Business Segments

9 Months Ended

Sep. 30, 2020

Effective July 1, 2020, we began managing our business under a new organizational structure on a regional basis through our three geographic markets, North America, EMEA and Emerging Markets. These became our reportable segments in the third quarter of 2020. Prior to this change, our reportable segments consisted of two global practices, Workforce Excellence and Business Transformation Services, which focused on providing similar and/or complementary products and services across our diverse customer base within target markets.

The reorganization was done to achieve the following:

•Unlock the potential of organic growth to achieve better business results for our clients and the Company.

•Simplify the matrix and empower rapid local decision making in service of our clients.

•Leverage global practice systems, processes, and intellectual property while enabling regional authority to better align and deliver to local client needs.

•Enable efficient use of our corporate infrastructure with regional resources.

Across our regional operating structure, the Company provides Workforce Transformation Services categorized into three primary solution sets:

•Organizational Performance Solutions ("OPS") - focus is on managed learning services, digital learning strategies and content development, business consulting, and leadership development solutions

•Technical Performance Solutions ("TPS") - focus is on engineering and technical services, enterprise technology adoption and Human Capital Management ("HCM") implementation services.

•Automotive Performance Solutions ("APS") - provides sales enablement solutions, including custom product sales training and other customer loyalty and marketing related services.

We have also identified four focus industries to deliver these services which include Automotive, Financial Services, Defense and Aerospace and Technology.

We do not allocate the following items to the segments: general & administrative expenses, sales & marketing expenses, restructuring charges, gain on change in fair value of contingent consideration, gain on sale of business, interest expense, other income (expense), and income tax expense (benefit).

The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated income before income tax expense (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenue:
North America	$	77,436	$	92,302	$	237,654	$	292,122
EMEA	25,437		29,577		78,647		91,373
Emerging Markets	12,721		17,126		33,718		44,396


	$	115,594	$	139,005	$	350,019	$	427,891
Gross profit:
North America	$	15,335	$	15,461	$	42,405	$	49,240
EMEA	2,845		3,046		7,530		10,282
Emerging Markets	2,485		3,160		4,241		6,382


Total gross profit	20,665		21,667		54,176		65,904
General and administrative expenses	17,642		15,240		49,106		46,769
Sales and marketing expenses	1,685		1,830		5,381		5,725
Restructuring charges	—		104		855		1,405
Gain on change in fair value of contingent consideration, net	—		—		—		677
Gain on sale of business	—		—		1,064		—
Operating income (loss)	1,338		4,493		(102)		12,682
Interest expense	440		1,575		2,025		4,852
Other income (expense)	196		184		(493)		272
Income (loss) before income tax expense (benefit)	$	1,094	$	3,102	$	(2,620)	$	8,102

Revenue by Category

The following series of tables presents our revenue disaggregated by various categories (dollars in thousands).


	Three Months Ended September 30,
	North America				EMEA				Emerging Markets				Consolidated
	2020		2019		2020		2019		2020		2019		2020		2019
Revenue by type of service:
Organizational Performance Solutions	$	30,732	$	36,235	$	11,156	$	12,522	$	6,453	$	9,089	$	48,341	$	57,846
Technical Performance Solutions	29,894		38,730		14,281		15,342		145		570		44,320		54,642
Automotive Performance Solutions	16,810		17,337		—		1,713		6,123		7,467		22,933		26,517
	$	77,436	$	92,302	$	25,437	$	29,577	$	12,721	$	17,126	$	115,594	$	139,005

Revenue by industry focus group:
Automotive	$	19,437	$	22,441	$	1,596	$	3,712	$	6,129	$	8,167	$	27,162	$	34,320
Financial Services	8,829		10,418		6,549		6,983		3,863		6,393		19,241		23,794
Defense & Aerospace	18,275		17,667		1,014		2,632		—		—		19,289		20,299
Technology	8,315		7,570		901		808		365		57		9,581		8,435
All Other	22,580		34,206		15,377		15,442		2,364		2,509		40,321		52,157
	$	77,436	$	92,302	$	25,437	$	29,577	$	12,721	$	17,126	$	115,594	$	139,005


	Nine Months Ended September 30,
	North America				EMEA				Emerging Markets				Consolidated
	2020		2019		2020		2019		2020		2019		2020		2019
Revenue by type of service:
Organizational Performance Solutions	$	93,089	$	104,662	$	33,042	$	41,342	$	16,308	$	22,750	$	142,439	$	168,754
Technical Performance Solutions	91,495		113,156		45,257		44,559		367		914		137,119		158,629
Automotive Performance Solutions	53,070		74,304		348		5,472		17,043		20,732		70,461		100,508
	$	237,654	$	292,122	$	78,647	$	91,373	$	33,718	$	44,396	$	350,019	$	427,891

Revenue by industry focus group:
Automotive	$	61,610	$	83,142	$	5,721	$	11,986	$	15,054	$	22,726	$	82,385	$	117,854
Financial Services	28,019		26,543		19,136		25,226		10,243		15,139		57,398		66,908
Defense & Aerospace	56,278		49,939		3,932		7,108		—		—		60,210		57,047
Technology	22,622		26,302		2,074		2,652		1,004		130		25,700		29,084
All Other	69,125		106,196		47,784		44,401		7,417		6,401		124,326		156,998
	$	237,654	$	292,122	$	78,647	$	91,373	$	33,718	$	44,396	$	350,019	$	427,891