Scholastic Corporation

Revenue decreased 6% to $476.1 million in the fourth quarter and 3% to $1.6 billion for fiscal 2026. Adjusted operating income was $58.3 million in Q4 versus $63.4 million a year ago; full-year adjusted operating income increased to $47.1 million from $35.8 million. Adjusted EBITDA was $84.7 million in Q4 versus $91.2 million last year, and full-year adjusted EBITDA rose 4% to $151.5 million, or 15% on a comparable basis reflecting the sale-leaseback in both periods. Adjusted EPS was $2.19 in Q4 versus $0.87 last year, and $1.87 for the full year versus $0.48. For fiscal 2027, management guided to 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; first-quarter revenue is expected to be slightly down year over year, with growth expected to start in Q2 and continue through the rest of the year.

Peter Warwick framed fiscal 2026 as a year that showed the earnings power of a more focused Scholastic after a multiyear transformation in governance, structure, strategy, and capital allocation. He emphasized the company’s mission-driven positioning around trusted children’s content, school channels, and literacy solutions, and said AI and technology should improve speed and efficiency without replacing human editorial judgment. His tone was confident and optimistic, especially around Book Fairs, the publishing pipeline, entertainment expansion, and a transformed education business entering fiscal 2027.

Haji Glover highlighted the main financial drivers: Q4 revenue of $476.1 million, full-year revenue of $1.6 billion, and adjusted EBITDA of $151.5 million, up 4% year over year. He pointed to Book Fairs and Children’s Book Publishing/Distribution as profit contributors, while Education remained pressured and International was mixed; he also noted tariff-related costs came in below the initial estimate due to mitigation actions, refunds, and tariff suspension earlier than expected. On capital allocation, he said the company generated $436 million of free cash flow in fiscal 2026 because of more than $400 million of net sale-leaseback proceeds, ended the year with $48.9 million of net cash, had $75 million outstanding on its $400 million revolver, returned over $285 million to shareholders, and now has $183 million remaining under the repurchase authorization. He also confirmed the dividend increase from $0.20 to $0.25 per share starting in Q1 fiscal 2027 and reiterated a long-term net leverage framework of 2x to 2.5x adjusted EBITDA.

Analysts focused on why revenue missed expectations, and Peter said the biggest factors were the difficult compare against Sunrise on the Reaping in trade and weaker-than-expected Education revenue because schools and districts did not provide the late-year spending surge Scholastic had anticipated. Questions on Book Fairs centered on what drove the growth and what FY27 could look like; management said higher fair count was the main driver, with modest revenue-per-fair gains, more eWallet adoption, better product mix, and lower cancellations expected to support continued growth. Analysts also pressed on Education stabilization and the timing of improvement; Peter said the segment has a stronger product portfolio, better expense control, and a reorganized go-to-market model under a new Chief Revenue Officer, with improvement expected over the full year and more visible in the second half. On capital returns, management said future buybacks could be funded from both cash and borrowing if needed, but they believe existing cash and leverage capacity are sufficient.