NEW YORK, March 18, 2021 /PRNewswire/ -- Scholastic
Corporation (NASDAQ: SCHL), the global children's publishing,
education and media company, today reported financial results for
the Company's fiscal third quarter ended February 28, 2021. The third quarter is a
seasonally lower revenue quarter for the Company in which it
typically records a loss. School book fairs revenues declined in
the quarter, as many schools were still operating in remote or
hybrid mode. The impact on operating income from this revenue
shortfall was offset by the continued effect of the Company's cost
reduction program, resulting in a year-over-year improvement in the
Company's quarterly operating loss, both before and after one-time
items.
Fiscal Third Quarter 2021 Review
(In $
Millions)
|
|
Third
Quarter
|
Variance
|
|
FY
2021
|
FY
2020
|
$
|
%
|
Revenues
|
$277.5
|
$373.3
|
($95.8)
|
(26%)
|
Operating income
(loss)
|
(24.2)
|
(60.0)
|
35.8
|
60%
|
One-time
items
|
12.3
|
43.2
|
(30.9)
|
(72%)
|
Operating income
(loss),
excluding one-time items*
|
(11.9)
|
(16.8)
|
4.9
|
29%
|
* Please refer to the
non-GAAP financial tables attached
|
Chairman's Commentary
"Getting kids back into school is now a clear national priority
and we are experiencing growth in spring fair bookings as more
districts offer in-person learning. We are seeing expanded
opportunities in all of Scholastic's channels for summer reading,
helped by the urgency of parents and educators to accelerate the
reading growth of their children. In addition, significant
federal stimulus dollars will be supporting K-12 education," said
Richard Robinson, Chairman,
President and Chief Executive Officer. "These trends support
our confidence in a strong recovery for our school-related
businesses in our coming fiscal year."
Mr. Robinson continued, "Although school book fairs revenues
declined in the quarter, as expected, our trade, teaching resources
and digital education businesses continue to perform extremely
well. Scholastic's trade group was recently cited as
'untouchable' by Publishers Weekly as evidenced by our top position
in their children's fiction bestseller list for 2020, where we held
nearly 50% of the bestsellers for the entire year. We are
excited about our spring frontlist of new trade titles including
Dog Man: Mothering Heights, and we have just released The
Power of Story 2021, a valuable resource for parents, teachers,
librarians and booksellers seeking diverse books. Responding
to new opportunities in the K-12 education market, in the quarter
we announced the combination of two education businesses into a new
Education Solutions group, with greater focus on digital learning
and curriculum programs. This new strategic direction will
allow for increased investment in education content, as well as
greater market penetration and cross-selling opportunities across
our portfolio of both print and digital curriculum and supplemental
literacy products and book collections."
Mr. Robinson concluded, "We have successfully delivered on our
committed $100 million of cost
savings and continue to reduce our cost base in response to lower
revenues due to COVID-related school closings, while also
continuing to make strategic investments in new trade titles and
educational products, including our new early childhood curriculum,
as well as technology. Our solid balance sheet and market
leading publishing and education content have enabled us to
navigate through this challenging period, while strengthening our
capacities for greater success long-term in the U.S. and
internationally."
Revenues
Third quarter revenue was $277.5
million, a decrease of 26% compared to $373.3 million in the third quarter of 2020,
mainly due to lower sales in the Company's book fairs operations
that were adversely impacted by continuing COVID-related conditions
in schools across the United
States and Canada. Partially offsetting the shortfall
in book fairs' revenues was continued strength in the Company's
trade, teaching resources and digital education subscription lines
of business. Trade publishing showed year-over-year revenue growth
in the quarter driven by bestsellers and best-selling series
combined with a growing evergreen backlist. Scholastic ended
the quarter with 6 of the top 10 titles on Publishers Weekly's
Bestseller list for Children's Fiction led by Dav Pilkey's Cat Kid Comic
Club®.
Income
Operating loss in the third quarter was $24.2 million, compared to an operating loss of
$60.0 million a year ago.
During the quarter, the Company continued to take aggressive
actions to pare its operating costs resulting in a $64.8 million reduction in selling, general and
administrative expenses, or 33% below the prior year period.
Partially offsetting these savings were increases in postage,
freight and shipping, including the payment of holiday surcharges,
due to industry-wide capacity constraints in the quarter.
Excluding one-time items in both periods, the operating loss in the
third quarter was $11.9 million, as
compared to an operating loss of $16.8
million in the third quarter of the prior fiscal year, a 29%
improvement year-over-year as the Company's restructuring and cost
saving initiatives, as well as the receipt of certain COVID-related
wage and rent subsidies, continued to favorably impact both fixed
and variable costs throughout the Company's operations
worldwide.
Net loss for the current period was $13.9
million, compared to a net loss in the prior year period of
$43.3 million, a reduction of
68%. Loss per diluted share in the third fiscal quarter was
$0.41 compared to a loss per diluted
share of $1.25 in the prior year
period. Excluding one-time items, third quarter 2021 loss per
diluted share was $0.14, compared to
a loss per diluted share of $0.34 in
the third quarter of 2020.
Capital Position and Liquidity
Net cash provided by operating activities was $16.4 million in the current fiscal quarter
compared to net cash provided by operating activities of
$29.7 million in the third quarter of
fiscal 2020. The Company had free cash flow (a non-GAAP liquidity
measure defined in the accompanying tables and reconciled to net
cash provided) of $5.5 million in the
current quarter, up $0.6 million as
compared to free cash flow of $4.9
million a year ago. The Company's free cash flow
performance in the third quarter benefitted from effective
management of working capital and capital expenditures as the
Company took decisive actions to preserve its cash position.
At quarter-end, the Company's cash and cash equivalents exceeded
total debt by $162.5 million,
compared to $247.7 million a year
ago. Net cash balances increased by $0.7
million from the prior quarter-end.
Capital expenditures in the third quarter were $10.9 million, below the current period's
depreciation and amortization expense and prior year period outlays
of $17.7 million, as the Company
continued to make strategic investments in key growth areas of the
business and on technology, both internal and customer-facing, to
allow it to operate with greater efficiency. The Company has
also undertaken a planned consolidation of underutilized facilities
that will help reduce future operating costs. In the quarter, the
Company sold its Southam, UK warehouse and distribution facility as
part of this plan.
The Company also distributed $5.1
million in dividends in the third quarter.
Overall Results – Third Quarter
(In $
Millions)
|
Third
Quarter
|
FY2021
|
FY2020
|
|
As
Reported
|
One-Time
Items
|
Ex.
One-Times
|
Ex.
One-Times
|
Earnings (loss)
before taxes
|
($22.0)
|
$12.3
|
($9.7)
|
($16.9)
|
Interest
(income) expense
|
1.7
|
-
|
1.7
|
(0.3)
|
Depreciation
and amortization
|
15.9
|
-
|
15.9
|
16.1
|
Amortization
of prepublication costs
|
6.3
|
-
|
6.3
|
6.7
|
Adjusted
EBITDA
|
$1.9
|
$12.3
|
$14.2
|
$5.6
|
Loss before taxes for the quarter ended February 28, 2021 was $22.0 million, compared to a loss before taxes of
$60.1 million in the third 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 third fiscal quarter of 2021
was a gain of $14.2 million, compared
to a gain of $5.6 million in the
third quarter of 2020, a 154% improvement notwithstanding a 26%
COVID-related decline in revenues.
Fiscal 2021 Outlook
Scholastic sees increasing opportunities to help students
returning to the classroom with its rich and diverse print and
digital content, deep market penetration and a capacity through our
school-based fair and club channels and curriculum services to help
students read and learn. However, given continued
COVID-related uncertainty, Scholastic is not providing a financial
outlook for the remainder of its 2021 fiscal year.
With more schools resuming in-person instruction, the Company's
augmented marketing efforts are driving an increase in spring fair
bookings, although on-going COVID challenges will nevertheless have
an impact on book fairs' results. The Company expects that
its new summer reading campaigns in clubs, fairs and education,
with programs and offers to help students accelerate their
learning, will have a favorable impact on the Company's fourth
quarter revenues. Additionally, Scholastic's trade spring frontlist
features the next titles from a number of the Company's top-selling
properties and authors, including Dav
Pilkey and Wings of Fire™ author, Tui T. Sutherland.
Segment Results
All comparisons detailed in this section refer to operating
results for the third quarter ended February
28, 2021 versus the third quarter ended February 29, 2020.
Children's Book Publishing and Distribution
In $
millions
|
Third
Quarter
|
|
|
|
2021
|
2020
|
$ Change
|
% Change
|
Revenue
|
|
|
|
|
Book
Clubs
|
$
35.0
|
$
43.4
|
$
(8.4)
|
(19%)
|
Book
Fairs
|
27.0
|
100.1
|
(73.1)
|
(73%)
|
Trade
|
79.3
|
76.7
|
2.6
|
3%
|
Total
revenue
|
141.3
|
220.2
|
(78.9)
|
(36%)
|
Operating income /
(loss)
|
(6.6)
|
2.2
|
(8.8)
|
nm
|
Operating income /
(loss), before one-time items*
|
(3.7)
|
2.2
|
(5.9)
|
nm
|
* Please refer to the
non-GAAP financial tables attached
|
Third quarter segment revenues fell $78.9
million, or 36%, to $141.3
million, driven by the continued COVID-impacted decline in
on-site book fairs, although the impact on operating income was
mitigated, in part, by aggressive cost savings actions. Book
club's revenues finished below the prior year period, as expected,
due to a strategic shift by management unrelated to COVID to reduce
certain offers and SKU's to enhance club's profitability. Trade
revenues grew on a strong frontlist that included Dav Pilkey's Cat Kid Comic Club,
Claudia and the New Girl (The Baby-Sitters Club®
Graphic Novel #9), and Harry
Potter and the Sorcerer's Stone: MinaLima Edition. In
addition, Scholastic's Early Learner Jumbo Workbooks and its
Klutz® line of book-based activity kits performed well
as parents sought ways to keep their children engaged and learning
while at home due to COVID. Segment operating loss was
$6.6 million reflecting the decline
in book fair revenues, partially offset by the Company's cost
reduction programs that drove significantly lower selling, general
and administrative expenses. In the quarter, certain
restructuring activities related to the Company's book fairs
distribution network optimization project gave rise to one-time
asset impairment and branch consolidation costs totaling
$2.9 million. Excluding these
one-time items, segment operating loss was $3.7 million in the current quarter.
Education
In $
millions
|
Third
Quarter
|
|
|
|
2021
|
2020
|
$ Change
|
% Change
|
Revenue
|
$
66.3
|
$
74.3
|
$
(8.0)
|
(11%)
|
Operating income /
(loss)
|
10.1
|
9.8
|
0.3
|
3%
|
For the current fiscal quarter, segment revenue was $66.3 million, compared to $74.3 million a year ago, an 11% decrease,
predominantly due to lower classroom magazines and custom
publishing revenues. Higher sales of take-home book packs, teaching
resources early readers and workbooks, and digital subscription
programs effectively offset a year-over-year drop in sales of the
Company's traditional classroom book collections due to a large
Houston ISD sale recorded in the prior year quarter. Digital
subscription booking rates continued to climb in the current period
and incremental revenue will be recognized in future periods as
product is delivered. Segment operating income was
$10.1 million, a 3% improvement
versus the prior year period, as a direct result of company-wide
cost savings programs in the current quarter.
International
In $
millions
|
Third
Quarter
|
|
|
|
2021
|
2020
|
$ Change
|
% Change
|
Revenue
|
$
69.9
|
$
78.8
|
$
(8.9)
|
(11%)
|
Operating income /
(loss)
|
(1.1)
|
(3.7)
|
2.6
|
70%
|
Operating income /
(loss), before one-time items*
|
(0.9)
|
(3.7)
|
2.8
|
76%
|
* Please refer to the
non-GAAP financial tables attached
|
Third quarter segment revenues were $69.9
million, down $8.9 million, or
11%, as compared to the third quarter of fiscal 2020, with lower
sales in the Company's book fairs operations in Canada and the UK, as well as in its direct
sales channels in Asia. Reported revenues include a
$3.5 million favorable impact of
foreign exchange in the current fiscal quarter. The revenue
shortfall was more than offset by the Company's previously
announced cost savings activities and the receipt of certain
COVID-related government wage and rent subsidies in Australia, Canada and the UK. Segment operating
loss narrowed to $1.1 million, as
compared to an operating loss of $3.7
million in the prior year period, a 70% improvement.
Excluding one-time severance and branch consolidation costs,
segment operating loss was $0.9
million in the current quarter.
Overhead
In $
millions
|
Third
Quarter
|
|
|
|
2021
|
2020
|
$ Change
|
% Change
|
Overhead
expense
|
$
26.6
|
$
68.3
|
$
41.7
|
61%
|
Overhead expense,
excluding one-time items*
|
17.4
|
25.1
|
7.7
|
31%
|
* Please refer to the
non-GAAP financial tables attached
|
Corporate overhead for the third fiscal quarter was $17.4 million, excluding one-time items of
$9.2 million, pre-tax, which compared
favorably with the $25.1 million
recorded in the prior year period, after excluding $43.2 million in one-time items. The
year-over-year reduction in overhead was the result of lower spend
across all major categories including staffing, medical, outside
services and consultants, travel, and supplies. Non-recurring
items reflected in overhead in the current period included
$9.2 million for lease and asset
impairments and restructuring severance related to the closure of
certain ancillary facilities. Non-recurring items reflected in
overhead in the prior year period included a $40.0 million non-cash inventory write-down
resulting from a change in the Company's inventory procurement and
retention policies, as well as restructuring severance of
$3.2 million.
Fiscal Year-To-Date 2021 Review
(In $
Millions)
|
|
Year-To-Date
|
Variance
|
|
FY
2021
|
FY
2020
|
$
|
%
|
Revenues
|
$898.9
|
$1,203.1
|
($304.2)
|
(25%)
|
Operating income
(loss)
|
(32.4)
|
(42.3)
|
9.9
|
23%
|
One-time
items
|
29.8
|
49.4
|
(19.6)
|
(40%)
|
Operating income
(loss), excluding one-time items*
|
(2.6)
|
7.1
|
(9.7)
|
(137%)
|
* Please refer to the
non-GAAP financial tables attached
|
Year-to-Date Results
For the first nine months of fiscal 2021, revenue was
$898.9 million, compared to
$1,203.1 million in the prior year
period, a decrease of $304.2 million,
or 25%. The Company reported a net loss per diluted share in the
first nine months of the fiscal year of $0.54, compared to a net loss per diluted share
of $0.89 a year ago. Excluding
one-time items of $0.65 and
$1.03 per diluted share,
respectively, the Company's earnings per diluted share was
$0.11 in the first nine months of
fiscal 2021 versus earnings per diluted share of $0.15 in the prior year period. The current
period's reduced results are mainly attributable to lower demand in
the Company's book fairs channels in the U.S., Canada and the UK in the first nine months of
fiscal 2021, due to the global pandemic, partially offset by better
operating margins resulting from the Company's cost savings and
restructuring initiatives, and the receipt of certain COVID-related
subsidies and tax credits in the current fiscal year.
Adjusted EBITDA (as defined) for the third fiscal quarter of
2021 was a gain of $76.0 million,
compared to a gain of $73.9 million
in the third quarter of 2020, a 3% improvement.
Net cash provided by operating activities was $36.5 million in the first nine months of the
current fiscal year compared to net cash provided by operating
activities of $44.0 million in the
same period last year. The Company had free cash flow (as defined)
of $1.5 million in the current fiscal
year-to-date, compared to a free cash use of $25.9 million in the prior year period. The
current year-to-date's free cash flow includes $37.1 million in capital expenditures and
$15.3 million in net prepublication
spend.
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 fourth quarter of fiscal 2021. The dividend is
payable on June 15, 2021 to
shareholders of record as of the close of business on April 30, 2021.
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 table
attached to this press release for supporting details on the impact
of one-time items on operating income, net income and diluted EPS,
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, March 18, 2021. 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 4453507.
The recording will be available through Friday, March 26, 2021.
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, school administrators, 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 1
|
Scholastic
Corporation
|
|
Consolidated
Statements of Operations
|
|
(Unaudited)
|
|
|
(In $
Millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
NINE MONTHS
ENDED
|
|
|
|
|
|
02/28/21
|
02/29/20
|
|
|
02/28/21
|
02/29/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$277.5
|
$373.3
|
|
|
$898.9
|
$1,203.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
146.0
|
183.0
|
|
|
468.5
|
584.4
|
|
|
|
|
|
Selling, general and
administrative expenses (1)
|
130.1
|
194.9
|
|
|
405.9
|
574.8
|
|
|
|
|
|
Depreciation and
amortization
|
14.7
|
15.4
|
|
|
46.0
|
46.2
|
|
|
|
|
|
Asset impairments and
write downs (2)
|
10.9
|
40.0
|
|
|
10.9
|
40.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses
|
301.7
|
433.3
|
|
|
931.3
|
1,245.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
(24.2)
|
(60.0)
|
|
|
(32.4)
|
(42.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
(1.7)
|
0.3
|
|
|
(4.1)
|
1.0
|
|
|
|
|
Other components of
net periodic benefit (cost)
|
0.1
|
(0.4)
|
|
|
(0.1)
|
(1.0)
|
|
|
|
|
Gain (loss) on sale
of assets and other (3)
|
3.8
|
-
|
|
|
10.4
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before income taxes
|
(22.0)
|
(60.1)
|
|
|
(26.2)
|
(42.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes(4)
|
(8.0)
|
(16.8)
|
|
|
(7.6)
|
(11.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
(14.0)
|
(43.3)
|
|
|
(18.6)
|
(30.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income
(loss) attributable to noncontrolling interest
|
(0.1)
|
0.0
|
|
|
0.0
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Scholastic Corporation
|
($13.9)
|
($43.3)
|
|
|
($18.6)
|
($30.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per share of Class A and Common Stock
(5)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
($0.41)
|
($1.25)
|
|
|
($0.54)
|
($0.89)
|
|
|
|
|
|
Diluted
|
($0.41)
|
($1.25)
|
|
|
($0.54)
|
($0.89)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
34,348
|
34,544
|
|
|
34,316
|
34,750
|
|
|
|
|
Diluted weighted
average shares outstanding
|
34,687
|
34,842
|
|
|
34,490
|
35,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In the three and nine
months ended February 28, 2021, the Company recognized pretax
severance of $0.8 and $18.0, respectively, and pretax branch
consolidation costs of $0.6 and $0.9, respectively. In the three
and nine months ended February 29, 2020, the Company
recognized pretax severance of $3.2 and $6.9, respectively,
and pretax settlement charges of $0.0 and $2.5,
respectively.
|
|
|
|
|
|
|
|
|
(2)
|
In the three and nine
months ended February 28, 2021, the Company recognized pretax asset
impairments of $8.5 related to its plan to cease use of certain
leased office space in New York City and consolidate into its
company-owned New York headquarters building and $2.4 related to
its plan to permanently close 12 of its 54 book fair warehouses in
the U.S. as part of a branch consolidation project. In the three
and nine months ended February 29, 2020, the Company recognized a
pretax asset write down of $40.0 related to the Company's club and
fair channels.
|
|
|
|
|
|
|
|
|
(3)
|
In the three and nine
months ended February 28, 2021, the Company recognized pretax gain
on the sale of its UK distribution center located in Southam of
$3.8. In the nine months ended February 28, 2021, the Company
recognized pretax gain on the sale of its Danbury facility of
$6.6.
|
|
|
|
|
|
|
|
|
(4)
|
In the three and nine
months ended February 28, 2021, the Company recognized a benefit
for income taxes in respect to one-time pretax charges of $3.2 and
$7.5, respectively. In the three and nine months ended February 29,
2020, the Company recognized a benefit for income taxes in respect
to one-time pretax charges of $11.8 and $13.5,
respectively.
|
|
|
|
|
|
|
|
|
(5)
|
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
|
|
NINE MONTHS
ENDED
|
|
|
|
|
02/28/21
|
02/29/20
|
|
Change
|
|
02/28/21
|
02/29/20
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Clubs
|
$35.0
|
$43.4
|
|
($8.4)
|
(19%)
|
|
$107.7
|
$137.3
|
|
($29.6)
|
(22%)
|
|
|
|
Book Fairs
|
27.0
|
100.1
|
|
(73.1)
|
(73%)
|
|
87.9
|
351.7
|
|
(263.8)
|
(75%)
|
|
|
|
Consolidated
Trade
|
79.3
|
76.7
|
|
2.6
|
3%
|
|
276.9
|
254.4
|
|
22.5
|
9%
|
|
|
|
Total
revenues
|
141.3
|
220.2
|
|
(78.9)
|
(36%)
|
|
472.5
|
743.4
|
|
(270.9)
|
(36%)
|
|
|
|
Operating income
(loss)
|
(6.6)
|
2.2
|
|
(8.8)
|
nm
|
|
1.9
|
70.1
|
|
(68.2)
|
(97%)
|
|
|
|
Operating
margin
|
-
|
1.0%
|
|
|
|
|
0.4%
|
9.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Education
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
66.3
|
74.3
|
|
(8.0)
|
(11%)
|
|
187.4
|
192.6
|
|
(5.2)
|
(3%)
|
|
|
|
Operating income
(loss)
|
10.1
|
9.8
|
|
0.3
|
3%
|
|
19.8
|
2.6
|
|
17.2
|
nm
|
|
|
|
Operating
margin
|
15.2%
|
13.2%
|
|
|
|
|
10.6%
|
1.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
69.9
|
78.8
|
|
(8.9)
|
(11%)
|
|
239.0
|
267.1
|
|
(28.1)
|
(11%)
|
|
|
|
Operating income
(loss)
|
(1.1)
|
(3.7)
|
|
2.6
|
70%
|
|
23.3
|
4.3
|
|
19.0
|
nm
|
|
|
|
Operating
margin
|
-
|
-
|
|
|
|
|
9.7%
|
1.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overhead
expense
|
26.6
|
68.3
|
|
41.7
|
61%
|
|
77.4
|
119.3
|
|
41.9
|
35%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
($24.2)
|
($60.0)
|
|
$35.8
|
60%
|
|
($32.4)
|
($42.3)
|
|
$9.9
|
23%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3
|
Scholastic
Corporation
|
|
Supplemental
Information
|
|
(Unaudited)
|
|
(In $
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Balance Sheet Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/28/21
|
02/29/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$353.2
|
$263.8
|
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
238.0
|
281.2
|
|
|
|
|
|
|
|
|
Inventories,
net
|
304.8
|
307.7
|
|
|
|
|
|
|
|
|
Accounts
payable
|
134.3
|
187.9
|
|
|
|
|
|
|
|
|
Accrued
royalties
|
77.6
|
77.3
|
|
|
|
|
|
|
|
|
Lines of credit and
current portion of long-term debt
|
190.7
|
9.7
|
|
|
|
|
|
|
|
|
Long-term
debt
|
-
|
6.4
|
|
|
|
|
|
|
|
|
Total debt
|
190.7
|
16.1
|
|
|
|
|
|
|
|
|
Net debt (cash)
(1)
|
(162.5)
|
(247.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
1,176.8
|
1,199.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Cash Flow Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
NINE MONTHS
ENDED
|
|
|
|
|
02/28/21
|
02/29/20
|
|
|
02/28/21
|
02/29/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
$16.4
|
$29.7
|
|
|
$36.5
|
$44.0
|
|
|
|
|
Add: Net proceeds from sale
of assets
|
5.1
|
0.0
|
|
|
17.4
|
0.0
|
|
|
|
|
Less: Additions to property, plant
and equipment
|
10.9
|
17.7
|
|
|
37.1
|
48.4
|
|
|
|
|
Prepublication
expenditures
|
5.1
|
7.1
|
|
|
15.3
|
21.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow (use)
(2)
|
$5.5
|
$4.9
|
|
|
$1.5
|
($25.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net debt (cash) 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
|
|
Supplemental
Results
|
|
Excluding
One-Time Items
|
|
(Unaudited)
|
|
(In $
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
|
|
|
|
Reported
|
One-time
|
Excluding
|
|
Reported
|
One-time
|
Excluding
|
|
|
|
|
|
|
|
|
02/28/21
|
items
|
One-time
items
|
|
02/29/20
|
items
|
One-time
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share (1)
|
|
($0.41)
|
$0.26
|
($0.14)
|
|
($1.25)
|
$0.91
|
($0.34)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(2)
|
|
($13.9)
|
$9.1
|
($4.8)
|
|
($43.3)
|
$31.4
|
($11.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution(3)
|
|
($6.6)
|
$2.9
|
($3.7)
|
|
$2.2
|
$0.0
|
$2.2
|
|
|
|
|
|
|
Education
|
|
10.1
|
-
|
10.1
|
|
9.8
|
-
|
9.8
|
|
|
|
|
|
|
International(4)
|
|
(1.1)
|
0.2
|
(0.9)
|
|
(3.7)
|
-
|
(3.7)
|
|
|
|
|
|
|
Overhead(5)
|
|
(26.6)
|
9.2
|
(17.4)
|
|
(68.3)
|
43.2
|
(25.1)
|
|
|
|
|
|
|
Operating income
(loss)
|
|
($24.2)
|
$12.3
|
($11.9)
|
|
($60.0)
|
$43.2
|
($16.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NINE MONTHS
ENDED
|
|
|
|
|
|
|
|
Reported
|
One-time
|
Excluding
|
|
Reported
|
One-time
|
Excluding
|
|
|
|
|
|
|
|
|
02/28/21
|
items
|
One-time
items
|
|
02/29/20
|
items
|
One-time
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share (1)
|
|
($0.54)
|
$0.65
|
$0.11
|
|
($0.89)
|
$1.03
|
$0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(2)
|
|
($18.6)
|
$22.3
|
$3.7
|
|
($30.8)
|
$35.9
|
$5.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution(3)
|
|
$1.9
|
$2.9
|
$4.8
|
|
$70.1
|
$0.0
|
$70.1
|
|
|
|
|
|
|
Education
|
|
19.8
|
-
|
19.8
|
|
2.6
|
-
|
2.6
|
|
|
|
|
|
|
International(4)
|
|
23.3
|
2.8
|
26.1
|
|
4.3
|
-
|
4.3
|
|
|
|
|
|
|
Overhead(5)
|
|
(77.4)
|
24.1
|
(53.3)
|
|
(119.3)
|
49.4
|
(69.9)
|
|
|
|
|
|
|
Operating income
(loss)
|
|
($32.4)
|
$29.8
|
($2.6)
|
|
($42.3)
|
$49.4
|
$7.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
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.
|
|
|
|
|
|
|
(2)
|
In the three and nine
months ended February 28, 2021, the Company recognized a benefit
for income taxes in respect to one-time pretax charges of $3.2 and
$7.5, respectively. In the three and nine months ended February 29,
2020, the Company recognized a benefit for income taxes in respect
to one-time pretax charges of $11.8 and $13.5,
respectively.
|
|
|
|
|
|
|
(3)
|
In the three and nine
months ended February 28, 2021, the Company recognized pretax asset
impairment of $2.4 and branch consolidation costs of $0.5 related
to its plan to permanently close 12 out of its 54 book fair
warehouses in the U.S.
|
|
|
|
|
|
|
(4)
|
In the three and nine
months ended February 28, 2021, the Company recognized pretax
severance of $0.2 and $2.5, respectively, and pretax branch
consolidation costs of $0.0 and $0.3,
respectively.
|
|
|
|
|
|
|
(5)
|
In the three and nine
months ended February 28, 2021, the Company recognized pretax
severance of $0.6 and $15.5, respectively, and pretax asset
impairment charges of $8.5 and branch consolidation costs of $0.1
related to its plan to cease use of certain leased office space and
consolidate into its company-owned New York headquarters building.
In the three and nine months ended February 29, 2020, the Company
recognized pretax severance of $3.2 and $6.9, respectively,
and a pretax asset write down of $40.0 related to the Company's
club and fair channels. In the nine months ended February 29, 2020,
the Company recognized pretax settlement charges of
$2.5.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5
|
Scholastic
Corporation
|
|
Consolidated
Statements of Operations - Supplemental
|
|
Adjusted
EBITDA
|
|
(Unaudited)
|
|
(In $
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
|
|
|
02/28/21
|
|
02/29/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before income taxes as reported
|
|
($22.0)
|
|
|
($60.1)
|
|
|
|
|
One-time items before
income taxes
|
|
12.3
|
|
|
43.2
|
|
|
|
|
Earnings (loss)
before income taxes excluding one-time items
|
|
(9.7)
|
|
|
(16.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income)
expense
|
|
1.7
|
|
|
(0.3)
|
|
|
|
|
|
Depreciation and
amortization(1)
|
|
15.9
|
|
|
16.1
|
|
|
|
|
|
Amortization of
prepublication costs
|
|
6.3
|
|
|
6.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
|
$14.2
|
|
|
$5.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NINE MONTHS
ENDED
|
|
|
|
|
|
|
02/28/21
|
|
02/29/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before income taxes as reported
|
|
($26.2)
|
|
|
($42.3)
|
|
|
|
|
One-time items before
income taxes
|
|
29.8
|
|
|
49.4
|
|
|
|
|
Earnings (loss)
before income taxes excluding one-time items
|
|
3.6
|
|
|
7.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income)
expense
|
|
4.1
|
|
|
(1.0)
|
|
|
|
|
|
Depreciation and
amortization(1)
|
|
49.3
|
|
|
48.1
|
|
|
|
|
|
Amortization of
prepublication costs
|
|
19.0
|
|
|
19.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
|
$76.0
|
|
|
$73.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For the three and
nine months ended February 28, 2021, amounts include depreciation
of $0.8 and $2.4, respectively, recognized in cost of goods sold,
amortization of deferred financing costs of $0.2 and $0.4,
respectively, and amortization of capitalized cloud software of
$0.2 and $0.5, respectively, recognized in selling, general and
administrative expenses. For the three and nine months ended
February 29, 2020, amounts include depreciation of $0.6 and $1.7,
respectively, recognized in cost of goods sold, amortization of
deferred financing costs of $0.1 and $0.2, respectively, and
amortization of capitalized cloud software of $0.0 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHL: Financial
View original content to download
multimedia:http://www.prnewswire.com/news-releases/scholastic-reports-fiscal-2021-third-quarter-results-301250497.html
SOURCE Scholastic Corporation