Scholastic(SCHL) - 2025 Q3 - Quarterly Results

Revenue Performance - Revenues for Q3 fiscal 2025 increased by 4% to $335.4 million, compared to$323.7 million in Q3 fiscal 2024[8] - The Children's Book Publishing and Distribution segment's revenues rose by 5% to $203.3 million, with operating income improving to$7.6 million from $2.3 million a year ago[11] - The Education Solutions segment experienced a 16$57.2 million, driven by ongoing challenges in the supplemental curriculum market[13] - International revenues increased by 5% to $59.3 million, excluding a negative impact of$2.7 million from foreign currency exchange[15] - Revenues for the three months ended February 28, 2025, were $335.4 million, a 3$323.7 million for the same period last year[34] - The Children's Book Publishing and Distribution segment reported revenues of $203.3 million for the three months ended February 28, 2025, a 5$193.1 million in the prior year[41] - The Education Solutions segment experienced a 16% decline in revenues, reporting $57.2 million for the three months ended February 28, 2025, down from$68.5 million[41] - The Entertainment segment generated revenues of $12.8 million for the three months ended February 28, 2025, a significant increase from$0.5 million in the prior year[41] - International revenues remained stable at $59.3 million for the three months ended February 28, 2025, compared to$59.1 million in the same period last year[41] Profitability and Earnings - Adjusted EBITDA for Q3 fiscal 2025 was $6.0 million, a significant increase of 183$7.2 million in the same quarter last year[10] - Operating income for the three months ended February 28, 2025, was a loss of $23.9 million, an improvement from a loss of$34.9 million in the prior year[34] - Net loss for the three months ended February 28, 2025, was $3.6 million, compared to a net loss of$26.5 million for the same period last year[34] - Basic and diluted earnings per share for the three months ended February 28, 2025, were both $(0.13), an improvement from$(0.91) in the prior year[34] - Adjusted EBITDA for the three months ended February 28, 2025, was $6.0 million, compared to$(7.2) million in the prior year, indicating a positive trend[56] - The total earnings before income taxes reported was $(28.4) million, compared to$(34.6) million for the same period in the previous year, indicating an improvement of approximately 17.5%[60] Cash Flow and Debt - Free cash flow usage for fiscal 2025 was $30.7 million, compared to$7.1 million in the prior year period, reflecting lower customer remittances and higher interest payments[19] - Net debt increased to $189.4 million, compared to a net cash position of$78.9 million in the prior year, due to borrowings for the acquisition[20] - Cash and cash equivalents decreased to $94.7 million from$110.4 million year-over-year, a decline of 14.5%[44] - Net cash used in operating activities for the three months ended February 28, 2025, was $(12.0) million, compared to$13.1 million for the same period last year[44] - Free cash flow for the three months ended February 28, 2025, was $(30.7) million, a significant decrease from$(7.1) million in the prior year[44] - The company’s lines of credit and long-term debt increased to $280.8 million from$31.5 million year-over-year, indicating a significant rise in leverage[44] Shareholder Returns - The company returned over $35 million to shareholders through share repurchases and dividends in Q3, with an increased share repurchase authorization of$100 million[6][24] Segment Performance - The acquisition of 9 Story Media Group contributed to revenue growth, particularly in the Entertainment segment, which reported revenues of $12.8 million[14] - The Children's Book Publishing and Distribution segment reported earnings before income taxes of$73.0 million for the nine months ended February 28, 2025, consistent with the previous year's $72.8 million, showing stability in this segment[60] - The Education Solutions segment experienced a loss before income taxes of$(24.4) million for the nine months ended February 28, 2025, compared to a loss of $(13.7) million in the prior year, indicating a decline of approximately 78.0$(6.0) million for the nine months ended February 28, 2025, compared to $(7.2) million in the previous year, indicating an improvement of approximately 16.7$(11.4) million for the nine months ended February 28, 2025, compared to $(4.4) million in the previous year, representing a decline of approximately 159.1$1.8 million for the three months ended February 28, 2025, related to cost-savings initiatives[35] - The company recognized pretax severance costs of $0.7 million related to cost-savings initiatives for the three months ended February 28, 2025[52] Guidance and Future Outlook - Full-year Adjusted EBITDA guidance for fiscal 2025 has been narrowed to approximately$140 million, down from a previous range of $140 million to$150 million[7] - Adjusted EBITDA for the nine months ended February 28, 2025, was $54.2 million, a significant increase from$(31.1) million reported for the same period last year, reflecting a turnaround in performance[60] - One-time items before income taxes for the nine months ended February 28, 2025, totaled $10.1 million, compared to$10.6 million in the previous year, showing a slight decrease[60] - Depreciation and amortization for the nine months ended February 28, 2025, amounted to $82.4 million, up from$69.1 million in the same period last year, reflecting increased investment in assets[60] - Interest expense for the nine months ended February 28, 2025, was $11.9 million, compared to$2.4 million in the previous year, indicating an increase in financing costs[60]