Company Overview - Scholastic Corporation has been a leader in children's publishing for over 100 years, focusing on literacy and educational content [1] - The company is the largest publisher and distributor of children's books globally, reaching over 135 countries [1] Earnings Announcement - Scholastic will release its third quarter fiscal year 2025 earnings on March 20, 2025, at 4:00 PM ET [2] - A conference call will follow at 4:30 PM ET, hosted by the President and CEO, Peter Warwick, and CFO, Haji Glover [2] - Participants are encouraged to join the call five minutes early to avoid delays [2] Access Information - The earnings release will be available on the company's investor relations website [2] - A live webcast of the conference call can be accessed online, with details for phone access also provided [2] - An archived version of the webcast and accompanying slides will be available shortly after the live call [2]

Financial Performance - Revenues for the second quarter ended November 30, 2024 were $544.6 million, a decrease of $18.0 million or 3% compared to the prior fiscal year quarter [166]. - Net income per diluted share for the second quarter of fiscal 2024 was $1.71, down from $2.45 in the prior fiscal year quarter [166]. - Revenues for the six months ended November 30, 2024 decreased by $9.3 million to $781.8 million, compared to $791.1 million in the prior fiscal year period [169]. - Revenues for the quarter ended November 30, 2024 decreased by $18.0 million to $544.6 million, a decline of 3.2% compared to the prior fiscal year quarter [195]. - Revenues for the three months ended November 30, 2024 were $71.2 million, a decrease of 12.1% from $81.0 million in the prior fiscal year quarter [236]. - Revenues for the quarter ended November 30, 2024 increased by $0.2 million to $86.7 million, compared to $86.5 million in the prior fiscal year quarter [244]. - Revenues from the Entertainment segment for the three and six months ended November 30, 2024 were $16.8 million and $33.4 million, respectively, compared to $0.4 million and $0.8 million in the prior fiscal year period [241]. Segment Performance - The Children's Book Publishing and Distribution segment saw a revenue decrease of $22.4 million, primarily due to lower trade channel revenues [169]. - Revenues from the Entertainment segment increased by $32.6 million, reflecting the addition of 9 Story [169]. - Education Solutions segment revenues decreased by $20.1 million to $126.9 million, driven by lower spending on supplemental materials [183]. - The Children's Book Publishing and Distribution segment saw a revenue decrease of $25.4 million, primarily due to lower trade channel revenues and a shift in book fair deliveries [195]. - Education Solutions segment revenues decreased by $9.8 million, attributed to reduced spending on supplemental materials and lower subscription revenues from Magazines+ [208]. - The Entertainment segment's revenues increased by $16.4 million, benefiting from the addition of 9 Story [195]. Expenses and Costs - Selling, general and administrative expenses for the six months ended November 30, 2024 increased to $407.0 million, compared to $397.3 million in the prior fiscal year period [172]. - Selling, general and administrative expenses increased to $224.9 million, up $11.8 million from the prior fiscal year quarter, primarily due to higher operating expenses from the addition of 9 Story [198]. - Cost of goods sold for the quarter was $228.6 million, or 42.0% of revenues, compared to $234.1 million, or 41.6% of revenues in the prior year [197]. - Cost of goods sold for the quarter ended November 30, 2024 was $27.3 million, or 38.3% of revenues, compared to $30.7 million, or 37.9% of revenues, in the prior fiscal year quarter [238]. - Cost of goods sold for the quarter ended November 30, 2024 was $48.9 million, or 56.4% of revenues, compared to $48.9 million, or 56.5% of revenues, in the prior fiscal year quarter [246]. - Other operating expenses for the six months ended November 30, 2024 were $89.7 million, a decrease of $6.9 million compared to $96.6 million in the prior fiscal year period [239]. Cash Flow and Liquidity - Cash provided by operating activities was $29.3 million for the six months ended November 30, 2024, a decrease of $42.3 million compared to $71.6 million in the prior fiscal year period [221]. - Cash provided by financing activities was $214.5 million for the six months ended November 30, 2024, an increase of $312.3 million compared to cash used in financing activities of $97.8 million in the prior fiscal year period [222]. - The Company's cash and cash equivalents totaled $139.6 million at November 30, 2024, compared to $149.5 million at November 30, 2023 [223]. - Cash used in investing activities was $217.2 million for the six months ended November 30, 2024, an increase of $168.1 million compared to the prior fiscal year period, driven by the acquisition of 9 Story for $176.2 million [251]. - The Company expects to maintain sufficient liquidity, with cash and cash equivalents of $139.6 million and availability under the U.S. Credit Agreement of $149.6 million as of November 30, 2024 [224]. Tax and Interest - The interim effective tax rate for the six months ended November 30, 2024 was 37.2%, an increase from 22.9% in the prior fiscal year [201]. - Interest expense for the six months ended November 30, 2024 was $8.7 million, compared to $0.8 million in the prior fiscal year period, due to borrowings for the 9 Story acquisition [173]. - The average interest rate on long-term debt is 6.8% with total long-term debt amounting to $250.0 million as of November 30, 2024 [229]. - The company is subject to market risks from changes in interest rates affecting its variable-rate borrowings [257]. Strategic Initiatives - The Company expects revenues to benefit from new releases, including the thirteenth book in the Dog Man series and the fifth book in the Hunger Games series [167]. - The company is developing new supplemental products for schools, expected to launch for the 2025/2026 school years [194]. - The company has $76.6 million remaining available for future purchases of common shares under its open-market buy-back program as of November 30, 2024 [252]. - The company categorizes its businesses into four reportable segments: Children's Book Publishing and Distribution, Education Solutions, International, and Entertainment [277]. - The company’s operating philosophy focuses on using cash from operating activities for debt reduction, reinvestment, and strategic acquisitions [252]. Risks and Challenges - The company faces risks from changing industry trends in the media and content sector, which may affect the demand for its entertainment programming [281]. - The company’s entertainment business relies on key relationships with buyers of film and television content, which may impact financial performance due to demand fluctuations [264]. - The entertainment segment includes operations from the recently acquired 9 Story Media Group Inc., which may impact the company's financial performance if synergies are not realized [265]. - The company reported a significant increase in cash used for acquisitions, with the previous year involving only $5.8 million for educational programs and $2.1 million for a noncontrolling interest [251].

Financial Data and Key Metrics Changes - In Q2 2025, revenues decreased by 3% to $544.6 million, operating income fell to $78.9 million from $101.3 million in the prior year, and adjusted EBITDA was $108.7 million compared to $124 million a year ago [44][42][43] - Net income was $52 million, down from $76.9 million in the prior year, with diluted earnings per share at $1.82 compared to $2.45 last year [44][45] Business Segment Data and Key Metrics Changes - Children's Book Publishing and Distribution revenues decreased by 6% to $367 million, with operating income down to $102.1 million [45][46] - Book Fairs revenues were $231 million, a decrease of 5%, while Book Clubs revenue increased by 2% to $33.2 million [46][48] - Trade Publishing revenues were $102.8 million, down from $117.9 million in the prior year [49] - Entertainment segment revenues were $16.8 million, reflecting contributions from the acquisition of 9 Story Media Group, but incurred an operating loss of $3.9 million [50][49] - Education Solutions segment revenues declined by 12% to $71.2 million, with an operating loss of $0.5 million compared to a profit of $5.8 million in the prior year [52][54] - International segment revenues were $86.7 million, in line with the prior year, with slight decreases in Australia [55] Market Data and Key Metrics Changes - The company is closely monitoring U.S. trade policy and expects little exposure in the second half of fiscal 2025 due to prior inventory purchases [11][12] - The company anticipates modest growth in major international markets relative to fiscal 2024 [39] Company Strategy and Development Direction - Scholastic is focused on expanding its core markets and exploring new models, channels, and products [8][9] - The company aims to leverage its brand and IP through direct-to-consumer offerings and partnerships with public and private funders [40] - Investments are being made in new literacy programs and educational solutions to align with the science of reading [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential changes in U.S. policy and educational funding, emphasizing the importance of state and local funding [11][14][82] - The company remains optimistic about its long-term growth opportunities and is taking proactive steps to align spending with growth priorities [63][64] Other Important Information - The company successfully upsized its unsecured revolving credit facility to $400 million, maintaining a strong balance sheet [10][58] - Free cash flow in Q2 was $42.4 million, down from $88.6 million in the prior year [57] Q&A Session Summary Question: Dynamics and factors driving margins in the Entertainment segment - The operating loss in the Entertainment segment was impacted by intangible assets and production expenses [70][73] Question: Role of 9 Story in the Dog Man movie production - The Dog Man movie is produced by DreamWorks, with Scholastic expecting benefits from increased book sales due to the movie's release [79][80] Question: Base case for funding changes with the incoming Trump administration - Short-term impacts are not expected, but a decentralization of funding from federal to state and local levels is anticipated [82] Question: Optimism regarding state literacy partnerships - Increased student participation in the New World Reading Initiative in Florida is driving optimism [85] Question: Capital allocation priorities and leverage goals - The company is comfortable with its current leverage and plans to increase it modestly to support growth initiatives [87]

■SCHOLASTIC Second Quarter 2025 Earnings Call Presentation Thursday, December 19, 2024 Forward-Looking Statements / Regulation G This presentation contains certain statements made today which will be forward-looking. These forward-looking statements, by their nature, are subject to various risks and uncertainties, and actual results may differ materially from those currently anticipated. Today's comments include references to certain non-GAAP financial measures as defined in Regulation G. The reconciliation ...

Financial Performance - Scholastic reported quarterly earnings of $1.82 per share, missing the Zacks Consensus Estimate of $2.30 per share, and down from $2.45 per share a year ago, representing an earnings surprise of -20.87% [1] - The company posted revenues of $544.6 million for the quarter ended November 2024, missing the Zacks Consensus Estimate by 1.69%, and down from $562.6 million year-over-year [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.78 on revenues of $347.05 million, and for the current fiscal year, it is $1.41 on revenues of $1.66 billion [8] - The estimate revisions trend for Scholastic is currently unfavorable, leading to a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [7] Industry Context - Scholastic belongs to the Zacks Publishing - Books industry, which is currently in the bottom 13% of over 250 Zacks industries, suggesting a challenging environment for the company [9]

Financial Performance - Revenues for Q2 Fiscal 2025 decreased 3% to $544.6 million compared to $562.6 million in Q2 Fiscal 2024[4] - Operating income fell 26% to $74.7 million, down from $101.3 million a year ago, reflecting a 22% decrease when excluding one-time items[6] - Diluted earnings per share decreased 30% to $1.71, compared to $2.45 in the prior year[4] - Net income for the three months ended November 30, 2024, was $48.8 million, compared to $76.9 million for the same period in 2023, reflecting a decline of 36.6%[30] - Adjusted EBITDA for Q2 Fiscal 2025 decreased 12% to $108.7 million compared to $124.0 million in Q2 Fiscal 2024[6] - Adjusted EBITDA for the three months ended November 30, 2024, was $108.7 million, down from $124.0 million in the prior year[45] - Reported earnings before income taxes were $70.5 million, compared to a loss of $12.9 million in the previous period[51] - Earnings before income taxes excluding one-time items were $70.5 million, a significant improvement from a loss of $12.9 million[51] Segment Performance - The Children's Book Publishing and Distribution segment's revenues decreased 6% to $367.0 million, with Book Fairs revenues down 5% to $231.0 million[7][8] - Education Solutions revenues decreased 12% to $71.2 million, resulting in a segment operating loss of $0.5 million[11] - The Children's Book Publishing and Distribution segment reported total revenues of $367.0 million for the three months ended November 30, 2024, a decrease of 6% from $392.4 million in the prior year[33] - The Education Solutions segment experienced a revenue decline of 12% to $71.2 million for the three months ended November 30, 2024, compared to $81.0 million in the same period last year[33] - The Entertainment segment generated revenues of $16.8 million for the three months ended November 30, 2024, significantly up from $0.4 million in the prior year, marking a substantial increase[33] - The Children's Book Publishing and Distribution segment generated $102.1 million in earnings before income taxes for the three months ended November 30, 2024[50] - The Education Solutions segment reported a loss of $0.5 million for the three months ended November 30, 2024, compared to a loss of $5.8 million in the same period of 2023[50] - The newly formed Entertainment segment reported a loss of $4.9 million for the three months ended November 30, 2024[50] - International segment earnings before income taxes were $5.2 million for the three months ended November 30, 2024[50] Cash Flow and Debt - The Company reported a net cash provided by operating activities of $71.2 million, down from $109.7 million in the prior year[16] - Net debt increased to $120.8 million from a net cash position of $143.2 million in the prior year, due to borrowings for the acquisition of 9 Story Media Group[17] - Cash and cash equivalents decreased to $139.6 million as of November 30, 2024, down from $149.5 million a year earlier[36] - Free cash flow for the three months ended November 30, 2024, was $42.4 million, down from $88.6 million in the prior year[36] Cost Management - The company recognized pretax severance costs of $3.8 million for the three months ended November 30, 2024, related to cost-savings initiatives[30] - Overhead costs for the three months ended November 30, 2024, were $31.1 million, compared to $23.3 million in the prior year[50] - The company recognized pretax severance costs of $0.4 million related to cost-saving initiatives in the three months ended November 30, 2024[41] Future Outlook - The Company expects to achieve 90,000 Book Fairs in Fiscal 2025, indicating strong participation[8] - The Company reaffirmed its guidance for Fiscal 2025, confident in its ability to navigate the market[2] - Future outlook includes continued focus on cost-saving initiatives and potential acquisitions to enhance market position[41]

Core Insights - Scholastic Corporation reaffirms its fiscal 2025 guidance despite a 3% decrease in revenues for the second quarter, primarily due to timing-related factors in publishing releases and lower sales in Education Solutions [1][7][10] - The company continues to see growth in its school-based channels, with a record number of fall Book Fairs booked since the pandemic, and positive momentum in Book Clubs [2][3] - The acquisition of 9 Story Media Group is contributing to the company's integrated development and production slate, enhancing its digital-first growth opportunities [3][5] Financial Performance - Revenues for the second quarter decreased to $544.6 million from $562.6 million, reflecting a 3% decline year-over-year [7][31] - Operating income fell 26% to $74.7 million, down from $101.3 million in the prior year, influenced by one-time charges [8][31] - Adjusted EBITDA decreased 12% to $108.7 million, indicating lower operating income in key segments [10][31] Segment Analysis - Children's Book Publishing and Distribution segment revenues decreased 6% to $367.0 million, with Book Fairs revenues down 5% to $231.0 million [11][12] - Education Solutions revenues decreased 12% to $71.2 million, reflecting lower spending on supplemental curriculum products [16] - The Entertainment segment generated $16.8 million in revenues, primarily from the addition of 9 Story Media Group, but reported an operating loss of $4.7 million [17][34] Capital Position and Liquidity - The company has a strong balance sheet with a recently upsized revolving credit facility of $400 million, allowing for continued investment in growth opportunities [5][21] - Free cash flow for the second quarter was $42.4 million, down from $88.6 million in the prior year, primarily due to higher inventory spend and interest payments [20][35] - Net cash position shifted to a debt of $120.8 million compared to a net cash position of $143.2 million in the prior year, reflecting borrowings for the acquisition [21][35] Strategic Outlook - Scholastic plans to release several highly anticipated titles in the coming months, including the fifth book in the Hunger Games series, which is expected to drive revenue growth [4][14] - The company aims to leverage its trusted brand and bestselling intellectual properties to expand its market presence and drive long-term profitable growth [5][29]

Group 1 - Scholastic Corporation declared a quarterly cash dividend of $0.20 per share for the third quarter of fiscal 2025 [1] - The dividend is payable on March 14, 2025, to shareholders of record as of January 31, 2025 [1] Group 2 - Scholastic has over 100 years of experience in providing quality content and experiences focused on literacy for children [2] - The company is the world's largest publisher and distributor of children's books, reaching over 135 countries [2] - Scholastic aims to empower children to become lifelong readers and learners through various resources, including bestselling books and classroom materials [2]

Scholastic (SCHL) came out with a quarterly loss of $2.13 per share versus the Zacks Consensus Estimate of a loss of $2.48. This compares to loss of $2.20 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 14.11%. A quarter ago, it was expected that this publishing, education and media company would post earnings of $2.66 per share when it actually produced earnings of $1.73, delivering a surprise of -34.96%. Over the last four ...

Company Affirms Fiscal 2025 Guidance NEW YORK, Sept. 26, 2024 /PRNewswire/ -- Scholastic Corporation (NASDAQ: SCHL), the global children's publishing, education and media company, today reported financial results for the Company's fiscal first quarter ended August 31, 2024. Peter Warwick, President and Chief Executive Officer, said, "During our first quarter, Scholastic prepared for another important back-toschool season, as we executed on our long-term growth initiatives. In the seasonally quiet quarter fo ...