Loading...
01/10 16:34
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals increased losses in the Education and Entertainment segments, higher net debt, and a significant increase in net cash used by operating activities. While there are positive signs in international revenues and cost reduction efforts, the challenging selling environment and cautious school spending due to federal fund delays overshadow these. The Q&A also highlights uncertainties in monetizing digital content and the impact of paused federal grants. These factors, combined with weak guidance and increased debt, point to a likely negative stock price movement.
Revenues Decreased 5% to $225.6 million year-over-year. This decline reflects the normal seasonality of the business during the summer months.
Operating Loss Improved to $81.9 million from $85.6 million in the prior year period, driven by cost-saving initiatives.
Adjusted EBITDA Loss of $55.7 million, an improvement from a loss of $60.5 million a year ago, due to cost-saving measures.
Net Loss Increased to $63.3 million from $60.3 million in the prior year period, primarily due to lower shares outstanding from share buybacks.
Children's Book Publishing and Distribution Revenues Increased 4% to $109.4 million, driven by growth in school book fairs.
Book Fair Revenue Increased 18% to $34.1 million, driven by higher Scholastic dollar redemptions.
Book Clubs Revenue Decreased to $1.8 million from $2.7 million, reflecting the timing of mailings.
Trade Publishing Division Revenues Flat at $73.5 million, reflecting continued strong demand for Hunger Games and Harry Potter titles.
Scholastic Education Revenues Decreased to $40.1 million from $55.7 million, reflecting lower spending on supplemental curriculum products and timing of state-sponsored program revenues.
Scholastic Education Operating Loss Increased to $21.2 million from $17 million, due to lower gross profit partially offset by cost cuts.
Entertainment Segment Revenues Decreased by $3 million to $13.6 million, primarily due to fewer episodic deliveries.
Entertainment Segment Operating Loss Increased by $5.2 million to $4 million, including $700,000 in incremental amortization expense on intangible assets.
International Segment Revenues Increased to $59.4 million from $56.8 million, driven by higher revenues in Australia, the U.K., and Asia.
International Segment Operating Loss Improved to $4.1 million from $8.3 million, reflecting higher revenues and optimization efforts.
Unallocated Overhead Costs Decreased by $6.6 million to $18.3 million, driven by lower employee expenses from cost reduction initiatives.
Net Cash Used by Operating Activities Increased to $81.8 million from $41.9 million, driven by higher inventory purchases, timing of general operating expense payments, and higher interest.
Free Cash Used Increased to $100.2 million from $68.7 million, reflecting lower cash flow from operations partially offset by lower capital expenditures.
Net Debt Increased to $242.8 million from $136.6 million, due to working capital requirements.
New Book Releases: Scholastic announced several new book releases, including the 25th title in the 'I Survived' series, an illustrated edition of 'Catching Fire,' and an interactive illustrated edition of 'Harry Potter and the Goblet of Fire.' A collector's edition of 'Sunrise on the Reaping' will be released in November to align with the upcoming Lionsgate film adaptation. Additionally, Dave Pilkey's 'Dogman: Big Jim Believes' is set for release, with preorders tracking well.
Digital Content Expansion: Scholastic launched its first branded streaming app in partnership with Future Today, offering nearly 400 half-hours of content, scaling to 1,300 by fiscal 2027. The app is supported by a significant marketing campaign.
International Growth: Scholastic is focusing on expanding English as a second language programs and growing markets like India and the Philippines. International revenues increased, driven by higher revenues in Australia, the U.K., and Asia.
Cost Optimization: The company implemented cost-saving initiatives, reducing employee expenses and consulting costs. Adjusted operating loss improved in several segments due to these measures.
Real Estate Monetization: Scholastic is progressing on its real estate monetization process for its SoHo headquarters and Jefferson City distribution center, with significant investor interest.
Integration of Media Assets: Scholastic integrated 9-Story Media Group's assets into its strategy, using YouTube as a launchpad for new properties and consolidating branded channels under the Scholastic banner.
Education Segment Refocus: The education segment is being refocused under new leadership, prioritizing high-impact offerings like Knowledge Library and rationalizing the product portfolio.
Volatile funding environment in Scholastic Education: Sales were pressured due to delays and cancellations of federal education grants and state budget impasses, impacting revenue and operations.
Lower spending on supplemental curriculum products: Decreased demand for these products led to a decline in revenue for the Scholastic Education segment.
Tariff expenses: The company expects approximately $10 million in incremental tariff expenses this fiscal year, increasing product costs.
Higher inventory purchases and tariff charges: These factors contributed to increased cash use and working capital requirements.
Decline in Entertainment segment revenue: Revenues decreased by $3 million due to fewer episodic deliveries, impacting profitability.
Seasonal operating losses: The company recorded operating losses in the first and third quarters due to the seasonal nature of its business.
Cost pressures from severance payments: Higher severance payments as part of cost-saving initiatives increased cash outflows.
Dependence on major trade releases: The company’s financial performance is heavily reliant on the success of major trade releases, which could pose risks if sales underperform.
Revenue Growth: Scholastic affirms fiscal year 2026 guidance for revenue growth of 2% to 4%.
Adjusted EBITDA: The company projects adjusted EBITDA of $160 million to $170 million for fiscal year 2026.
Free Cash Flow: Full year free cash flow is expected to be between $30 million and $40 million.
Real Estate Monetization: Scholastic is progressing with potential sale-leaseback transactions for its New York City office and Jefferson City distribution centers, expecting to conclude this fall.
Cost Structure Optimization: The company is implementing SG&A optimization to sustainably lower its cost structure, particularly in non-revenue generating and consulting expenses.
Tariff Expenses: Scholastic anticipates approximately $10 million of incremental tariff expenses in fiscal year 2026.
Second Quarter Outlook: A strong second quarter is expected, driven by major trade releases.
Children's Book Publishing and Distribution: The company is optimistic about its publishing plan for fiscal year 2026, which includes new titles and major releases.
Scholastic Entertainment: The segment is positioned for renewed growth as industry greenlighting accelerates, with new digital-first content and publishing tie-ins planned.
International Growth: Growth opportunities are identified in expanding English as a second language programs and in markets like India and the Philippines.
Regular Dividends: The company returned $5.2 million to shareholders through regular dividends in the first quarter.
Share Buyback Authorization: The company has $70 million remaining on its share buyback authorization and plans to continue purchasing shares as conditions allow.
The earnings call summary shows strong financial performance with increased net income and cash flow, despite some revenue declines in specific segments. The Q&A indicates optimism about future growth, especially in book fairs and education solutions. The buyback authorization and commitment to shareholder returns further bolster confidence. Although some segments face challenges, overall guidance remains positive, with expectations of improved margins and revenue growth. The market is likely to react positively to this balanced outlook.
The earnings call reveals increased losses in the Education and Entertainment segments, higher net debt, and a significant increase in net cash used by operating activities. While there are positive signs in international revenues and cost reduction efforts, the challenging selling environment and cautious school spending due to federal fund delays overshadow these. The Q&A also highlights uncertainties in monetizing digital content and the impact of paused federal grants. These factors, combined with weak guidance and increased debt, point to a likely negative stock price movement.
The earnings call presents a mixed picture: strong growth in Trade and Entertainment segments, but declines in Education, reduced cash flow, and increased debt. Cost-saving measures and strategic initiatives indicate potential medium-term benefits. The Q&A highlights management's cautious optimism and focus on efficiency, but lack of concrete guidance or timelines dampens sentiment. Overall, the stock is likely to remain stable in the short term, with no strong catalysts for significant movement.
The earnings call presents a mixed picture: positive financial performance with improved revenue and profitability, yet challenges in the Education Solutions segment and production delays. Shareholder returns through buybacks and dividends are a positive, but the cautious spending by schools and economic pressures weigh negatively. The Q&A reflects uncertainty in education funding and strategic business reviews, maintaining a neutral overall sentiment. Considering these factors, the stock price is likely to remain stable, with no significant catalysts for a major price movement.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
