Scholastic Reports Fiscal 2020 3rd Quarter Results.

NEW YORK: Scholastic Corporation (NASDAQ: SCHL), the global children's publishing, education and media company, today reported financial results for the Company's fiscal third quarter ended February 29, 2020.

Third quarter revenue was $373.3 million, an increase of $13.2 million or 4%, compared to $360.1 million in the third quarter of 2019. The year-over-year increase in revenues was led by the Company's education and trade businesses, which grew sales 23% and 17%, respectively, compared to the prior year period.

Operating loss in the third quarter was $60.0 million, compared to an operating loss of $21.4 million a year ago, largely attributable to a one-time $40.0 million non-cash write down of inventory primarily resulting from lower anticipated requirements in the Company's school channels, in addition to $3.2 million in pre-tax severance. Excluding these one-time items, the operating loss in the seasonally lower third quarter was $16.8 million, a 10% improvement from the prior year period's operating loss of $18.7 million.

Net loss as reported for the current period was $43.3 million, versus a net loss in the prior year period of $12.6 million. Loss per diluted share in the third quarter was $1.25 compared to a loss per diluted share of $0.36 in the third quarter of 2019. Excluding one-time items, third quarter 2020 loss per diluted share was $0.34, compared to loss per diluted share of $0.32 in the third quarter of 2019.

"Following our strong third quarter with revenue gains of 4% and a threefold improvement in adjusted EBITDA, and year-to-date results trending ahead of our fiscal year targets, Scholastic's business in the fourth quarter will be affected by coronavirus-related school closings mandated by states and districts, which will impact our school-based businesses directly. Given this situation, we will no longer be affirming guidance for the fiscal year," said Richard Robinson, Chairman, President and Chief Executive Officer. "While revenues will be lower in the seasonally important fourth quarter, we are taking aggressive actions to reduce operating expenses throughout the Company, including the temporary closing of warehousing and distribution centers, and a freeze on hiring, travel and other discretionary spending not directly tied to short-term revenue, while working hard to ensure the safety and well-being of our staff worldwide. And still, we remain dedicated to our mission, providing the children and schools we serve free access to Scholastic's Learn at Home digital hub with learning content for children from Pre-K to 12, which has seen over eight million visitors in less than one week as parents turn to Scholastic for resources to help their children learn at home."

Mr. Robinson continued, "Scholastic has significant cash reserves and access to liquidity, and we have implemented immediate actions to protect our strong financial position in this period of uncertainty by discontinuing all non-essential cash outlays and deferring capital spending plans. Additionally, the one-time non-cash excess inventory write-off taken in the quarter, and associated changes in inventory policies, will result in more efficient asset utilization, lower obsolescence expense and reduced warehouse labor costs in future periods."

Fiscal 2020 View

Through the nine months ended February 29, 2020, the Company remained on course to achieve its operating goals for 2020 fiscal year revenues and Adjusted EBITDA (as defined in the accompanying tables). The Company's long-term capital investment plan also remained on target, although project spending is now being deferred to safeguard the Company's cash position...