Financial Data and Key Metrics Changes - Revenues decreased by 5% to $225.6 million in the first quarter, reflecting the seasonality of the business [13] - Adjusted EBITDA was a loss of $55.7 million, an improvement from a loss of $60.5 million a year ago [14] - Net loss was $63.3 million compared to $60.3 million in the prior year period, with adjusted loss per diluted share increasing to $2.52 from $2.13 [14] Business Line Data and Key Metrics Changes - Children's Book Publishing and Distribution revenues increased by 4% to $109.4 million, with Book Fair revenue up 18% to $34.1 million [14][15] - Trade Publishing revenues were essentially flat at $73.5 million, driven by strong demand for key titles [15] - Scholastic Education segment revenues decreased to $40.1 million from $55.7 million, reflecting lower spending on supplemental curriculum products [16] - Entertainment segment revenues decreased by $3 million to $13.6 million, primarily due to fewer episodic deliveries [16] Market Data and Key Metrics Changes - International segment revenues increased to $59.4 million from $56.8 million, with growth driven by higher revenues in Australia, the UK, and Asia [17] - The company expects to surpass 10 million monthly views of classic Clifford content on YouTube by year-end [9] Company Strategy and Development Direction - The company is focused on building long-term opportunities as a global leader in children's publishing, media, and education [22] - Efforts include real estate monetization, cost reductions, and strengthening the organization [22][19] - The integration of Trade, Fairs, and Clubs into a new Children's Book Group aims to streamline operations and enhance data analytics [8] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging funding environment for Scholastic Education, with delays and cancellations of federal education grants impacting sales [10][11] - The company remains optimistic about long-term growth potential despite near-term challenges [11] - Full-year guidance for revenue growth of 2% to 4% and adjusted EBITDA of $160 to $170 million has been affirmed [21] Other Important Information - The company is actively pursuing share buybacks and has $70 million remaining on its authorization [18] - Seasonal net cash used by operating activities increased to $81.8 million, driven by fluctuations in net working capital [18] Q&A Session Summary Question: Feedback on new products in Education Solutions - Management received positive feedback on new products despite a difficult selling environment due to funding uncertainties [24][25] Question: Key variables to monitor for spending trends - Management indicated that schools are still spending but are cautious due to funding uncertainties, with expectations for improvement as funding becomes more certain [26][28] Question: Timing for financial impact from the Entertainment Segment - Management expects gradual benefits from the digital model and increased revenue from YouTube, with significant growth anticipated over time [30][31] Question: Cost structure and areas for expense reduction - Management highlighted ongoing efforts to reduce costs, with $15 million to $20 million in reductions already realized [36] Question: Factors affecting fiscal year guidance - Management emphasized the importance of retail market conditions and consumer spending, with a focus on managing costs and investing in growth [37][39] Question: Outlook for fiscal Q2 - Management expressed optimism for Q2, citing strong upcoming releases and increased fair bookings [48][50]

Financial Data and Key Metrics Changes - Revenues decreased by 5% to $225.6 million in the first quarter, reflecting the seasonality of the business [11] - Adjusted operating loss improved to $81.9 million from $85.6 million in the prior year [12] - Adjusted EBITDA was a loss of $55.7 million, an improvement from a loss of $60.5 million a year ago [13] - Net loss was $63.3 million compared to $60.3 million in the prior year period, with adjusted loss per diluted share increasing to $2.52 from $2.13 [13] Business Line Data and Key Metrics Changes - Children's Book Publishing and Distribution revenues increased by 4% to $109.4 million, driven by growth in School Book Fairs [14] - Book Fair revenue was $34.1 million, an increase of 18%, while Book Clubs revenue decreased to $1.8 million from $2.7 million [14] - Trade Publishing revenues were essentially flat at $73.5 million, reflecting strong demand for key titles [14] - Scholastic Education segment revenues decreased to $40.1 million from $55.7 million, impacted by lower spending on supplemental curriculum products [15] - Entertainment Segment revenues decreased by $3 million to $13.6 million, primarily due to fewer episodic deliveries [15] Market Data and Key Metrics Changes - International Segment revenues increased to $59.4 million from $56.8 million, with growth driven by higher revenues in Australia, the U.K., and Asia [16] - Excluding foreign currency impacts, segment revenues were up $2.4 million [16] Company Strategy and Development Direction - The company is focused on real estate monetization and has significant investor interest in its properties [4] - Aiming for profitable growth through financial discipline and operational leverage while affirming full-year guidance [4] - The integration of Trade, Fairs, and Clubs into a new Children's Book Group aims to streamline operations and enhance data analytics [7] - The company is leveraging digital platforms like YouTube to expand its IP reach and create high-margin revenue streams [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging funding environment for Scholastic Education but remains confident in long-term potential [10] - The company expects a strong second quarter, benefiting from major trade releases and increased fair bookings [19] - Affirmation of fiscal year 2026 guidance for revenue growth of 2%-4% and adjusted EBITDA of $160 million-$170 million [19] Other Important Information - The company is closely monitoring tariff impacts, expecting approximately $10 million in incremental tariff expenses this fiscal year [19] - Seasonal net cash used by operating activities was $81.8 million, an increase from $41.9 million in the prior year [17] - The company has $70 million remaining on its share buyback authorization [17] Q&A Session Summary Question: Feedback on new products in Education Solutions - Management received positive feedback on new products despite a difficult selling environment due to funding uncertainties [22][23] Question: Key variables to monitor for spending trends - Management indicated that schools are still spending but are cautious due to funding uncertainties, expecting improvements as funding becomes more certain [24][25] Question: Timing for financial impact from the Entertainment Segment - Management noted that digital revenue from YouTube will grow over time, with no immediate financial impact expected [26][27] Question: Cost structure and expense reduction opportunities - Management highlighted ongoing cost reduction efforts, with $15 million to $20 million in reductions already realized [31][32] Question: Factors affecting fiscal year guidance - Management emphasized the importance of retail market conditions and tariff expenses in achieving guidance [34][35] Question: Expectations for fiscal Q2 - Management expressed optimism for Q2, citing strong upcoming releases and increased fair bookings [45][46]

Financial Data and Key Metrics Changes - Revenues decreased by 5% to $225.6 million in the first quarter, reflecting the seasonality of the business [13] - Adjusted EBITDA was a loss of $55.7 million, an improvement from a loss of $60.5 million a year ago [14] - Net loss was $63.3 million compared to $60.3 million in the prior year period, with adjusted loss per diluted share increasing to $2.52 from $2.13 [14] Business Line Data and Key Metrics Changes - Children's Book Publishing and Distribution revenues increased by 4% to $109.4 million, with Book Fair revenue rising by 18% to $34.1 million [14][15] - Scholastic Education segment revenues decreased to $40.1 million from $55.7 million in the prior year, reflecting lower spending on supplemental curriculum products [15][16] - Entertainment segment revenues decreased by $3 million to $13.6 million, primarily due to fewer episodic deliveries [16] Market Data and Key Metrics Changes - International segment revenues increased to $59.4 million from $56.8 million, driven by higher revenues in Australia, the UK, and Asia [17] - The company expects to surpass 10 million monthly views of classic Clifford content on YouTube by year-end [9] Company Strategy and Development Direction - The company is focused on building long-term opportunities in children's publishing, media, and education, while reducing costs and optimizing capital structure [22] - The integration of Trade, Fairs, and Clubs into a new Children's Book Group aims to streamline operations and enhance data analytics [8] - The company is pursuing real estate monetization, with significant investor interest in its properties [4][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a volatile funding environment affecting the Education segment but remains confident in long-term potential [10][11] - The company affirmed its fiscal year 2026 guidance for revenue growth of 2% to 4% and adjusted EBITDA of $160 to $170 million [21] Other Important Information - The company returned $5.2 million to shareholders through regular dividends and has $70 million remaining on its share buyback authorization [18] - The company is closely monitoring tariff impacts, expecting approximately $10 million in incremental tariff expenses this fiscal year [21] Q&A Session Summary Question: Feedback on new products in Education Solutions - Management received positive feedback on new products despite a difficult selling environment due to funding uncertainties [25] Question: Key variables to watch for spending trends - Management indicated that schools are still spending but are cautious due to funding uncertainties, expecting more confidence as federal programs resume [26][28] Question: Timing for financial impact from the Entertainment segment - Management noted that digital revenue from YouTube is expected to grow over time, with no immediate financial impact [30] Question: Cost structure and expense reduction opportunities - Management highlighted ongoing cost reduction efforts, with $15 million to $20 million in cost savings already realized [36] Question: Factors affecting fiscal year guidance - Management emphasized the importance of retail market conditions and tariff impacts on the business [37][38]

Financial Data and Key Metrics Changes - Revenues decreased by 5% to $225.6 million in Q1 2026, reflecting the seasonality of the business [11] - Adjusted EBITDA was a loss of $55.7 million, an improvement from a loss of $60.5 million a year ago [12] - Net loss was $63.3 million compared to $60.3 million in the prior year period, with adjusted loss per diluted share increasing to $2.52 from $2.13 [12] Business Line Data and Key Metrics Changes - Children's Book Publishing and Distribution revenues increased by 4% to $109.4 million, with Book Fair revenue rising 18% to $34.1 million [13][14] - Trade Publishing revenues were essentially flat at $73.5 million, driven by strong demand for key titles [14] - Scholastic Education segment revenues decreased to $40.1 million from $55.7 million, reflecting lower spending on supplemental curriculum products [15] - Entertainment segment revenues decreased by $3 million to $13.6 million, primarily due to fewer episodic deliveries [15] Market Data and Key Metrics Changes - International segment revenues increased to $59.4 million from $56.8 million, with growth driven by higher revenues in Australia, the UK, and Asia [16] - The company expects to see growth opportunities in expanding English as a second language programs in markets like India and the Philippines [10] Company Strategy and Development Direction - The company is focused on building long-term opportunities as a global leader in children's publishing, media, and education [20] - Ongoing real estate monetization efforts are generating significant investor interest, with processes expected to conclude in the fall [18] - The integration of Trade, Fairs, and Clubs into a new Children's Book Group aims to streamline operations and enhance data analytics [7] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the long-term potential of the Education segment despite current funding uncertainties [10] - The company is affirming its fiscal year 2026 guidance for revenue growth of 2% to 4% and adjusted EBITDA of $160 to $170 million [19] - Management highlighted the importance of aligning spending with long-term goals to drive favorable operating margins [19] Other Important Information - The company had borrowings of $325 million under its unsecured revolving credit facility, with net debt increasing to $242.8 million [17] - Free cash use in Q1 was $100.2 million compared to $68.7 million in the prior year, reflecting lower cash flow from operations [17] Q&A Session Summary Question: Feedback on new products in Education Solutions business - Management received positive feedback on new products, particularly Knowledge Library, despite a difficult selling environment due to funding uncertainties [22][23] Question: Key variables to monitor for spending trends - Management indicated that schools continue to spend, but uncertainty in future funding may lead to cautious purchasing [24] Question: Timing for financial impact from YouTube content - Management expects gradual benefits from the digital model and advertising revenue, with significant growth anticipated over time [28] Question: Cost structure and expense reduction opportunities - Management is actively identifying areas for cost reduction, with an expected $15 million to $20 million in savings [33] Question: Guidance affirmation and potential performance variables - Management expressed confidence in their guidance, noting that retail market conditions and tariff impacts are key factors to monitor [34][35]

Core Insights - The company is focused on the development of transcript-related projects, indicating a commitment to enhancing their offerings in this area [1] - The company publishes thousands of quarterly earnings calls each quarter, showcasing significant growth and expansion in their coverage [1] Industry Developments - The ongoing growth in transcript-related projects suggests a rising demand for detailed financial communications within the investment community [1] - The expansion of coverage in earnings calls reflects a broader trend in the industry towards transparency and accessibility of financial information [1]

Financial Performance - Revenues for the first quarter of fiscal year 2026 decreased by $11.6 million, a 5% decrease, to $225.6 million compared to $237.2 million in fiscal year 2025 [8] - Operating loss for the first quarter of fiscal year 2026 was $(92.2) million, compared to $(88.5) million in fiscal year 2025, a decrease of 4% [8] - Excluding one-time items, the operating loss was $(81.9) million in fiscal year 2026, compared to $(85.6) million in fiscal year 2025, reflecting a 4% improvement [8] - Adjusted EBITDA for the first quarter of fiscal year 2026 was $(55.7) million, compared to $(60.5) million in fiscal year 2025, an increase of 8% [8] - Free cash flow use for the three-month period ending August 31, 2025, was $(100.2) million, compared to $(68.7) million for the same period in 2024 [10] Segment Performance (excluding one-time items) - Children's Book Publishing and Distribution saw total revenues increase by 4% to $109.4 million, with School Reading Events up 14% to $35.9 million [9] - Education Solutions revenues decreased by 28% to $40.1 million [9] - Entertainment revenues decreased by 18% to $13.6 million [9] - International revenues increased by 5% to $59.4 million [9] Outlook - The company is affirming fiscal year 2026 guidance, expecting revenue growth of 2% to 4%, Adjusted EBITDA of $160 million to $170 million, and free cash flow of $30 million to $40 million [11]

Fiscal 2026 Q1 Review [Executive Summary & CEO Commentary](index=1&type=section&id=Executive%20Summary%20%26%20CEO%20Commentary) Scholastic reported a seasonal Q1 operating loss, with CEO Peter Warwick highlighting steady progress in book fairs, Entertainment IP, and strategic Education efforts, alongside real estate monetization plans - The company typically generates an **operating loss** in the first quarter due to **seasonality** when schools are not in session[1](index=1&type=chunk)[2](index=2&type=chunk) - **Fall book fair bookings are encouraging and exceed prior year bookings**, showing **strong engagement with hosts**[3](index=3&type=chunk) - Scholastic Entertainment is **expanding IP reach and value**, creating new brands, and building **higher-margin digital and licensing revenue streams**, leveraging 9 Story Media Group capabilities[3](index=3&type=chunk) - The Education division faced pressure from a **difficult and volatile funding environment**, leading to **delayed or reduced school purchases**[4](index=4&type=chunk) - The company is **evaluating potential sale-leasebacks of key real estate assets** to **enhance shareholder value**, which have **drawn substantial interest**[5](index=5&type=chunk) [Consolidated Financial Highlights](index=1&type=section&id=Consolidated%20Financial%20Highlights) Q1 FY26 saw a **5% revenue decrease** to **$225.6 million**, a **4% operating loss increase** to **$92.2 million**, and a **28% diluted loss per share widening**, while **Adjusted EBITDA improved 8%** to a **$55.7 million loss** | In $ millions (except per share data) | Fiscal 2026 | Fiscal 2025 | Change ($) | Change (%) | | :----------------------------------- | :---------- | :---------- | :--------- | :--------- | | Revenues | $ 225.6 | $ 237.2 | $ (11.6) | (5)% | | Operating income (loss) | $ (92.2) | $ (88.5) | $ (3.7) | (4)% | | Earnings (loss) before taxes | $ (97.0) | $ (91.8) | $ (5.2) | (6)% | | Diluted earnings (loss) per share | $ (2.83) | $ (2.21) | $ (0.62) | (28)% | | Operating income (loss), ex. one-time items * | $ (81.9) | $ (85.6) | $ 3.7 | 4 % | | Diluted earnings (loss) per share, ex. one-time items * | $ (2.52) | $ (2.13) | $ (0.39) | (18)% | | Adjusted EBITDA * | $ (55.7) | $ (60.5) | $ 4.8 | 8 % | [Overall Financial Performance](index=1&type=section&id=Overall%20Financial%20Performance) Consolidated revenues **decreased 5%** to **$225.6 million** due to lower Education Solutions sales, resulting in a **$92.2 million operating loss**, though **Adjusted EBITDA improved 8%** to a **$55.7 million loss** - Revenues **decreased 5% to $225.6 million**, mainly due to **lower Education Solutions sales** amid a **volatile funding environment**[7](index=7&type=chunk) - Operating loss **increased 4% to $92.2 million** (including one-time charges), but **improved by $3.7 million excluding these charges**[8](index=8&type=chunk) - **Adjusted EBITDA improved 8% to a loss of $55.7 million**, reflecting **reduced discretionary overhead** and **higher Children's Book Publishing and Distribution revenues**[8](index=8&type=chunk)[9](index=9&type=chunk) Quarterly Results by Segment [Children's Book Publishing and Distribution](index=2&type=section&id=Children's%20Book%20Publishing%20and%20Distribution) This segment's revenues **increased 4%** to **$109.4 million**, driven by an **18% rise in Book Fairs**, despite a **33% drop in Book Clubs**, leading to an improved operating loss of **$35.1 million** | Metric | FY26 Q1 ($M) | FY25 Q1 ($M) | Change ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Total Revenues | 109.4 | 105.4 | 4.0 | 4 % | | Book Fairs Revenues | 34.1 | 28.8 | 5.3 | 18 % | | Book Clubs Revenues | 1.8 | 2.7 | (0.9) | (33)% | | Consolidated Trade | 73.5 | 73.9 | (0.4) | (1)% | | Operating income (loss) | (35.1) | (36.6) | 1.5 | 4 % | - **Higher redemptions of Scholastic Dollars** in Book Fairs are indicative of **positive engagement with Book Fair hosts**[11](index=11&type=chunk) [Education Solutions](index=2&type=section&id=Education%20Solutions) Education Solutions revenues significantly **decreased 28%** to **$40.1 million** due to school funding uncertainty, resulting in an **increased operating loss of $21.2 million** | Metric | FY26 Q1 ($M) | FY25 Q1 ($M) | Change ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Revenues | 40.1 | 55.7 | (15.6) | (28)% | | Operating income (loss) | (21.2) | (17.0) | (4.2) | (25)% | - The division continues to execute on **more focused product, marketing, and sales strategies** with the long-term goal of **regaining market share**[12](index=12&type=chunk) [Entertainment](index=2&type=section&id=Entertainment) Entertainment revenues **decreased 18%** to **$13.6 million** due to production delays, widening the operating loss to **$4.0 million**, partly from **$2.5 million in intangible amortization** related to the 9 Story transaction | Metric | FY26 Q1 ($M) | FY25 Q1 ($M) | Change ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Revenues | 13.6 | 16.6 | (3.0) | (18)% | | Operating income (loss) | (4.0) | (0.5) | (3.5) | NM | - The company incurred **$2.5 million in intangible amortization** related to the **9 Story transaction** during the quarter[13](index=13&type=chunk) [International](index=2&type=section&id=International) International revenues grew **4%** to **$59.4 million** (excluding currency impact), driven by Australia, UK, and Asia, leading to a **49% improved operating loss** of **$4.2 million** | Metric | FY26 Q1 ($M) | FY25 Q1 ($M) | Change ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Revenues | 59.4 | 56.8 | 2.6 | 5 % | | Operating income (loss) | (4.2) | (8.3) | 4.1 | 49 % | - **Excluding favorable foreign currency exchange of $0.2 million**, International revenues **increased 4%**[14](index=14&type=chunk) - **Adjusted operating loss improved by $4.2 million**, driven by **higher revenues and operational efficiencies**[14](index=14&type=chunk) [Overhead](index=2&type=section&id=Overhead) Overhead costs were **$27.7 million**, but adjusted costs **decreased $6.6 million** excluding **$9.4 million in one-time charges**, reflecting successful cost-saving initiatives | Metric | FY26 Q1 ($M) | FY25 Q1 ($M) | Change ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Operating income (loss) | (27.7) | (26.1) | (1.6) | (6)% | - **Excluding one-time charges**, adjusted overhead costs **decreased $6.6 million** due to **cost-saving initiatives**[15](index=15&type=chunk) Capital Position and Liquidity [Cash Flow and Debt](index=3&type=section&id=Cash%20Flow%20and%20Debt) Net cash used by operating activities **increased 95%** to **$81.8 million**, and net debt rose to **$242.8 million**, reflecting working capital needs, dividends, and share repurchases | In $ millions | Fiscal 2026 | Fiscal 2025 | Change ($) | Change (%) | | :------------------------------------------------ | :---------- | :---------- | :--------- | :--------- | | Net cash (used) provided by operating activities | $ (81.8) | $ (41.9) | $ (39.9) | (95)% | | Additions to property, plant and equipment and prepublication expenditures | (14.9) | (24.4) | 9.5 | 39 % | | Net of borrowings (repayments) film related obligations | (3.5) | (2.4) | (1.1) | (46)% | | Free cash flow (use)* | $ (100.2) | $ (68.7) | $ (31.5) | (46)% | | Net cash (debt)* | $ (242.8) | $ (152.1) | $ (90.7) | (60)% | - Net cash used by operating activities **increased by 95% to $81.8 million**, driven by **lower net income** and **seasonal working capital**[17](index=17&type=chunk) - Net debt **increased to $242.8 million from $152.1 million**, reflecting **working capital, dividends, and share repurchases**[18](index=18&type=chunk) - The Company **distributed $5.2 million in dividends** and has **$70.0 million remaining for share repurchases**[18](index=18&type=chunk) [Real Estate Monetization Initiatives](index=3&type=section&id=Real%20Estate%20Monetization%20Initiatives) Scholastic is evaluating potential sale-leaseback transactions for its NYC and Missouri real estate, expecting **significant additional liquidity** for **debt reduction and share repurchases** this fall - Scholastic has **retained Newmark Group** to identify investment partners for **potential sale-leaseback transactions** of its owned real estate assets[19](index=19&type=chunk) - These processes are expected to **conclude this fall** and could provide **significant additional liquidity** for **debt reduction and share repurchases**[19](index=19&type=chunk) Additional Information [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) The company provides **non-GAAP measures** like **Adjusted EBITDA** and **Free Cash Flow** for supplemental understanding, not as substitutes for GAAP financial information - **Non-GAAP measures** like **"Adjusted EBITDA"** and **"Free Cash Flow"** are included to **supplement GAAP financial statements**[20](index=20&type=chunk) - This information is **supplemental and not a substitute for GAAP financial information**[20](index=20&type=chunk) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) Scholastic discussed **Q1 results** on a September 18, 2025 conference call, with a webcast and slides available on its investor relations website - A conference call was held on **September 18, 2025, at 4:30 p.m. ET** to discuss results, moderated by **Peter Warwick and Haji Glover**[21](index=21&type=chunk) - **Access to the live webcast and dial-in details were provided**, with an **archived webcast and slides available at investor.scholastic.com**[22](index=22&type=chunk) [About Scholastic](index=3&type=section&id=About%20Scholastic) **Scholastic Corporation** is a **global children's publishing, education, and media company** with over 100 years of history, empowering literacy through diverse content and channels worldwide - **Scholastic Corporation (NASDAQ: SCHL)** is a **global children's publishing, education, and media company** with **over 100 years of history**[23](index=23&type=chunk) - The company's mission is to **empower children to become lifelong readers and learners** through **bestselling books, literacy resources, and entertaining media**[23](index=23&type=chunk) - Scholastic **operates globally, reaching over 135 countries** through **school-based book clubs, book fairs, libraries, retail, and online platforms**[23](index=23&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This news release contains **forward-looking statements** subject to market and product acceptance risks, where **actual results could differ materially** from current expectations - The news release contains **forward-looking statements** subject to **risks and uncertainties**, including **market conditions and product acceptance**[25](index=25&type=chunk) - **Actual results could differ materially** from those currently anticipated[25](index=25&type=chunk) Unaudited Financial Statements [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section details revenues, operating costs, and net income (loss) for the three months ended August 31, 2025, and August 31, 2024 | | Three months ended | | | | :-------------------------------------- | :--------- | :--------- | :--------- | | | 08/31/25 | 08/31/24 | | | Revenues | $ 225.6 | $ 237.2 | | | Operating costs and expenses: | | | | | Cost of goods sold | 123.5 | 128.3 | | | Selling, general and administrative expense | 177.2 | 182.1 | | | Depreciation and amortization | 16.3 | 15.3 | | | Asset impairments and write downs | 0.8 | — | | | Total operating costs and expenses | 317.8 | 325.7 | | | Operating income (loss) | (92.2) | (88.5) | | | Interest income (expense), net | (4.5) | (3.0) | | | Other components of net periodic benefit (cost) | (0.3) | (0.3) | | | Earnings (loss) before income taxes | (97.0) | (91.8) | | | Provision (benefit) for income taxes | (25.9) | (29.3) | | | Net income (loss) | (71.1) | (62.5) | | | Basic and diluted earnings (loss) per share of Class A and Common Stock | | | | | Basic | $ (2.83) | $ (2.21) | | | Diluted | $ (2.83) | $ (2.21) | | | Basic weighted average shares outstanding | 25,161 | 28,290 | | | Diluted weighted average shares outstanding | 25,410 | 28,908 | [Segment Results](index=6&type=section&id=Segment%20Results) This section presents revenues and operating income (loss) for each operating segment for the three months ended August 31, 2025, and August 31, 2024 | | | | Three months ended | | | Change | | | :----------------------------------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | | | 08/31/25 | | | 08/31/24 | | $ | % | | Children's Book Publishing and Distribution | | | | | | | | | Revenues | | | | | | | | | Books Clubs | $ 1.8 | | $ 2.7 | | $ (0.9) | (33)% | | Book Fairs | 34.1 | | 28.8 | | 5.3 | 18 % | | School Reading Events | 35.9 | | 31.5 | | 4.4 | 14 % | | Consolidated Trade | 73.5 | | 73.9 | | (0.4) | (1)% | | Total Revenues | 109.4 | | 105.4 | | 4.0 | 4 % | | Operating income (loss) | (35.1) | | (36.6) | | 1.5 | 4 % | | Operating margin | NM | | NM | | | | | Education Solutions | | | | | | | | | Revenues | 40.1 | | 55.7 | | (15.6) | (28)% | | Operating income (loss) | (21.2) | | (17.0) | | (4.2) | (25)% | | Operating margin | NM | | NM | | | | | Entertainment | | | | | | | | | Revenues | 13.6 | | 16.6 | | (3.0) | (18)% | | Operating income (loss) | (4.0) | | (0.5) | | (3.5) | NM | | Operating margin | NM | | NM | | | | | International | | | | | | | | | Revenues | 59.4 | | 56.8 | | 2.6 | 5 % | | Operating income (loss) | (4.2) | | (8.3) | | 4.1 | 49 % | | Operating margin | NM | | NM | | | | | Overhead | | | | | | | | | Revenues | 3.1 | | 2.7 | | 0.4 | 15 % | | Operating income (loss) | (27.7) | | (26.1) | | (1.6) | (6)% | | Operating income (loss) | $ (92.2) | $ | (88.5) | $ | (3.7) | (4)% | [Supplemental Balance Sheet and Cash Flow Items](index=7&type=section&id=Supplemental%20Balance%20Sheet%20and%20Cash%20Flow%20Items) This section provides selected balance sheet items and cash flow details, including net cash from operating activities and free cash flow (use) | Selected Balance Sheet Items | | | | | :--------------------------- | :--------- | :--------- | :--------- | | | 08/31/25 | | 08/31/24 | | Cash and cash equivalents | $ 94.3 | | $ 84.1 | | Accounts receivable, net | 187.0 | | 201.1 | | Inventories, net | 322.2 | | 310.3 | | Accounts payable | 175.8 | | 184.0 | | Deferred revenue | 181.0 | | 173.9 | | Accrued royalties | 86.6 | | 77.5 | | Film related obligations | 14.7 | | 34.1 | | Lines of credit and long-term debt | 331.2 | | 231.1 | | (1) Net cash (debt) | (242.8) | | (152.1) | | Total stockholders' equity | 878.0 | | 957.3 | | Selected Cash Flow Items | | | | | | | Three months ended | | | | 08/31/25 | | 08/31/24 | | Net cash provided by (used in) operating activities | $ (81.8) | | $ (41.9) | | Property, plant and equipment additions | (10.0) | | (20.0) | | Prepublication expenditures | (4.9) | | (4.4) | | Net borrowings (repayments) of film related obligations | (3.5) | | (2.4) | | (2) Free cash flow (use) | $ (100.2) | | $ (68.7) | - **Net cash (debt)** is defined as **cash and cash equivalents less production cash, net of lines of credit and short-term and long-term debt, excluding film related obligations**[32](index=32&type=chunk) - **Free cash flow (use)** is defined as **net cash from operating activities, adjusted for acquisitions, asset sales, capital expenditures, prepublication costs, and film related obligations**[33](index=33&type=chunk) [Supplemental Results - Excluding One-Time Items](index=8&type=section&id=Supplemental%20Results%20-%20Excluding%20One-Time%20Items) This table reconciles reported financial results to those excluding **one-time items** for diluted EPS, net income, earnings before taxes, and segment operating income | | | | | Three months ended | | | | | | | | | :----------------------------------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | | | | | 08/31/2025 | | | | | 08/31/2024 | | | | | | | Reported | One-time items | | Excluding One-time items | | | Reported | One-time items | | Excluding One-time items | | | Diluted earnings (loss) per (1) share | $ (2.83) | $ 0.31 | $ (2.52) | | $ (2.21) | $ 0.08 | $ (2.13) | | | (2) Net income (loss) | $ (71.1) | $ 7.8 | $ (63.3) | | $ (62.5) | $ 2.2 | $ (60.3) | | | Earnings (loss) before income taxes | $ (97.0) | $ 10.3 | $ (86.7) | | $ (91.8) | $ 2.9 | $ (88.9) | | | Children's Book Publishing (3) and Distribution | $ (35.1) | $ 0.8 | $ (34.3) | | $ (36.6) | $ — | $ (36.6) | | | Education Solutions | (21.2) | — | (21.2) | | (17.0) | — | (17.0) | | | (4) Entertainment | (4.0) | 0.0 | (4.0) | | (0.5) | 1.7 | 1.2 | | | (5) International | (4.2) | 0.1 | (4.1) | | (8.3) | — | (8.3) | | | (6) Overhead | (27.7) | 9.4 | (18.3) | | (26.1) | 1.2 | (24.9) | | | Operating income (loss) | $ (92.2) | $ 10.3 | $ (81.9) | | $ (88.5) | $ 2.9 | $ (85.6) | | - **One-time items for Q1 FY26** included **$0.8M asset impairment** in Children's Book Publishing, **less than $0.1M acquisition costs** in Entertainment, **$0.1M severance** in International, and **$8.7M severance plus $0.7M other expenses** in Overhead[36](index=36&type=chunk)[37](index=37&type=chunk) [Adjusted EBITDA (Consolidated & Segment)](index=9&type=section&id=Adjusted%20EBITDA%20(Consolidated%20%26%20Segment)) This section calculates consolidated and segment **Adjusted EBITDA**, reconciling it from earnings before income taxes, excluding **one-time items**, interest, depreciation, and amortization | | | Three months ended | | | | :------------------------------------------ | :------- | :------- | :------- | :------- | | | 08/31/25 | | 08/31/24 | | | Earnings (loss) before income taxes as reported | $ (97.0) | | $ (91.8) | | | One-time items before income taxes | 10.3 | | 2.9 | | | Earnings (loss) before income taxes excluding one-time items | (86.7) | | (88.9) | | | (1) Interest (income) expense | 4.5 | | 3.4 | | | Depreciation and amortization | 26.5 | | 25.0 | | | (2) Adjusted EBITDA | $ (55.7) | | $ (60.5) | | | | | | | | | | Three months ended | | | | | | | | :----------------------------------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | :------- | | | CBPD (1) | EDUC (1) | ENT (1) | INTL (1) | OVH (1) | | Total | | | Earnings (loss) before income taxes as reported | $ (35.1) | $ (21.2) | $ (4.5) | $ (4.7) | $ (31.5) | | $ (97.0) | | | One-time items before income taxes | 0.8 | — | 0.0 | 0.1 | 9.4 | | 10.3 | | | Earnings (loss) before income taxes excluding one-time items | (34.3) | (21.2) | (4.5) | (4.6) | (22.1) | | (86.7) | | | (2) Interest (income) expense | 0.0 | 0.0 | 0.5 | (0.0) | 4.0 | | 4.5 | | | (3) Depreciation and amortization | 7.6 | 6.1 | 4.8 | 1.9 | 6.1 | | 26.5 | | | Adjusted EBITDA | $ (26.7) | $ (15.1) | $ 0.8 | $ (2.7) | $ (12.0) | | $ (55.7) | | | | | | | | | | Three months ended | | | | | | | | | | | | | | | 08/31/24 | | | | | | | | | CBPD (1) | EDUC (1) | ENT (1) | INTL (1) | OVH (1) | | Total | | | Earnings (loss) before income taxes as reported | $ (36.6) | $ (17.0) | $ (1.1) | $ (8.7) | $ (28.4) | | $ (91.8) | | | One-time items before income taxes | — | — | 1.7 | — | 1.2 | | 2.9 | | | Earnings (loss) before income taxes excluding one-time items | (36.6) | (17.0) | 0.6 | (8.7) | (27.2) | | (88.9) | | | (2) Interest (income) expense | 0.0 | — | 1.1 | (0.0) | 2.3 | | 3.4 | | | (3) Depreciation and amortization | 7.5 | 6.2 | 3.5 | 1.9 | 5.9 | | 25.0 | | | Adjusted EBITDA | $ (29.1) | $ (10.8) | $ 5.2 | $ (6.8) | $ (19.0) | | $ (60.5) | | - **Adjusted EBITDA** is defined as **earnings (loss), excluding one-time items, before interest, taxes, depreciation, and amortization**, and is considered a **meaningful measure of operating profitability**[40](index=40&type=chunk)

Core Insights - Scholastic Corporation reported financial results for the fiscal first quarter ended August 31, 2025, affirming its fiscal 2026 guidance despite a seasonal operating loss [1][2][6] - The company experienced a decrease in revenues by 5% to $225.6 million, primarily due to lower sales in the Education Solutions segment [6][7] - Adjusted EBITDA improved by 8% to a loss of $55.7 million, reflecting a reduction in discretionary overhead expenses and higher revenues in the Children's Book Publishing and Distribution segment [7][8] Financial Performance - Revenues decreased from $237.2 million in fiscal 2025 to $225.6 million in fiscal 2026, a decline of $11.6 million or 5% [6][7] - Operating loss increased to $92.2 million from $88.5 million year-over-year, with one-time charges impacting both periods [7][8] - Diluted earnings per share fell to $(2.83) from $(2.21), a decrease of 28% [6][7] Segment Analysis - Children's Book Publishing and Distribution segment revenues increased by 4% to $109.4 million, driven by strong performances in book fairs and franchises like Hunger Games [9][11] - Education Solutions revenues decreased by 28% to $40.1 million due to funding uncertainties affecting school purchases [12][13] - Entertainment segment revenues fell by 18% to $13.6 million, primarily due to anticipated production delays [13][14] Capital Position and Liquidity - Net cash used by operating activities was $81.8 million, compared to $41.9 million in the prior year, reflecting lower net income and seasonal working capital needs [16][18] - Free cash flow usage increased to $100.2 million from $68.7 million year-over-year, driven by higher operating cash use [16][18] - Net debt rose to $242.8 million from $152.1 million, influenced by working capital requirements and dividends [18][19] Strategic Initiatives - The company is focused on optimizing capital allocation and strengthening its balance sheet, including evaluating potential sale-leaseback transactions for key real estate assets [6][20] - Scholastic is expanding its digital and licensing revenue streams through new initiatives, including a Scholastic-branded streaming app and tie-in products for new IP [4][6] - The company aims to enhance its Education division by refining its product portfolio and aligning marketing strategies to better meet educators' needs [5][12]

Core Insights - 9 Story Media Group has partnered with Future Today to launch the first-ever Scholastic-branded streaming app, available on Roku and Amazon Fire TV, providing families with a free and safe platform for on-demand access to Scholastic programming [1][3]. Company Overview - 9 Story Media Group is a leading creator, producer, and distributor of children's media, now part of the Scholastic portfolio, recognized for its digital content strategy and AVOD distribution [7]. - Future Today is a leader in ad-supported streaming media, managing top free channels across various OTT platforms and providing technology solutions for content owners [8][9]. Content Offering - The Scholastic app features over 400 hours of premium content from iconic titles such as "Clifford the Big Red Dog," "The Magic School Bus," and "Goosebumps," targeting children ages 2-12 and their families [2][3]. Strategic Goals - The app is part of Scholastic's broader strategy to expand access to its catalog of children's series, leveraging synergies from its investment in 9 Story [3]. - The collaboration aims to meet the strong demand for quality nostalgic content, ensuring families have access to trusted stories that entertain and educate [5].

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Scholastic (SCHL) despite an increase in revenues, with the actual results being crucial for stock price movement [1][2]. Earnings Expectations - Scholastic is expected to report a quarterly loss of $2.45 per share, reflecting a year-over-year change of -15% [3]. - Revenues are projected to be $238.91 million, which is a 0.7% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 0.97% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Scholastic is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -1.02% [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likely deviation of actual earnings from the consensus estimate, with positive readings being more predictive of earnings beats [9][10]. - Scholastic currently holds a Zacks Rank of 5, which complicates the prediction of an earnings beat [12]. Historical Performance - In the last reported quarter, Scholastic was expected to post earnings of $0.85 per share but delivered $0.87, resulting in a surprise of +2.35% [13]. - Over the past four quarters, Scholastic has beaten consensus EPS estimates three times [14]. Conclusion - Scholastic does not appear to be a strong candidate for an earnings beat, and investors should consider other factors when making decisions regarding the stock ahead of the earnings release [17].