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Segment Information | 9 Months Ended
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May 31, 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).
|  | Revenue From |  |  |  |  |  |
Quarter Ended |  | External |  |  |  |  |  | Adjusted
May 31, 2024 |  | Customers |  |  | Gross Profit |  |  | EBITDA
Enterprise Division: |  |  |  |  |  |  |  |
Direct offices | $ | 49,334 |  | $ | 40,172 |  | $ | 12,170
International licensees |  | 2,701 |  |  | 2,435 |  |  | 1,334
|  | 52,035 |  |  | 42,607 |  |  | 13,504
Education practice |  | 20,079 |  |  | 13,179 |  |  | 3,080
Corporate and eliminations |  | 1,259 |  |  | 420 |  |  | (2,660)
Consolidated | $ | 73,373 |  | $ | 56,206 |  | $ | 13,924
Quarter Ended |  |  |  |  |  |  |  |
May 31, 2023 |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |
Direct offices | $ | 50,382 |  | $ | 40,425 |  | $ | 11,322
International licensees |  | 2,835 |  |  | 2,549 |  |  | 1,415
|  | 53,217 |  |  | 42,974 |  |  | 12,737
Education practice |  | 17,082 |  |  | 10,929 |  |  | 1,649
Corporate and eliminations |  | 1,142 |  |  | 330 |  |  | (2,487)
Consolidated | $ | 71,441 |  | $ | 54,233 |  | $ | 11,899
Three Quarters Ended |  |  |  |  |  |  |  |
May 31, 2024 |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |
Direct offices | $ | 141,509 |  | $ | 115,186 |  | $ | 32,978
International licensees |  | 8,826 |  |  | 7,861 |  |  | 4,571
|  | 150,335 |  |  | 123,047 |  |  | 37,549
Education practice |  | 49,402 |  |  | 31,157 |  |  | 2,593
Corporate and eliminations |  | 3,372 |  |  | 1,132 |  |  | (7,802)
Consolidated | $ | 203,109 |  | $ | 155,336 |  | $ | 32,340
Three Quarters Ended |  |  |  |  |  |  |  |
May 31, 2023 |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |
Direct offices | $ | 144,194 |  | $ | 116,199 |  | $ | 32,212
International licensees |  | 9,048 |  |  | 8,184 |  |  | 4,787
|  | 153,242 |  |  | 124,383 |  |  | 36,999
Education practice |  | 45,631 |  |  | 28,497 |  |  | 1,309
Corporate and eliminations |  | 3,692 |  |  | 1,305 |  |  | (6,750)
Consolidated | $ | 202,565 |  | $ | 154,185 |  | $ | 31,558
‎ A reconciliation of our consolidated Adjusted EBITDA to consolidated net income is provided below (in thousands).
| Quarter Ended |  | Three Quarters Ended
|  | May 31, |  |  | May 31, |  |  | May 31, |  |  | May 31,
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023
Segment Adjusted EBITDA | $ | 16,584 |  | $ | 14,386 |  | $ | 40,142 |  | $ | 38,308
Corporate expenses |  | (2,660) |  |  | (2,487) |  |  | (7,802) |  |  | (6,750)
Consolidated Adjusted EBITDA |  | 13,924 |  |  | 11,899 |  |  | 32,340 |  |  | 31,558
Stock-based compensation |  | (2,828) |  |  | (3,307) |  |  | (7,092) |  |  | (9,357)
Restructuring costs |  | (701) |  |  | - |  |  | (3,008) |  |  | -
Impaired asset |  | - |  |  | - |  |  | (928) |  |  | -
Increase in the fair value of |  |  |  |  |  |  |  |  |  |  |
contingent consideration liabilities |  | - |  |  | - |  |  | - |  |  | (7)
Depreciation |  | (990) |  |  | (934) |  |  | (2,994) |  |  | (3,131)
Amortization |  | (1,062) |  |  | (1,086) |  |  | (3,204) |  |  | (3,270)
Income from operations |  | 8,343 |  |  | 6,572 |  |  | 15,114 |  |  | 15,793
Interest income |  | 268 |  |  | 362 |  |  | 857 |  |  | 804
Interest expense |  | (247) |  |  | (354) |  |  | (916) |  |  | (1,173)
Income before income taxes |  | 8,364 |  |  | 6,580 |  |  | 15,055 |  |  | 15,424
Income tax provision |  | (2,643) |  |  | (2,017) |  |  | (3,609) |  |  | (4,455)
Net income | $ | 5,721 |  | $ | 4,563 |  | $ | 11,446 |  | $ | 10,969
Revenue by Category The following table presents our revenue disaggregated by geographic region (in thousands).
| Quarter Ended |  | Three Quarters Ended
|  | May 31, |  |  | May 31, |  |  | May 31, |  |  | May 31,
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023
Americas | $ | 62,084 |  | $ | 59,456 |  | $ | 169,840 |  | $ | 167,835
Asia Pacific |  | 6,460 |  |  | 7,418 |  |  | 19,438 |  |  | 20,801
Europe/Middle East/Africa |  | 4,829 |  |  | 4,567 |  |  | 13,831 |  |  | 13,929
| $ | 73,373 |  | $ | 71,441 |  | $ | 203,109 |  | $ | 202,565
‎ The following table presents our revenue disaggregated by type of service (in thousands).
Quarter Ended |  | Services and |  |  |  |  |  |  |  |  | Leases and |  |  |
May 31, 2024 |  | Products |  |  | Subscriptions |  |  | Royalties |  |  | Other |  |  | Consolidated
Enterprise Division: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 22,682 |  | $ | 26,028 |  | $ | 624 |  | $ | - |  | $ | 49,334
International licensees |  | 58 |  |  | 303 |  |  | 2,340 |  |  | - |  |  | 2,701
|  | 22,740 |  |  | 26,331 |  |  | 2,964 |  |  | - |  |  | 52,035
Education practice |  | 9,117 |  |  | 10,397 |  |  | 565 |  |  | - |  |  | 20,079
Corporate and eliminations |  | - |  |  | - |  |  | 313 |  |  | 946 |  |  | 1,259
Consolidated | $ | 31,857 |  | $ | 36,728 |  | $ | 3,842 |  | $ | 946 |  | $ | 73,373
Quarter Ended |  |  |  |  |  |  |  |  |  |  |  |  |  |
May 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 24,808 |  | $ | 25,033 |  | $ | 541 |  | $ | - |  | $ | 50,382
International licensees |  | 89 |  |  | 321 |  |  | 2,425 |  |  | - |  |  | 2,835
|  | 24,897 |  |  | 25,354 |  |  | 2,966 |  |  | - |  |  | 53,217
Education practice |  | 6,456 |  |  | 9,971 |  |  | 655 |  |  | - |  |  | 17,082
Corporate and eliminations |  | - |  |  | - |  |  | 313 |  |  | 829 |  |  | 1,142
Consolidated | $ | 31,353 |  | $ | 35,325 |  | $ | 3,934 |  | $ | 829 |  | $ | 71,441
Three Quarters Ended |  |  |  |  |  |  |  |  |  |  |  |  |  |
May 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 61,398 |  | $ | 78,457 |  | $ | 1,654 |  | $ | - |  | $ | 141,509
International licensees |  | 374 |  |  | 959 |  |  | 7,493 |  |  | - |  |  | 8,826
|  | 61,772 |  |  | 79,416 |  |  | 9,147 |  |  | - |  |  | 150,335
Education practice |  | 16,783 |  |  | 29,662 |  |  | 2,957 |  |  | - |  |  | 49,402
Corporate and eliminations |  | - |  |  | - |  |  | 939 |  |  | 2,433 |  |  | 3,372
Consolidated | $ | 78,555 |  | $ | 109,078 |  | $ | 13,043 |  | $ | 2,433 |  | $ | 203,109
Three Quarters Ended |  |  |  |  |  |  |  |  |  |  |  |  |  |
May 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 70,112 |  | $ | 72,233 |  | $ | 1,849 |  | $ | - |  | $ | 144,194
International licensees |  | 276 |  |  | 1,016 |  |  | 7,756 |  |  | - |  |  | 9,048
|  | 70,388 |  |  | 73,249 |  |  | 9,605 |  |  | - |  |  | 153,242
Education practice |  | 15,065 |  |  | 28,015 |  |  | 2,551 |  |  | - |  |  | 45,631
Corporate and eliminations |  | - |  |  | - |  |  | 936 |  |  | 2,756 |  |  | 3,692
Consolidated | $ | 85,453 |  | $ | 101,264 |  | $ | 13,092 |  | $ | 2,756 |  | $ | 202,565

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