Segment Information
 9 Months Ended
May 31, 2021
Segment Information [Abstract]  
Segment Information NOTE 11 – 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 are comprised 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 sales offices located in Japan, China, the United Kingdom, Australia, Germany, Switzerland, and Austria; 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 results 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 certain corporate administrative functions.

We have determined that the Company’s chief operating decision maker is the CEO, 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 (loss) excluding interest expense, income taxes, depreciation expense, amortization expense, stock-based compensation, and certain other charges such as adjustments for changes in the fair value of contingent liabilities arising from business acquisitions. 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).

Sales to

Quarter Ended

External

Adjusted

May 31, 2021

Customers

Gross Profit

EBITDA

Enterprise Division:

Direct offices

$

42,704

$

34,678

$

8,894

International licensees

2,395

2,069

821

45,099

36,747

9,715

Education practice

11,899

8,179

1,132

Corporate and eliminations

1,738

981

(2,284)

Consolidated

$

58,736

$

45,907

$

8,563

Quarter Ended

May 31, 2020

Enterprise Division:

Direct offices

$

26,760

$

21,108

$

352

International licensees

708

339

(724)

27,468

21,447

(372)

Education practice

8,216

4,711

(1,536)

Corporate and eliminations

1,421

663

(1,734)

Consolidated

$

37,105

$

26,821

$

(3,642)

Three Quarters Ended

May 31, 2021

Enterprise Division:

Direct offices

$

115,185

$

93,201

$

21,729

International licensees

7,421

6,454

3,608

122,606

99,655

25,337

Education practice

27,874

17,510

(2,010)

Corporate and eliminations

4,743

2,469

(5,925)

Consolidated

$

155,223

$

119,634

$

17,402

Three Quarters Ended

May 31, 2020

Enterprise Division:

Direct offices

$

106,844

$

81,221

$

10,796

International licensees

7,120

5,696

2,696

113,964

86,917

13,492

Education practice

30,190

17,828

(3,707)

Corporate and eliminations

5,309

2,772

(4,410)

Consolidated

$

149,463

$

107,517

$

5,375

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

Quarter Ended

Three Quarters Ended

May 31,

May 31,

May 31,

May 31,

2021

2020

2021

2020

Segment Adjusted EBITDA

$

10,847 

$

(1,908)

$

23,327 

$

9,785 

Corporate expenses

(2,284)

(1,734)

(5,925)

(4,410)

Consolidated Adjusted EBITDA

8,563 

(3,642)

17,402 

5,375 

Stock-based compensation

(2,370)

5,104 

(5,127)

1,460 

Business acquisition costs

(300)

-

(300)

-

Decrease (increase) in the fair value of

contingent consideration liabilities

(118)

276 

(164)

367 

Government COVID-19 assistance

-

-

234 

-

Knowledge Capital wind-down costs

-

-

-

(389)

Gain from insurance settlement

-

933 

150 

933 

Depreciation

(1,423)

(1,652)

(4,904)

(4,925)

Amortization

(1,238)

(1,164)

(3,503)

(3,504)

Income (loss) from operations

3,114

(145)

3,788

(683)

Interest income

16 

18 

56 

36 

Interest expense

(525)

(621)

(1,633)

(1,783)

Income (loss) before income taxes

2,605

(748)

2,211

(2,430)

Income tax benefit (provision)

10,149 

(10,220)

9,605 

(7,985)

Net income (loss)

$

12,754

$

(10,968)

$

11,816

$

(10,415)

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,

2021

2020

2021

2020

Americas

$

47,524

$

32,788

$

124,679

$

119,545

Asia Pacific

7,922

2,759

21,351

19,987

Europe/Middle East/Africa

3,290

1,558

9,193

9,931

$

58,736

$

37,105

$

155,223

$

149,463


‎

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

Quarter Ended

Services and

Leases and

May 31, 2021

Products

Subscriptions

Royalties

Other

Consolidated

Enterprise Division:

Direct offices

$

23,266

$

18,752

$

686

$

-

$

42,704

International licensees

412

-

1,983

-

2,395

23,678

18,752

2,669

-

45,099

Education practice

4,298

7,171

430

-

11,899

Corporate and eliminations

-

-

345

1,393

1,738

Consolidated

$

27,976

$

25,923

$

3,444

$

1,393

$

58,736

Quarter Ended

May 31, 2020

Enterprise Division:

Direct offices

$

10,051

$

15,965

$

744

$

-

$

26,760

International licensees

191

-

517

-

708

10,242

15,965

1,261

-

27,468

Education practice

1,373

6,286

557

-

8,216

Corporate and eliminations

-

-

334

1,087

1,421

Consolidated

$

11,615

$

22,251

$

2,152

$

1,087

$

37,105

Three Quarters Ended

May 31, 2021

Enterprise Division:

Direct offices

$

60,589

$

52,499

$

2,097

$

-

$

115,185

International licensees

1,267

-

6,154

-

7,421

61,856

52,499

8,251

-

122,606

Education practice

8,018

17,977

1,879

-

27,874

Corporate and eliminations

-

-

1,053

3,690

4,743

Consolidated

$

69,874

$

70,476

$

11,183

$

3,690

$

155,223

Three Quarters Ended

May 31, 2020

Enterprise Division:

Direct offices

$

58,946

$

45,425

$

2,473

$

-

$

106,844

International licensees

1,191

-

5,929

-

7,120

60,137

45,425

8,402

-

113,964

Education practice

7,908

19,296

2,986

-

30,190

Corporate and eliminations

-

-

1,649

3,660

5,309

Consolidated

$

68,045

$

64,721

$

13,037

$

3,660

$

149,463