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Segment Information
 6 Months Ended
Feb. 28, 2023
Segment Information [Abstract]  
Segment Information

NOTE 8 – SEGMENT INFORMATION

Segment Information

Our sales are primarily comprised of training and consulting services and our internal reporting and operating structure is currently organized around two divisions. The Enterprise Division, which consists of our Direct Office and International Licensee segments and the Education Division, which is comprised of our Education practice. Based on the applicable guidance, our operations consist of three reportable segments and one corporate services group. The following is a brief description of our reportable segments:

Direct Offices – Our Direct Office segment has a depth of expertise in helping organizations solve problems that require changes in human behavior, including leadership, productivity, execution, trust, and sales performance. We have a variety of principle-based offerings that help build winning and profitable cultures. This segment includes our sales personnel that serve the United States and Canada; our international sales offices located in Japan, China, the United Kingdom, Australia, Germany, Switzerland, and Austria; our government services sales channel; and our book and audio sales.

International Licensees – Our independently owned international licensees provide our offerings and services in countries where we do not have a directly-owned office. These licensee partners allow us to expand the reach of our services to large multinational organizations as well as smaller organizations in their countries. This segment’s sales are primarily comprised of royalty revenues received from these licensees.

Education Practice – Centered around the principles found in The Leader in Me, the Education practice is dedicated to helping educational institutions build a culture that will produce great results. We believe these results are manifested by increases in student performance, improved school culture, decreased disciplinary issues, and increased teacher engagement and parental involvement. This segment includes our domestic and international Education practice operations, which are focused on sales to educational institutions such as elementary schools, high schools, and colleges and universities.

 

Corporate and Other – Our corporate and other information includes leasing operations, shipping and handling revenues, royalty revenues from Franklin Planner Corp., and the cost of certain corporate administrative functions.

We have determined that the Company’s chief operating decision maker is the Chief Executive Officer, and the primary measurement tool used in business unit performance analysis is Adjusted EBITDA, which may not be calculated as similarly titled amounts disclosed by other companies. Adjusted EBITDA is a non-GAAP financial measure. For reporting purposes, our consolidated Adjusted EBITDA may be calculated as net income excluding interest, income taxes, depreciation expense, intangible asset amortization expense, stock-based compensation, and certain other charges such as adjustments for changes in the fair value of contingent liabilities arising from business acquisitions. We reference this non-GAAP financial measure in our decision making because it provides supplemental information that facilitates consistent internal comparisons to the historical operating performance of prior periods and we believe it provides investors with greater transparency to evaluate operational activities and financial results.

Our operations are not capital intensive and we do not own any manufacturing facilities or equipment. Accordingly, we do not allocate assets to the reportable segments for analysis purposes. Interest expense and interest income are primarily generated at the corporate level and are not allocated. Income taxes are likewise calculated and paid on a corporate level (except for entities that operate in foreign jurisdictions) and are not allocated for analysis purposes.

We account for the following segment information on the same basis as the accompanying condensed consolidated financial statements (in thousands).

Sales to

Quarter Ended

External

Adjusted

February 28, 2023

Customers

Gross Profit

EBITDA

Enterprise Division:

Direct offices

$

43,646

$

35,854

$

9,641

International licensees

2,935

2,659

1,541

46,581

38,513

11,182

Education practice

14,198

8,392

(622)

Corporate and eliminations

977

305

(2,373)

Consolidated

$

61,756

$

47,210

$

8,187

Quarter Ended

February 28, 2022

Enterprise Division:

Direct offices

$

41,502 

$

33,948 

$

8,732 

International licensees

2,588 

2,304 

1,444 

44,090 

36,252 

10,176 

Education practice

11,066 

7,098 

(324)

Corporate and eliminations

1,443 

764 

(1,810)

Consolidated

$

56,599 

$

44,114 

$

8,042 

Two Quarters Ended

February 28, 2023

Enterprise Division:

Direct offices

$

93,812

$

75,775

$

20,890

International licensees

6,213

5,635

3,372

100,025

81,410

24,262

Education practice

28,549

17,568

(341)

Corporate and eliminations

2,551

974

(4,262)

Consolidated

$

131,125

$

99,952

$

19,659

Two Quarters Ended

February 28, 2022

Enterprise Division:

Direct offices

$

86,621 

$

70,150 

$

18,686 

International licensees

5,586 

5,005 

3,115 

92,207 

75,155 

21,801 

Education practice

22,763 

14,959 

(89)

Corporate and eliminations

2,889 

1,599 

(3,738)

Consolidated

$

117,859 

$

91,713 

$

17,974 

A reconciliation of our consolidated Adjusted EBITDA to consolidated net income is provided below (in thousands).

Quarter Ended

Two Quarters Ended

February 28,

February 28,

February 28,

February 28,

2023

2022

2023

2022

Segment Adjusted EBITDA

$

10,560

$

9,852 

$

23,921

$

21,712 

Corporate expenses

(2,373)

(1,810)

(4,262)

(3,738)

Consolidated Adjusted EBITDA

8,187

8,042 

19,659

17,974 

Stock-based compensation

(3,315)

(1,969)

(6,050)

(3,618)

Increase in the fair value of

contingent consideration liabilities

-

(20)

(7)

(48)

Depreciation

(951)

(1,190)

(2,196)

(2,470)

Amortization

(1,093)

(1,346)

(2,185)

(2,776)

Income from operations

2,828

3,517 

9,221

9,062 

Interest income

362

12 

442

27 

Interest expense

(409)

(423)

(819)

(869)

Income before income taxes

2,781

3,106 

8,844

8,220 

Income tax provision

(1,042)

(1,228)

(2,438)

(2,530)

Net income

$

1,739

$

1,878 

$

6,406

$

5,690 

Revenue by Category

The following table presents our revenue disaggregated by geographic region (in thousands).

Quarter Ended

Two Quarters Ended

February 28,

February 28,

February 28,

February 28,

2023

2022

2023

2022

Americas

$

51,638

$

46,447 

$

108,380

$

95,202 

Asia Pacific

5,925

6,489 

13,383

14,287 

Europe/Middle East/Africa

4,193

3,663 

9,362

8,370 

$

61,756

$

56,599 

$

131,125

$

117,859 


‎

The following table presents our revenue disaggregated by type of service (in thousands).

Quarter Ended

Services and

Leases and

February 28, 2023

Products

Subscriptions

Royalties

Other

Consolidated

Enterprise Division:

Direct offices

$

19,086

$

23,711

$

849

$

-

$

43,646

International licensees

43

343

2,549

-

2,935

19,129

24,054

3,398

-

46,581

Education practice

4,110

8,860

1,228

-

14,198

Corporate and eliminations

-

-

308

669

977

Consolidated

$

23,239

$

32,914

$

4,934

$

669

$

61,756

Quarter Ended

February 28, 2022

Enterprise Division:

Direct offices

$

20,212 

$

20,553 

$

737 

$

-

$

41,502 

International licensees

99 

313 

2,176 

-

2,588 

20,311 

20,866 

2,913 

-

44,090 

Education practice

2,844 

7,128 

1,094 

-

11,066 

Corporate and eliminations

-

-

220 

1,223 

1,443 

Consolidated

$

23,155 

$

27,994 

$

4,227 

$

1,223 

$

56,599 

Two Quarters Ended

February 28, 2023

Enterprise Division:

Direct offices

$

45,303

$

47,201

$

1,308

$

-

$

93,812

International licensees

186

695

5,332

-

6,213

45,489

47,896

6,640

-

100,025

Education practice

8,610

18,044

1,895

-

28,549

Corporate and eliminations

-

-

624

1,927

2,551

Consolidated

$

54,099

$

65,940

$

9,159

$

1,927

$

131,125

Two Quarters Ended

February 28, 2022

Enterprise Division:

Direct offices

$

44,063 

$

41,065 

$

1,493 

$

-

$

86,621 

International licensees

212 

605 

4,769 

-

5,586 

44,275 

41,670 

6,262 

-

92,207 

Education practice

6,070 

14,972 

1,721 

-

22,763 

Corporate and eliminations

-

-

564 

2,325 

2,889 

Consolidated

$

50,345 

$

56,642 

$

8,547 

$

2,325 

$

117,859