Financial Data and Key Metrics Changes - Revenues increased by 1% to $551.1 million in the second quarter, with operating income improving to $95 million from $78.9 million in the prior year period [22][23] - Adjusted EBITDA grew by 13% to $122.5 million compared to $108.7 million a year ago, while net income rose to $66.3 million from $52 million [22][23] - Adjusted earnings per diluted share increased to $2.57 from $1.82 last year [23] Business Line Data and Key Metrics Changes - Children's Book Publishing and Distribution revenues increased by 4% to $380.9 million, driven by strong performance in Book Fairs, which generated $242 million, a 5% increase [23][24] - Trade Publishing revenues rose by 7% to $110.4 million, supported by new releases, particularly the latest Dog Man title [24] - Scholastic Education segment revenues decreased to $62.2 million from $71.2 million, reflecting lower spending on supplemental curriculum products [25] Market Data and Key Metrics Changes - International segment revenues increased to $89.5 million from $86.7 million, with growth driven by new titles and favorable foreign currency exchange [26] - The company anticipates modest declines in revenues and profitability in the international segment following strong performance in fiscal 2025 [27] Company Strategy and Development Direction - The company has focused on transforming into a growth-oriented, shareholder-focused entity, with significant changes in leadership and organizational structure [4][5] - Strategic initiatives include the acquisition of 9 Story Media Group and the implementation of a disciplined capital allocation approach, returning nearly $500 million to shareholders since fiscal 2022 [7][8] - The company aims to leverage its unique strengths in brand, IP, and channels to drive long-term growth and value creation [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of fiscal 2026, expecting revenue growth in school reading events and entertainment divisions, despite anticipated lower revenues in trade and international segments [31] - The company remains cautiously optimistic about the education segment, anticipating improvements in the sales pipeline and federal funding disbursements [18][31] - Management highlighted the importance of maintaining operational efficiencies and preparing for market recovery in the education sector [56][58] Other Important Information - The company closed two sale-leaseback transactions, unlocking over $400 million in liquidity, which will be used for share repurchases and other capital allocation priorities [8][29] - The board has authorized an increase in the open market share repurchase program to $150 million [30] Q&A Session Summary Question: Use of proceeds from the sale-leaseback transactions - Management indicated that the first step is to increase the share buyback authorization, with plans to return cash to shareholders as shares are currently viewed as undervalued [41][43] Question: Guidance on top-line revenue changes - Management noted that the education business is experiencing softness due to funding issues, but expects growth in book fairs to help offset this [48] Question: Expectations for trade channel sales - Management confirmed that trade channel sales are expected to be in line with the previous year, despite tough comparisons due to major releases last year [49] Question: Performance in the education solutions segment - Management acknowledged the challenges in the education segment but highlighted cost management efforts that have helped stabilize the business [56][58]

Financial Data and Key Metrics Changes - In Q3 2025, revenues increased by 4% to $335.4 million, with an improved operating loss of $20.9 million compared to $30.6 million in the prior year [34] - Adjusted EBITDA was $6 million, up from a loss of $7.2 million a year ago, and net loss improved to $1.3 million from a loss of $23.3 million [34] - Adjusted loss per diluted share improved to $0.05 compared to a loss of $0.80 last year [34] Business Line Data and Key Metrics Changes - Children's Book Publishing and Distribution revenues increased by 5% to $203.3 million, with adjusted operating income rising to $7.6 million from $2.8 million [35] - Book Fairs revenues were $110.7 million, an increase of 8%, while Book Clubs revenues rose by 14% to $15.2 million [36][37] - Entertainment segment revenues were $12.8 million, reflecting the contribution of 9 Story Media Group, but adjusted operating loss was $2.4 million compared to a loss of $0.1 million a year ago [39] - Education Solutions segment revenues declined by 16% to $57.2 million, with an adjusted operating loss of $6.9 million compared to a loss of $0.8 million in the prior year [41] Market Data and Key Metrics Changes - The International segment saw revenues of $59.3 million, with a year-over-year increase excluding unfavorable foreign currency exchange impacts [45] - Major markets including Canada, the U.K., and New Zealand benefited from strong sales of new titles, particularly "Dog Man: Big Jim Begins" [30] Company Strategy and Development Direction - The company remains committed to capital allocation priorities, investing in growth initiatives while returning over $35 million to shareholders through share repurchases and dividends [9] - A strategic review of the Education Solutions business is underway to optimize its long-term potential [29] - The company is focused on enhancing its core and adjoining markets, leveraging its brand and distribution channels for growth opportunities [60] Management's Comments on Operating Environment and Future Outlook - Management noted increasing consumer caution in spending, particularly in discretionary categories like children's books, and uncertainty around federal education policy affecting school purchases [12][68] - The company anticipates modest revenue growth for the full year, with adjusted EBITDA forecasted at approximately $140 million [10][53] - Management expressed confidence in long-term growth opportunities despite short-term pressures [60] Other Important Information - The company has a strong balance sheet with modest debt and significant owned real estate assets, providing options for liquidity and shareholder returns [9][48] - The company repurchased 1.45 million shares for $30 million in the last quarter, with an additional $53.4 million authorized for repurchases [51][52] Q&A Session Summary Question: Outlook on backlist sales given consumer pressure - Management indicated that successful frontlist titles can drive backlist sales, particularly with key authors like Dav Pilkey and Suzanne Collins [66][67] Question: Changes in funding levels for school districts - Management noted that schools are being more cautious with spending, primarily pausing to assess future funding levels [69][70] Question: Strategic review of Education Solutions - The review is internally led, focusing on resource allocation to ensure success in the supplemental education market [78] Question: Fair value of real estate assets - Management refrained from providing specific valuations but emphasized the importance of making information available for investor assessment [83]