On July 18, 2024, Scholastic Corp (SCHL, Financial) released its 8-K filing detailing the financial results for the fiscal fourth quarter and full year ended May 31, 2024. Scholastic Corp is an American publishing and education media company that focuses on books and educational material for schools, teachers, parents, and children. The company is one of the world's largest publishers of children's books and also owns exclusive rights to various books, including Harry Potter and The Hunger Games. Some of the company's original titles include Clifford the Big Red Dog, Goosebumps, and The Magic School Bus. It has three reportable segments: Children's Book Publishing and Distribution, Education Solutions, and International. The majority of its revenue is from the Children's Book Publishing and Distribution segment.
Performance and Challenges
Scholastic Corp (SCHL, Financial) reported a 10% decline in revenues for the fourth quarter, amounting to $474.9 million, down from $528.3 million in the same period last year. This decline was primarily driven by lower U.S. Book Club revenues and decreased sales in the Education Solutions segment. The company also faced increased pressure on consumer spending, which impacted its School Book Fairs business.
Operating income for the quarter fell sharply by 49% to $47.2 million, compared to $92.0 million in the previous year. Adjusted EBITDA also saw a significant decline of 21%, reaching $90.7 million. These results reflect the challenges faced by the company in managing operating expenses amid declining revenues.
Financial Achievements
Despite the challenges, Scholastic Corp (SCHL, Financial) made notable progress in advancing its 360-degree content creation strategy. The acquisition of 9 Story Media Group has bolstered the company's production, distribution, and licensing capabilities, adding an extensive children's content library to its portfolio. This strategic move is expected to enhance Scholastic's position as a global children's media company.
Additionally, the company's Scholastic Trade Publishing segment continued to perform well, with the twelfth book in Dav Pilkey’s Dog Man® series achieving the number one best-selling spot across multiple countries. This success underscores the strength of Scholastic's global franchises and its ability to drive sales through popular titles.
Income Statement Highlights
| Metric | Q4 FY2024 | Q4 FY2023 | Change |
|---|---|---|---|
| Revenues | $474.9 million | $528.3 million | -10% |
| Operating Income | $47.2 million | $92.0 million | -49% |
| Diluted EPS | $1.23 | $2.26 | -46% |
| Adjusted EBITDA | $90.7 million | $115.0 million | -21% |
Segment Performance
In the Children's Book Publishing and Distribution segment, revenues decreased by 9% to $266.0 million. Book Fairs revenues were down 6% to $169.5 million, while Book Clubs revenues saw a significant decline of 45% to $14.4 million. The Education Solutions segment also faced a 17% drop in revenues, amounting to $135.7 million, primarily due to lower sales of supplemental instructional materials.
International revenues declined by 4% to $70.8 million, impacted by lower trade channel sales in Asia and Australia. However, increased revenues in U.K. book fairs partially offset these declines.
Analysis and Outlook
Scholastic Corp (SCHL, Financial) has been navigating increased spending headwinds in its school-based businesses, which have impacted its financial performance. The company's strategic investments, such as the acquisition of 9 Story Media Group, are expected to drive long-term growth. However, the immediate challenges posed by reduced consumer and school spending continue to pressure results.
Looking ahead, Scholastic Corp (SCHL, Financial) expects modest revenue growth of 4% to 6% in fiscal 2025, with continued investment in growth initiatives and cost management. The company remains committed to leveraging its strong brand and content portfolio to achieve accelerated growth and margin targets over the next three to five years.
For more detailed financial information, readers can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from Scholastic Corp for further details.
