$67M
Increased Revenues Reflect Strength of Book Fairs and Education
Solutions
$21M Increase
in Operating Cash Flows
Expecting Q4 to Be Led By Peak Selling
Season for Education Solutions and Fair Count Continuing at 70% of
Pre-Pandemic Levels
NEW YORK, March 17, 2022 /PRNewswire/ -- 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, 2022.
The Company recorded a 24% increase in third quarter revenues, a
seasonally lower revenue period in which it typically records an
operating loss.
Fiscal Third Quarter 2022 Review
In $
millions
|
Third
Quarter
|
|
Change
|
|
Fiscal
2022
|
|
Fiscal
2021
|
|
$
|
%
|
Revenues
|
$
|
344.5
|
|
$
|
277.5
|
|
$
|
67.0
|
24 %
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
(19.5)
|
|
$
|
(24.2)
|
|
$
|
4.7
|
19 %
|
One-time
items
|
|
2.8
|
|
|
12.3
|
|
|
|
|
Operating income
(loss), ex. one-time items*
|
$
|
(16.7)
|
|
$
|
(11.9)
|
|
$
|
(4.8)
|
(40) %
|
|
* Please refer to the
non-GAAP financial tables attached
|
Company Commentary
Peter Warwick, President and
Chief Executive Officer, said, "Strong demand for our products
resulted in a 24% increase in revenues in the third quarter with
the biggest impact coming from higher than expected revenue per
fair from book fairs, where fair count continues to approximate 70%
of pre-pandemic levels. As parents and teachers around the world
seek to close the learning gaps created by the disruption of
in-person learning, demand for our proven educational products is
getting stronger. Whether it's from our core Trade backlist titles,
Graphix™ series, engaging educational materials or the
exciting way we deliver book fairs to schools, our loyal customers
are turning to Scholastic to reinforce the love of reading in
children."
"We are looking forward to a strong and successful fourth
quarter which will include the spring book fair season for U.S.
schools and the start of the peak selling season for Education
Solutions. The enduring strength of the Scholastic brand and our
iconic book properties also continue to drive interest from top
tier production and entertainment companies. We are particularly
excited about the upcoming April theatrical release of The Bad
Guys™ movie from Dreamworks® and our live
action Goosebumps® series which was greenlit for
Disney+™."
"Operationally, we expect to maintain our strong margins through
the current fiscal year. In addition to the benefit of previous
cost savings initiatives, we will continue to take steps to
mitigate risks associated with inflationary cost pressures, supply
chain challenges and higher oil prices."
Revenues
Consolidated revenues increased 24% to $344.5 million in the third quarter versus the
prior year period. With schools having returned to in-classroom
learning, the school channels drove a majority of the increase with
more in-person book fairs and better than expected revenue per
fair. The Company's education offerings also drove higher revenues
primarily related to core instructional products and sales of
Scholastic Magazines+™. Education Solutions revenues
also increased for the New Worlds Reading Initiative, a
five-year agreement with University of
Florida's Lastinger Center for Learning to provide books to
Florida students (kindergarten
through 5th grade) who are reading below grade level. The Company
began fulfilling orders in the current fiscal quarter for the
100,000+ students now enrolled in the program. Higher trade channel
revenues were driven by core backlist titles as demand for the
Company's best-selling series continues. Internationally,
Canada experienced higher revenues
in all channels, UK revenues increased primarily in book fairs and
trade channels, and Australia
revenues improved as schools began to lift certain restrictions
after their summer holiday. Asia
markets continued to be negatively impacted by COVID-related
shutdowns and recently adopted restrictive regulations in
China.
Overall Results
In $
millions
|
Third
Quarter
|
|
Change
|
|
Fiscal
2022
|
|
Fiscal
2021
|
|
$
|
%
|
Operating income
(loss)
|
$
|
(19.5)
|
|
$
|
(24.2)
|
|
$
|
4.7
|
19 %
|
Earnings (loss)
before taxes
|
$
|
(19.8)
|
|
$
|
(22.0)
|
|
$
|
2.2
|
10 %
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) ex. one-times *
|
$
|
(16.7)
|
|
$
|
(11.9)
|
|
$
|
(4.8)
|
(40) %
|
Earnings (loss) ex.
one-times *
|
$
|
(17.0)
|
|
$
|
(9.7)
|
|
$
|
(7.3)
|
(75) %
|
Adjusted
EBITDA*
|
$
|
5.9
|
|
$
|
14.2
|
|
$
|
(8.3)
|
(58) %
|
|
|
|
|
|
* Please refer to the
non-GAAP financial tables attached
|
|
|
|
|
Excluding one-time items in both periods, operating loss
increased $4.8 million and third
quarter adjusted EBITDA declined $8.3
million due primarily to higher labor related costs and
$6.7 million in non-recurring
government wage subsidies received in the prior period. In
addition, the prior period benefited from a $3.8 million gain related to the sale of a UK
distribution center.
Capital Position and Liquidity
In $
millions
|
Third
Quarter
|
|
Change
|
|
Fiscal
2022
|
|
Fiscal
2021
|
|
$
|
%
|
Net cash provided by
operating activities
|
$
|
36.9
|
|
$
|
16.4
|
|
$
|
20.5
|
125 %
|
Additions to
property, plant and equipment and prepublication
expenditures
|
|
(13.5)
|
|
|
(16.0)
|
|
|
2.5
|
16 %
|
Net proceeds from
sale of assets
|
|
—
|
|
|
5.1
|
|
|
(5.1)
|
NM
|
Free cash flow
(use)*
|
$
|
23.4
|
|
$
|
5.5
|
|
$
|
17.9
|
NM
|
|
|
|
|
|
|
|
|
|
|
Net debt
(cash)*
|
$
|
(295.2)
|
|
$
|
(162.5)
|
|
$
|
(132.7)
|
(82) %
|
|
* Please refer to the
non-GAAP financial tables attached
|
NM - Not
meaningful
|
The increase in free cash flow and the higher net cash position
versus the prior period was driven primarily by higher cash
collections due to improved revenues. This was partially offset by
higher inventory purchases to compensate for longer manufacturing
and transportation lead times.
The Company distributed $5.2
million in dividends in the third quarter and, to date, has
reacquired 498,079 shares of its common stock for $19.8 million in fiscal year transactions. This
included a privately negotiated transaction with a related party
for 300,000 shares at a 4.2% discount to market prices. The Company
expects to continue open market repurchases of its shares for the
foreseeable future.
Outlook
In the Children's Book Publishing and Distribution
segment, the Company expects the number of in-person book fairs to
continue to trend at 70% of pre-pandemic levels with improved
revenue per fair over the same period. In the book clubs channel,
having successfully cleared the backlogged orders, the Company
expects to see continued strong customer re-engagement. The trade
channel is anticipating the benefit of new releases, such as Cat
Kid Comic Club® #3: On Purpose by Dav Pilkey, and Colin
Kaepernick's I Color Myself Different. The Company's
media group has a robust pipeline that should favorably impact
future fiscal year periods. Scholastic is continuously looking to
grow the publishing program by attracting talented and diverse
creators, building and acquiring intellectual properties and, when
appropriate, raising awareness of properties by developing
on-screen adaptations.
The fourth quarter of the fiscal year is the beginning of the
Education Solutions peak selling season. The Company
anticipates a strong fourth quarter driven by its comprehensive
education offerings, which include both print and digital content.
Revenues related to summer reading initiatives are also expected to
be robust as educators continue to seek materials to boost student
reading levels. Consistent with previous years, the Company will
balance fulfillment capacity with customer delivery date
expectations, which may shift orders to the first quarter of the
next fiscal year. Revenues related to the New Worlds Reading
Initiative will continue in the fourth quarter as additional
shipments are made to customers. Marketing efforts related to this
program will ramp up toward the end of the Florida school year and will likely result in
a significant number of books being shipped in the summer months of
June and July, which marks the end of the first year of the
five-year program. Scholastic Magazines+ has launched pre-orders
for fiscal 2023 for the highly anticipated
Storyworks® 1, which creates a full line of
Storyworks ELA titles for advanced kindergarten and grades 1-6.
Internationally, the Company is optimistic that the easing of
COVID-related restrictions will benefit the major markets of
Canada, UK and Australia and New
Zealand, but anticipates that COVID-related issues and
recently adopted restrictive regulations in China will result in continued softness in
Asia.
Cost pressures for paper, printing, and freight will continue in
the fourth quarter as current period inventory, with an associated
higher cost of product, is sold. Similarly, the Company expects
higher labor costs due to continuing inflationary pressures.
Additionally, rising fuel costs will impact the business, primarily
related to the delivery of book fairs where the Company manages its
own distribution fleet. The Company is taking all available actions
to mitigate higher costs and identify further opportunities for
incremental cost savings, including process improvements and
automation, proactive resource allocation, book fair vehicle route
optimization, vendor diversification, product rationalization and
pricing, as well as the benefits of cross divisional
collaborations.
Segment Results
All comparisons detailed in this section refer to operating
results for the third quarter ended February 28, 2022 versus
the third quarter ended February 28, 2021.
Children's Book Publishing and Distribution (CBP&D)
In $
millions
|
Third
Quarter
|
|
Change
|
|
Fiscal
2022
|
|
Fiscal
2021
|
|
$
|
%
|
Revenues
|
|
|
|
|
|
|
|
|
|
Books Clubs
|
$
|
40.5
|
|
$
|
35.1
|
|
$
|
5.4
|
15 %
|
Book Fairs
|
|
76.0
|
|
|
27.0
|
|
|
49.0
|
181 %
|
Trade
|
|
84.5
|
|
|
80.8
|
|
|
3.7
|
5 %
|
Total
Revenue
|
$
|
201.0
|
|
$
|
142.9
|
|
$
|
58.1
|
41 %
|
Operating income
(loss)
|
|
5.0
|
|
|
(7.6)
|
|
|
12.6
|
166 %
|
Operating income
(loss) ex. one-time items*
|
|
5.0
|
|
|
(4.7)
|
|
|
|
|
|
* Please refer to the
non-GAAP financial tables attached
|
Third quarter segment revenues were $201.0 million, an increase of $58.1 million, or 41%, versus the prior year
period, primarily driven by the book fairs channel where the number
of fairs continue to approximate 70% of the fairs held during the
pre-COVID third quarter of fiscal 2020. Revenue per fair increased
compared with the prior year period and is favorable to
pre-pandemic levels, driven in part by improved fair type
prioritization and data analytics resulting in enhanced marketing
initiatives. Book clubs revenues include the processing of backlog
orders from the previous quarter. Trade sales remain strong as the
Company's series publishing such as Wings of
Fire™, The Baby-sitters Club®
Graphix™ and Baby-sitters Little
Sisters® Graphix™, and Five Nights
at Freddy's™ continue to resonate with young
readers.
Education Solutions
In $
millions
|
Third
Quarter
|
|
Change
|
|
Fiscal
2022
|
|
Fiscal
2021
|
|
$
|
%
|
Revenue
|
$
|
77.2
|
|
$
|
66.3
|
|
$
|
10.9
|
16 %
|
Operating income
(loss)
|
|
13.1
|
|
|
9.7
|
|
|
3.4
|
35 %
|
Operating income
(loss) ex. one-time items*
|
|
13.1
|
|
|
9.7
|
|
|
|
|
|
* Please refer to the
non-GAAP financial tables attached
|
Third quarter segment revenues were $77.2
million, an increase of $10.9
million, or 16%, compared with the same prior year period.
$5.7 million of the revenue increase
was driven by a sponsored program sale related to the New Worlds
Reading Initiative, a five-year agreement with the State of Florida and the University of Florida Lastinger Center for
Learning. In addition, revenues for education product offerings
increased $4.7 million primarily
related to core instructional products such as Scholastic
Bookroom, Scholastic Edge™ and
Guided Reading and revenues related to the Scholastic
Magazines+ increased $3.4 million,
which was partially offset by a $1.9
million decrease in revenues primarily related to teaching
resources products which performed well during the prior year's
virtual school environment.
International
In $
millions
|
Third
Quarter
|
|
Change
|
|
Fiscal
2022
|
|
Fiscal
2021
|
|
$
|
%
|
Revenue
|
$
|
66.3
|
|
$
|
68.3
|
|
$
|
(2.0)
|
(3) %
|
Operating income
(loss)
|
|
(5.0)
|
|
|
(1.0)
|
|
|
(4.0)
|
NM
|
Operating income
(loss) ex. one-time items*
|
|
(4.6)
|
|
|
(0.8)
|
|
|
|
|
|
* Please refer to the
non-GAAP financial tables attached
|
NM - Not
meaningful
|
Third quarter segment revenues were $66.3
million, a decrease of $2.0
million, or 3%, compared with the same prior year period. In
local currency, revenues decreased $0.4
million, coupled with a $1.6
million unfavorable impact from foreign exchange. The
Company's Asia markets continue to
be impacted by COVID restrictions and recently adopted restrictive
regulations in China resulting in
a decrease in local currency revenues of $3.7 million. This was offset by improved
performance in the Company's major markets of $3.7 million. Local currency revenues in
Canada increased $3.0 million, driven by improvement in all sales
channels, especially book fairs and trade channels. Local currency
revenues in the UK increased $0.4
million driven by the book fairs channel. Australia and New
Zealand local currency revenues increased $0.3 million as these markets have been slower to
lift restrictions resulting in continued school channel
disruptions. Revenues in the export channel decreased $0.4 million. Prior year operating income
included the benefit of $2.1 million
in non-recurring COVID-related government subsidies.
Overhead
In $
millions
|
Third
Quarter
|
|
Change
|
|
Fiscal
2022
|
|
Fiscal
2021
|
|
$
|
%
|
Overhead
expense
|
$
|
32.6
|
|
$
|
25.3
|
|
$
|
7.3
|
29 %
|
Overhead expense ex.
one-time items*
|
|
30.2
|
|
|
16.1
|
|
|
|
|
|
* Please refer to the
non-GAAP financial tables attached
|
Third quarter overhead expenses were $32.6 million, an increase of $7.3 million, or 29%, compared with the same
prior year period due to higher unallocated costs of $7.6 million driven by increased
employee-related expenses at the Company's Jefferson City, Missouri distribution
facility.
Fiscal Year-To-Date 2022 Review
In $
millions
|
Year-To-Date
|
|
Change
|
|
Fiscal
2022
|
|
Fiscal
2021
|
|
$
|
%
|
Revenues
|
$
|
1,128.5
|
|
$
|
898.9
|
|
$
|
229.6
|
26 %
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
31.9
|
|
$
|
(32.4)
|
|
$
|
64.3
|
198 %
|
One-time
items
|
|
(0.5)
|
|
|
29.8
|
|
|
|
|
Operating income
(loss), ex. one-time items*
|
$
|
31.4
|
|
$
|
(2.6)
|
|
$
|
34.0
|
NM
|
|
* Please refer to the
non-GAAP financial tables attached
|
NM - Not
meaningful
|
Year-To-Date Results
For the first nine months of fiscal 2022, revenue was
$1,128.5 million, compared with
$898.9 million in the same prior year
period, an increase of $229.6
million, or 26%. The Company reported earnings per diluted
share in the first nine months of the fiscal year of $0.80, versus a net loss per diluted share of
$0.54 a year ago. Excluding one-time
items of $0.01 and $0.65 per diluted share, respectively, the
Company reported earnings per diluted share of $0.80 in the first nine months of fiscal 2022
versus earnings per diluted share of $0.11 in the prior year period. The favorable
results are mainly attributable to the recovery of the U.S. book
fairs business, continued growth in the trade channel and higher
sales of the Company's educational offerings.
Adjusted EBITDA (as defined) for the first nine months of fiscal
2022 was $106.6 million, compared
with $76.0 million in the first nine
months of fiscal 2021, an increase of $30.6
million, or 40%.
Net cash provided by operating activities was $178.5 million in the first nine months of the
current fiscal year compared to net cash provided by operating
activities of $36.5 million in the
same period last year. The Company had free cash flow (as defined)
of $147.9 million in the current
fiscal year-to-date, compared with free cash flow of $1.5 million in the same prior year period. The
current year-to-date's free cash flow includes $28.0 million in capital expenditures and
$13.0 million in net prepublication
spend. The $146.4 million free cash
flow improvement reflects revenue improvements from the
school-based channels coupled with ongoing cost savings initiatives
as well as a first quarter tax refund.
Dividends
As previously announced, the Company's Board of Directors
declared a quarterly cash dividend of $0.15 per share on the Company's Class A and
Common Stock for the fourth quarter of fiscal 2022. The dividend is
payable on June 15, 2022 to
shareholders of record as of the close of business on April 29, 2022.
Additional Information
To supplement our financial statements presented in accordance
with GAAP, we include certain non-GAAP calculations and
presentations including, as noted above, "Adjusted EBITDA" and
"Free Cash Flow". Please refer to the non-GAAP financial tables
attached to this press release for supporting details on the impact
of one-time items on operating income, net income and diluted EPS,
and the use of non-GAAP financial measures included in this
release. This information should be considered as supplemental in
nature and not as a substitute for the related financial
information prepared in accordance with GAAP.
Conference Call
The Company will hold a conference call to discuss its results
at 4:30 p.m. ET today, March 17, 2022. Peter
Warwick, Scholastic's President and Chief Executive Officer,
and Kenneth Cleary, the Company's
Chief Financial Officer, will moderate the call.
The conference call and accompanying slides will be webcast and
accessible through the Investor Relations section of Scholastic's
website, www.scholastic.com. Participation by telephone will be
available by dialing (877) 654-5161 from within the U.S. or +1
(678) 894-3064 internationally. Shortly following the call, an
archived webcast and accompanying slides from the conference call
will also be posted at investor.scholastic.com. An audio-only
replay of the call will be available by dialing (855) 859-2056 from
within the U.S. or +1 (404) 537-3406 internationally, and entering
access code 8594653. The recording will be available through
Friday, March 25, 2022.
About Scholastic
For more than 100 years, Scholastic Corporation (NASDAQ: SCHL)
has been encouraging the personal and intellectual growth of all
children, beginning with literacy. Having earned a reputation as a
trusted partner to educators and families, Scholastic is the
world's largest publisher and distributor of children's books, a
leading provider of literacy curriculum, professional services, and
classroom magazines, and a producer of educational and entertaining
children's media. The Company creates and distributes bestselling
books and e-books, print and technology-based learning programs for
pre-K to grade 12, and other products and services that support
children's learning and literacy, both in school and at home. With
15 international operations and exports to 165 countries,
Scholastic makes quality, affordable books available to all
children around the world through school-based book clubs and book
fairs, classroom libraries, school and public libraries, retail,
and online. Learn more at www.scholastic.com.
Forward-Looking Statements
This news release contains certain forward-looking statements
relating to future periods. Such forward-looking statements are
subject to various risks and uncertainties, including those arising
from the continuing impact of COVID-19 related measures taken by
governmental authorities, school administrators, or suppliers or
customers which may curtail or otherwise adversely affect certain
of the Company's business operations, and the conditions of the
children's book and educational materials markets generally and
acceptance of the Company's products within those markets, and
other risks and factors identified from time to time in the
Company's filings with the Securities and Exchange Commission.
Actual results could differ materially from those currently
anticipated.
SCHL: Financial
Table 1
|
|
Scholastic
Corporation
|
Consolidated
Statements of Operations
|
(Unaudited)
|
(In $ Millions,
except shares and per share data)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
02/28/22
|
02/28/21
|
|
02/28/22
|
02/28/21
|
Revenues
|
$
|
344.5
|
$
|
277.5
|
|
$
|
1,128.5
|
$
|
898.9
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
169.6
|
|
135.9
|
|
|
540.9
|
|
440.6
|
Selling, general and
administrative expenses (1)
|
|
180.8
|
|
140.2
|
|
|
512.7
|
|
433.8
|
Depreciation and
amortization
|
|
13.6
|
|
14.7
|
|
|
43.0
|
|
46.0
|
Asset impairments and
write downs (2)
|
|
—
|
|
10.9
|
|
|
—
|
|
10.9
|
Total operating costs
and expenses
|
|
364.0
|
|
301.7
|
|
|
1,096.6
|
|
931.3
|
Operating income
(loss)
|
|
(19.5)
|
|
(24.2)
|
|
|
31.9
|
|
(32.4)
|
Interest income
(expense), net
|
|
(0.4)
|
|
(1.7)
|
|
|
(2.2)
|
|
(4.1)
|
Other components of
net periodic benefit (cost)
|
|
0.1
|
|
0.1
|
|
|
0.1
|
|
(0.1)
|
Gain (loss) on sale
of assets and other (3)
|
|
—
|
|
3.8
|
|
|
6.2
|
|
10.4
|
Earnings (loss)
before income taxes
|
|
(19.8)
|
|
(22.0)
|
|
|
36.0
|
|
(26.2)
|
Provision (benefit)
for income taxes (4)
|
|
(4.7)
|
|
(8.0)
|
|
|
7.1
|
|
(7.6)
|
Net income
(loss)
|
|
(15.1)
|
|
(14.0)
|
|
|
28.9
|
|
(18.6)
|
Less: Net income
(loss) attributable to noncontrolling interest
|
|
0.2
|
|
(0.1)
|
|
|
0.1
|
|
0.0
|
Net income (loss)
attributable to Scholastic Corporation
|
$
|
(15.3)
|
$
|
(13.9)
|
|
$
|
28.8
|
$
|
(18.6)
|
Basic and diluted
earnings (loss) per share of Class A and
Common Stock (5)
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.44)
|
$
|
(0.41)
|
|
$
|
0.83
|
$
|
(0.54)
|
Diluted
|
$
|
(0.44)
|
$
|
(0.41)
|
|
$
|
0.80
|
$
|
(0.54)
|
Basic weighted
average shares outstanding
|
|
34,577
|
|
34,348
|
|
|
34,576
|
|
34,316
|
Diluted weighted
average shares outstanding
|
|
35,761
|
|
34,687
|
|
|
35,605
|
|
34,490
|
(1)
|
In the three and nine
months ended February 28, 2022, the Company recognized pretax
severance and related charges of $2.5 and $5.7,
respectively, and branch consolidation costs of $0.3 and $0.4,
respectively. In the nine months ended February 28, 2022, the
Company
recognized $6.6 of insurance proceeds related to an intellectual
property legal settlement accrued in fiscal 2021. In the three and
nine
months ended February 28, 2021, the Company recognized pretax
severance of $0.8 and $18.0, respectively, and branch consolidation
costs
of $0.6 and $0.9, respectively.
|
|
|
(2)
|
In the three and nine
months ended February 28, 2021, the Company recognized pretax asset
impairments of $8.5 related to its plan to cease
use of certain leased office space in New York City and consolidate
into its company-owned New York headquarters building and $2.4
related to its plan to permanently close 12 of its 54 book fair
warehouses in the U.S. as part of a branch consolidation
project.
|
|
|
(3)
|
In the nine months
ended February 28, 2022, the Company recognized pretax gain on the
sale of its Lake Mary facility of $6.2. In the three
and nine months ended February 28, 2021, the Company
recognized pretax gain on the sale of its UK distribution center
located in Southam
of $3.8. In the nine months ended February 28, 2021, the
Company recognized pretax gain on the sale of its Danbury facility
of $6.6.
|
|
|
(4)
|
In the three and nine
months ended February 28, 2022, the Company recognized a benefit of
$0.7 and a provision of $0.2, respectively, for
income taxes in respect to one-time pretax items. In the three and
nine months ended February 28, 2021, the Company recognized a
benefit
for income taxes in respect to one-time pretax charges of $3.2 and
$7.5, respectively.
|
|
|
(5)
|
Earnings (loss) per
share are calculated on non-rounded net income (loss) and shares
outstanding. Recalculating earnings per share based on
numbers rounded to millions may not yield the results as
presented.
|
Table 2
|
|
Scholastic
Corporation
|
Segment
Results
|
(Unaudited)
|
(In $
Millions)
|
|
|
Three months
ended
|
Change
|
|
Nine months
ended
|
Change
|
|
02/28/22
|
02/28/21
|
$
|
%
|
|
02/28/22
|
02/28/21
|
$
|
%
|
Children's Book
Publishing and
Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Books Clubs
|
$
|
40.5
|
$
|
35.1
|
$
|
5.4
|
15 %
|
|
$
|
99.2
|
$
|
107.9
|
$
|
(8.7)
|
(8) %
|
Book Fairs
|
|
76.0
|
|
27.0
|
|
49.0
|
181 %
|
|
|
268.2
|
|
87.9
|
|
180.3
|
NM
|
Consolidated
Trade
|
|
84.5
|
|
80.8
|
|
3.7
|
5 %
|
|
|
301.9
|
|
283.4
|
|
18.5
|
7 %
|
Total
Revenues
|
|
201.0
|
|
142.9
|
|
58.1
|
41 %
|
|
|
669.3
|
|
479.2
|
|
190.1
|
40 %
|
Operating income
(loss)
|
|
5.0
|
|
(7.6)
|
|
12.6
|
166 %
|
|
|
68.5
|
|
(1.2)
|
|
69.7
|
NM
|
Operating
margin
|
|
2.5 %
|
|
— %
|
|
|
|
|
|
10.2 %
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Education
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
77.2
|
|
66.3
|
|
10.9
|
16 %
|
|
|
236.8
|
|
187.4
|
|
49.4
|
26 %
|
Operating income
(loss)
|
|
13.1
|
|
9.7
|
|
3.4
|
35 %
|
|
|
36.0
|
|
17.6
|
|
18.4
|
105 %
|
Operating
margin
|
|
17.0 %
|
|
14.6 %
|
|
|
|
|
|
15.2 %
|
|
9.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
66.3
|
|
68.3
|
|
(2.0)
|
(3) %
|
|
|
222.4
|
|
232.3
|
|
(9.9)
|
(4) %
|
Operating income
(loss)
|
|
(5.0)
|
|
(1.0)
|
|
(4.0)
|
NM
|
|
|
2.0
|
|
21.7
|
|
(19.7)
|
(91) %
|
Operating
margin
|
|
— %
|
|
— %
|
|
|
|
|
|
0.9 %
|
|
9.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overhead
expense
|
|
32.6
|
|
25.3
|
|
7.3
|
29 %
|
|
|
74.6
|
|
70.5
|
|
4.1
|
6 %
|
Operating income
(loss)
|
$
|
(19.5)
|
$
|
(24.2)
|
$
|
4.7
|
19 %
|
|
$
|
31.9
|
$
|
(32.4)
|
$
|
64.3
|
198 %
|
NM - Not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3
|
|
Scholastic
Corporation
|
Supplemental
Information
|
(Unaudited)
|
(In $
Millions)
|
|
Selected Balance
Sheet Items
|
|
02/28/22
|
02/28/21
|
|
|
|
Cash and cash
equivalents
|
$
|
308.9
|
$
|
353.2
|
|
|
|
|
|
Accounts receivable,
net
|
|
287.7
|
|
238.0
|
|
|
|
|
|
Inventories,
net
|
|
299.4
|
|
304.8
|
|
|
|
|
|
Accounts
payable
|
|
173.4
|
|
134.3
|
|
|
|
|
|
Accrued
royalties
|
|
84.2
|
|
77.6
|
|
|
|
|
|
Lines of credit and
current portion of long-term debt
|
|
13.7
|
|
190.7
|
|
|
|
|
|
Long-term
debt
|
|
—
|
|
—
|
|
|
|
|
|
Total debt
|
|
13.7
|
|
190.7
|
|
|
|
|
|
Net debt (cash)
(1)
|
|
(295.2)
|
|
(162.5)
|
|
|
|
|
|
Total stockholders'
equity
|
|
1,185.3
|
|
1,176.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Cash Flow
Items
|
|
Three months
ended
|
|
Nine months
ended
|
|
02/28/22
|
02/28/21
|
|
02/28/22
|
02/28/21
|
Net cash provided by
(used in) operating activities
|
$
|
36.9
|
$
|
16.4
|
|
$
|
178.5
|
$
|
36.5
|
Add:
|
|
|
|
|
|
|
|
|
|
Net proceeds from sale
of assets
|
|
—
|
|
5.1
|
|
|
10.4
|
|
17.4
|
Less:
|
|
|
|
|
|
|
|
|
|
Additions to property,
plant and equipment
|
|
9.2
|
|
10.9
|
|
|
28.0
|
|
37.1
|
Prepublication
expenditures
|
|
4.3
|
|
5.1
|
|
|
13.0
|
|
15.3
|
Free cash flow
(use) (2)
|
$
|
23.4
|
$
|
5.5
|
|
$
|
147.9
|
$
|
1.5
|
|
|
(1)
|
Net debt (cash) is
defined by the Company as lines of credit and short-term debt plus
long-term-debt, net of cash and cash equivalents. The
Company utilizes this non-GAAP financial measure, and believes it
is useful to investors, as an indicator of the Company's
effective
leverage and financing needs.
|
|
|
(2)
|
Free cash flow (use)
is defined by the Company as net cash provided by or used in
operating activities (which includes royalty advances)
and cash acquired through acquisitions and from sale of assets,
reduced by spending on property, plant and equipment and
prepublication
costs. The Company believes that this non-GAAP financial measure is
useful to investors as an indicator of cash flow available for
debt
repayment and other investing activities, such as acquisitions. The
Company utilizes free cash flow as a further indicator of
operating
performance and for planning investing activities.
|
Table 4
|
|
Scholastic
Corporation
|
Supplemental
Results
|
Excluding One-Time
Items
|
(Unaudited)
|
(In $ Millions,
except per share data)
|
|
|
Three months
ended
|
|
02/28/2022
|
|
02/28/2021
|
|
Reported
|
|
One-time
items
|
|
Excluding
One-time
items
|
|
Reported
|
|
One-time
items
|
|
Excluding
One-time
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share (1)
|
$
|
(0.44)
|
|
$
|
0.06
|
|
$
|
(0.38)
|
|
$
|
(0.41)
|
|
$
|
0.26
|
|
$
|
(0.14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(2)
|
$
|
(15.3)
|
|
$
|
2.1
|
|
$
|
(13.2)
|
|
$
|
(13.9)
|
|
$
|
9.1
|
|
$
|
(4.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution (3)
|
$
|
5.0
|
|
$
|
—
|
|
$
|
5.0
|
|
$
|
(7.6)
|
|
$
|
2.9
|
|
$
|
(4.7)
|
Education
Solutions
|
|
13.1
|
|
|
—
|
|
|
13.1
|
|
|
9.7
|
|
|
—
|
|
|
9.7
|
International
(4)
|
|
(5.0)
|
|
|
0.4
|
|
|
(4.6)
|
|
|
(1.0)
|
|
|
0.2
|
|
|
(0.8)
|
Overhead
(5)
|
|
(32.6)
|
|
|
2.4
|
|
|
(30.2)
|
|
|
(25.3)
|
|
|
9.2
|
|
|
(16.1)
|
Operating income
(loss)
|
$
|
(19.5)
|
|
$
|
2.8
|
|
$
|
(16.7)
|
|
$
|
(24.2)
|
|
$
|
12.3
|
|
$
|
(11.9)
|
|
|
Nine months
ended
|
|
02/28/2022
|
|
02/28/2021
|
|
Reported
|
|
One-time
items
|
|
Excluding
One-time
items
|
|
Reported
|
|
One-time
items
|
|
Excluding
One-time
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share (1)
|
$
|
0.80
|
|
$
|
(0.01)
|
|
$
|
0.80
|
|
$
|
(0.54)
|
|
$
|
0.65
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(2)
|
$
|
28.8
|
|
$
|
(0.3)
|
|
$
|
28.5
|
|
$
|
(18.6)
|
|
$
|
22.3
|
|
$
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution (3)
|
$
|
68.5
|
|
$
|
—
|
|
$
|
68.5
|
|
$
|
(1.2)
|
|
$
|
2.9
|
|
$
|
1.7
|
Education
Solutions
|
|
36.0
|
|
|
—
|
|
|
36.0
|
|
|
17.6
|
|
|
—
|
|
|
17.6
|
International
(4)
|
|
2.0
|
|
|
1.1
|
|
|
3.1
|
|
|
21.7
|
|
|
2.8
|
|
|
24.5
|
Overhead
(5)
|
|
(74.6)
|
|
|
(1.6)
|
|
|
(76.2)
|
|
|
(70.5)
|
|
|
24.1
|
|
|
(46.4)
|
Operating income
(loss)
|
$
|
31.9
|
|
$
|
(0.5)
|
|
$
|
31.4
|
|
$
|
(32.4)
|
|
$
|
29.8
|
|
$
|
(2.6)
|
(1)
|
Earnings (loss) per
share are calculated on non-rounded net income (loss) and shares
outstanding. Recalculating earnings per share based on
rounded numbers may not yield the results as presented.
|
|
|
(2)
|
In the three and nine
months ended February 28, 2022, the Company recognized a benefit of
$0.7 and a provision of $0.2, respectively, for
income taxes in respect to one-time pretax items. In the three and
nine months ended February 28, 2021, the Company recognized a
benefit
for income taxes in respect to one-time pretax charges of $3.2 and
$7.5, respectively.
|
|
|
(3)
|
In the three and nine
months ended February 28, 2021, the Company recognized pretax asset
impairment of $2.4 and branch consolidation
costs of $0.5 related to its plan to permanently close 12 out of
its 54 book fair warehouses in the U.S.
|
|
|
(4)
|
In the three and nine
months ended February 28, 2022, the Company recognized pretax
severance of $0.1 and $0.7, respectively, and branch
consolidation costs of $0.3 and $0.4, respectively. In the three
and nine months ended February 28, 2021, the Company
recognized pretax
severance of $0.2 and $2.5, respectively, and branch consolidation
costs of $0.0 and $0.3, respectively.
|
|
|
(5)
|
In the three and nine
months ended February 28, 2022, the Company recognized pretax
severance and related charges of $2.4 and $5.0,
respectively. In the nine months ended February 28, 2022, the
Company recognized $6.6 of insurance proceeds related to an
intellectual
property legal settlement accrued in fiscal 2021. In the three and
nine months ended February 28, 2021, the Company recognized
pretax
severance of $0.6 and $15.5, respectively, and pretax asset
impairment charges of $8.5 and branch consolidation costs of $0.1
related to its
plan to cease use of certain leased office space and consolidate
into its company-owned New York headquarters building.
|
Table 5
|
|
Scholastic
Corporation
|
Consolidated
Statements of Operations - Supplemental
|
Adjusted
EBITDA
|
(Unaudited)
|
(In $
Millions)
|
|
|
Three months
ended
|
|
|
02/28/22
|
|
02/28/21
|
|
Earnings (loss)
before income taxes as reported
|
$
|
(19.8)
|
|
$
|
(22.0)
|
|
One-time items before
income taxes
|
|
2.8
|
|
|
12.3
|
|
Earnings (loss)
before income taxes excluding one-time items
|
|
(17.0)
|
|
|
(9.7)
|
|
Interest (income)
expense
|
|
0.4
|
|
|
1.7
|
|
Depreciation and
amortization (1)
|
|
16.1
|
|
|
15.9
|
|
Amortization of
prepublication costs
|
|
6.4
|
|
|
6.3
|
|
Adjusted EBITDA
(2)
|
$
|
5.9
|
|
$
|
14.2
|
|
|
|
Nine months
ended
|
|
|
02/28/22
|
|
02/28/21
|
|
Earnings (loss)
before income taxes as reported
|
$
|
36.0
|
|
$
|
(26.2)
|
|
One-time items before
income taxes
|
|
(0.5)
|
|
|
29.8
|
|
Earnings (loss)
before income taxes excluding one-time items
|
|
35.5
|
|
|
3.6
|
|
Interest (income)
expense
|
|
2.2
|
|
|
4.1
|
|
Depreciation and
amortization (1)
|
|
49.0
|
|
|
49.3
|
|
Amortization of
prepublication costs
|
|
19.9
|
|
|
19.0
|
|
Adjusted EBITDA
(2)
|
$
|
106.6
|
|
$
|
76.0
|
|
(1)
|
For the three and
nine months ended February 28, 2022, amounts include depreciation
of $1.0 and $2.9, respectively, recognized in cost of
goods sold, amortization of deferred financing costs of $0.0 and
$0.3, respectively, and amortization of capitalized cloud software
of $1.5
and $2.8, respectively, recognized in selling, general and
administrative expenses. For the three and nine months ended
February 28, 2021,
amounts include depreciation of $0.8 and $2.4, respectively,
recognized in cost of goods sold, amortization of deferred
financing costs of
$0.2 and $0.4, respectively, and amortization of capitalized cloud
software of $0.2 and $0.5, respectively, recognized in selling,
general and
administrative expenses.
|
|
|
(2)
|
Adjusted EBITDA is
defined by the Company as earnings (loss), excluding one-time
items, before interest, taxes, depreciation and
amortization. The Company believes that Adjusted EBITDA is a
meaningful measure of operating profitability and useful for
measuring
returns on capital investments over time as it is not distorted by
unusual gains, losses, or other items.
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SOURCE Scholastic Corporation