Scholastic Corporation

First-quarter revenue decreased 4% to $216.8 million from $225.6 million a year ago. Operating loss was $92.2 million, flat versus the prior year period, and adjusted operating loss was $88.7 million versus $81.9 million last year. Net loss was $71.2 million, or $3.77 per diluted share, compared with $71.1 million, or $2.83 per diluted share; adjusted net loss was $68.6 million, or $3.63 per diluted share, versus $63.3 million, or $2.52 per diluted share. Adjusted EBITDA was a loss of $63.6 million versus a loss of $55.7 million, and on a comparable basis management said adjusted EBITDA improved $0.6 million year over year. For the full year, Scholastic reaffirmed revenue growth of approximately 2% to 4%, adjusted EBITDA of approximately $135 million to $145 million, and free cash flow of approximately $35 million to $40 million.

Peter Warwick said the company is focused on translating prior progress into stronger performance through fiscal 2027, with the first quarter reflecting normal seasonality and the sale-leaseback impact. He highlighted what he called an especially promising fall setup: stronger Book Fairs metrics, a major Harry Potter publishing push tied to the upcoming HBO series, a new Dog Man title, renewed Hunger Games activity, and a growing Entertainment business. His tone was confident and upbeat, repeatedly emphasizing execution and saying Scholastic remains 'very confident' in Book Fairs and in the full-year plan.

Haji Glover said the quarter was consistent with expectations for Scholastic’s smallest revenue period, with lower revenue mainly from Education and Children's Book Publishing and Distribution and the elimination of rental income after the sale-leaseback. He noted Entertainment revenue rose to $20.1 million from $13.6 million, while Education revenue fell to $30.4 million from $40.1 million and International revenue was $60.5 million versus $59.4 million, with foreign exchange providing a $1.2 million tailwind. Cash used in operating activities was $94.6 million, free cash use was $110.8 million, net debt was $86.8 million, and the company returned about $29.6 million to shareholders, including $25.8 million of buybacks and $3.8 million of dividends; about $157 million remained authorized for repurchases. He also said the company expects international operating income to be modestly lower due partly to inflation and higher fuel and freight costs, but reiterated that this was already reflected in the full-year forecast.

Analysts pressed management on whether higher fuel costs in International were a new issue and whether they were already included in guidance; Haji said they were specifically tied to war-related costs in certain markets and were already anticipated in the full-year forecast. Brendan McCarthy also asked about Entertainment margins after the segment’s adjusted EBITDA margin expanded sharply; Haji attributed the improvement to operating leverage, business mix, and fixed depreciation from the acquisition. On Book Fairs, Peter Warwick said early fall metrics are strong, with fair count at or above expectations, more large-school fairs, and strong response to new formats; he said growth is coming from both returning schools and new schools/new models.