- Fourth Quarter Operating Income Up $55.8M on 28% YOY Higher Revenue of $514.4M
- Company Expects Full Year 2023 Revenue to Increase 8%-10%
Versus Fiscal 2022
- Regular Quarterly Dividend Raised 33% to $0.20 Per Share
NEW
YORK, July 21, 2022 /PRNewswire/ -- Scholastic
Corporation (NASDAQ: SCHL), the global children's publishing,
education and media company, today reported financial results for
the Company's fiscal fourth quarter and full year ended
May 31, 2022. Scholastic recorded significant revenue and
operating income gains in both reporting periods, led by increased
in-person book fairs and record revenue-per-fair levels in the U.S.
book fairs channel, as well as strong demand for the Company's
educational offerings.
As previously announced, reflecting confidence in the Company's
performance and outlook, its Board of Directors also approved a 33%
increase in its regular quarterly cash dividend to $0.20 per share from $0.15 per share on the Company's Class A and
Common Stock for the first quarter of fiscal 2023. The dividend is
payable on September 15, 2022 to
shareholders of record as of the close of business on August 31, 2022.
Company Commentary from Peter
Warwick, Scholastic President & CEO
"Scholastic's strong fourth fiscal quarter and full-year results
were driven by the success of our strategic and operational
initiatives, and the ever growing demand for our products by
children, parents and our long-standing school partners."
"It's clear that Scholastic has emerged from the challenges of
the pandemic even stronger and better positioned for future
sustainable growth, as indicated by our higher expectations for
fiscal 2023 and the recently announced increase in our regular
quarterly dividend. Scholastic's employees did an amazing job
fulfilling our Company mission during these uncertain times by
embracing every opportunity to increase collaboration and foster
innovation."
"Looking ahead to fiscal 2023 and beyond, we see continuing
demand for our products and services deeply rooted in the
fundamental role of our engaging independent reading materials in
the learning goals of children. This goes beyond recovery as there
is a renewed focus on the benefits that independent reading and
book ownership have for young readers and their overall
development. As educators, parents and policymakers look to close
the learning gaps exacerbated by the pandemic, Scholastic will
continue to be a trusted and preferred partner. In addition, our
popular and highly-valued intellectual property will fuel our
growth and financial performance, as we continually expand and
refresh our deep library of content."
|
Fiscal 2022 Q4
Review
|
|
|
|
|
|
|
|
|
In $
millions
|
Fourth
Quarter
|
|
Change
|
|
2022
|
|
2021
|
|
$
|
%
|
|
Revenues
|
$
|
514.4
|
|
$
|
401.4
|
|
$
|
113.0
|
28 %
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
65.5
|
|
$
|
9.7
|
|
$
|
55.8
|
NM
|
|
Earnings (loss) before
taxes
|
$
|
53.7
|
|
$
|
8.0
|
|
$
|
45.7
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss), ex. one-time items*
|
$
|
66.1
|
|
$
|
41.6
|
|
$
|
24.5
|
59 %
|
|
Earnings (loss) before
taxes, ex. one-times *
|
$
|
65.9
|
|
$
|
39.9
|
|
$
|
26.0
|
65 %
|
|
Adjusted
EBITDA*
|
$
|
88.5
|
|
$
|
63.6
|
|
$
|
24.9
|
39 %
|
|
|
|
|
|
|
|
|
|
|
|
* Please refer to the
non-GAAP financial tables attached
|
|
NM - Not
meaningful
|
|
|
|
|
|
|
|
|
|
Revenues increased 28% driven primarily by the return of
in-person book fairs and the historically high revenue-per-fair as
well as the continued growth in educational product sales due to
the high demand for independent reading for children.
Operating Income increased $55.8M to $65.5M
while Adjusted EBITDA (a non-GAAP measure of operations explained
in the accompanying tables) increased 39% to $88.5M. These increases are indicative of the
Company's ongoing efforts to improve operational efficiencies by
streamlining distribution channels and focusing on intelligent
spending throughout the Company.
|
Segment Results
|
|
|
|
|
|
|
|
|
In $
millions
|
Fourth
Quarter
|
|
Change
|
|
2022
|
|
2021
|
|
$
|
%
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution
|
$
|
277.2
|
|
$
|
195.8
|
|
$
|
81.4
|
42 %
|
|
Education
Solutions
|
|
156.8
|
|
|
124.9
|
|
|
31.9
|
26 %
|
|
International
|
|
80.4
|
|
|
80.7
|
|
|
(0.3)
|
(0) %
|
|
|
|
|
|
|
|
|
|
|
|
Overhead ex. one-times
*
|
$
|
28.4
|
|
$
|
15.0
|
|
$
|
13.4
|
89 %
|
|
|
|
|
|
|
|
|
|
|
|
* Please refer to the
non-GAAP financial tables attached
|
|
|
|
|
|
|
|
|
|
Children's Book Publishing and Distribution
Book Fairs revenues increased $85.1M on historically high revenue-per-fair
levels on 72% of pre-pandemic in-person fair count.
Trade revenues increased $6.6M primarily driven by key frontlist
publishing and backlist titles from the Company's best-selling
series that continue to resonate with customers.
Book Clubs revenues decreased $10.3M as a result of the residual effects of the
labor and system issues experienced earlier in the fiscal year.
Education Solutions
Higher revenues of $31.9M were driven by the increased demand for
educational materials needed to support a generation of students
affected by the COVID pandemic. The Company experienced an increase
in sales of family and community engagement and summer reading
offerings in the fourth quarter, as well as higher sales of its
Scholastic LiteracyTM and Rising Voices
Library®.
Demand continues to benefit, in part, from
government financed programs such as ESSER, the Elementary and
Secondary School Emergency Relief Fund, which provides direct
funding to states and districts, and from state-driven programs as
seen in the New Worlds Reading Initiative, which exceeded
its enrollment target in the first year of a five year
contract.
International
In the major markets, revenue increased
$4.5M, primarily driven by the
performance of the book fairs channel in both the UK and
Canada markets. Business in
Australia and New Zealand was adversely affected by the
later timing of COVID-related shutdowns when compared to the other
markets.
Revenues in Asia decreased as the Company exited its
direct sales business, which is no longer a strategic fit for the
Company's future growth strategy, and China continued to be impacted by restrictive
government regulations on after-school tutoring programs as well as
pandemic-related shutdowns.
Overhead
Excluding one-time items, overhead costs
increased $13.4M which was primarily
related to an increase in employee-related costs arising from
inflationary pressures on labor, including unallocated wages from
the Company's Missouri
distribution facilities as well as higher accrued bonuses and
salary-related benefit costs.
|
Fiscal 2022 YTD
Review
|
|
|
|
|
|
|
|
|
In $
millions
|
Fiscal
Year
|
|
Change
|
|
2022
|
|
2021
|
|
$
|
%
|
|
Revenues
|
$
|
1,642.9
|
|
$
|
1,300.3
|
|
$
|
342.6
|
26 %
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
97.4
|
|
$
|
(22.7)
|
|
$
|
120.1
|
NM
|
|
Earnings (loss) before
taxes
|
$
|
89.7
|
|
$
|
(18.2)
|
|
$
|
107.9
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss), ex. one-time items*
|
$
|
97.5
|
|
$
|
39.0
|
|
$
|
58.5
|
150 %
|
|
Earnings (loss) ex.
one-times *
|
$
|
95.2
|
|
$
|
43.5
|
|
$
|
51.7
|
119 %
|
|
Adjusted
EBITDA*
|
$
|
188.9
|
|
$
|
139.6
|
|
$
|
49.3
|
35 %
|
|
|
|
|
|
|
|
|
|
|
|
* Please refer to the
non-GAAP financial tables attached
|
|
NM - Not
meaningful
|
Revenues increased 26% primarily driven by the return of
in-person book fairs resulting in higher revenues of $265.4M. Education Solutions revenue increased
$81.3M on overall higher demand with
improved sales of the Company's culturally-responsive products such
as Rising Voices Library, early childhood products such as
PreK On My WayTM,
summer reading programs and Scholastic Literacy.
Operating Income of $97.4M
(and Adjusted EBITDA of $188.9M) are
indicative of the recovery of the U.S. book fairs business which
benefited from minimal incremental distribution costs associated
with higher revenue per fair. The Company also had overall lower
selling, general and administrative expenses as a percentage of
revenue which is indicative of the effectiveness of the Company's
cost saving initiatives and improved operational efficiencies.
|
Capital Position and
Liquidity
|
|
|
|
|
|
|
|
|
|
|
In $
millions
|
|
Fiscal
Year
|
|
Change
|
|
|
2022
|
|
2021
|
|
$
|
%
|
|
Net cash provided by
operating activities
|
|
$
|
226.0
|
|
$
|
71.0
|
|
$
|
155.0
|
NM
|
|
Additions to property,
plant and equipment and prepublication expenditures
|
|
|
(59.2)
|
|
|
(67.9)
|
|
|
8.7
|
13 %
|
|
Net proceeds from sale
of assets
|
|
|
16.0
|
|
|
17.4
|
|
|
(1.4)
|
(8) %
|
|
Free cash flow
(use)*
|
|
$
|
182.8
|
|
$
|
20.5
|
|
$
|
162.3
|
NM
|
|
Net cash
(debt)*
|
|
$
|
310.1
|
|
$
|
176.3
|
|
$
|
133.8
|
76 %
|
|
|
* Please refer to the
non-GAAP financial tables attached
|
|
NM - Not
meaningful
|
The $155.0M increase in cash
provided by operating activities and the $162.3M increase in free cash flow (a non-GAAP
measure of operations explained in the accompanying tables) versus
the prior period were primarily driven by $390.0M in higher customer collections on the
increase in revenues as well as $54.0M in higher net federal tax refunds. This
was partially offset by higher inventory purchases of $112.4M, increased payroll related payments,
higher postage and freight charges, and a $13.4M net settlement of an intellectual property
litigation matter. Higher cash balances will afford the Company
financial flexibility to pursue strategic growth initiatives.
The Company distributed $5.2M in
dividends in the fourth quarter and has reacquired 870,258 shares
of its common stock for $33.4M in
fiscal year 2022. As previously disclosed, this included a
privately negotiated transaction with a related party for 300,000
common shares at a 4.2% discount to market prices. In addition,
during the fourth fiscal quarter, the Company entered into a
privately negotiated transaction with a third party for the
repurchase of 190,290 common shares at a 4.0% discount to market
prices. The Company expects to continue open market repurchases of
its shares for the foreseeable future.
Outlook
In fiscal 2023, the Company expects the overall demand for
independent reading resources at home and in school to remain
strong, and management will continue to reallocate investments to
yield the best returns by focusing on the value of the Company's
intellectual property, expanding its education solutions channel
and, where appropriate, adjust product pricing.
In the book fairs channel, the Company will strategically
increase fair count, anticipating 85% pre-pandemic levels, while
maintaining strong revenue per fair, continuing to leverage
improved distribution efficiencies and sales and marketing efforts.
Labor and system issues in the book clubs channel have been
mitigated and higher operating incomes are expected on improved
customer confidence. The Company is also excited about new releases
in the trade channel from some of the most popular best-selling
series and authors such as Wings of FireTM
GraphixTM by Tui
Sutherland, Cat Kid Comic Club®:
Collaborations by Dav Pilkey,
Brian Selznick's Big Tree and many more. The Company's
content benefited from on-screen adaptations such as Dreamworks'
The Bad GuysTM and Netflix's
HeartstopperTM in fiscal 2022 and moving forward
Scholastic Entertainment has 35+ projects in development, some of
which will impact next fiscal year, such as Eva the
OwletTM, a new animated kids and family series on
AppleTV+ based on the New York Times
bestselling Scholastic book series "Owl Diaries"TM by
award-winning author Rebecca
Elliott.
The Company anticipates increased demand of its educational
products supported by continued government-related funding
programs, as well as improvements in Education Solutions' sales and
marketing efforts. The Company will enter its second year of the
New Worlds Reading Initiative, which will begin in the second
fiscal quarter, and will look for future state-sponsored programs
opportunities as they arise. The sales of Scholastic
Magazines+TM have reached near pre-pandemic levels
with distribution of over 125M units
of digital and physical product to children throughout the U.S. The
Company will prudently increase spending to improve cross-selling
initiatives and data-driven selling opportunities which will
benefit future periods but will impact next fiscal year, decreasing
operating income.
Internationally, the Company is expecting modest improvement in
operating profits as the major markets continue to recover from the
impacts of the global pandemic and Asia benefits from the Company's strategic
exit of the low-margin direct sales business.
Overhead costs are expected to increase next year due to higher
salary related costs as a result of continuing inflationary
pressures and an increase in spending on transformative and digital
services as the Company invests in future growth opportunities. The
Company will continue to explore further opportunities for measured
cost savings with process improvements and automation, product
rationalization and overall improvements in resource allocation to
increase shareholder value.
The Company expects fiscal year 2023 revenues to increase 8%-10%
and has set an Adjusted EBITDA (as defined in the accompanying
tables) target for fiscal year 2023 of $195M to $205M, up
from $188.9M in fiscal 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, July 21, 2022. Peter
Warwick, Scholastic 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.investor.scholastic.com. To access the conference call
by phone, please go to this link (registration link), and you will
be provided with dial in details. To avoid delays, we encourage
participants to dial into the conference call fifteen minutes ahead
of the scheduled start time. Shortly following the call, an
archived webcast and accompanying slides from the conference call
will also be posted at investor.scholastic.com.
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
|
|
Twelve months
ended
|
|
05/31/22
|
05/31/21
|
|
05/31/22
|
05/31/21
|
|
Revenues
|
$
|
514.4
|
$
|
401.4
|
|
$
|
1,642.9
|
$
|
1,300.3
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
224.6
|
|
188.1
|
|
|
765.5
|
|
628.7
|
|
Selling, general and
administrative expenses (1)
|
|
210.1
|
|
188.9
|
|
|
722.8
|
|
622.7
|
|
Depreciation and
amortization
|
|
13.8
|
|
14.5
|
|
|
56.8
|
|
60.5
|
|
Asset impairments and
write downs (2)
|
|
0.4
|
|
0.2
|
|
|
0.4
|
|
11.1
|
|
Total operating costs
and expenses
|
|
448.9
|
|
391.7
|
|
|
1,545.5
|
|
1,323.0
|
|
Operating income
(loss)
|
|
65.5
|
|
9.7
|
|
|
97.4
|
|
(22.7)
|
|
Interest income
(expense), net
|
|
(0.2)
|
|
(1.7)
|
|
|
(2.4)
|
|
(5.8)
|
|
Other components of net
periodic benefit (cost)
|
|
0.0
|
|
0.0
|
|
|
0.1
|
|
(0.1)
|
|
Gain (loss) on assets
held for sale (3)
|
|
(15.1)
|
|
—
|
|
|
(15.1)
|
|
—
|
|
Gain (loss) on sale of
assets and other (4)
|
|
3.5
|
|
—
|
|
|
9.7
|
|
10.4
|
|
Earnings (loss)
before income taxes
|
|
53.7
|
|
8.0
|
|
|
89.7
|
|
(18.2)
|
|
Provision (benefit) for
income taxes (5)
|
|
1.6
|
|
0.3
|
|
|
8.7
|
|
(7.3)
|
|
Net income
(loss)
|
|
52.1
|
|
7.7
|
|
|
81.0
|
|
(10.9)
|
|
Less: Net income (loss)
attributable to noncontrolling interest
|
|
0.0
|
|
0.1
|
|
|
0.1
|
|
0.1
|
|
Net income (loss)
attributable to Scholastic Corporation
|
$
|
52.1
|
$
|
7.6
|
|
$
|
80.9
|
$
|
(11.0)
|
|
Basic and diluted
earnings (loss) per share of Class A and Common Stock
(6)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.51
|
$
|
0.22
|
|
$
|
2.33
|
$
|
(0.32)
|
|
Diluted
|
$
|
1.46
|
$
|
0.22
|
|
$
|
2.27
|
$
|
(0.32)
|
|
Basic weighted average
shares outstanding
|
|
34,382
|
|
34,378
|
|
|
34,527
|
|
34,332
|
|
Diluted weighted
average shares outstanding
|
|
35,434
|
|
35,108
|
|
|
35,564
|
|
34,622
|
|
|
(1)
|
In the three and twelve
months ended May 31, 2022, the Company recognized pretax severance
and related charges of $0.5 and $6.2,
respectively, and pretax branch consolidation costs of $0.1 and
$0.5, respectively. In the twelve months ended May 31, 2022,
the Company
recognized $6.6 of pretax insurance proceeds related to an
intellectual property legal settlement accrued in fiscal 2021. In
the three and
twelve months ended May 31, 2021, the Company recognized
pretax mediation-assisted settlement charges of $20.0 related to
intellectual
property used in formerly owned products, pretax severance of $5.1
and $23.1, respectively, and pretax branch consolidation and
other
business rationalization costs of $6.6 and $7.5,
respectively.
|
|
|
|
(2)
|
In the three and twelve
months ended May 31, 2021, the Company recognized pretax asset
impairments of $0.2 and $2.6 related to its plan
to permanently close 13 of its 54 book fair warehouses in the U.S.
as part of a branch consolidation project. In the twelve months
ended
May 31, 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.
|
|
|
|
(3)
|
In the three and the
twelve months ended May 31, 2022, the Company recognized pretax
loss on assets held for sale related to the
Company's plan to exit the direct sales business in Asia of $15.1.
The business and related assets are expected to be sold in the
first quarter
of fiscal 2023.
|
|
|
|
(4)
|
In the three and twelve
months ended May 31, 2022, the Company recognized pretax gain on
the sale of its UK distribution facility located
in Witney of $3.5. In the twelve months ended May 31, 2022,
the Company recognized pretax gain on the sale of its Lake Mary
facility of
$6.2. In the twelve months ended May 31, 2021, the Company
recognized pretax gain on the sale of its UK distribution center
located in
Southam of $3.8 and pretax gain on the sale of its Danbury facility
of $6.6.
|
|
|
|
(5)
|
In the three and twelve
months ended May 31, 2022, the Company recognized a benefit of $3.1
and $1.3, respectively, for income taxes in
respect to one-time pretax items. In the three and twelve months
ended May 31, 2021, the Company recognized a benefit for
income taxes
in respect to one-time pretax charges of $8.0 and $15.5,
respectively.
|
|
|
|
(6)
|
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
|
|
Twelve months
ended
|
Change
|
|
05/31/22
|
05/31/21
|
$
|
%
|
|
05/31/22
|
05/31/21
|
$
|
%
|
|
Children's Book
Publishing and Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Books Clubs
|
$
|
27.2
|
$
|
37.5
|
$
|
(10.3)
|
(27) %
|
|
$
|
126.4
|
$
|
145.4
|
$
|
(19.0)
|
(13) %
|
|
Book Fairs
|
|
161.5
|
|
76.4
|
|
85.1
|
111 %
|
|
|
429.7
|
|
164.3
|
|
265.4
|
162 %
|
|
Consolidated
Trade
|
|
88.5
|
|
81.9
|
|
6.6
|
8 %
|
|
|
390.4
|
|
365.3
|
|
25.1
|
7 %
|
|
Total
Revenues
|
|
277.2
|
|
195.8
|
|
81.4
|
42 %
|
|
|
946.5
|
|
675.0
|
|
271.5
|
40 %
|
|
Operating income
(loss)
|
|
46.8
|
|
10.1
|
|
36.7
|
NM
|
|
|
115.3
|
|
8.9
|
|
106.4
|
NM
|
|
Operating
margin
|
|
16.9 %
|
|
5.2 %
|
|
|
|
|
|
12.2 %
|
|
1.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Education
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
156.8
|
|
124.9
|
|
31.9
|
26 %
|
|
|
393.6
|
|
312.3
|
|
81.3
|
26 %
|
|
Operating income
(loss)
|
|
45.8
|
|
40.1
|
|
5.7
|
14 %
|
|
|
81.8
|
|
57.7
|
|
24.1
|
42 %
|
|
Operating
margin
|
|
29.2 %
|
|
32.1 %
|
|
|
|
|
|
20.8 %
|
|
18.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
80.4
|
|
80.7
|
|
(0.3)
|
(0) %
|
|
|
302.8
|
|
313.0
|
|
(10.2)
|
(3) %
|
|
Operating income
(loss)
|
|
1.3
|
|
(0.5)
|
|
1.8
|
NM
|
|
|
3.3
|
|
21.2
|
|
(17.9)
|
(84) %
|
|
Operating
margin
|
|
1.6 %
|
|
— %
|
|
|
|
|
|
1.1 %
|
|
6.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overhead
expense
|
|
28.4
|
|
40.0
|
|
(11.6)
|
(29) %
|
|
|
103.0
|
|
110.5
|
|
(7.5)
|
(7) %
|
|
Operating income
(loss)
|
$
|
65.5
|
$
|
9.7
|
$
|
55.8
|
NM
|
|
$
|
97.4
|
$
|
(22.7)
|
$
|
120.1
|
NM
|
|
NM - Not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3
|
|
|
Scholastic
Corporation
|
|
Supplemental
Information
|
|
(Unaudited)
|
|
(In $
Millions)
|
|
|
Selected Balance
Sheet Items
|
|
05/31/22
|
05/31/21
|
|
|
|
|
Cash and cash
equivalents
|
$
|
316.6
|
$
|
366.5
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
299.4
|
|
256.1
|
|
|
|
|
|
|
Inventories,
net
|
|
281.4
|
|
269.7
|
|
|
|
|
|
|
Accounts
payable
|
|
162.3
|
|
138.0
|
|
|
|
|
|
|
Accrued
royalties
|
|
61.3
|
|
45.5
|
|
|
|
|
|
|
Lines of credit and
current portion of long-term debt
|
|
6.5
|
|
182.9
|
|
|
|
|
|
|
Long-term
debt
|
|
—
|
|
7.3
|
|
|
|
|
|
|
Total debt
|
|
6.5
|
|
190.2
|
|
|
|
|
|
|
Net cash (debt)
(1)
|
|
310.1
|
|
176.3
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
1,218.4
|
|
1,182.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Cash Flow
Items
|
|
Three months
ended
|
|
Twelve months
ended
|
|
05/31/22
|
05/31/21
|
|
05/31/22
|
05/31/21
|
|
Net cash provided by
(used in) operating activities
|
$
|
47.5
|
$
|
34.5
|
|
$
|
226.0
|
$
|
71.0
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from sale
of assets
|
|
5.6
|
|
—
|
|
|
16.0
|
|
17.4
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Additions to property,
plant and equipment
|
|
14.0
|
|
10.1
|
|
|
42.0
|
|
47.2
|
|
Prepublication
expenditures
|
|
4.2
|
|
5.4
|
|
|
17.2
|
|
20.7
|
|
Free cash flow (use)
(2)
|
$
|
34.9
|
$
|
19.0
|
|
$
|
182.8
|
$
|
20.5
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net cash (debt) is
defined by the Company as cash and cash equivalents, net of lines
of credit and short-term debt plus long-term-debt. 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
|
|
05/31/2022
|
|
05/31/2021
|
|
Reported
|
|
One-time
items
|
|
Excluding
One-time
items
|
|
Reported
|
|
One-time
items
|
|
Excluding
One-time
items
|
|
Diluted earnings (loss)
per share (1)
|
$
|
1.46
|
|
$
|
0.26
|
|
$
|
1.72
|
|
$
|
0.22
|
|
$
|
0.68
|
|
$
|
0.90
|
|
Net income (loss)
(2)
|
$
|
52.1
|
|
$
|
9.1
|
|
$
|
61.2
|
|
$
|
7.6
|
|
$
|
23.9
|
|
$
|
31.5
|
|
Earnings (loss) before
income taxes (3)
|
$
|
53.7
|
|
$
|
12.2
|
|
$
|
65.9
|
|
$
|
8.0
|
|
$
|
31.9
|
|
$
|
39.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution (4)
|
$
|
46.8
|
|
$
|
—
|
|
$
|
46.8
|
|
$
|
10.1
|
|
$
|
2.5
|
|
$
|
12.6
|
|
Education
Solutions
|
|
45.8
|
|
|
—
|
|
|
45.8
|
|
|
40.1
|
|
|
—
|
|
|
40.1
|
|
International
(5)
|
|
1.3
|
|
|
0.6
|
|
|
1.9
|
|
|
(0.5)
|
|
|
4.4
|
|
|
3.9
|
|
Overhead
(6)
|
|
(28.4)
|
|
|
0.0
|
|
|
(28.4)
|
|
|
(40.0)
|
|
|
25.0
|
|
|
(15.0)
|
|
Operating income
(loss)
|
$
|
65.5
|
|
$
|
0.6
|
|
$
|
66.1
|
|
$
|
9.7
|
|
$
|
31.9
|
|
$
|
41.6
|
|
|
Twelve months
ended
|
|
05/31/2022
|
|
05/31/2021
|
|
Reported
|
|
One-time
items
|
|
Excluding
One-time
items
|
|
Reported
|
|
One-time
items
|
|
Excluding
One-time
items
|
|
Diluted earnings (loss)
per share (1)
|
$
|
2.27
|
|
$
|
0.12
|
|
$
|
2.38
|
|
$
|
(0.32)
|
|
$
|
1.35
|
|
$
|
1.02
|
|
Net income (loss)
(2)
|
$
|
80.9
|
|
$
|
4.2
|
|
$
|
85.1
|
|
$
|
(11.0)
|
|
$
|
46.2
|
|
$
|
35.2
|
|
Earnings (loss) before
income taxes (3)
|
$
|
89.7
|
|
$
|
5.5
|
|
$
|
95.2
|
|
$
|
(18.2)
|
|
$
|
61.7
|
|
$
|
43.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution (4)
|
$
|
115.3
|
|
$
|
—
|
|
$
|
115.3
|
|
$
|
8.9
|
|
$
|
5.4
|
|
$
|
14.3
|
|
Education
Solutions
|
|
81.8
|
|
|
—
|
|
|
81.8
|
|
|
57.7
|
|
|
—
|
|
|
57.7
|
|
International
(5)
|
|
3.3
|
|
|
1.7
|
|
|
5.0
|
|
|
21.2
|
|
|
7.2
|
|
|
28.4
|
|
Overhead
(6)
|
|
(103.0)
|
|
|
(1.6)
|
|
|
(104.6)
|
|
|
(110.5)
|
|
|
49.1
|
|
|
(61.4)
|
|
Operating income
(loss)
|
$
|
97.4
|
|
$
|
0.1
|
|
$
|
97.5
|
|
$
|
(22.7)
|
|
$
|
61.7
|
|
$
|
39.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 twelve
months ended May 31, 2022, the Company recognized a benefit of $3.1
and $1.3, respectively, for income taxes
in respect to one-time pretax items. In the three and twelve months
ended May 31, 2021, the Company recognized a benefit for
income taxes
in respect to one-time pretax charges of $8.0 and $15.5,
respectively.
|
|
|
|
(3)
|
In the three and the
twelve months ended May 31, 2022, the Company recognized pretax
loss on assets held for sale related to the
Company's plan to exit the direct sales business in Asia of $15.1.
The business and related assets are expected to be sold in the
first quarter
of fiscal 2023. In the three and twelve months ended May 31,
2022, the Company recognized pretax gain on the sale of its UK
distribution
facility located in Witney of $3.5. In the twelve months ended
May 31, 2022, the Company recognized pretax gain on the sale
of its Lake
Mary facility of $6.2.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
In the three and twelve
months ended May 31, 2021, the Company recognized pretax asset
impairment of $0.2 and $2.6, respectively, and
pretax branch consolidation costs of $2.3 and $2.8, respectively,
related to its plan to permanently close 13 of its 54 book fair
warehouses in
the U.S.
|
|
|
|
(5)
|
In the three and twelve
months ended May 31, 2022, the Company recognized pretax severance
of $0.5 and $1.2, respectively, and pretax
branch consolidation costs of $0.1 and $0.5, respectively. In the
three and twelve months ended May 31, 2021, the Company
recognized
pretax severance of $0.1 and $2.6, respectively, and pretax branch
consolidation and other business rationalization costs of $4.3 and
$4.6,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
In the twelve months
ended May 31, 2022, the Company recognized pretax insurance
proceeds related to an intellectual property legal
settlement accrued in fiscal 2021 of $6.6 partly offset by pretax
severance and related charges of $5.0. In the three and twelve
months ended
May 31, 2021, the Company recognized pretax mediation-assisted
settlement charges of $20.0 related to intellectual property used
in
formerly owned products and pretax severance of $5.0 and $20.5,
respectively. In the twelve months ended May 31, 2021,
the Company recognized pretax asset impairment charges of $8.5 and
pretax branch consolidation costs of $0.1, respectively, 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.
|
|
Table 5
|
|
|
Scholastic
Corporation
|
|
Consolidated
Statements of Operations - Supplemental
|
|
Adjusted
EBITDA
|
|
(Unaudited)
|
|
(In $
Millions)
|
|
|
Three months
ended
|
|
|
05/31/22
|
|
05/31/21
|
|
|
Earnings (loss) before
income taxes as reported
|
$
|
53.7
|
|
$
|
8.0
|
|
|
One-time items before
income taxes
|
|
12.2
|
|
|
31.9
|
|
|
Earnings (loss)
before income taxes excluding one-time items
|
|
65.9
|
|
|
39.9
|
|
|
Interest (income)
expense
|
|
0.2
|
|
|
1.7
|
|
|
Depreciation and
amortization (1)
|
|
15.9
|
|
|
15.6
|
|
|
Amortization of
prepublication costs
|
|
6.5
|
|
|
6.4
|
|
|
Adjusted EBITDA
(2)
|
$
|
88.5
|
|
$
|
63.6
|
|
|
|
Twelve months
ended
|
|
|
05/31/22
|
|
05/31/21
|
|
|
Earnings (loss) before
income taxes as reported
|
$
|
89.7
|
|
$
|
(18.2)
|
|
|
One-time items before
income taxes
|
|
5.5
|
|
|
61.7
|
|
|
Earnings (loss)
before income taxes excluding one-time items
|
|
95.2
|
|
|
43.5
|
|
|
Interest (income)
expense
|
|
2.4
|
|
|
5.8
|
|
|
Depreciation and
amortization (1)
|
|
64.9
|
|
|
64.9
|
|
|
Amortization of
prepublication costs
|
|
26.4
|
|
|
25.4
|
|
|
Adjusted EBITDA
(2)
|
$
|
188.9
|
|
$
|
139.6
|
|
|
|
|
|
|
|
|
|
(1)
|
For the three and
twelve months ended May 31, 2022, amounts include depreciation of
$0.9 and $3.8, respectively, recognized in cost of
goods sold, amortization of deferred financing costs of $0.1 and
$0.4, respectively, and amortization of capitalized cloud software
of $1.1
and $3.9, respectively, recognized in selling, general and
administrative expenses. For the three and twelve months ended
May 31, 2021,
amounts include depreciation of $0.8 and $3.2, respectively,
recognized in cost of goods sold, amortization of deferred
financing costs of
$0.1 and $0.5, respectively, and amortization of capitalized cloud
software of $0.2 and $0.7, 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