SCHL - Earnings call transcript Q1 2025

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Operator

Good day, and thank you for standing by. Welcome to the Scholastic reports Q1 fiscal year 2025 results conference call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Jeffrey Mathews.

Jeffrey Mathews

to XXXX everyone, Call. Quarter welcome, and Scholastic's First Fiscal Earnings Hello, Chief Executive on by Officer; Chief our joined call, and Officer Warwick, Glover, Today I'm and Peter the President. Vice our President Haji Financial and Executive

investor As IR on may now website the already not you our if which presentation you've usual, investor.scholastic.com, done posted we download have company at so.

uncertainties, that by and will be various forward-looking statements, their We'd materially are currently today risks results from like forward-looking. anticipated. actual made and to may differ certain statements point to nature, out subject those These

non-GAAP In has The addition, filed this we Investor and also financial to GAAP will release measures a those in on our Relations of website. afternoon be defined be the G. release X-K. discussing the Regulation may financial directly This earnings earnings comparable some been measures accompanying in tables measures Form to most as posted reconciliation found company's

review presentation have quarterly them investor_relations@scholastic.com. factors with our to after annual to the and SEC. to reports in you review please call, today's address, in questions company's IR directly disclosed you Should and disclaimers encourage the We e-mail the the and the any filed release send investor risk

call the begin to And like to presentation. now I'd turn Peter to afternoon's Warwick over this

Peter Warwick

Scholastic's corporate program. as well continue strategy corporate functions relations lead Scholastic's and investor on Management you, cross-company refine Thank first will as the and growth our I'd Jeff Executive Chief Jeff, this like Committee. Officer. role, long-term joining his Scholastic's partnership to sustainability Thanks He'll Jeff for on Growth also afternoon, with everyone. to appointment and in us. peers impact good congratulating start by implement new his development In and as company's

as development Scholastic investor growth, has rejoined well the of our also he's us here knowledge growth across to company helped and had I'm experience of XX-plus as long-term and Scholastic, has in have to deep initiatives Jeff since already a the capital building Jeff targets leading long-term relations thrilled value. shareholder and strategy, the impact and prioritized M&A on as profound years implementation create. allocation, now of strategy industry Jeff's and growth

turn I'll XXXX our of the to back-to-school and opportunity for excitement overview. the millions yet important stories for positioning season, school supporting and fiscal schools Scholastic preparing to in the bring began kids company year that, and With X books, to ahead quarter of families while another educators. reading the

our media growth while production quarter, unique our and growth as growing our trusted We first of company and a the During and we compelling media long-term a build invested slate global upon on strengths publishing, most Children's the exciting of Group. execute continued and initiatives. strategy Books Education reinforce and Media Story to businesses X critically our arising properties to children's of acquisition early acclaimed with in wins and content from development advancing

revenue on the X quarter year-over-year the rose seasonal Story, operating First improved. and loss addition of

typically quarters, a summer and the United the with records operating school first and breaks in Scholastic losses reminder, which third States. quiet As winter in coincide

market over returned million through dividend. we open and to quarter, repurchases During $XX regular shareholders combination the of share a our

We guidance. and XXXX our remain in affirming confident outlook are fiscal our

returning opportunities growth Story our line partial bottom ahead reflecting long-term plan of committed forward line target contribution and compelling as remain an year We and year top to allocation capital investing to initiatives. continue in we growth, and important our X growth to look on our We advance We modest capital the shareholders. most Group. priorities, to Media execute

Children's Books grow. revenue Now In with smallest to I'll that, segments. to highlights the its seasonally across turn our business continued quarter,

busy are our combined over not revenues quarter year Book during but the channels produces minimal ago, Reading division, Fairs schools first was Clubs Events and which in School when Our Book new preparing in a focused reading bring for delivering only we year. joyful Fairs summer the invest growth. remain for can business the Scholastic as school Book of the that this on celebration long-term We session

pricing strategic bookings new have should target achieve fiscal contribute all beyond. of optimization, types and Fall value and to fair this remain to category year Continued performance XX,XXX our fairs been our we track case and strong, XXXX. on in

more In strategically strategies higher business generating participation. profitable initial the this in fiscal transitioning XXXX, we're in responses families. a promotions customers indicate and now new teachers Book revitalizing sponsor to channel the for season process the strategic Book Clubs, Clubs to and and reengaging After are that fall's this teacher to implemented back-to-school smaller, of loyal core

value that expect last we cash is we teachers, raised Events, in-kind for and term the schools in long which as ever. and as positioned headwinds $XXX last the strongly School saw remains differentiated year While and confident same spring, approximately and for Reading million relevant we're

Bookscan. to well in market year-over-year we Circana book Publishing, execute continue that Trade slightly In per a was down retail selling

Publishing was quarter release edition the movie versus a ago Trade title's our the Hunger title the paperback for in from fourth quiet The division in series release. sales benefited Games First the relatively the of quarter quarter domestic a when of of year ahead

presence critically to publishing Times children's book, Scholastic-published across picture continue middle graphic The novel quarter acclaimed multiple successfully Scholastic's and front and titles engage lists. last backlist Importantly, maintaining series, New bestseller readers young with grade their York

Bad the title released Serpent by Karen's Away our successes Hoffman; in title Baby-sitters series; latest series, author best-selling newly Club's Beast; manga in kid-friendly The Little Guys graphic We series. included in The Aaron Unico: and In The Flew the Sleepover, in Blabey's new Awakening, Alice Guys latest first Sister Bad When novel X, the and quarter

the and ahead series of official strong from Handbook second Goosebumps the season Duper Disney+. Extra Pokemon Super Goosebumps Deluxe also of the coloring saw for results book We

picture Potter X, all be book a holiday Hogwarts, season, final Looking delight of at in Guys from we're book and Bad Christmas Aaron will franchises, ages. global quarter additional that in Harry including best-selling fall this and for time the new publishing, to series Blabey's at titles excited the fans

year's publishing to ago, comparison compared timing year our year-over-year plan a the will of X. publishing division another face Given difficult quarter in this

and Dog Games full the fiscal of revenues. Man We half expect anticipated year benefit highly in the Hunger continue to to year of the titles new releases second

participate our segment, Entertainment, June, expanding life more In franchises of revenue Story, the contributed closed a the first our company, recent are cycle reach where quarter. evolution EBITDA global and profitably they to X of Scholastic in the continued in to advance and newest positively IP. as full kids children's children's and addition which media its reportable our in ability Scholastic to

series an series. updated Magic forward fall, This on Development Clifford preschool projects. and are market School taking for to and animated Bus production we to major move the continue first

for of as look also announcing and airing we reach to monetize licensing These date launch the early X sales Story's X distribution We have We're soon platforms. leverage Scholastic on opportunities to expand Disney+. brands forward IP teams. taking of and advertising-supported the on season of classic Scholastic merchandising significant upside advantage Scholastic core Goosebumps

In quarter X, Tubi, one School properties. top-performing we on it our launched Magic Bus where of the became

while as also properties for with core new you properties with viewership on Clifford developments channel on in Scholastic's updating prepare in through stood in fiscal look up upcoming on momentum. and existing We Classic synergies showing XXXX. beyond We building YouTube media a to positive print 'XX we forward and growth fiscal the U.S.

to Turning Solutions. Education

programs. with pressured With the in implementing we with current and investments leverage spending First related instruction. school and primarily supplemental English and literacy on quarter to updated curriculum near districts' lower and forward products on spending in sales language that on declined supplemental year-over-year, sales, adopting core reflecting focus literacy lower new collection programs align move term, new curriculum content and Scholastic's curriculum

will products to anticipate to growth continue new fiscal these beginning XXXX. in contribute We

ahead, continue profitable forecast the quarter, state in expect fourth segment quarter. We larger trends Looking growth and community the sales continue investing in ahead programs expanded books to to literacy more sales kids' as second in of to an driven in access our second of anticipated outside half and to of we lower fiscal improve this in participation state-sponsored partners school. XXXX, by partners

line revenues in were in with international, prior year. finally, And

modest contribution expect fiscal relative further in operating to growth and to drive in in XXXX. improvements major margins continue markets improvements and Canada We to operational

with that, the to our turn first I'll XXXX And to quarter over Haji review results. call fiscal

Haji Glover

afternoon, quarter, our for release otherwise good filings results to and press for everyone. I Today, adjusted refer first refer our Peter, a onetime Please SEC indicated. and unless to items. you, tables items, the excluding onetime Thank complete will on discussion

long and revenues from of businesses us our our position loss operating ago a seasonally quiet season. and The making improved and to near forward Peter back-to-school and of fiscal increased our earlier, I'm well quarter. progress in against discussed making investments we year beyond. term, year preparation and work further ahead in plan team's As proud first hard look our this we core are

$XXX.X of $XX.X year loss to a year. from $XX.X declined financial revenues share $X.XX million diluted of in Turning million $XX.X the the In operating results. a company's loss quarter On improved The million profitability multiple improved of in EBITDA Net quarter, million a consolidated $XX.X declining year a prior basis, million, prior X% from measures. ago. on million to Adjusted the seasonal an million, per increased loss last and from $XX.X to to first improvement was period. $XX.X loss from loss a year $X.XX period. compared loss to was the our

highly As seasonal. a are results reminder, Scholastic

second loss in quarters. and also an with In quarter, operating to first quarter, the we addition generally record profitable third fourth the

Book primarily year Publishing X% revenues revenues the channel. $X.X Now prior higher and in turning increased segment. results. $XX.X quarter trade $XXX.X reflecting million in seasonally our to higher quiet operating Children's a for revenues for Distribution, primarily the to million, our In first million, loss quarter driven decreased by to segment from period the Segment

school Events contribute business quarter, session to profitable of period Book as first million. business fiscal our team core resonate million, XXXX, revenues in fairs year's compared business the to Reading in which schools for Book quarter. Fair million the meaningful increased Reading sales transitioning year. first well to of we to fiscal $XX.X $XX.X to in reengage XXXX, growth were largely and year. quarter, year this season. Trade is million year and the achieve positioned slightly confident revenues frontlist foreign of target Hunger The with series, are Games revenue not to customers. prior of more and million with $XX.X compared count The of not our rights summer. IP revenues a to track this from than is smaller, ago in when teachers Fairs the this Snakes. our back-to-school After the higher revenues on strategies line $X.X X% and paperback up Clubs offset the of that expect prior in profits of XX,XXX the customers the in a reflecting sales Events to modest implemented were strategically Ballad has Overall, release to deals. revenues school in in In our The the best-selling benefited edition $X.X Fair revenues Clubs School remain Scholastic of lower are book new This year in we publishing fourth Book School Book company's continues more Songbirds

We franchise are major many frontlist fiscal are including of half in second our publishing, excited releases we about year. titles the global the

the Education in quarter, products. was million in Solutions state-sponsored offset by revenues segment supplemental This curriculum on lower were partly down programs. reflecting spending to growth $XX.X XX% first

the focus As pressures classroom continue lines, first materials libraries instructional curriculum in near-term of adopting literacy core and collections impact school to new product programs, supplemental sales quarter. including implementing on key districts and supplemental and on

are has the developing This, our profitability. million, $XX higher Peter a instructional primarily year. the materials. significant program products in scheduled literacy operating in impact schools decreased school quarter, and impact $X.X for driven increased time of million sales As expenses for coupled Segment to and teams launch on structured loss by of by than offset the lower XXXX improved XXXX supplemental new to participation programs revenues noted, state-sponsored more with operating supplemental as

June, and the segment the Books I from income $X.X will were the Group, with results results in which now pro reflecting segment With company's development production Story period. historically Children's on X and the segment benefit turn primarily to segment Media in a acquired the on Media reported operating Scholastic prior revenues XXXX and segment. the basis execute year and million, and company-wide our forma Entertainment on contribution should Story we making relative X of progress to X this $XX.X Group. existing division Entertainment new We're Story consolidated our million, slate continue which profits the integrated revenues combined to synergies, in up from Entertainment was fiscal were beyond.

million. the to million period quarter of revenues compared International segment revenues $XX.X the were prior first in $XX.X year

year-over-year million lower operating million and partly prior sales of million in period, million in cost primarily million of $X.X impact Unallocated the Canada International $X.X prior backlist period. loss $XX.X overhead the were lower quarter first in Hunger offset by increased the Dog revenues $X.X line in of from the revenues to unfavorable as Excluding $XX.X in in the strong compared were costs million $X foreign the the by employee-related to U.K. exchange, driven segment currency year Games quarter. with prior The Man year improved in year

higher spending, turning million compared and cash in the million in quarter $XX.X was CapEx balance products a activities in operating to year new the used Free on Solutions. prior of cash prior by $XX.X Education $XX.X Now year. million and Net period, sheet. reflecting flow of first including $XX.X the million compared use used to cash to primarily the

spending Consistent business, these the In business. flow as typically our to free repayment part capital. in include cash an better include addition, manage cash in production borrowing receivables cash we new loans free both and definition production other we Entertainment now definition loans overall the the segment, view media and of tax flow. and to industry our loans, are to and flow timing companies working with secured related reflect the of by and this and and essentially offset we in therefore other generation Production free how of of borrowing within

Furthermore, of extending million to Group explore the $XXX to revolving During the $XXX continue transaction process meet revolver from Story the the amending under we'll credit strong opportunities needs. We're company existing working complete another seasonal the X to and quarter, capital and our sheet. unsecured. to million our facility Media borrowed increasing optimize currently which in facility, X the $XXX million to its credit for is years, balance

primarily million was X At the XX of flow the Group to fiscal debt transaction, end Story Media by $XXX.X cash end net over driven of the million position of positive compared the last months. cash $XXX.X $XX.X XXXX, at quarter, of net a the million offset partly by free

open the continue XXX,XXX $XX to first returned deploy million we dividend our repurchased addition our as to In in shareholders $X investments, repurchases. for our and Peter market our last quarter regular million. shares capital first through to the over quarter, growth regular share Together in with quarter we We dividend, said.

to capital and and growth their opportunities deploy cash returns. in enhance by, opportunities; and pursue leverage first, to continue a sheet second, will strong investing to balance We shareholders our excess maintaining balance to efficient sheet; to third, returning

we ahead the of guidance. year, As our the rest are we affirming XXXX year look to fiscal

to million our of continue and outlook for $XX $XX free needs. cash The reflecting $XXX X% to million million, adjusted capital X% and of growth and expect year $XXX remains flow full million. revenue to planned working EBITDA investments We between the

discussed. would I like timing a that to about Peter reinforce note

Solutions lower to segment results in our year-over-year our Education prior our and to second Publishing compared plan lower increased in Per year-over-year of we expect second expect contribute the our We in the profitability half period. to year quarter XXXX. continue fiscal plan, timing to the related of publication Trade headwinds sales the to

Thank We call Peter the you growth focus now final your the I remainder about for for hand positive and will continue remain to the remarks. on year time of his our today. back investments. to

Peter Warwick

you, Thank Haji.

well XXXX we on initiatives on preparing fiscal In Scholastic's our made we out to confident execute July, planned building laid plan Scholastic's quarter, in goals. pursue businesses the forward year core remain these as our value I our towards opportunity accelerating the and and create are strategic beyond. on to the We while As this Reading that long-term impact and continuing continued first look Events. for positioned year to progress in is year growth. to fundamental new focused School for last school We

Thank now me to you Jeff. call much, very turn over let and the

Jeffrey Mathews

With will Peter. you, Thank for the call we Operator? that, questions. open

Operator

Brendan from with question McCarthy [Operator first Instructions] comes Sidoti. Our

Brendan Michael McCarthy

out rest margins. nice see year gross at looking you you're year-over-year. there Can looks was downturn with what margins the inflation? off there seeing improvement gross of you start about and looking in given the like to the just Wanted further talk improvement whether It a

Haji Glover

Yes.

gross As really the modest is our that's gross around in and driving far the it's conversation driving the growth throughout outlook. the margin, in really planned mix year, mix see this. We we as the rest do -- margin for already that of our

Brendan Michael McCarthy

that's seeing, there looking you're know that the I fiscal second I Got of on still it. you some to guess, quarter? impacted out great. the quarter, last spending I the second the business. Yes, consumer fiscal trend I quarter to fairs turn wanted quarter, the pressure noted business. Is was that a fourth 'XX, to fairs that know

Peter Warwick

continue, got And Well, expected pressures, the at with fairs. fall only of for the terms whilst just still -- having much XX,XXX-plus present probably are we've think, the we this the business. adjustments But benefit full of moving of fairs those in And really a also we've pretty as sort moment, have operating really our made some the fairs fairs we year. how good we season. I the

go that's was think us factor. But growth I modest that in So I fiscal per-fair a it's as think therefore, planning. fiscal only that XXXX. expecting also sort gives much case of say we're And revenue mitigating important also sense the really we more to not which XXXX, in are things that will

Brendan Michael McCarthy

have -- far businesses expectations the been fiscal so of the year year? X your school to School it. the then school I year, into and Got clubs and relative performing know about the business, Events channels, at as that looking month but is this those school how Reading the month -- how start at just X question, the we're And a only into follow-up

Peter Warwick

expected. pretty been much is no been were It's I good no mean, news -- expecting. surprises. There we bad exactly as we operating as that have good surprises, they've much been They've the pretty

And that's so I think pretty positive.

we think been those businesses, has seen numbers area quite the the been teachers. have one particularly sponsors, of the clubs it's particularly X an with, although actually the smallest I in where of we've uptick that pleased business,

the work I show been to -- early So thing content, -- for redesigning done. think to worthwhile that's -- been is prepare that's year very having that materials have has we last signs did that the a think, and I

Brendan Michael McCarthy

on you were And there. I in clubs mentioned new I Got know and additional with resonating they're you this provide you color how still at it. customers are Can point? those go-to-market of and the strategies testing guess business, strategies testing some

Peter Warwick

mean I most redesigned our that Yes. we've things focused been it's very on for the done one our we've our much profitable customers. And of core and customers that example. is interest igniting of the flyers,

So done. one we've that thing that's

The is I other been to much that year thing that was process doing very very think too. been whole And before. worthwhile, we've than the the teacher-centric has therefore, that's it actually be more going

Brendan Michael McCarthy

I a It are quite ask on Solutions state new what back from in getting is -- That's it. the either I the sounds states business? guess of for there Education or favorable question I the to outlook prospects like helpful. new of what's some the Got for entities guess the the this wanted of business new line business business. half year. that state-sponsored of

Peter Warwick

very and readers in have with something that in that of overall students been number -- state sure I which happening one's been there's -- do home. to much that worked they that Well, legislatures, education books we've And in but books much striving It's I states very by faculties, that's who has education the can home. is within paid, departments think get the are by trend the in of long particularly kids much an there's to being as is a more they shown with also as making able successful. marketplace, at attention mean, greater kind which

I a that recognition what's needed. think is there's growing that,

actually models and has In confident more been that happening it to the whilst good business. And another been that, partnership the we've that good all the homes year schools, some the of quite books we've they're into part of we'll to addition the get I get had to feeling feeling that -- the into school state, us, districts ways into also our is of rest particularly that we're and activities philanthropic one books develop books mean have things selling opportunity able of more that's for through parents. partners, of other difficult in this got in into actually that we've we're to home.

been extent, consciously up we've so there very building as of business able -- in the are of our And that business sort are changes to the some we marketplace. part to rebalance,

Brendan Michael McCarthy

it Great. me One balance just the for turn and on I'll more over, sheet. then

in debt the to new allocating more you leverage Just now? is revolver with company position, are net see flow do cash the where you future? with down pay comfortable Or the the

Haji Glover

Yes. Currently, today. are we we where in very confident stand

press the -- sheet, in in immediate our As the right section we term opportunities of but on are mentioned in now. we at that nothing -- my the balance other looking sort in

Brendan Michael McCarthy

Great, great. That's all for me.

Operator

And for will this any I call to pass concludes remarks. closing back management Q&A. our the

Peter Warwick

all opportunities. toward you, like make and everyone, for ahead continued joining on again Well, progress work to XXXX for long-term look Scholastic's fiscal of Scholastic's to an support. we as and your realizing thank forward execute season. the of back-to-school year thank our preparation plan hard for ahead We call important their and for today's employees I'd

Operator

participation, concludes This your for Thank you you. call. you today's Thank now and conference disconnect. may

Scholastic (SCHL) 26 Sep 242025 Q1 Earnings call transcript