Segment Information

9 Months Ended

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.

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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

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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

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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