Scholastic(US:SCHL)2025-12-19 21:04Financial Performance - Net income for the quarter ended November 30, 2025 increased by $7.1 million to $55.9 million, compared to $48.8 million in the prior fiscal year quarter, with earnings per share of $2.21 and $2.17 for Class A and Common Stock respectively [128]. - Revenues for the quarter ended November 30, 2025 increased by $13.9 million to $380.9 million, driven by new releases and increased revenues from School Reading Events [131]. - Revenues for the six months ended November 30, 2025 decreased by $24.6 million to $102.3 million in the Education Solutions segment, primarily due to delayed school funding [137]. - Revenues for the quarter ended November 30, 2025 decreased by $1.7 million to $15.1 million, compared to $16.8 million in the prior fiscal year quarter, primarily due to lower production revenues [146]. - Revenues for the six months ended November 30, 2025 decreased by $4.7 million to $28.7 million, compared to $33.4 million in the prior fiscal year period [147]. Cost and Expenses - Cost of goods sold for the quarter ended November 30, 2025 was $146.5 million, or 38.5% of revenues, a decrease from 39.0% in the prior fiscal year quarter due to improved inventory utilization [131]. - Other operating expenses for the quarter ended November 30, 2025 increased by $4.0 million to $125.6 million, driven by inflationary pressures [133]. - Cost of goods sold for the quarter ended November 30, 2025 was $8.8 million, or 58.3% of revenues, down from $10.6 million, or 63.1% of revenues in the prior fiscal year quarter [148]. - Other operating expenses for the quarter ended November 30, 2025 were $29.2 million, a decrease of $2.9 million from $32.1 million in the prior fiscal year quarter, primarily due to lower employee-related costs [157]. Segment Performance - Segment operating income for the quarter ended November 30, 2025 increased by $6.7 million to $108.8 million, attributed to increased revenues from book fairs and trade channels [135]. - Segment operating loss for the quarter ended November 30, 2025 was $9.0 million, compared to $4.7 million in the prior fiscal year quarter, driven by asset impairments recognized during the quarter [152]. - Segment operating income for the quarter ended November 30, 2025 was $12.4 million, compared to $5.7 million in the prior fiscal year quarter, reflecting improved margins and increased revenues [159]. Cash Flow and Liquidity - Cash used in operating activities was $8.6 million for the six months ended November 30, 2025, compared to cash provided of $29.3 million in the prior fiscal year period, representing an increase in cash used of $37.9 million [164]. - Cash provided by financing activities was $13.9 million for the six months ended November 30, 2025, down from $214.5 million in the prior fiscal year period, a decrease of $200.6 million [166]. - The Company's cash and cash equivalents totaled $99.3 million at November 30, 2025, down from $139.6 million at November 30, 2024 [167]. - The Company expects to maintain sufficient liquidity to fund ongoing operations, with cash and cash equivalents of $99.3 million and availability under the U.S. Credit Agreement of $124.6 million at November 30, 2025 [169]. Debt and Obligations - The company reported total debt obligations of $275.0 million as of November 30, 2025, with an average interest rate of 5.7% [176]. - The company has short-term debt obligations of $5.6 million, with an average interest rate of 9.0% for the fiscal year 2026 [176]. - Film-related obligations amount to $14.8 million, with varying average interest rates between 5.0% and 6.6% [176]. Tax and Regulatory Matters - The interim effective tax rate for the six months ended November 30, 2025 was 28.0%, a decrease from 37.2% in the prior fiscal year period [127]. - The certifications of the Chief Executive Officer and Chief Financial Officer were filed pursuant to the Sarbanes-Oxley Act of 2002 [184]. - The report was signed by the President and Chief Executive Officer, Peter Warwick, and the Chief Financial Officer, Haji L. Glover, on December 19, 2025 [186]. Risk Management - The Company expects newly imposed tariffs to continue to increase cost of goods sold, particularly during the upcoming peak selling season [132]. - The company manages foreign currency exchange risks through established procedures and short-term forward exchange contracts, which were not significant as of November 30, 2025 [175]. - The company is exposed to market risks primarily from changes in interest rates affecting its variable-rate borrowings [176]. - The company’s cash flows and earnings are subject to fluctuations from changes in foreign currency exchange rates due to its operations in various foreign countries [175]. Internal Controls - There were no changes in the company's internal control over financial reporting that materially affected its effectiveness during the quarter ended November 30, 2025 [179]. - The Corporation's disclosure controls and procedures were effective as of November 30, 2025, ensuring timely reporting as required by the SEC [179]. - The company’s management has concluded that its disclosure controls and procedures were effective as of November 30, 2025 [179]. - There were no changes in the Corporation's internal control over financial reporting during the quarter ended November 30, 2025, that materially affected its internal controls [179]. Share Repurchase - The company has not repurchased any shares under its authorized stock repurchase program during the three months ended November 30, 2025 [181]. - No shares were repurchased under the Company's authorized stock repurchase program during the three months ended November 30, 2025 [181]. Contracts and Agreements - The Company has entered into multiple contracts of purchase and sale and lease agreements dated December 1, 2025, with ESRT 555-557 Broadway, L.L.C. and FNLR Fortuna Major LLC [183]. - The financial statements for the quarter ended November 30, 2025, include condensed consolidated statements of operations and cash flows, among others [184]. - The company did not report any adoption or termination of trading arrangements by its directors or officers during the quarter [182].