♥SCHOLASTIC Third Quarter 2026 Earnings Call Presentation Thursday, March 19, 2026 2 Peter Warwick President and Chief Executive Officer Capital Allocation Actions Completed sale-leaseback transactions, unlocking more than $400 million in net proceeds ● Repurchased more than 4.4 million shares for approximately $147 million in the open market since December ● Introduced long-term net leverage targets of 2.0 – 2.5x Adjusted EBITDA ● Announced planned $200 Modified Dutch Auction tender offer, part of a $300 m ...

Core Insights - Scholastic Corporation reported its fiscal 2026 third quarter results, highlighting a focus on enhancing shareholder value through significant balance sheet optimization and share repurchase initiatives [1][2]. Financial Performance - Revenues for the third quarter decreased by 2% to $329.1 million, primarily due to lower revenues in the Children's Book Publishing and Distribution and International segments, partially offset by higher revenues in the Entertainment segment [10][12]. - Operating loss increased by 13% to $26.9 million compared to the previous year, with adjusted EBITDA dropping to $0.0 million from $6.0 million [11][29]. - The company expects full-year adjusted EBITDA to remain between $146 million and $156 million, with free cash flow forecasted to exceed $430 million [6][19]. Segment Performance - The Children's Book Publishing and Distribution segment saw revenues decrease by 3% to $197.6 million, with Book Fairs revenues increasing by 2% to $113.3 million [12][14]. - Education segment revenues decreased by 2% to $56.1 million, reflecting a challenging funding environment for schools, although operating loss improved to $5.2 million [14][46]. - The Entertainment segment experienced a 25% revenue increase to $16.0 million, driven by higher episodic deliveries [15][46]. - International revenues decreased by 7% to $58.7 million, impacted by the timing of the Dog Man® publishing calendar [16][46]. Shareholder Returns and Capital Management - The company has authorized a new $300 million share repurchase program, including a planned $200 million modified Dutch auction tender offer [2][24]. - Since December, Scholastic has returned approximately $147 million to shareholders through open-market share repurchases [23][24]. - The company established a long-term net leverage target of 2.0 to 2.5 times adjusted EBITDA, reflecting a disciplined approach to balance sheet management [23][24].

Financial Performance - Scholastic achieved a 13% growth in adjusted EBITDA during the second quarter of fiscal year 2026[5] - Revenue increased by 1% to $551.1 million in Fiscal 2026 Q2, compared to $544.6 million in Fiscal 2025 Q2[9] - Operating income increased by 11% to $82.9 million in Fiscal 2026 Q2, compared to $74.7 million in Fiscal 2025 Q2[9] - Diluted earnings per share increased by 27% to $2.17 in Fiscal 2026 Q2, compared to $1.71 in Fiscal 2025 Q2[9] - Adjusted EBITDA reached $122.5 million in Fiscal 2026 Q2, compared to $108.7 million in Fiscal 2025 Q2[9] Segment Performance - Children's Book Publishing and Distribution revenue increased by 4% to $380.9 million, with operating income up 7% to $108.8 million[10] - Education Solutions revenue decreased by 13% to $62.2 million[10] - International revenue increased by 3% to $89.5 million, with operating income up 80% to $12.8 million[10] Strategic Initiatives and Capital Allocation - The company unlocked over $400 million through sale-leaseback transactions to advance capital allocation priorities[5, 6] - Nearly $500 million was returned to shareholders, reducing share count by approximately 25%[6] Fiscal Year 2026 Outlook - The company affirmed its adjusted EBITDA outlook of $146 to $156 million, including a $14 million partial-year impact from sale-leasebacks[12] - Free cash flow is expected to exceed $430 million, reflecting sale-leaseback net proceeds[12]

Financial Performance - Scholastic's Q3 2025 revenues increased by 4% year-over-year, reaching $335.4 million compared to $323.7 million in Q3 2024 [8] - The company's operating loss improved by 32%, with a loss of $23.9 million in Q3 2025 compared to a loss of $34.9 million in Q3 2024 [8] - Adjusted EBITDA for Q3 2025 was $6.0 million, a 183% increase compared to $(7.2) million in Q3 2024 [8, 18] - Diluted loss per share improved by 86%, from $(0.91) in Q3 2024 to $(0.13) in Q3 2025 [8] Segment Performance - Children's Book Publishing and Distribution revenues increased by 5%, totaling $203.3 million in Q3 2025 compared to $193.1 million in Q3 2024 [6, 10] - Education Solutions revenues decreased by 16%, amounting to $57.2 million in Q3 2025 compared to $68.5 million in Q3 2024 [6, 10] - Entertainment revenues significantly increased, reaching $12.8 million in Q3 2025 compared to $0.5 million in Q3 2024, driven by the acquisition of 9 Story Media Group [6, 10] - International revenues increased by 5% excluding FX impact [6] Fiscal Year 2025 Outlook - The company refined its FY25 Adjusted EBITDA outlook to approximately $140 million [4, 14] - Modest revenue growth is expected year-over-year [4, 14] - Free cash flow outlook remains between $20 million and $30 million [14]