Scholastic(US:SCHL)2021-12-17 01:50Financial Data and Key Metrics Changes - Revenues for Q2 grew to $524.2 million, up from $406.2 million in the prior year, representing a 29% increase [36] - Operating income increased to $84.3 million from $54.3 million year-over-year [36] - Net income rose to $69 million compared to $39.4 million last year [36] - Adjusted EBITDA was $113.7 million, up from $77.7 million in the previous year [36] - Earnings per diluted share increased to $1.93 from $1.15 [36] - Net cash provided by operating activities was $78 million, compared to $46.1 million in the same quarter last year [37] - Free cash flow for the quarter was $75.4 million, up from $30.9 million [37] Business Line Data and Key Metrics Changes - Book Fairs revenue reached $176.2 million, significantly up from $47.7 million in the prior period [42] - Trade revenues were $124.4 million, slightly down from $129.3 million due to the previous year's release of a high-profile title [45] - Book Clubs revenue was $51.9 million, down from $67 million, attributed to labor shortages and backlog issues [46] - Education Solutions revenues increased to $79.5 million from $67.5 million, with operating income rising to $15.6 million from $10.3 million [49] - Magazine revenue increased by $2.7 million compared to the prior year [50] Market Data and Key Metrics Changes - International segment revenues were $92.2 million, down from $94.7 million, with operating income decreasing to $9 million from $19.5 million [52] - Australia and New Zealand faced lower revenues due to recent lockdowns, while Canada showed a strong recovery [53] - Sales in Asia decreased due to COVID restrictions and new regulations in China affecting tutoring and foreign content [54] Company Strategy and Development Direction - The company aims to recover its Book Fairs business as schools reopen for in-person learning, with a focus on improving data analytics capabilities [42][44] - A formal combination of the Education and Magazine divisions is expected to streamline marketing and growth opportunities [27] - The company is enhancing its digital offerings and focusing on diverse voices in publishing [51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future results despite ongoing cost and supply chain challenges [61] - The company has implemented cost-saving initiatives and technology investments that are expected to benefit operations moving forward [57][58] - Management noted that while labor and product costs have increased, proactive measures are being taken to address these challenges [60] Other Important Information - The company restarted its share buyback program, reacquiring over 134,000 shares for $5 million [41] - A five-year partnership with the University of Florida aims to support literacy initiatives, with potential to reach 500,000 children [29] - The company approved a regular quarterly dividend of $0.15 per share [62] Q&A Session Summary Question: What is the outlook for the Book Fairs business? - Management confirmed that the Book Fairs business is recovering, with revenues exceeding expectations, although still below pre-pandemic levels [11][42] Question: How is the company addressing labor shortages? - The company is increasing wages and incentives at its distribution facilities to attract more staff and reduce backlogs [46][60]