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Segment Information | 12 Months Ended
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Aug. 31, 2024
Segment Information [Abstract] |
Segment Information | 16. SEGMENT INFORMATION Reportable Segments Our sales are primarily comprised of training and consulting services and our internal reporting structure is comprised of three reportable operating segments and a corporate services group. Our internal reporting structure and reportable segments are organized primarily around the client channels which produce the Company’s revenues. The following is a brief description of our reportable segments: Direct Offices – This segment includes our sales personnel that serve the United States and Canada; our international sales offices that serve clients in Japan, China, the United Kingdom, Ireland, Australia, New Zealand, Germany, Switzerland, and Austria; our governmental sales channel; our coaching operations; and our books and audio sales channel. International Licensees – This segment is primarily comprised of our international licensees’ royalty revenues. Education Practice – This group includes our domestic and international Education practice operations, which are focused on sales to educational institutions. Corporate and Other – Our corporate and other information includes royalty revenue from Franklin Planner Corporation, leasing activities, shipping and handling revenues, and certain corporate administrative expenses. We have determined that the Company’s chief operating decision maker is the CEO, and the primary measurement tool used in business unit performance analysis is Adjusted EBITDA, which may not be calculated as similarly titled amounts reported by other companies. For reporting purposes, w e define Adjusted EBITDA as net income or loss excluding the impact of interest, income taxes, intangible asset amortization, depreciation, stock-based compensation expense, and certain other items such as adjustments to the fair value of expected contingent consideration liabilities arising from business acquisitions, and other unusual or infrequent items. Our operations are not capital intensive and we do not own any manufacturing facilities or equipment. Accordingly, we do not allocate assets to the divisions 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 our segment information on the same basis as the accompanying consolidated financial statements (in thousands).
|  | Sales to |  |  |  |  |  |
Fiscal Year Ended |  | External |  |  |  |  |  | Adjusted
August 31, 2024 |  | Customers |  |  | Gross Profit |  |  | EBITDA
Enterprise Division: |  |  |  |  |  |  |  |
Direct offices | $ | 197,610 |  | $ | 162,430 |  | $ | 50,376
International licensees |  | 11,229 |  |  | 9,971 |  |  | 5,647
|  | 208,839 |  |  | 172,401 |  |  | 56,023
Education Division |  | 73,519 |  |  | 47,149 |  |  | 9,522
Corporate and eliminations |  | 4,875 |  |  | 1,522 |  |  | (10,272)
Consolidated | $ | 287,233 |  | $ | 221,072 |  | $ | 55,273
Fiscal Year Ended |  |  |  |  |  |  |  |
August 31, 2023 |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |
Direct offices | $ | 194,021 |  | $ | 156,915 |  | $ | 44,198
International licensees |  | 11,645 |  |  | 10,507 |  |  | 5,874
|  | 205,666 |  |  | 167,422 |  |  | 50,072
Education Division |  | 69,736 |  |  | 44,418 |  |  | 7,426
Corporate and eliminations |  | 5,119 |  |  | 1,650 |  |  | (9,432)
Consolidated | $ | 280,521 |  | $ | 213,490 |  | $ | 48,066
Fiscal Year Ended |  |  |  |  |  |  |  |
August 31, 2022 |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |
Direct offices | $ | 183,845 |  | $ | 148,051 |  | $ | 37,497
International licensees |  | 10,551 |  |  | 9,382 |  |  | 4,964
|  | 194,396 |  |  | 157,433 |  |  | 42,461
Education Division |  | 61,852 |  |  | 41,206 |  |  | 8,408
Corporate and eliminations |  | 6,593 |  |  | 3,273 |  |  | (8,672)
Consolidated | $ | 262,841 |  | $ | 201,912 |  | $ | 42,197
‎ A reconciliation of Adjusted EBITDA to consolidated net income is provided below (in thousands):
YEAR ENDED |  |  |  |  |  |  |  |
AUGUST 31, |  | 2024 |  |  | 2023 |  |  | 2022
Segment Adjusted EBITDA | $ | 65,545 |  | $ | 57,498 |  | $ | 50,869
Corporate expenses |  | (10,272) |  |  | (9,432) |  |  | (8,672)
Consolidated Adjusted EBITDA |  | 55,273 |  |  | 48,066 |  |  | 42,197
Stock-based compensation |  | (10,142) |  |  | (12,520) |  |  | (8,286)
Increase in contingent |  |  |  |  |  |  |  |
consideration liabilities |  | - |  |  | (7) |  |  | (68)
Restructuring costs |  | (3,008) |  |  | (565) |  |  | -
Impaired asset |  | (928) |  |  | - |  |  | -
Depreciation |  | (3,905) |  |  | (4,271) |  |  | (4,903)
Amortization |  | (4,248) |  |  | (4,342) |  |  | (5,266)
Income from operations |  | 33,042 |  |  | 26,361 |  |  | 23,674
Interest income |  | 1,123 |  |  | 1,091 |  |  | 65
Interest expense |  | (1,119) |  |  | (1,583) |  |  | (1,675)
Income before income taxes |  | 33,046 |  |  | 25,869 |  |  | 22,064
Provision for income taxes |  | (9,644) |  |  | (8,088) |  |  | (3,634)
Net income | $ | 23,402 |  | $ | 17,781 |  | $ | 18,430
Disaggregated Revenue Our revenues are derived primarily from the United States. However, we also operate directly-owned offices or contract with licensees to provide our services in various countries throughout the world. Our consolidated revenues were derived from the following countries/regions (in thousands):
YEAR ENDED |  |  |  |  |  |  |  |
AUGUST 31, |  | 2024 |  |  | 2023 |  |  | 2022
Americas | $ | 242,494 |  | $ | 233,479 |  | $ | 218,863
Asia Pacific |  | 26,845 |  |  | 28,640 |  |  | 26,835
Europe/Middle East/Africa |  | 17,894 |  |  | 18,402 |  |  | 17,143
| $ | 287,233 |  | $ | 280,521 |  | $ | 262,841
The following table presents our revenue disaggregated by our significant revenue generating activities. Sales of services and products include training and consulting services and related products such as training manuals. Subscription sales include revenues from our subscription services such as the All Access Pass and Leader in Me membership. We receive royalty revenue from our international licensees and from other sources such as book publishing arrangements. Corporate royalties are amounts received from Franklin Planner Co. pursuant to a licensing arrangement obtained in fiscal 2020. Leases and other revenue is primarily comprised of lease revenues from sub-leases for space at our corporate headquarters campus and from shipping and handling revenues (in thousands). ‎
Fiscal Year Ended |  | Services and |  |  |  |  |  |  |  |  | Leases and |  |  |
August 31, 2024 |  | Products |  |  | Subscriptions |  |  | Royalties |  |  | Other |  |  | Consolidated
Enterprise Division: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 89,774 |  | $ | 105,071 |  | $ | 2,765 |  | $ | - |  | $ | 197,610
International licensees |  | 411 |  |  | 1,245 |  |  | 9,573 |  |  | - |  |  | 11,229
|  | 90,185 |  |  | 106,316 |  |  | 12,338 |  |  | - |  |  | 208,839
Education Division |  | 28,347 |  |  | 41,605 |  |  | 3,567 |  |  | - |  |  | 73,519
Corporate and eliminations |  | - |  |  | - |  |  | 1,252 |  |  | 3,623 |  |  | 4,875
Consolidated | $ | 118,532 |  | $ | 147,921 |  | $ | 17,157 |  | $ | 3,623 |  | $ | 287,233
Fiscal Year Ended |  |  |  |  |  |  |  |  |  |  |  |  |  |
August 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 93,700 |  | $ | 97,992 |  | $ | 2,329 |  | $ | - |  | $ | 194,021
International licensees |  | 428 |  |  | 1,327 |  |  | 9,890 |  |  | - |  |  | 11,645
|  | 94,128 |  |  | 99,319 |  |  | 12,219 |  |  | - |  |  | 205,666
Education Division |  | 26,803 |  |  | 39,662 |  |  | 3,271 |  |  | - |  |  | 69,736
Corporate and eliminations |  | - |  |  | - |  |  | 1,250 |  |  | 3,869 |  |  | 5,119
Consolidated | $ | 120,931 |  | $ | 138,981 |  | $ | 16,740 |  | $ | 3,869 |  | $ | 280,521
Fiscal Year Ended |  |  |  |  |  |  |  |  |  |  |  |  |  |
August 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 93,324 |  | $ | 88,055 |  | $ | 2,466 |  | $ | - |  | $ | 183,845
International licensees |  | 429 |  |  | 1,281 |  |  | 8,841 |  |  | - |  |  | 10,551
|  | 93,753 |  |  | 89,336 |  |  | 11,307 |  |  | - |  |  | 194,396
Education Division |  | 25,134 |  |  | 34,037 |  |  | 2,681 |  |  | - |  |  | 61,852
Corporate and eliminations |  | - |  |  | - |  |  | 1,194 |  |  | 5,399 |  |  | 6,593
Consolidated | $ | 118,887 |  | $ | 123,373 |  | $ | 15,182 |  | $ | 5,399 |  | $ | 262,841
Inter-segment sales were immaterial for the periods presented and were eliminated in consolidation. Other Geographic Information At August 31, 2024, we had wholly owned direct offices that serve clients in Australia, New Zealand, China, Japan, the United Kingdom, Ireland, Germany, Switzerland, and Austria. Our long-lived assets, excluding intangible assets and goodwill, were held in the following locations for the periods indicated (in thousands):
AUGUST 31, |  | 2024 |  |  | 2023
United States/Canada | $ | 28,552 |  | $ | 25,538
China |  | 1,860 |  |  | 1,504
Japan |  | 831 |  |  | 1,024
United Kingdom |  | 712 |  |  | 782
Australia |  | 230 |  |  | 100
Germany, Switzerland, and Austria |  | 115 |  |  | 223
| $ | 32,300 |  | $ | 29,171

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