Franklin Covey Co. , a global performance improvement company that creates and distributes content, training, processes, and tools that organizations and individuals use to transform their results, announced financial results for its fiscal first quarter ended November 30, 2013 . In a release on January 7 , the Company noted that Financial Highlights include: -Revenue: Consolidated revenue for the first quarter of fiscal 2014 was the second strongest ever for the Company's current business. First quarter fiscal 2014 revenue decreased 1 percent to $43.4 million , compared with $44.1 million in the prior year. Revenue increases in the Company's U.S./ Canada direct offices, Education practice, Sales Performance practice, and international licensee partner operations, were more than offset by declines in government services revenue, most of which shifted out of the first quarter into subsequent quarters due to the effects of the government shutdown; and to a decline in revenues from the Company's foreign direct offices that were adversely impacted by foreign exchange rates. For the trailing four quarters, consolidated revenues increased $15.3 million , or 9 percent, to $190.3 million . -Gross profit: First quarter gross profit increased to $30.0 million , with the Company's gross margin increasing to 69.2 percent of sales compared with 67.1 percent in the prior year. For the trailing four quarters, gross profit increased to $129.5 million , compared with $115.7 million for the corresponding period of the prior year. The Company's gross margin for the trailing four quarters ended November 30, 2013 was 68.0 percent compared with 66.1 percent for the preceding trailing four quarters. -Adjusted EBITDA: First quarter Adjusted EBITDA decreased $1.1 million to $6.0 million , compared with $7.1 million in the first quarter of the prior year, reflecting the above-noted shifting of government revenue into subsequent quarters; decreased direct foreign office revenues; and significant incremental growth investments. For the trailing four quarters, Adjusted EBITDA increased to $30.3 million , compared with $27.8 million for the same period last year. -Net Income: First quarter net income decreased to $1.7 million compared with $2.9 million in the first quarter of fiscal 2013, reflecting the above-noted factors. For the trailing four quarters, net income increased to $13.1 million , compared with $9.1 million during the four-quarter period ended December 1, 2012 . -Diluted EPS: Diluted EPS decreased to $.10 per share compared with $.15 per share for the first quarter of fiscal 2013. -Booking Momentum: The Company's booking momentum continued to be strong in the first quarter, with its pipeline of Booked Days and Awarded Revenue increasing to $35.0 million , the Company's largest- ever pipeline for a first quarter end. The corporate pipeline increased from $28.2 million at December 1, 2012 to $31.5 million at November 30, 2013 , while the government contract pipeline decreased by $2.2 million to $3.5 million at November 30, 2013 . -Adjusted EBITDA Outlook: Given strong booking momentum, and the expected shift of postponed contractual government services' revenue into subsequent quarters, the Company affirmed its previously- announced annual guidance range for Adjusted EBITDA of $35 million to $37 million . Bob Whitman , Chairman and Chief Executive Officer, noted, "Coming off our best-ever fourth quarter (revenue growth of 21 percent, and Adjusted EBITDA growth of 30 percent) and fiscal year for our current business, we were pleased to continue our strong momentum during the first quarter of fiscal 2014. Our U.S. direct offices, excluding Government services, posted their strongest first quarter ever, as did our Education and Sales Performance practices, and our international licensee partners. Bookings in these operations were strong, and we finished the quarter with our largest-ever Pipeline of Booked Days and Awarded Revenue for a first quarter. We were awarded the renewal of a large government agency contract in September, and expected to deliver millions of dollars of revenue related to that contract in the first quarter. However, the government shutdown in October, and its slow restart, resulted in the need to reschedule nearly all of the training days from this contract into future quarters. The postponed delivery of training on this renewed government contract, and for other government business, combined with decreases in our international direct office revenues that were significantly impacted by foreign exchange related issues, more than offset the growth in other areas of our business. With the strength of our other operations during the quarter, our strong booking momentum, the size of our contractual pipelines, and the expected shift of government business into the other quarters of fiscal 2014, the outlook for the future direction of our business remains strong and we expect to have another outstanding year in fiscal 2014." Consolidated sales decreased by 1 percent to $43.4 million compared with $44.1 million in the first quarter of fiscal 2013. For the quarter ended November 30, 2013 we had continued strong growth in our National Account practices fueled by significantly increased Sales Performance and Education practice sales, growth from our U.S./ Canada regional direct offices (excluding our government services office), and from our international licensees. Increased sales from these channels were offset during the quarter by 1) the United States government shutdown, which postponed the delivery of training services on a large government contract that was renewed in September and delayed the delivery of training on other government contracts; 2) a $2.2 million decrease in sales from the Company's international direct offices that was exacerbated by the strengthening of the U.S. dollar, which had a $1.1 million adverse impact (primarily in Japan ) on translated sales; and 3) the expiration of a large leasing contract at our corporate headquarters. The Company believes that the postponed government services sales on the renewed contract will be recovered during the second and third quarters of fiscal 2014, but the recovery of other postponed governmental sales is dependent upon the resolution of uncertainties in government operations. The adverse impact of the strengthening U.S. Dollar against the Japanese Yen on comparative periods is expected to last into the Company's second quarter, but is expected to stabilize on a year-over-year basis in the second half of fiscal 2014. The Company also obtained a new long-term leasing contract for vacant space that will improve leasing revenues during the remainder of fiscal 2014 when compared with the quarter ended November 30, 2013 . Gross profit increased to $30.0 million compared with $29.6 million in the first quarter of the prior year due to increased gross margin on sales during the quarter. The Company's gross margin for the quarter ended November 30, 2013 increased to 69.2 percent compared with 67.1 percent in the first quarter of the prior year. The improved gross margin was primarily due to a $1.4 million intellectual property component of a large government contract that was renewed during the quarter. Selling, general and administrative expenses (SG&A) increased $1.8 million compared with the first quarter of fiscal 2013. The increase in SG&A expenses over the prior year was primarily due to 1) a $1.6 million increase primarily related to the addition of new sales-related personnel, marketing, and other advertising and promotional costs related to the Company's strategic sales initiatives; and 2) a $0.8 million increase in non-cash share-based compensation expense primarily due to an equity award granted in the fourth quarter of fiscal 2013. The Company continues to invest in new sales and sales-related personnel, and hired 17 new client partners at the beginning of fiscal 2014. These new client partners are expected to ramp up during fiscal 2014 and provide incremental sales growth later in the fiscal year. The Company is also heavily investing in new product development efforts, particularly related to the fiscal 2014 release of new and updated leadership content and corresponding marketing efforts to make the launch of these offerings successful. The impact of these investments in the Company's SG&A expenses was partially offset by a $0.5 million reduction in the fair value of estimated contingent earnout payments from the fiscal 2013 acquisition of NinetyFive 5, LLC and by $0.2 million of decreased bonus expense as financial targets were not met for the quarter ended November 30, 2013 . The Company's depreciation expense increased by $0.1 million primarily due to the addition of new capital assets during the first quarter of fiscal 2014. Amortization expense increased $0.4 million compared with the prior year due to the acquisition of NinetyFive 5 during the third quarter of fiscal 2013. Increased operating expenses from the Company's investments in additional sales personnel and other marketing expenses supporting strategic sales initiatives reduced the Company's income from operations by $1.8 million to $3.5 million , compared with $5.3 million in the first quarter of fiscal 2013. Net income decreased $1.2 million to $1.7 million , or $.10 per diluted share, compared with $2.9 million , or $.15 per diluted share in fiscal 2013. The Company's balance sheet and liquidity position remained healthy through the first quarter as the Company had $2.0 million in cash and cash equivalents at November 30, 2013 with no borrowings on its line of credit facility, compared with $12.3 million at August 31, 2013 . Net working capital of $36.1 million represents a $6.0 million increase compared with the quarter ended December 1, 2012 , but a slight decrease compared with $38.2 million on August 31, 2013 . Franklin Covey Co. is a global provider of training and consulting services in the areas of leadership, productivity, strategy execution, customer loyalty, trust, sales performance, government, education and individual effectiveness. More Information: http://www.franklincovey.com ((Comments on this story may be sent to firstname.lastname@example.org ))
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