NEW YORK, Sept. 24, 2020 /PRNewswire/ -- Scholastic
Corporation (NASDAQ: SCHL), the global children's publishing,
education and media company, today reported financial results for
the Company's fiscal first quarter ended August 31, 2020. Scholastic typically reports an
operating loss and high cash utilization in its fiscal first
quarter, when most U.S. schools are not in session.
Fiscal First Quarter 2021 Review
(In $ Millions)
In $
millions
|
First
Quarter
|
Variance
|
|
FY
2021
|
FY
2020
|
$
|
%
|
Revenues
|
$215.2
|
$232.6
|
($17.4)
|
(7%)
|
Operating income
(loss)
|
(57.0)
|
(87.4)
|
30.4
|
35%
|
One-time
items
|
12.0
|
4.3
|
7.7
|
-
|
Operating income
(loss), excluding one-time items*
|
(45.0)
|
(83.1)
|
38.1
|
46%
|
* Please
refer to the non-GAAP financial tables attached
|
Chairman's Commentary
"The successful execution of our previously announced
$100 million cost savings program
significantly improved the Company's quarterly operating loss and
cash used in operating activities year-over-year, and preserved our
strong capital position. Scholastic's trade and education
businesses performed well and remain positioned for further growth,
and we are proud of the work we have done to deepen our digital
connections with customers, with digital billings up 15% in the
quarter," said Richard Robinson,
Chairman, President and Chief Executive Officer. While the first
quarter is not traditionally a significant quarter for the
Company's school-based distribution channels, the benefits realized
from cost savings actions taken this quarter have improved our
operations and should help mitigate lower revenue expectations for
clubs and fairs in the second quarter as schools adapt to COVID-19
disruptions and delays. In addition, the cost savings measures
should bring permanent improvements to the Company's cost structure
and opportunities for substantial gains in profitability as normal
sales levels return."
Mr. Robinson continued, "We continue to leverage our amazing
intellectual properties in the trade and media businesses. The
Ballad of Songbirds and Snakes, published at the end of May,
remained on bestsellers lists throughout the summer, while our
entertainment unit announced development deals for live-action
feature films of beloved book series, including Caster™,
Goosebumps®, Animorphs®, and The Magic School
Bus®. While not reflected in our first quarter results,
Dav Pilkey's Dog Man: Grime and
Punishment, released on September
1st, is already the number one bestselling book
overall in the U.S., Australia and
Canada, and we are actively
preparing for the important fall release of J.K. Rowling's first
new children's book in thirteen years, The
Ickabog®."
Mr. Robinson concluded, "Spurred by remote learning experiences
last spring, the digital evolution in home and school education is
accelerating, leading to increased sales and usage of our highly
innovative and award-winning digital literacy programs, Literacy
Pro™, Scholastic F.I.R.S.T. ® and
W.O.R.D.™, as well as expanded adoption of the digital
editions of our classroom magazines and our recently released
Learn at Home for families with fun educational activities
for 4-10 year olds. Sales also grew for flexible solutions
like our take-home Grab and Go reading packs to prevent the
'slide' in the academic growth of young learners due to their
extended period away from school. As we celebrate our
100th anniversary next month, we continue to innovate
learning solutions which will meet the needs of millions of
students, parents and teachers now and for years to come, while we
reduce our cost base and strengthen our businesses to emerge from
this crisis a nimble and more profitable company."
Revenues
First quarter revenue was $215.2
million, a decrease of 7% compared to $232.6 million in the first quarter of 2020 on
lower sales in the Company's school distribution channels due to
COVID-impacted delays in school openings, as well as a shift in the
timing of the release, as planned, of new titles in the popular Dog
Man® book series, which benefited the first quarter in
the prior year period. Partially offsetting these declines were
strong audio book sales in the current period and improved results
across a number of education business lines, including digital
product subscriptions, teaching resources, summer literacy camps
and summer reading programs.
Income
Operating loss in the first quarter was $57.0 million, compared to an operating loss of
$87.4 million a year ago, mainly
attributable to aggressive cost savings measures taken throughout
the Company, as well as lower technology-related overhead expense.
Excluding one-time items, the operating loss in the first quarter
was $45.0 million, a 46% improvement
from the prior year period's operating loss of $83.1 million, excluding one-time items.
Net loss for the current period was $39.8
million, compared to a net loss in the prior year period of
$58.5 million, an improvement of 32%.
Included in this favorable comparison was a non-operating gain
realized on the sale of the Company's Danbury, CT facility of $6.6 million in the current quarter. Loss
per diluted share in the first fiscal quarter was $1.16 compared to a loss per diluted share of
$1.68 in the first quarter of 2020.
Excluding one-time items, first quarter 2021 loss per diluted share
was $0.90, compared to a loss per
diluted share of $1.59 in the first
quarter of 2020, a 43% improvement.
Capital Position and Liquidity
Net cash used in operating activities was $26.0 million in the current fiscal quarter
compared to net cash used in operating activities of $97.6 million in the first quarter of fiscal
2020. The Company had a free cash use (a non-GAAP liquidity measure
defined in the accompanying tables and reconciled to net cash use)
of $34.9 million in the current
quarter, compared to a free cash use of $118.5 million a year ago, an improvement of
71%. The Company traditionally records a high free cash use
in its first fiscal quarter when schools are closed and inventory
procurement and other activities ramp up in advance of the
back-to-school selling season. The Company's cost savings
initiatives resulted in lower net spending as it successfully
adapted to the impact on its operations in the first quarter of
COVID-related delays in school re-openings and changes in school
routines that resulted from these delays.
At quarter-end, the Company's cash and cash equivalents exceeded
total debt by $135.6 million,
compared to $186.4 million a year
ago. The Company continues to believe that it has sufficient cash
reserves and access to liquidity to support its FY2021 business
plan.
Capital expenditures in the first quarter were $16.0 million, slightly higher than depreciation
and amortization expense for the period. Partially offsetting
the cash outlays for property, plant and equipment in the quarter
were net proceeds realized from the sale of the Danbury facility of $12.3 million.
The Company also distributed $5.1
million in dividends in the first fiscal quarter.
Overall Results
(In $ Millions)
First Quarter
FY2021
|
As
Reported
|
One-Time
Items
|
Ex.
One-Times
|
Earnings (loss)
before taxes
|
$
(51.8)
|
$
(12.0)
|
$
(39.8)
|
Interest
(income) expense
|
1.2
|
-
|
1.2
|
Depreciation
and amortization
|
16.4
|
-
|
16.4
|
Amortization
of prepublication costs
|
6.3
|
-
|
6.3
|
Adjusted
EBITDA
|
$
(27.9)
|
$
(12.0)
|
$
(15.9)
|
Net loss before taxes for the quarter ended August 31, 2020 was $51.8
million compared to a net loss before taxes of $87.1 million in the first quarter of the prior
fiscal year. Adjusted EBITDA (a non-GAAP performance measure
defined in the accompanying tables and reconciled to earnings
(loss) before taxes) for the first fiscal quarter of 2021 was a
loss of $15.9 million, compared to a
loss of $61.0 million in the first
quarter of 2020, a 74% improvement. 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,
such as share repurchases.
Fiscal 2021 Outlook
The Company has substantially completed work on lowering its
cost base by $100 million, and
believes that a significant portion of these cost savings, as well
as new measures being taken, should continue to favorably impact
future period results. The outlook for the Company's trade and
education businesses remains positive with a robust frontlist of
bestselling series and authors scheduled to release over the
remainder of the fiscal year and Scholastic's digital education
programs and digital-only magazines gaining momentum as schools
look to learning solutions which can be used at school and at
home. However, delays in club orders and fair bookings will
likely lead to a significant decline in revenues in the Company's
Children's Book Publishing and Distribution segment in the second
quarter. The Company believes that business conditions should
improve in the second half of its fiscal year as schools adjust to
operational changes in response to COVID-19, and we expect
increasing demand for the Company's slate of flexible new services,
such as our virtual and shippable fair options and home delivery of
club and fair orders, as well as our safe and easy in-person fairs.
Given the variability in school schedules, as well as the
possibility of new COVID outbreaks and their potential impact on
schools, Scholastic is not providing a financial outlook for fiscal
year 2021.
Segment Results
All comparisons detailed in this section refer to operating
results for the first quarter ended August
31, 2020 versus the first quarter ended August 31, 2019.
Children's Book Publishing and Distribution
In $
millions
|
First
Quarter
|
|
|
|
2021
|
2020
|
$ Change
|
% Change
|
Revenue
|
|
|
|
|
Book
Clubs
|
$
5.8
|
$
8.0
|
$
(2.2)
|
(28%)
|
Book
Fairs
|
13.2
|
27.5
|
(14.3)
|
(52%)
|
Trade
|
71.9
|
74.1
|
(2.2)
|
(3%)
|
Total
revenue
|
90.9
|
109.6
|
(18.7)
|
(17%)
|
Operating income /
(loss)
|
(29.2)
|
(41.7)
|
12.5
|
30%
|
Operating income /
(loss), before one-time items*
|
(29.2)
|
(41.7)
|
12.5
|
30%
|
* Please
refer to the non-GAAP financial tables attached
|
First quarter segment revenues decreased $18.7 million, or 17%, to $90.9 million, as schools in the U.S. remained
closed in the early part of the fiscal quarter as a result of the
coronavirus lockdown and encountered delayed re-openings in the
latter part of the quarter. These actions affected the Company's
club and fair channels, where combined revenues fell $16.5 million, as compared to the prior year
period. The slight drop-off in consolidated trade revenues was
primarily due to a year-over-year difference in the scheduled
on-sale dates for books in the best-selling Dav Pilkey Dog Man
series. The prior year period benefited from the August 2019 release of Dog Man: For Whom the
Ball Rolls, while this season's publication of Dog Man:
Grime and Punishment became available for sale on September 1st, after the fiscal
quarter-end. Partially offsetting this timing difference was the
market response to a strong trade frontlist including: The
Ballad of Songbirds and Snakes (The Hunger Games #4); The
Baby-Sitters Club® Graphix #8: Logan Likes Mary Anne!; Captain
Underpants and the Revolting Revenge of the Radioactive
Robo-Boxers (Color Edition); The Bad Guys in the Dawn of the
Underlord (The Bad Guys® #11); Karen's Roller
Skates (Baby-Sitters Little Sister® Graphic Novel
#2); Forget Me Nat (Nat Enough #2), and You Should See Me
in a Crown by best-selling author Leah
Johnson, which was the first young adult novel picked by
Reese Witherspoon's Book Club.
Additionally, workbooks in the Company's Scholastic Early Learners™
and BOB Books® lines were major sellers as parents look
for engaging educational materials for their children learning at
home. Segment operating loss improved by $12.5 million, or 30%, compared to last year
reflecting the aggressive actions taken to reduce operating costs
and the temporary closure of fair distribution facilities.
Education
In $
millions
|
First
Quarter
|
|
|
|
2021
|
2020
|
$ Change
|
% Change
|
Revenue
|
$
53.6
|
$
48.4
|
$
5.2
|
11%
|
Operating income /
(loss)
|
(2.2)
|
(13.4)
|
11.2
|
84%
|
Operating income /
(loss), before one-time items*
|
(2.2)
|
(13.4)
|
11.2
|
84%
|
* Please
refer to the non-GAAP financial tables attached
|
For the current fiscal quarter, segment revenue was $53.6 million, compared to $48.4 million a year ago, an 11% increase. The
improved results were driven by higher sales of the Company's
instructional programs, including Scholastic's Summer
LitCamp® partnership with BellXcel®
Summer, and our line of Grab and Go summer reading
packs, both of which encourage students to develop social and
emotional learning and accelerate critical reading and writing
skills. Digital revenues also rose in the current period, including
a sale to LAUSD for Scholastic Literacy Pro and F.I.R.S.T.,
our digital programs for independent reading and foundational
reading skills, respectively. Scholastic's teaching resources
business reported increased volumes for its First Little Readers™
packs and teaching guides and Jumbo and Summer Express activity
books, as well as its Teachables™ teacher-created lesson plans and
activity sheets, which saw a 21% increase in its subscriber base
versus the prior year period. Segment operating loss was
$2.2 million, an $11.2 million, or 84%, improvement versus the
prior year period, on the contribution from higher revenues and
effective cost savings measures taken in the current quarter.
International
In $
millions
|
First
Quarter
|
|
|
|
2021
|
2020
|
$ Change
|
% Change
|
Revenue
|
$
70.7
|
$
74.6
|
$
(3.9)
|
(5%)
|
Operating income /
(loss)
|
5.2
|
(3.7)
|
8.9
|
*
|
Operating income /
(loss), before one-time items*
|
6.2
|
(3.7)
|
9.9
|
*
|
* Please
refer to the non-GAAP financial tables attached
|
First quarter segment revenues were $70.7
million, down $3.9 million, or
5%, as compared to the first quarter of fiscal 2020, with lower
volumes reported in book fair channels across the Company's major
markets in Canada, Australia and the U.K., primarily due to
school closings in the current period, as well as lower sales in
the Company's direct sales business in Asia, partially offset by stronger trade
publishing globally. Australia
book clubs performed well, reporting year-over-year gains, despite
new lockdown measures amid a spike in confirmed COVID cases in the
quarter. International recorded operating income of $5.2 million, a $8.9
million improvement as compared to an operating loss of
$3.7 million in the prior period due
to cost containment in labor and operations. Excluding one-time
severance charges taken in the current quarter, the segment's
adjusted operating income was $6.2
million.
Overhead
In $
millions
|
First
Quarter
|
|
|
|
2021
|
2020
|
$ Change
|
% Change
|
Overhead
expense
|
$
30.8
|
$
28.6
|
$
(2.2)
|
(8%)
|
Overhead expense,
excluding one-time items*
|
19.8
|
24.3
|
4.5
|
19%
|
* Please
refer to the non-GAAP financial tables attached
|
Corporate overhead for the first fiscal quarter was $19.8 million, excluding one-time items of
$11.0 million, pre-tax, which
compared favorably with the $24.3
million recorded in the prior year period, after excluding
$4.3 million in one-time items. The
lower overhead expense in the current fiscal quarter was primarily
due to lower labor expenses and other operational savings across
multiple cost centers related to the Company's previously announced
program to reduce costs, as well as lower technology-related spend
in the current quarter. Non-recurring items reflected in overhead
in the current period included $11.0
million in pre-tax severance associated with the Company's
current cost savings and restructuring programs.
Dividend
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 second quarter of fiscal 2021. The dividend is
payable on December 15, 2020 to
shareholders of record as of the close of business on October 30, 2020.
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 Use". Please refer to the non-GAAP financial tables
attached to this press release for supporting details on one-time
items 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.
Investor Conference Call
The Company will hold a conference call to discuss its results
at 4:30 p.m. ET today, September 24, 2020. Scholastic's Chairman,
President and CEO, Richard Robinson,
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 to the Company's investor relations webpage at
www.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 8359084.
The recording will be available through Friday, October 2, 2020.
About Scholastic
For 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 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 per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
|
|
08/31/20
|
08/31/19
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$215.2
|
$232.6
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
123.2
|
137.1
|
|
|
|
|
Selling, general and
administrative expenses (1)
|
|
132.1
|
165.9
|
|
|
|
|
Bad debt
expense
|
|
1.4
|
1.6
|
|
|
|
|
Depreciation and
amortization
|
|
15.5
|
15.4
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses
|
|
272.2
|
320.0
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
(57.0)
|
(87.4)
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
(1.2)
|
0.7
|
|
|
|
Other components of
net periodic benefit (cost)
|
|
(0.2)
|
(0.4)
|
|
|
|
Gain (loss) on sale
of assets and other (2)
|
|
6.6
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before income taxes
|
|
(51.8)
|
(87.1)
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes(3)
|
|
(12.0)
|
(28.6)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
(39.8)
|
(58.5)
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income
(loss) attributable to noncontrolling interests
|
|
0.0
|
0.0
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Scholastic Corporation
|
|
($39.8)
|
($58.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per share of Class A and Common Stock
(4)
|
|
|
|
|
|
|
|
Basic
|
|
($1.16)
|
($1.68)
|
|
|
|
|
Diluted
|
|
($1.16)
|
($1.68)
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
|
34,258
|
34,871
|
|
|
|
Diluted weighted
average shares outstanding
|
|
34,393
|
35,174
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In the three months
ended August 31, 2020, the Company recognized pretax severance of
$12.0. In the three months ended August 31, 2019, the Company
recognized pretax severance of $2.8 and a pretax settlement expense
of $1.5.
|
|
|
|
|
|
|
(2)
|
In the three months
ended August 31, 2020, the Company recognized pretax gain on the
sale of its Danbury facility of $6.6.
|
|
|
|
|
|
|
(3)
|
In the three months
ended August 31, 2020 and August 31, 2019, the Company recognized a
benefit for income taxes in respect to one-time pretax charges of
$3.1 and $1.2, respectively.
|
|
|
|
|
|
|
(4)
|
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
|
|
|
|
|
|
08/31/20
|
08/31/19
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Book
Clubs
|
|
$5.8
|
$8.0
|
|
($2.2)
|
(28%)
|
|
|
|
Book
Fairs
|
|
13.2
|
27.5
|
|
(14.3)
|
(52%)
|
|
|
|
Consolidated Trade
|
|
71.9
|
74.1
|
|
(2.2)
|
(3%)
|
|
|
|
Total
revenues
|
|
90.9
|
109.6
|
|
(18.7)
|
(17%)
|
|
|
|
Operating income
(loss)
|
|
(29.2)
|
(41.7)
|
|
12.5
|
|
|
|
|
Operating
margin
|
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Education
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
53.6
|
48.4
|
|
5.2
|
11%
|
|
|
|
Operating income
(loss)
|
|
(2.2)
|
(13.4)
|
|
11.2
|
|
|
|
|
Operating
margin
|
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
70.7
|
74.6
|
|
(3.9)
|
(5%)
|
|
|
|
Operating income
(loss)
|
|
5.2
|
(3.7)
|
|
8.9
|
|
|
|
|
Operating
margin
|
|
7.4%
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overhead
expense
|
|
30.8
|
28.6
|
|
(2.2)
|
(8%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
($57.0)
|
($87.4)
|
|
$30.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3
|
Scholastic
Corporation
|
|
Supplemental
Information
|
|
(Unaudited)
|
|
(In $
Millions)
|
|
|
|
|
|
|
|
|
|
Selected
Balance Sheet Items
|
|
|
|
|
|
|
|
|
|
|
|
|
08/31/20
|
08/31/19
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$355.5
|
$199.4
|
|
|
|
|
|
Accounts receivable,
net
|
219.6
|
226.1
|
|
|
|
|
|
Inventories,
net
|
323.2
|
403.6
|
|
|
|
|
|
Accounts
payable
|
168.3
|
226.4
|
|
|
|
|
|
Accrued
royalties
|
56.2
|
63.3
|
|
|
|
|
|
Lines of credit and
current portion of long-term debt
|
19.9
|
13.0
|
|
|
|
|
|
Long-term
debt
|
200.0
|
-
|
|
|
|
|
|
Total debt
|
219.9
|
13.0
|
|
|
|
|
|
Total finance lease
liabilities
|
11.8
|
11.1
|
|
|
|
|
|
Net debt
(1)
|
(135.6)
|
(186.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
1,147.4
|
1,196.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Cash Flow Items
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
|
|
08/31/20
|
08/31/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
($26.0)
|
($97.6)
|
|
|
|
|
|
Add: Net proceeds from sale
of assets
|
12.3
|
0.0
|
|
|
|
|
|
Less: Additions to property, plant
and equipment
|
16.0
|
13.5
|
|
|
|
|
|
Pre-publication expenditures
|
5.2
|
7.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow (use)
(2)
|
($34.9)
|
($118.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net debt 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
|
|
Consolidated
Statements of Operations - Supplemental
|
|
Excluding
One-Time Items
|
|
(Unaudited)
|
|
(In $
Millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
|
|
Reported
|
One-time
|
Excluding
|
|
Reported
|
One-time
|
Excluding
|
|
|
|
|
|
|
08/31/20
|
items
|
One-time
items
|
|
08/31/19
|
items
|
One-time
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$215.2
|
$0.0
|
$215.2
|
|
$232.6
|
$0.0
|
$232.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
123.2
|
-
|
123.2
|
|
137.1
|
-
|
137.1
|
|
|
|
|
Selling, general and
administrative expenses (1)
|
|
132.1
|
(12.0)
|
120.1
|
|
165.9
|
(4.3)
|
161.6
|
|
|
|
|
Bad debt
expense
|
|
1.4
|
-
|
1.4
|
|
1.6
|
-
|
1.6
|
|
|
|
|
Depreciation and
amortization
|
|
15.5
|
-
|
15.5
|
|
15.4
|
-
|
15.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses
|
|
272.2
|
(12.0)
|
260.2
|
|
320.0
|
(4.3)
|
315.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
(57.0)
|
12.0
|
(45.0)
|
|
(87.4)
|
4.3
|
(83.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
(1.2)
|
-
|
(1.2)
|
|
0.7
|
-
|
0.7
|
|
|
|
Other components of
net periodic benefit (cost)
|
|
(0.2)
|
-
|
(0.2)
|
|
(0.4)
|
-
|
(0.4)
|
|
|
|
Gain (loss) on sale
of assets and other (2)
|
|
6.6
|
-
|
6.6
|
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before income taxes
|
|
(51.8)
|
12.0
|
(39.8)
|
|
(87.1)
|
4.3
|
(82.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes(3)
|
|
(12.0)
|
3.1
|
(8.9)
|
|
(28.6)
|
1.2
|
(27.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
(39.8)
|
8.9
|
(30.9)
|
|
(58.5)
|
3.1
|
(55.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income
(loss) attributable to noncontrolling interests
|
|
0.0
|
-
|
0.0
|
|
0.0
|
-
|
0.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Scholastic Corporation
|
|
($39.8)
|
$8.9
|
($30.9)
|
|
($58.5)
|
$3.1
|
($55.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
($1.16)
|
$0.26
|
($0.90)
|
|
($1.68)
|
$0.09
|
($1.59)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In the three months
ended August 31, 2020, the Company recognized pretax severance of
$12.0. In the three months ended August 31, 2019, the Company
recognized pretax severance of $2.8 and a pretax settlement expense
of $1.5.
|
|
|
|
|
|
|
(2)
|
In the three months
ended August 31, 2020, the Company recognized pretax gain on the
sale of its Danbury facility of $6.6.
|
|
|
|
|
|
|
(3)
|
In the three months
ended August 31, 2020 and August 31, 2019, the Company recognized a
benefit for income taxes in respect to one-time pretax charges of
$3.1 and $1.2, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5
|
Scholastic
Corporation
|
|
Consolidated
Statements of Operations - Supplemental
|
|
Adjusted
EBITDA
|
|
(Unaudited)
|
|
(In $
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
|
|
|
08/31/20
|
|
08/31/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before income taxes as reported
|
|
($51.8)
|
|
|
($87.1)
|
|
|
|
|
One-time items before
income taxes
|
|
12.0
|
|
|
4.3
|
|
|
|
|
Earnings (loss)
before income taxes excluding one-time items
|
|
(39.8)
|
|
|
(82.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income)
expense
|
|
1.2
|
|
|
(0.7)
|
|
|
|
|
|
Depreciation and
amortization(1)
|
|
16.4
|
|
|
16.1
|
|
|
|
|
|
Amortization of
prepublication costs
|
|
6.3
|
|
|
6.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
|
($15.9)
|
|
|
($61.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For the three months
ended August 31, 2020 and August 31, 2019, amounts include
depreciation of $0.8 and $0.6, respectively, recognized in cost of
goods sold, amortization of deferred financing costs of $0.1 and
$0.1, respectively, and amortization of capitalized cloud software
of $0.0 and $0.0, 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6
|
Scholastic
Corporation
|
|
Segment
Results - Supplemental
|
|
Excluding
One-Time Items
|
|
(Unaudited)
|
|
(In $
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
|
|
|
|
Reported
|
One-time
|
Excluding
|
|
Reported
|
One-time
|
Excluding
|
|
|
|
|
|
|
|
|
08/31/20
|
items
|
One-time
items
|
|
08/31/19
|
items
|
One-time
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Clubs
|
|
$5.8
|
|
$5.8
|
|
$8.0
|
|
$8.0
|
|
|
|
|
|
|
Book Fairs
|
|
13.2
|
|
13.2
|
|
27.5
|
|
27.5
|
|
|
|
|
|
|
Consolidated
Trade
|
|
71.9
|
|
71.9
|
|
74.1
|
|
74.1
|
|
|
|
|
|
|
Total
Revenues
|
|
90.9
|
|
90.9
|
|
109.6
|
|
109.6
|
|
|
|
|
|
|
Operating income
(loss)
|
|
(29.2)
|
-
|
(29.2)
|
|
(41.7)
|
-
|
(41.7)
|
|
|
|
|
|
|
Operating
margin
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Education
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
53.6
|
|
53.6
|
|
48.4
|
|
48.4
|
|
|
|
|
|
|
Operating income
(loss)
|
|
(2.2)
|
-
|
(2.2)
|
|
(13.4)
|
-
|
(13.4)
|
|
|
|
|
|
|
Operating
margin
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
70.7
|
|
70.7
|
|
74.6
|
|
74.6
|
|
|
|
|
|
|
Operating income
(loss) (1)
|
|
5.2
|
1.0
|
6.2
|
|
(3.7)
|
-
|
(3.7)
|
|
|
|
|
|
|
Operating
margin
|
|
7.4%
|
|
8.8%
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overhead expense
(2)
|
|
30.8
|
(11.0)
|
19.8
|
|
28.6
|
(4.3)
|
24.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
($57.0)
|
$12.0
|
($45.0)
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($87.4)
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$4.3
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($83.1)
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(1)
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In the three months
ended August 31, 2020, the Company recognized pretax severance of
$1.0.
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(2)
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In the three months
ended August 31, 2020, the Company recognized pretax severance of
$11.0. In the three months ended August 31, 2019, the Company
recognized pretax severance of $2.8 and a pretax settlement expense
of $1.5.
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View original content to download
multimedia:http://www.prnewswire.com/news-releases/scholastic-reports-fiscal-2021-first-quarter-results-301137812.html
SOURCE Scholastic Corporation