantial returns.

In comparison, Forestar Group Inc. (FOR) leads the peer group with a remarkable ROIC of 122.97% and a WACC of 8.57%, resulting in a ROIC to WACC ratio of 14.36. This highlights Forestar's exceptional efficiency in generating returns well above its cost of capital. Despite this, Franklin Covey's performance remains commendable within its industry.

CRA International, Inc. (CRAI) presents a ROIC of 15.57% and a WACC of 8.61%, leading to a ROIC to WACC ratio of 1.81. While CRAI generates returns above its cost of capital, it does not match the efficiency of Franklin Covey. Similarly, Alamo Group Inc. (ALG) and Thermon Group Holdings, Inc. (THR) show modest ROIC to WACC ratios of 1.12 and 1.08, respectively, indicating returns slightly above their cost of capital.

Forrester Research, Inc. (FORR) faces challenges with a negative ROIC of -7.08% against a WACC of 6.97%, resulting in a ROIC to WACC ratio of -1.02. This suggests inefficiencies in capital utilization, contrasting sharply with Franklin Covey's robust financial performance. Franklin Covey's ability to generate returns well above its cost of capital underscores its effective capital management and solid return on investments.

Franklin Covey Co. (NYSE: FC) Earnings Report Highlights

  • Franklin Covey Co. (NYSE:FC) reported an earnings per share (EPS) of -$0.082, surpassing the estimated EPS of -$0.11, marking an earnings surprise of 27.27%.
  • The company's revenue was approximately $59.6 million, missing the estimated $62.65 million by 4.96%.
  • FC's financial health indicators include a low debt-to-equity ratio of 0.023 and an earnings yield of approximately 4.87%.

Franklin Covey Co. (NYSE:FC) is a key player in the organizational performance improvement sector. The company specializes in providing subscription-based content, training, and tools designed to drive systemic changes in human behavior. FC operates within the Zacks Consulting Services industry, competing with other firms that offer similar consulting and training services.

On April 2, 2025, FC reported its earnings, revealing an earnings per share (EPS) of -$0.082, which was better than the estimated EPS of -$0.11. This result represents an earnings surprise of 27.27%, as highlighted by Zacks. However, it marks a decline from the $0.06 per share reported in the same quarter last year, indicating a challenging period for the company.

In terms of revenue, FC generated approximately $59.6 million, falling short of the estimated $62.65 million by 4.96%. This is a decrease from the $61.34 million reported in the same quarter the previous year. Despite this shortfall, FC has managed to surpass consensus revenue estimates twice in the last four quarters, demonstrating some resilience in its financial performance.

FC's financial metrics provide further insight into its current standing. The company has a price-to-earnings (P/E) ratio of approximately 20.55, indicating investor expectations of future earnings growth. Its price-to-sales ratio is about 1.29, while the enterprise value to sales ratio is around 1.15, suggesting a relatively balanced valuation in relation to its sales.

The company's financial health is underscored by a low debt-to-equity ratio of 0.023, indicating minimal reliance on debt financing. However, its current ratio of approximately 0.90 suggests potential liquidity challenges in meeting short-term obligations. Despite these challenges, FC maintains an earnings yield of about 4.87%, reflecting its ability to generate earnings relative to its share price.

Franklin Covey Co. Performance Analysis

  • Franklin Covey Co. (NYSE:FC) showcases a high Return on Invested Capital (ROIC) of 36.27%, indicating efficient capital utilization.
  • Compared to its peers, Franklin Covey Co. has a significantly higher ROIC to WACC ratio of 3.63, suggesting superior value generation from its investments.
  • Forestar Group Inc. (FOR) leads the peer group with an exceptional ROIC to WACC ratio of 13.83, highlighting its outstanding capital efficiency and growth potential.

Franklin Covey Co. (NYSE:FC) is a global company specializing in performance improvement. It offers training and consulting services to help organizations and individuals achieve better results. The company operates in a competitive landscape with peers like CRA International, Thermon Group Holdings, Forrester Research, Forestar Group, and Alamo Group. These companies also focus on various aspects of business improvement and consulting.

Franklin Covey Co. boasts a Return on Invested Capital (ROIC) of 36.27%, significantly higher than its Weighted Average Cost of Capital (WACC) of 9.98%. This results in a ROIC to WACC ratio of 3.63, indicating that the company is effectively using its capital to generate returns. This efficiency in capital utilization is a positive sign for investors, as it suggests that the company is generating substantial value from its investments.

In comparison, CRA International, Inc. (CRAI) has a ROIC of 15.57% and a WACC of 9.12%, resulting in a ROIC to WACC ratio of 1.71. While CRAI is generating returns above its cost of capital, its efficiency is not as pronounced as Franklin Covey's. Thermon Group Holdings, Inc. (THR) has a ROIC of 8.21% and a WACC of 8.35%, leading to a ROIC to WACC ratio of 0.98, indicating that its returns are slightly below its cost of capital.

Forrester Research, Inc. (FORR) presents a different scenario with a negative ROIC of -51.82% against a WACC of 7.09%, resulting in a ROIC to WACC ratio of -7.31. This suggests that Forrester is not generating sufficient returns to cover its cost of capital, which could be a concern for investors. On the other hand, Forestar Group Inc. (FOR) stands out with a remarkable ROIC of 122.97% and a WACC of 8.89%, leading to a ROIC to WACC ratio of 13.83. This indicates exceptional capital efficiency and strong growth potential.

Alamo Group Inc. (ALG) has a ROIC of 10.48% and a WACC of 9.30%, resulting in a ROIC to WACC ratio of 1.13. While Alamo Group is generating returns above its cost of capital, its efficiency is moderate compared to Franklin Covey and Forestar Group. Overall, Franklin Covey Co. demonstrates strong capital utilization, but Forestar Group Inc. leads the peer group with the highest ROIC to WACC ratio, highlighting its superior capital efficiency.

Franklin Covey Co. (NYSE:FC) Performance Analysis

  • Franklin Covey Co. (NYSE:FC) boasts a Return on Invested Capital (ROIC) of 36.27% and a Weighted Average Cost of Capital (WACC) of 10.05%, indicating efficient capital use.
  • Comparatively, peers like CRA International and Thermon Group Holdings show lower efficiency in generating returns above their cost of capital.
  • Forestar Group Inc. stands out with a ROIC of 122.97% and a WACC of 9.00%, showcasing exceptional capital efficiency.

Franklin Covey Co. (NYSE:FC) is a global company specializing in performance improvement. It offers training and consulting services to help organizations and individuals achieve better results. The company operates in a competitive landscape with peers like CRA International, Thermon Group Holdings, Forrester Research, Forestar Group, and Alamo Group. These companies also focus on enhancing business performance through various services and solutions.

Franklin Covey Co. boasts a Return on Invested Capital (ROIC) of 36.27% and a Weighted Average Cost of Capital (WACC) of 10.05%. This results in a ROIC to WACC ratio of 3.61, indicating that the company generates returns well above its cost of capital. This metric is crucial as it shows how effectively the company uses its capital to generate profits.

In comparison, CRA International, Inc. (CRAI) has a ROIC of 11.57% and a WACC of 9.17%, leading to a ROIC to WACC ratio of 1.26. This suggests that while CRAI is generating returns above its cost of capital, it is not as efficient as Franklin Covey Co. Thermon Group Holdings, Inc. (THR) has a ROIC of 8.21% and a WACC of 8.44%, resulting in a ratio of 0.97, indicating returns slightly below its cost of capital.

Forrester Research, Inc. (FORR) presents a negative ROIC of -51.82% against a WACC of 7.17%, leading to a ROIC to WACC ratio of -7.23. This negative ratio suggests that Forrester is not generating sufficient returns to cover its cost of capital. On the other hand, Forestar Group Inc. (FOR) stands out with a ROIC of 122.97% and a WACC of 9.00%, resulting in a remarkable ROIC to WACC ratio of 13.66, indicating exceptional capital efficiency.

Alamo Group Inc. (ALG) has a ROIC of 10.48% and a WACC of 9.36%, resulting in a ROIC to WACC ratio of 1.12. This shows that Alamo Group is generating returns above its cost of capital, but not as efficiently as Franklin Covey Co. or Forestar Group. This analysis highlights the importance of comparing ROIC and WACC to assess a company's financial performance relative to its peers.

Franklin Covey Co. (NYSE:FC) Demonstrates Exceptional Capital Efficiency

  • Franklin Covey Co. (NYSE:FC) showcases a strong Return on Invested Capital (ROIC) of 36.27% compared to its Weighted Average Cost of Capital (WACC) of 10.23%, indicating highly efficient capital use.
  • The company's ROIC to WACC ratio of 3.54 significantly surpasses that of its competitors, reflecting its superior ability to generate value from its investments.
  • Forestar Group Inc. (FOR) leads in capital efficiency with a ROIC of 122.97% and a WACC of 9.27%, resulting in an impressive ROIC to WACC ratio of 13.26.

Franklin Covey Co. (NYSE:FC) is a global company specializing in organizational performance improvement. It offers training and consulting services to help businesses enhance productivity and leadership. In the competitive landscape, Franklin Covey stands out with its strong Return on Invested Capital (ROIC) of 36.27% compared to its Weighted Average Cost of Capital (WACC) of 10.23%, a key indicator of financial efficiency.

Franklin Covey's ROIC to WACC ratio of 3.54 suggests that the company is generating returns significantly above its cost of capital, indicating efficient capital use. This efficiency is crucial for investors as it reflects the company's ability to create value from its investments.

In comparison, CRA International, Inc. (CRAI) has a ROIC of 11.57% and a WACC of 9.19%, leading to a ROIC to WACC ratio of 1.26. Although positive, CRAI's ratio is lower than Franklin Covey's, indicating less efficient capital use. Similarly, Thermon Group Holdings, Inc. (THR) has a ROIC to WACC ratio of 0.91, with a ROIC of 7.51% and a WACC of 8.30%, showing it generates returns below its cost of capital.

Forrester Research, Inc. (FORR) presents a negative ROIC of -51.82% against a WACC of 7.35%, resulting in a ROIC to WACC ratio of -7.05. This negative ratio indicates that Forrester is not generating sufficient returns to cover its cost of capital, highlighting inefficiency. In contrast, Forestar Group Inc. (FOR) boasts a remarkable ROIC of 122.97% and a WACC of 9.27%, achieving a ROIC to WACC ratio of 13.26, the highest among its peers.

Alamo Group Inc. (ALG) has a ROIC of 10.48% and a WACC of 9.27%, resulting in a ROIC to WACC ratio of 1.13. While positive, it is still lower than Franklin Covey's, indicating less efficient capital use. Overall, Franklin Covey's strong ROIC to WACC ratio highlights its effective capital utilization compared to its peers, except for Forestar Group, which leads in capital efficiency.

Franklin Covey Co.'s Exceptional Capital Efficiency Outshines Peers

  • Franklin Covey Co. demonstrates superior capital efficiency with a Return on Invested Capital (ROIC) of 36.27% compared to its Weighted Average Cost of Capital (WACC) of 10.33%.
  • The company's ROIC to WACC ratio of 3.51 indicates strong value creation for shareholders, significantly outperforming peers like CRA International, Inc. (CRAI), Thermon Group Holdings, Inc. (THR), and Forrester Research, Inc. (FORR).
  • Competitors such as Thermon Group Holdings, Inc. (THR) and Forestar Group Inc. (FOR) show ROIC figures below their WACC, highlighting Franklin Covey Co.'s exceptional ability to generate returns on investments.

Franklin Covey Co. is a global company specializing in performance improvement. It offers training and consulting services to help organizations achieve results that require a change in human behavior. The company operates in a competitive landscape with peers like CRA International, Inc. (CRAI), Thermon Group Holdings, Inc. (THR), Forrester Research, Inc. (FORR), Forestar Group Inc. (FOR), and Alamo Group Inc. (ALG).

Franklin Covey Co. boasts a Return on Invested Capital (ROIC) of 36.27%, significantly higher than its Weighted Average Cost of Capital (WACC) of 10.33%. This results in a ROIC to WACC ratio of 3.51, indicating that the company is generating returns well above its cost of capital. This efficient capital utilization suggests strong value creation for shareholders.

In comparison, CRA International, Inc. (CRAI) has a ROIC of 11.57% and a WACC of 9.28%, resulting in a ROIC to WACC ratio of 1.25. While CRAI shows growth potential, its capital efficiency is lower than Franklin Covey Co.'s. This highlights Franklin Covey Co.'s superior ability to generate returns on its investments.

Thermon Group Holdings, Inc. (THR) and Forestar Group Inc. (FOR) have ROIC to WACC ratios of 0.89 and 0.80, respectively. Both companies have ROIC figures below their WACC, indicating they are not generating sufficient returns to cover their cost of capital. This contrasts with Franklin Covey Co.'s strong performance.

Forrester Research, Inc. (FORR) presents a negative ROIC of -51.82% against a WACC of 7.39%, resulting in a ROIC to WACC ratio of -7.01. This suggests significant challenges in generating returns. In contrast, Franklin Covey Co.'s positive ratio underscores its effective capital management and ability to create shareholder value.

Franklin Covey Co. (NYSE:FC) Outshines Peers in Capital Efficiency

  • Franklin Covey Co. boasts a remarkable Return on Invested Capital (ROIC) of 43.94%, significantly surpassing its Weighted Average Cost of Capital (WACC) of 10.33%.
  • The company's ROIC to WACC ratio of 4.25 indicates it is generating returns well above its cost of capital, suggesting strong value creation for shareholders.
  • Compared to peers like CRA International, Inc. (CRAI) and Thermon Group Holdings, Inc. (THR), Franklin Covey Co. demonstrates superior capital efficiency, positioning it as a leader among its competitors.

Franklin Covey Co. (NYSE:FC) is a global company specializing in performance improvement. It offers training and consulting services to help organizations achieve results that require a change in human behavior. The company operates in a competitive landscape with peers like CRA International, Inc. (CRAI), Thermon Group Holdings, Inc. (THR), Forrester Research, Inc. (FORR), Forestar Group Inc. (FOR), and Alamo Group Inc. (ALG).

Franklin Covey Co. boasts a remarkable Return on Invested Capital (ROIC) of 43.94%, significantly surpassing its Weighted Average Cost of Capital (WACC) of 10.33%. This results in a ROIC to WACC ratio of 4.25, indicating that the company is generating returns well above its cost of capital. This efficiency in capital utilization suggests strong value creation for shareholders.

In comparison, CRA International, Inc. (CRAI) has a ROIC of 16.81% and a WACC of 9.29%, resulting in a ROIC to WACC ratio of 1.81. While CRAI is the most efficient among its peers, Franklin Covey Co. still outshines with its superior ratio, highlighting its exceptional capital efficiency.

Thermon Group Holdings, Inc. (THR) and Forestar Group Inc. (FOR) have ROIC to WACC ratios of 0.94 and 0.84, respectively, indicating that their returns are below their cost of capital. Forrester Research, Inc. (FORR) presents a negative ROIC of -59.12% against a WACC of 7.39%, resulting in a ROIC to WACC ratio of -8.00, suggesting significant inefficiencies.

Alamo Group Inc. (ALG) shows a ROIC of 10.83% and a WACC of 9.34%, leading to a ROIC to WACC ratio of 1.16. While ALG is generating returns above its cost of capital, it still falls short compared to Franklin Covey Co.'s impressive performance. This positions Franklin Covey Co. as a leader in capital efficiency among its peers.