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Segment Information
 6 Months Ended
Feb. 29, 2024
Segment Information [Abstract]  
Segment Information NOTE 9 – 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 and impaired asset charges. 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 29, 2024

Customers

Gross Profit

EBITDA

Enterprise Division:

Direct offices

$

42,960

$

35,514

$

9,122

International licensees

2,748

2,374

1,342

45,708

37,888

10,464

Education practice

14,579

8,597

(529)

Corporate and eliminations

1,049

366

(2,487)

Consolidated

$

61,336

$

46,851

$

7,448

Quarter Ended

February 28, 2023

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 

Two Quarters Ended

February 29, 2024

Enterprise Division:

Direct offices

$

92,175

$

75,015

$

20,809

International licensees

6,126

5,426

3,238

98,301

80,441

24,047

Education practice

29,323

17,977

(487)

Corporate and eliminations

2,112

711

(5,142)

Consolidated

$

129,736

$

99,129

$

18,418

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 


‎

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

Quarter Ended

Two Quarters Ended

February 29,

February 28,

February 29,

February 28,

2024

2023

2024

2023

Segment Adjusted EBITDA

$

9,935 

$

10,560 

$

23,560 

$

23,921 

Corporate expenses

(2,487)

(2,373)

(5,142)

(4,262)

Consolidated Adjusted EBITDA

7,448 

8,187 

18,418 

19,659 

Stock-based compensation

(1,368)

(3,315)

(4,265)

(6,050)

Restructuring costs

(1,726)

-

(2,307)

-

Impaired asset

(928)

-

(928)

-

Increase in the fair value of

contingent consideration liabilities

-

-

-

(7)

Depreciation

(913)

(951)

(2,005)

(2,196)

Amortization

(1,071)

(1,093)

(2,142)

(2,185)

Income from operations

1,442 

2,828 

6,771 

9,221 

Interest income

301 

362 

589 

442 

Interest expense

(328)

(409)

(669)

(819)

Income before income taxes

1,415 

2,781 

6,691 

8,844 

Income tax provision

(541)

(1,042)

(966)

(2,438)

Net income

$

874 

$

1,739 

$

5,725 

$

6,406 

Revenue by Category

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

Quarter Ended

Two Quarters Ended

February 29,

February 28,

February 29,

February 28,

2024

2023

2024

2023

Americas

$

51,399

$

51,638 

$

107,756

$

108,380 

Asia Pacific

5,757

5,925 

12,978

13,383 

Europe/Middle East/Africa

4,180

4,193 

9,002

9,362 

$

61,336

$

61,756 

$

129,736

$

131,125 


‎

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

Quarter Ended

Services and

Leases and

February 29, 2024

Products

Subscriptions

Royalties

Other

Consolidated

Enterprise Division:

Direct offices

$

16,589

$

25,932

$

439

$

-

$

42,960

International licensees

85

324

2,339

-

2,748

16,674

26,256

2,778

-

45,708

Education practice

3,932

9,508

1,139

-

14,579

Corporate and eliminations

-

-

313

736

1,049

Consolidated

$

20,606

$

35,764

$

4,230

$

736

$

61,336

Quarter Ended

February 28, 2023

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 

Two Quarters Ended

February 29, 2024

Enterprise Division:

Direct offices

$

38,714

$

52,431

$

1,030

$

-

$

92,175

International licensees

316

657

5,153

-

6,126

39,030

53,088

6,183

-

98,301

Education practice

7,666

19,265

2,392

-

29,323

Corporate and eliminations

-

-

626

1,486

2,112

Consolidated

$

46,696

$

72,353

$

9,201

$

1,486

$

129,736

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