Turnaround continues for Utah's Franklin Covey
Franklin Covey Co. took some of its own advice. The time-management and productivity company sold off money-losing distractions, cut costs, erased debt and focused on its core mission, spreading the gospel of corporate organization.
The Salt Lake City-based company this week reported net income of $7.8 million, or 43 cents a share, for the fiscal year ending Aug. 31. That was up from $4.8 million, or 27 cents a share, from the year earlier.
With the results, the "7 Habits" company has cemented a turnaround years in the making, executives said. The numbers marked another in a series of consistent profits since 2010, when Franklin Covey wrote off the last expenses of an old business line selling the bound planners that made it famous.
"We're on a growth curve now," said Chairman and CEO Bob Whitman, who expects to triple profits in the next few years.
Franklin Covey calls itself a "performance improvement company." It has more than 12,000 coaches working for 4,000 corporate clients, including 75 percent of Fortune 500 companies.
The company takes 65 percent of its revenue from products such as books, manuals, films, online instruction and training, and the rest from consulting services. It shed a products division and closed a chain of retail stores as many as 185 were operating in 2002, some overseas.
The strategy is right out of a Franklin Covey textbook, with Whitman confident his senior team has set a focused course. The company emerged several years ago from declining fortunes none so stupefying as the $100 million loss recorded on the fiscal year 2002 books. The setback was dominated by write-offs, devalued assets, severance charges and a management stock loan program that tanked along with company stock.
Franklin Covey turned itself around by 2005 with strong cash flow. It has had accelerated earnings since 2010 and invested $100 million to reposition itself, Whitman said.
Franklin Covey stock closed at $12.97 Friday, up 10 percent, or $1.18. The stock dipped as low as 65 cents a share about 10 years ago.
Revenue for the 2012 fiscal year increased to $170.5 million, up from $160.8 million the year before. Net income was $3.4 million in the company's fourth quarter, up from $3 million for the year-earlier period.
Franklin Covey said revenue for the quarter was the strongest ever, at $51 million, up 13 percent from $45 million in the fourth quarter of fiscal 2011.
"For nine straight years we've had positive cash flow, and we grew in all but the panic of recession" in late 2009 and early 2010, Whitman said. "Then we grew rapidly ever since."
The company sells 900,000 books and e-books a year. "The 7 Habits of Highly Effective People" still ranks as the best-selling business book and remains among the top 30 on a monthly basis even after 25 years, Whitman said.
Franklin Covey co-founder Stephen R. Covey, the author of that book, died July 13 of injuries from a bicycle accident. He was 79. Covey wrote three other books that have all sold more than 1 million copies.
Franklin Covey was a 1997 merger of Franklin Quest, the day planner firm that made former Sen. Bob Bennett, R-Utah, a millionaire, and Covey Leadership, which ran seminars for executives and managers.
Franklin Covey has 590 employees in the U.S., Canada, Britain, Australia, and Japan. It operates in more than 130 other countries through licensees.