Scholastic Reports Fiscal 2023 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 28, 2023.

Peter Warwick, President and Chief Executive Officer, said, "Scholastic navigated short-term headwinds in domestic and international markets, which contributed to modest sales declines and higher losses in our seasonally small third quarter. The Company used its strong balance sheet to return over $53 million to shareholders through our dividend and expanded open-market share repurchases, while continuing to invest in strategic growth opportunities. Scholastic remains committed to deploying its capital to drive long-term growth and sustained value for its shareholders and other stakeholders.

"The Children's Books segment sustained growth and outperformed the overall retail children's book market in Q3, as Book Fairs continued to perform strongly. Investments in innovation and improved fair experience since the pandemic drove both higher fair count and revenue per fair. Book Clubs results came in lower, reflecting the timing of shipments a year ago. Multiple Scholastic titles again made bestseller lists, but Trade sales declined, as major book retailers slowed their ordering.

"In Education Solutions results declined partly reflecting ongoing purchasing delays by school and district administrators, who continue to focus on managing staffing shortages. As we actively manage the sales pipeline, we continue to invest in new go-to-market capabilities to advance our literacy platform strategy. We also announced key new products and collaborations last quarter that will contribute to segment results over the long term.

With tougher market conditions expected to continue into Q4, we have updated our fiscal 2023 outlook. We have quickly adjusted short-term spending, in line with our revised top-line outlook, and focused on initiatives to improve margins. Critically, the long-term outlook for the importance of children's books and of solutions to raise literacy rates remains as strong as ever, as does our optimism in Scholastic's ability to grow and uniquely meet these critical needs.

Outlook

The Company has updated its guidance for fiscal year 2023 and now expects Adjusted EBITDA (as defined in the accompanying tables) of $175 million to $185 million (compared to a range of $195 to $205 million, previously). Full-year revenue is expected to grow approximately 4% (compared to a range of 8% to 10%, previously), as the Company takes additional steps to manage spending and preserve margins in line with its updated outlook.

Fiscal 2023 Q3 Review

In $ millions

Third Quarter

Change

Fiscal 2023

Fiscal 2022

$

%

Revenues

$

324.9

$

344.5

$

(19.6)

(6) %

Operating income (loss)

$

(27.7)

$

(19.5)

$

(8.2)

(42) %

Earnings (loss) before taxes

$

(26.2)

$

(19.8)

$

(6.4)

(32) %

Operating income (loss), ex. one-time items *

$

(27.7)

$

(16.7)

$

(11.0)

(66) %

Earnings (loss) ex. one-times *

$

(26.2)

$

(17.0)

$

(9.2)

(54) %

Adjusted EBITDA *

$

(5.4)

$

5.9

$

(11.3)

(192) %

* Please refer to the non-GAAP financial tables attached

Revenues decreased $19.6 million to $324.9 million, partly reflecting softening retail demand for children's books, which impacted Trade sales in the U.S. and major...