Scholastic(SCHL) - 2022 Q4 - Annual Report

Revenue Growth - Revenues for the fiscal year ended May 31, 2022, increased by $342.6 million, or 26.3%, reaching $1,642.9 million compared to $1,300.3 million in the prior fiscal year[110] - Total revenues for fiscal year 2022 increased by $342.6 million, or 26.3%, to $1,642.9 million compared to $1,300.3 million in fiscal year 2021[136] - Revenues from the Children's Book Publishing and Distribution segment rose by $271.5 million, driven by a $265.4 million increase in book fairs channel revenues due to the return of in-person fairs[137] - Education Solutions segment revenues increased by $81.3 million, fueled by higher demand for educational products, particularly cultural awareness and early childhood programs[138] - Revenues for fiscal 2022 increased by $271.5 million to $946.5 million, a 40.2% increase compared to $675.0 million in fiscal 2021, driven by the recovery of the book fairs channel[150] - The book fairs channel revenues increased by $265.4 million, with a 26% increase in revenue-per-fair levels compared to the prior year[150] Profitability - The net income per basic and diluted share for Class A and Common Stock was $2.33 and $2.27, respectively, compared to a net loss of $0.32 per share in the prior fiscal year[110] - Operating income improved to $97.4 million from an operating loss of $22.7 million in the prior fiscal year, reflecting a $120.1 million improvement driven by the recovery of the book fairs business[111] - Net income attributable to Scholastic Corporation for fiscal year 2022 was $80.9 million, compared to a net loss of $11.0 million in fiscal year 2021[136] - Net income for fiscal 2022 was $81.0 million, an improvement of $91.9 million compared to a net loss of $10.9 million in fiscal 2021[147] - Segment operating income for the Children's Book Publishing and Distribution segment was $115.3 million, compared to $8.9 million in the prior fiscal year, reflecting a significant recovery[154] - The Company anticipates modest growth in operating income in fiscal 2023, despite increased spending associated with growth initiatives[160] Expenses and Costs - Cost of goods sold for fiscal year 2022 was $765.5 million, representing 46.6% of total revenues, down from 48.4% in the prior year[140] - Selling, general and administrative expenses increased by $100.1 million to $722.8 million, primarily due to higher employee-related costs and increased labor and warehouse-related expenses[141] - Other operating expenses rose to $380.5 million, an increase of $71.1 million, mainly due to higher employee-related costs and increased marketing expenses[152] - Management anticipates higher cost of goods sold as a percentage of revenues in fiscal 2023 due to inflationary pressures and newly purchased inventory[140] - A one percentage point change in the estimated reserve for returns could impact operating income by approximately $3.3 million[117] Future Outlook - For fiscal 2023, the company anticipates an 85% recovery in book fair count to pre-pandemic levels while maintaining strong revenue per fair[112] - The company expects continued growth in educational product sales due to government funding programs and improvements in sales and marketing efforts[113] - The New Worlds Reading Initiative program will enter its second year in August, contributing to revenue growth[113] - Internationally, modest improvement in operating profits is expected as major markets recover from the pandemic, aided by the exit from the low-margin direct-sales business in Asia[113] - The Company plans to exit and sell the direct sales business in Asia, which generated revenues of $17.2 million in fiscal 2022[162] Cash Flow and Liquidity - Cash provided by operating activities increased by $155.0 million to $226.0 million, driven by $390.0 million in higher customer collections and $54.0 million in higher net federal tax refunds[168] - Cash used in investing activities decreased by $7.3 million to $43.2 million, mainly due to lower spending on property, plant, and equipment[169] - Cash used by financing activities increased by $176.9 million to $229.2 million, primarily due to repayments of borrowings under the U.S. credit agreement of $175.0 million[170] - The Company's cash and cash equivalents totaled $316.6 million as of May 31, 2022, down from $366.5 million in the prior year[171] - The Company expects to maintain sufficient liquidity for ongoing operations, with primary sources including cash and cash equivalents of $316.6 million and U.S. loan agreements[175] - The U.S. credit agreement was amended to increase the borrowing limit from $250.0 million to $300.0 million, providing flexibility for business operations[173] Strategic Initiatives - The Company repurchased $33.4 million of common stock during the fiscal year, lifting the temporary suspension of its buy-back program[174] - The Company is exploring domestic and international expansion opportunities, including potential niche and strategic acquisitions[179] - The Company manages foreign currency exchange rate risks through established procedures and short-term forward exchange contracts[180]