Segment Information

3 Months Ended

Nov. 30, 2024

Segment Information [Abstract]

Segment Information

NOTE 7 – SEGMENT INFORMATION

Segments

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 North America, International Direct Office, and International Licensee segments, and the Education Division, which is comprised of our Education practice. Beginning with the first quarter of fiscal 2025, our chief operating decision maker (CODM) began to manage our business, allocate resources, and evaluate performance based on changes that were made in the Company’s management and reporting structure in connection with the restructuring activities discussed in Note 5. As a result, we realigned our reportable segments to those shown below.

Our operations consist of five reportable segments as described below:

North America – Our North America 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 and operations that serve the United States and Canada.

International Direct Offices – Our international direct offices provide the same offerings and content in countries outside of North America where we have a directly owned office, which includes Australia, Austria, China, France, Germany, Ireland, Japan, New Zealand, Switzerland, and the United Kingdom.

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 the 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 CODM continues to be 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. 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 unaudited condensed consolidated financial statements (in thousands). The prior period segment information has been recast to conform with the new reporting segment presentation described above.

		Revenue From
Quarter Ended		External				Adjusted
November 30, 2024		Customers		Gross Profit		EBITDA
Enterprise Division:
North America	$	40,137	$	32,821	$	8,744
International direct offices		8,239		6,113		(224)
International licensees		3,203		2,864		1,644
		51,579		41,798		10,164
Education practice		16,464		10,410		266
Corporate and eliminations		1,043		503		(2,756)
Consolidated	$	69,086	$	52,711	$	7,674
Quarter Ended
November 30, 2023
Enterprise Division:
North America	$	40,293	$	32,764	$	10,441
International direct offices		8,730		6,613		1,158
International licensees		3,423		3,081		1,916
		52,446		42,458		13,515
Education practice		14,891		9,475		110
Corporate and eliminations		1,062		344		(2,656)
Consolidated	$	68,399	$	52,277	$	10,969

‎

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

	Quarter Ended
		November 30,		November 30,
		2024		2023
Segment Adjusted EBITDA	$	10,430	$	13,625
Corporate expenses		(2,756)		(2,656)
Consolidated Adjusted EBITDA		7,674		10,969
Stock-based compensation		(2,167)		(2,897)
Restructuring costs		(1,984)		(581)
Depreciation		(950)		(1,091)
Amortization		(1,098)		(1,071)
Income from operations		1,475		5,329
Interest income		290		288
Interest expense		(178)		(341)
Income before income taxes		1,587		5,276
Income tax provision		(406)		(425)
Net income	$	1,181	$	4,851

Disaggregated Revenue

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

	Quarter Ended
		November 30,		November 30,
		2024		2023
Americas	$	57,730	$	56,357
Asia Pacific		6,563		7,221
Europe/Middle East/Africa		4,793		4,821
	$	69,086	$	68,399

‎

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

Quarter Ended		Services and						Leases and
November 30, 2024		Products		Subscriptions		Royalties		Other		Consolidated
Enterprise Division:
North America	$	16,266	$	23,537	$	334	$	-	$	40,137
International direct offices		5,626		2,571		42		-		8,239
International licensees		62		279		2,862		-		3,203
		21,954		26,387		3,238		-		51,579
Education practice		4,747		10,470		1,247		-		16,464
Corporate and eliminations		-		-		313		730		1,043
Consolidated	$	26,701	$	36,857	$	4,798	$	730	$	69,086
Quarter Ended
November 30, 2023
Enterprise Division:
North America	$	15,796	$	24,142	$	355	$	-	$	40,293
International direct offices		6,330		2,356		44		-		8,730
International licensees		231		332		2,860		-		3,423
		22,357		26,830		3,259		-		52,446
Education practice		3,734		9,757		1,400		-		14,891
Corporate and eliminations		-		-		313		749		1,062
Consolidated	$	26,091	$	36,587	$	4,972	$	749	$	68,399