Disclosures

Franklin Covey Co.

I, Kevin Liu , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
Disclosure Chart

Initiated Coverage on 09/17/2013 with Buy Rating and Price Target of $23.00

Ratings Distribution as of March 29, 2017
Rating Number of Companies Percent of Total Number of Companies with
Investment Banking Relationships
Percent of Total
Buy 158 67.8% 19 8.2%
Neutral 74 31.8% 1 0.4%
Sell 1 0.4% 0 0.0%
Total 233 100% 20 8.6%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
  • Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
  • Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

  • Acquisition/Integration - The Company actively evaluates potential acquisitions as part of its growth strategy. Acquisitions pursued by the Company could be dilutive to financial results and result in a difficult, dilutive or expensive integration.
  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Economy - Macro-economic issues such as increasing oil and gas prices and a possible drop in consumer spending could have a negative impact on the Company's business.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

    • FC Organizational Products - FC owns 19.5% of FC Organizational Products (FCOP) following the sale of its consumer solutions business unit to that company in FQ4 ‘08. Terms of the agreement entitled FC to a payment for working capital delivered on the closing date of the sale and a reimbursement for costs to complete the transaction. After extending the due date of the payment and receiving a promissory note for the amount owed plus accrued interest, FCOP’s financial position deteriorated during the last recession and the note receivable was written down. In addition, FCOP reimburses FC for certain operating costs, which are billed to FC by third party providers. This has resulted in an outstanding receivables balance, which may also not be recouped if FCOP’s financial position deteriorates further. Finally, FC remains secondarily liable for leases associated with the sold consumer solutions business, so if FCOP is unable to fulfill its obligations, FC would be on the hook. Should FCOP not repay the amounts owed to FC, or fail to fulfill its lease obligations, FC’s financial position and cash flows could be negatively impacted.
    • Personnel - FC is dependent upon its employees to effectively sell and deliver its training solutions. Should the company struggle to attract, retain and motivate talent, its operations could be adversely impacted.