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    Franklin Covey Co (FC)

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    Business Description

    Franklin Covey Co. (NYSE: FC) is a global leadership company dedicated to improving individual and organizational performance through behavior change. The company provides world-class content, tools, and services designed to help clients achieve sustained superior results. Its offerings include subscription-based services, training programs, and educational solutions, delivered through scalable and flexible platforms to clients in over 160 countries.

    1. Direct Offices - Provides sales and services to clients in the United States and Canada, international direct sales offices, government services, and book and audio sales.
    2. Education Practice - Focuses on improving performance and culture in educational institutions, including elementary schools, high schools, and colleges.
    3. International Licensees - Generates royalty revenues from independently owned international licensees operating in approximately 150 countries and territories.
    4. Corporate and Other - Includes leasing operations, shipping and handling revenues, royalty revenues from Franklin Planner Corp., and administrative functions.

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    Paul S. WalkerPresident and CEOSeptember 1, 2021Paul S. Walker began his career at Franklin Covey in 2000 as a business developer. He held roles such as Client Partner, Area Director, and General Manager of the North America Central Region. He became President and CEO in 2021 and joined the Board of Directors in 2023.
    M. Sean CoveyPresident of the Education DivisionSeptember 2008M. Sean Covey has led the Education Division since its inception, growing its global presence. He previously managed the international licensee network and developed offerings like The 4 Disciplines of Execution.
    Jennifer C. ColosimoPresident of the Enterprise DivisionSeptember 2020Jennifer C. Colosimo joined Franklin Covey in 1996 and held roles such as Client Partner and COO. After a stint outside the company, she returned in 2016 and became President of the Enterprise Division in 2020.
    Stephen D. YoungCFO and Chief Accounting OfficerJanuary 2001Stephen D. Young joined Franklin Covey in 2001 as EVP of Finance and became CFO in 2002. He has over 40 years of accounting experience and is a CPA with a degree from Brigham Young University.
    Colleen DomExecutive Vice-President of OperationsSeptember 2013Colleen Dom started at Franklin Covey in 1985 as the first Client Service Coordinator. She has over 35 years of experience in operations and has held roles such as VP of Domestic Operations starting in 1997.

    Questions to Ask Management

    1. Considering the $16 million incremental growth investments leading to a projected decline in adjusted EBITDA for fiscal 2025, what specific risks do you foresee that could prevent these investments from yielding the anticipated double-digit revenue growth in the following years?
    2. With the reorganization of your sales force into "expanders" and "hunters," how will you mitigate potential disruptions during this transition, and what strategies are in place to ensure that both teams can achieve their goals without negatively impacting existing customer relationships or new client acquisitions?
    3. Despite increasing average revenue per client from $39,000 to $85,000, you mentioned that you're only about 10% penetrated within most clients; what challenges have hindered deeper penetration, and how will your new investments specifically address these obstacles to drive further growth?
    4. Given the end of ESSER funding in September and its impact on your Education division, how confident are you in replacing this funding to prevent revenue declines, and what specific initiatives beyond grants and corporate partnerships are you implementing to sustain or grow revenue in this segment?
    5. Despite significant investments and a strong fourth-quarter performance, your revenue guidance for fiscal 2025 is only a midpoint growth of approximately 4.5%; can you explain why growth isn't expected to be higher and what factors might affect your ability to achieve the future revenue targets of 10%, 12%, and 14% growth in subsequent years?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateApril 18, 2024
    End Date/DurationNo expiration date
    Total Additional Amount$50.0 million
    Remaining Authorization$45.1 million (as of August 31, 2024)
    DetailsPart of the strategy to return capital to shareholders and increase shareholder value. The company believes shares are undervalued relative to expected cash flows.