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Segment Information | 3 Months Ended
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Nov. 30, 2023
Segment Information [Abstract] |
Segment Information | NOTE 7 – 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 direct sales offices; 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 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 restructuring costs. 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
November 30, 2023 |  | Customers |  |  | Gross Profit |  |  | EBITDA
Enterprise Division: |  |  |  |  |  |  |  |
Direct offices | $ | 49,215 |  | $ | 39,501 |  | $ | 11,687
International licensees |  | 3,378 |  |  | 3,052 |  |  | 1,896
|  | 52,593 |  |  | 42,553 |  |  | 13,583
Education practice |  | 14,744 |  |  | 9,380 |  |  | 42
Corporate and eliminations |  | 1,062 |  |  | 344 |  |  | (2,656)
Consolidated | $ | 68,399 |  | $ | 52,277 |  | $ | 10,969
Quarter Ended |  |  |  |  |  |  |  |
November 30, 2022 |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |
Direct offices | $ | 50,167 |  | $ | 39,921 |  | $ | 11,250
International licensees |  | 3,278 |  |  | 2,977 |  |  | 1,831
|  | 53,445 |  |  | 42,898 |  |  | 13,081
Education practice |  | 14,350 |  |  | 9,175 |  |  | 281
Corporate and eliminations |  | 1,574 |  |  | 669 |  |  | (1,890)
Consolidated | $ | 69,369 |  | $ | 52,742 |  | $ | 11,472
‎ A reconciliation of our consolidated Adjusted EBITDA to consolidated net income is provided below (in thousands).
| Quarter Ended
|  | November 30, |  |  | November 30,
|  | 2023 |  |  | 2022
Segment Adjusted EBITDA | $ | 13,625 |  | $ | 13,362
Corporate expenses |  | (2,656) |  |  | (1,890)
Consolidated Adjusted EBITDA |  | 10,969 |  |  | 11,472
Stock-based compensation |  | (2,897) |  |  | (2,735)
Restructuring |  | (581) |  |  | -
Increase in the fair value of |  |  |  |  |
contingent consideration liabilities |  | - |  |  | (7)
Depreciation |  | (1,091) |  |  | (1,246)
Amortization |  | (1,071) |  |  | (1,092)
Income from operations |  | 5,329 |  |  | 6,392
Interest income |  | 288 |  |  | 81
Interest expense |  | (341) |  |  | (410)
Income before income taxes |  | 5,276 |  |  | 6,063
Income tax provision |  | (425) |  |  | (1,396)
Net income | $ | 4,851 |  | $ | 4,667
Revenue by Category The following table presents our revenue disaggregated by geographic region (in thousands).
| Quarter Ended
|  | November 30, |  |  | November 30,
|  | 2023 |  |  | 2022
Americas | $ | 56,357 |  | $ | 56,743
Asia Pacific |  | 7,221 |  |  | 7,458
Europe/Middle East/Africa |  | 4,821 |  |  | 5,168
| $ | 68,399 |  | $ | 69,369
‎ The following table presents our revenue disaggregated by type of service (in thousands).
Quarter Ended |  | Services and |  |  |  |  |  |  |  |  | Leases and |  |  |
November 30, 2023 |  | Products |  |  | Subscriptions |  |  | Royalties |  |  | Other |  |  | Consolidated
Enterprise Division: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 22,126 |  | $ | 26,498 |  | $ | 591 |  | $ | - |  | $ | 49,215
International licensees |  | 231 |  |  | 332 |  |  | 2,815 |  |  | - |  |  | 3,378
|  | 22,357 |  |  | 26,830 |  |  | 3,406 |  |  | - |  |  | 52,593
Education practice |  | 3,734 |  |  | 9,757 |  |  | 1,253 |  |  | - |  |  | 14,744
Corporate and eliminations |  | - |  |  | - |  |  | 313 |  |  | 749 |  |  | 1,062
Consolidated | $ | 26,091 |  | $ | 36,587 |  | $ | 4,972 |  | $ | 749 |  | $ | 68,399
Quarter Ended |  |  |  |  |  |  |  |  |  |  |  |  |  |
November 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 26,217 |  | $ | 23,490 |  | $ | 460 |  | $ | - |  | $ | 50,167
International licensees |  | 143 |  |  | 352 |  |  | 2,783 |  |  | - |  |  | 3,278
|  | 26,360 |  |  | 23,842 |  |  | 3,243 |  |  | - |  |  | 53,445
Education practice |  | 4,500 |  |  | 9,183 |  |  | 667 |  |  | - |  |  | 14,350
Corporate and eliminations |  | - |  |  | - |  |  | 315 |  |  | 1,259 |  |  | 1,574
Consolidated | $ | 30,860 |  | $ | 33,025 |  | $ | 4,225 |  | $ | 1,259 |  | $ | 69,369

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