Segments

6 Months Ended

Jun. 30, 2019

The Company has three reportable segments: (i) Franchise; (ii) Corporate-owned stores; and (iii) Equipment.

The Company’s operations are organized and managed by type of products and services and segment information is reported accordingly. The Company’s chief operating decision maker (the “CODM”) is its Chief Executive Officer. The CODM reviews financial performance and allocates resources by reportable segment. There have been no operating segments aggregated to arrive at the Company’s reportable segments.

The Franchise segment includes operations related to the Company’s franchising business in the United States, Puerto Rico, Canada, the Dominican Republic, Panama and Mexico, including revenues and expenses from the NAF beginning on January 1, 2018 (see Note 15). The Corporate-owned stores segment includes operations with respect to all Corporate-owned stores throughout the United States and Canada. The Equipment segment includes the sale of equipment to our United States franchisee-owned stores.

The accounting policies of the reportable segments are the same as those described in Note 2. The Company evaluates the performance of its segments and allocates resources to them based on revenue and earnings before interest, taxes, depreciation, and amortization, referred to as Segment EBITDA. Revenues for all operating segments include only transactions with unaffiliated customers and include no intersegment revenues.

The tables below summarize the financial information for the Company’s reportable segments for the three and six months ended June 30, 2019 and 2018. The “Corporate and other” category, as it relates to Segment EBITDA, primarily includes corporate overhead costs, such as payroll and related benefit costs and professional services which are not directly attributable to any individual segment.



	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
Revenue
Franchise segment revenue - U.S.	$	70,221	$	57,252	$	134,618	$	110,697
Franchise segment revenue - International	1,591		898		2,956		2,065
Franchise segment total	71,812		58,150		137,574		112,762
Corporate-owned stores - U.S.	38,592		33,125		75,541		64,697
Corporate-owned stores - International	1,103		1,127		2,198		2,262
Corporate-owned stores total	39,695		34,252		77,739		66,959
Equipment segment - U.S.	70,154		48,148		115,165		82,161
Equipment segment total	70,154		48,148		115,165		82,161
Total revenue	$	181,661	$	140,550	$	330,478	$	261,882

Franchise segment revenue includes franchise revenue, NAF revenue, and commission income.

Franchise revenue includes revenue generated from placement services of $5,071 and $3,079 for the three months ended June 30, 2019 and 2018, respectively, and $7,836 and $5,177 for the six months June 30, 2019 and 2018, respectively.



	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
Segment EBITDA
Franchise	$	49,860		$	40,041		$	97,220		$	76,719
Corporate-owned stores	18,137			14,666			33,706			26,837
Equipment	16,772			11,457			27,179			18,925
Corporate and other	(10,370		)	(9,236		)	(23,932		)	(17,978		)
Total Segment EBITDA	$	74,399		$	56,928		$	134,173		$	104,503

The following table reconciles total Segment EBITDA to income before taxes:



	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
Total Segment EBITDA	$	74,399		$	56,928		$	134,173		$	104,503
Less:
Depreciation and amortization	10,577			8,619			20,484			17,084
Other expense	(1,444		)	(502		)	(4,762		)	(310		)
Income from operations	65,266			48,811			118,451			87,729
Interest income	1,979			418			3,777			455
Interest expense	(14,636		)	(9,046		)	(29,385		)	(17,816		)
Other expense	(1,444		)	(502		)	(4,762		)	(310		)
Income before income taxes	$	51,165		$	39,681		$	88,081		$	70,058

The following table summarizes the Company’s assets by reportable segment:



	June 30, 2019		December 31, 2018
Franchise	$	351,615	$	319,422
Corporate-owned stores	370,212		243,221
Equipment	185,284		210,462
Unallocated	616,356		580,311
Total consolidated assets	$	1,523,467	$	1,353,416

The table above includes $1,730 and $1,892 of long-lived assets located in the Company’s corporate-owned stores in Canada as of June 30, 2019 and December 31, 2018, respectively. All other assets are located in the U.S.

The following table summarizes the Company’s goodwill by reportable segment:



	June 30, 2019		December 31, 2018
Franchise	$	16,938	$	16,938
Corporate-owned stores	97,148		89,909
Equipment	92,666		92,666
Consolidated goodwill	$	206,752	$	199,513