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]

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 - Scholastic Corporation reported solid financial results for fiscal 2025, with Adjusted EBITDA in line with original guidance and a focus on cost management and profit growth for fiscal 2026 [1][2][6] - The company returned over $90 million to shareholders during the fiscal year, including dividends and share repurchases [21][22] Financial Performance - In Q4 of fiscal 2025, revenues increased by 7% to $508.3 million, driven by strong performance in Children's Book Publishing and Distribution, and the contribution from 9 Story Media Group [7][17] - Operating income rose 13% to $53.5 million, while Adjusted EBITDA increased by 1% to $91.2 million [8][17] - For the full year, revenues reached $1,625.5 million, a 2% increase from the previous year, with Adjusted EBITDA growing by 6% to $145.4 million [17][18] Segment Performance - The Children's Book Publishing and Distribution segment saw revenues rise by 9% to $288.2 million in Q4, while Education Solutions revenues decreased by 7% to $125.7 million due to market headwinds [9][13] - The Entertainment segment's revenues surged to $14.8 million, primarily due to the acquisition of 9 Story Media Group [14] - International revenues increased by 9% to $76.8 million, reflecting strong performance in trade channels [15] Strategic Initiatives - The company is implementing a strategic reorganization to enhance long-term growth and profitability, including a focus on product development aligned with educators' needs [4][5] - Scholastic is targeting Adjusted EBITDA of $160 million to $170 million for fiscal 2026, with revenue growth expected between 2% to 4% [6][17] Capital Position and Shareholder Returns - Scholastic distributed $22.6 million in dividends and repurchased shares worth $70 million during fiscal 2025 [21] - The company is exploring sale-leaseback transactions for its real estate assets to enhance liquidity for capital allocation priorities [22]