Scholastic Corp (SCHL) Reports Fiscal 2024 Second Quarter Earnings
Diluted earnings per share increased to $2.45, up 16% from the previous year.
Revenues decreased by 4% to $562.6 million, with a noted decline in School Reading Events.
Adjusted EBITDA rose slightly to $124.0 million, a 1% increase.
Over $58 million returned to shareholders through dividends and share buybacks.
On December 14, 2023, Scholastic Corp (NASDAQ:SCHL) released its 8-K filing, detailing the financial outcomes for the second quarter of fiscal year 2024. The company, a global leader in children's publishing, education, and media, has reported a mix of achievements and challenges in its latest earnings report.
Performance Overview
Scholastic Corp (NASDAQ:SCHL) experienced a 4% decline in revenues, which totaled $562.6 million for the quarter, primarily due to strategic reductions in promotional spending and the repositioning of its Book Clubs. Despite the revenue dip, the company saw an increase in diluted earnings per share (EPS) by 16%, rising to $2.45 compared to $2.12 in the prior year. Operating income also saw a modest increase of 1%, amounting to $101.3 million.
Segment Highlights and Financial Achievements
The Childrens Book Publishing and Distribution segment saw a 6% decrease in revenues, with Book Clubs revenues down by 44% due to reduced promotional spending. However, Book Fairs revenues increased by 1%, and the Education Solutions segment reported a 1% increase in revenues. International revenues, excluding favorable foreign currency exchange, declined by 4%. The company's operating income for the quarter was positively impacted by lower promotional spending and improvements in inventory product and freight costs.
Capital Position and Liquidity
Scholastic Corp (NASDAQ:SCHL) reported a strong capital position with net cash provided by operating activities increasing by 34% to $109.7 million. Free cash flow also saw a significant increase of 41%, amounting to $88.6 million. The company's net cash position improved, with a 44% decrease in net debt to $143.2 million. During the quarter, Scholastic returned over $58 million to shareholders through share buybacks and dividends. Additionally, the Board authorized an additional $66 million for share repurchases, bringing the total authorization to $100 million.
Adjusted Guidance and Outlook
While Scholastic Corp (NASDAQ:SCHL) delivered a solid performance in certain areas, the company has adjusted its fiscal 2024 guidance due to lower than expected participation and spending in its School Reading Events division. Adjusted EBITDA is now anticipated to be between $165 million and $175 million, with full-year revenue expected to be approximately level with or slightly below the prior year.
"Second quarter results came in below expectations for profit growth, however, largely reflecting lower than forecast participation and spending in our School Reading Events division, which we expect to continue for the remainder of this school year," said Peter Warwick, President and Chief Executive Officer.
Despite the revised outlook, Scholastic Corp (NASDAQ:SCHL) remains committed to its long-term growth strategy and enhancing shareholder returns. The company's leadership is optimistic about its publishing plan for the remainder of the fiscal year, including new titles in popular series such as Dog Man and HeartstopperTM.
Conclusion
Scholastic Corp (NASDAQ:SCHL) continues to navigate a complex environment with a strategic focus on long-term growth and shareholder value. The company's increased share repurchase authorization and strong cash flow performance underscore its commitment to these objectives. Investors and stakeholders will be watching closely as Scholastic adapts its strategies in response to the current market challenges.
For more detailed information on Scholastic Corp (NASDAQ:SCHL)'s financial results, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Scholastic Corp for further details.
This article first appeared on GuruFocus.
