NEW YORK, July 22, 2021 /PRNewswire/ -- Scholastic
Corporation (NASDAQ: SCHL), the global children's publishing,
education and media company, today reported financial results for
the Company's fiscal fourth quarter and full year ended
May 31, 2021.
Fiscal 2021 Review
In $
millions
|
Fiscal
2021
|
Fiscal
2020
|
Δ FY21 vs.
FY20
|
|
4Q
|
FY
|
4Q
|
FY
|
4Q
|
FY
|
Revenues
|
$401.4
|
$1,300.3
|
$284.0
|
$1,487.1
|
$117.4
|
($186.8)
|
Operating income
(loss)
|
9.7
|
(22.7)
|
(46.2)
|
(88.5)
|
55.9
|
65.8
|
One-time
items
|
(31.9)
|
(61.7)
|
(6.8)
|
(56.2)
|
na
|
na
|
Operating income
(loss), excluding one-time items*
|
41.6
|
39.0
|
(39.4)
|
(32.3)
|
81.0
|
71.3
|
*
Please refer to the non-GAAP financial tables attached for a
detailed reconciliation of reported results to adjusted
measures.
|
Company Commentary
"In the fourth quarter, Scholastic's businesses showed
dramatically improved results on both the top and bottom lines,
even as educators around the globe still struggled with
transitioning their students safely back to the classroom.
Management's decisive actions taken throughout the difficult 2021
fiscal year and our employees' disciplined execution helped to
successfully weather the adverse impacts of the pandemic on the
Company's end markets and supply chain. Our strength in
execution was most evident in our positive free cash flow
generation and improved operating margins, which resulted in
meaningful year-over-year growth in adjusted EBITDA despite a drop
in full year revenues," said James
Barge, speaking on behalf of Scholastic's board of
directors. "These results are particularly bittersweet in
light of last month's unexpected passing of Scholastic's longtime
leader, Dick Robinson, and we
acknowledge his stalwart vision and remarkable stewardship in
achieving these outcomes, as well as the culture he built."
Iole Lucchese, Scholastic's
Executive Vice President, Chief Strategy Officer added, "Despite
having to take difficult, but carefully measured, cost actions in
response to a 13% decline in sales in the year, Scholastic
continued to make important investments related to its key growth
initiatives with a focus on (1) book fairs recovery, (2) new
education solutions, including digital products and early childhood
programs, (3) increasing parent access to the Company's eCommerce
platforms, (4) English language learning in Asia, and (5) the acquisition and development
of content for our trade and media operations, as well as in
technology to improve our systems and processes. These initiatives
are the underpinnings of Scholastic's growth strategy for fiscal
2022 and beyond. In this coming school year, it is clear that
many students, not just the most vulnerable, and their teachers
will need additional support. Scholastic will be a strong
partner in literacy and education as we always have for more than
100 years, proudly extending Dick
Robinson's accomplished vision, a core element of our
success, as we maintain our focus on supporting our customers in
this changing environment."
Revenues
Consolidated revenues rose 41% to $401.4
million in the fourth quarter versus the prior year period,
despite continuing softness in the book fairs channel for premium
in-person fairs, which performed below expectations as schools
faced uncertain timetables in the early spring for returning
students safely back to classrooms. Each of the Company's
three operating segments – Children's Book Publishing and
Distribution, Education and International – showed marked
improvements, both sequentially relative to the third fiscal
quarter ended February 28, 2021 and
comparatively to the prior year period, amid improving market
conditions, strong demand for foundational literacy programs and
summer reading, and top selling trade titles such as
Dav Pilkey's Dog Man: Mothering
Heights, The Dangerous Gift (Wings of Fire™ #14),
Mister Impossible (The Dreamer Trilogy #2), and Claudia
and the New Girl (The Baby-Sitters Club® Graphic
Novel #9). The tougher trade comparison in the last quarter
of the fiscal year was the result of the release of the blockbuster
bestseller The Ballad of Songbirds and Snakes, the fourth
title in The Hunger Games® series in the fourth quarter
of the prior year period.
Fiscal 2021 full-year revenues declined $186.8 million, or 13%, as compared to the prior
year, to $1.30 billion, due to lower
sales in the Company's book fairs channels in the U.S. and abroad
as a result of COVID-related restrictions.
Operating Income
Fourth quarter operating income rose $55.9 million, or 121%, versus the prior year
period, to $9.7 million. The fourth
quarter increase in operating income was directly attributable to
the higher sales volume and the on-going benefits of the Company's
successful cost savings initiatives that improved operating
leverage, as well as the receipt of certain pandemic-related wage
and benefit subsidies globally. Excluding one-time items in
both periods, the Company had operating income of $41.6 million in the fourth quarter of 2021,
versus an operating loss of $39.4
million in the fourth quarter of 2020.
For the 2021 fiscal year, the Company recorded an operating loss
of $22.7 million, which was a
$65.8 million, or 74% improvement as
compared to an operating loss of $88.5
million in the prior year. Excluding one-time items,
the Company had operating income of $39.0
million in fiscal year 2021, versus an operating loss of
$32.3 million in fiscal year
2020.
Capital Position and Liquidity
Net cash provided by operating activities was $71.0 million in the current fiscal year compared
to $2.1 million in fiscal 2020. The
Company had a free cash flow (a non-GAAP liquidity measure defined
in the accompanying tables and reconciled to net cash provided) of
$20.5 million in the current fiscal
year, compared to a free cash use of $89.1
million in fiscal 2020.
At year-end, the Company's cash and cash equivalents exceeded
total debt by $176.3 million,
compared to $175.3 million a year
ago. The higher net cash position at May 31,
2021 reflects the effective management of both working
capital and capital expenditures throughout the fiscal year,
despite a sharp reduction in demand in most of the Company's book
fair channels around the globe.
Capital expenditures in the current fiscal year were
$47.2 million, below prior year's
levels despite the Company's continued investments for future
growth including further progress on its technology roadmap and
expanded customer access, as well as a planned consolidation of
underutilized facilities, and $20.7
million in pre-publication costs for new content development
in education, media and trade. These capital and pre-publication
investments, taken as a whole, were $23.3
million, or 26% below prior year's levels.
During the fiscal year, Scholastic sold two company-owned
facilities in the U.S. and U.K. for total net proceeds of
$17.4 million, and currently holds
two additional facilities for sale. The Company also
continued to pay its regular quarterly dividend, uninterrupted by
the pandemic, and distributed $5.2
million in dividends in the fourth quarter for a total of
$20.6 million in dividends in the
fiscal year.
Overall Results
In $
millions
|
Fiscal
2021
|
Fiscal
2020
|
Δ FY21 vs.
FY20
|
|
4Q
|
FY
|
4Q
|
FY
|
4Q
|
FY
|
Earnings (loss)
before taxes
|
$8.0
|
($18.2)
|
($47.4)
|
($89.7)
|
$55.4
|
$71.5
|
One-time
items
|
31.9
|
61.7
|
6.8
|
56.2
|
25.1
|
5.5
|
Earnings (loss) ex.
one-times
|
39.9
|
43.5
|
(40.6)
|
(33.5)
|
$80.5
|
77.0
|
Interest
(income) expense
|
1.7
|
5.8
|
0.9
|
(0.1)
|
0.8
|
5.9
|
Depreciation
and amortization
|
15.6
|
64.9
|
15.9
|
64.0
|
(0.3)
|
0.9
|
Prepublication
amortization
|
6.4
|
25.4
|
6.5
|
26.2
|
(0.1)
|
(0.8)
|
Adjusted
EBITDA
|
$63.6
|
$139.6
|
($17.3)
|
$56.6
|
$80.9
|
$83.0
|
* Please
refer to the non-GAAP financial tables attached.
|
Earnings before taxes for the quarter ended May 31, 2021 was $8.0
million, compared to a loss before taxes of $47.4 million in the fourth 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 fourth fiscal quarter of 2021 was a
gain of $63.6 million, compared to a
loss of $17.3 million in the fourth
quarter of 2020.
For the fiscal year ended May 31,
2021, the Company had a loss before taxes of $18.2 million, versus a loss before taxes of
$89.7 million in the prior fiscal
year. Fiscal 2021 full-year Adjusted EBITDA was $139.6 million, compared to $56.6 million in fiscal 2020, an increase of
$83.0 million, or 147%, improvement
notwithstanding the year-over-year decline in revenues.
Earnings Per Share and Other Items
In the fiscal fourth quarter of 2021, the Company recorded
earnings per diluted share of $0.22
compared to a loss per share of $0.38
in the fiscal fourth quarter of 2020. Excluding one-time
items, the current year's fiscal fourth quarter earnings per
diluted share was $0.90 versus a loss
per share of $0.23 in the prior year
period. Full year fiscal 2021 loss per share was $0.32 compared to a loss per share of
$1.27 in the prior year period.
Excluding one-time items, fiscal 2021 full year earnings per
diluted share was $1.02 versus a loss
per share of $0.08 in fiscal
2020.
Non-recurring items reflected in the current fiscal year's
results include $23.1 million in
pre-tax severance associated with a substantial reduction-in-force
to align Scholastic's workforce size with COVID-impacted business
volumes, $20.0 million in settlement
for certain past intellectual property usage (see below), and
$18.6 million in branch consolidation
costs and asset impairments that will serve to lower future
operating expenses.
Fiscal 2022 Outlook
While uncertainty still remains, the Company is beginning to see
strengthening underlying trends across all of its businesses and
customer end markets, as students around the globe return to the
classroom, educators look to dependable and effective ways for
accelerating student achievement, and stores welcome shoppers
without restrictions. Scholastic believes it is
well-positioned to continue the growth patterns seen in the fourth
quarter of fiscal 2021 as its markets recover, especially for its
book fairs businesses in the U.S., Canada and the U.K., and expects stronger
operating leverage and resultant free cash flow given the
successful reduction in labor and other operating costs from
pre-pandemic levels. Additionally, the Company continues to
identify further opportunities for incremental cost savings through
process improvements and automation, consolidating functions, and
increased utilization of the Company's international shared
services resources.
In Children's Book Publishing and Distribution, the Company
expects growth to be driven by a recovery in its book fairs
operations as schools return to a more normal academic calendar
with fewer COVID-related closures, as well as in trade through the
development of new titles and content, in particular content which
can be further developed through the Company's growing
entertainment business into successful media properties. Fiscal
2022 year-to-date, the Company is seeing book fair bookings and
confirmations by schools at a slightly higher rate than preliminary
expectations, however Scholastic anticipates that rebuilding the
book fairs business will take time given changes in customer
engagement and capacity constraints post-pandemic. Key
titles in the Company's upcoming frontlist include: Dav Pilkey's Cat Kid Comic Club:
Perspectives (Cat Kid Comic Club™ #2); The Christmas Pig
by J.K. Rowling; Kristy and the Snobs: Baby-Sitters Club
Graphic Novel #10; The Brightest Night: Wings of Fire Graphic Novel
#5; I Survived the Attacks of September
11, 2001 (I Survived Graphic Novel #4); and The Bad
Guys in They're Bee-Hind You!
(The Bad Guys™ #14).
In Education, the Company expects incremental growth through an
emphasis on the development of new digital products, including the
adaptation of successful existing products into enhanced digital
offerings for hybrid teaching models, as well as the impact of
federal stimulus funds on the overall K-12 education landscape that
may be utilized by schools to help students accelerate their
learning post-pandemic.
In International, the Company expects growth through the
expansion of Scholastic's range of English language learning
digital product offerings in Asia,
including, in particular, an expanding line-up of market leading
digital home learning products in China and Korea.
More generally, and in response to recent learnings from the
pandemic, Scholastic sees incremental growth in many of its
channels as it builds on the greater involvement of parents
globally in purchasing home learning for their children, and is
accelerating the Company's business of direct-to-parent marketing
of books and educational materials through improved customer
access, digital marketing and eCommerce.
As a result of these actions, the Company expects significant
growth in fiscal 2022 revenues from prior year levels. Improvement
in Adjusted EBITDA will be driven by revenue gains in all operating
segments with increased leverage on the margin as a result of the
Company's cost mitigation actions in the last fiscal year,
partially offset by higher compensation costs and the
discontinuation of certain COVID-related government subsidies in
the new fiscal year. In addition, the Company expects that certain
fiscal 2021 cost savings that were tied to lower sales volumes will
not be repeated in fiscal 2022 as customer demand rises to
pre-pandemic levels. Scholastic expects to provide additional
guidance information throughout its fiscal year as details on the
post-pandemic marketplace for its products and services become
clearer.
Segment Results
All comparisons detailed in this section refer to operating
results for the fourth quarter and full year ended May 31, 2021 versus the fourth quarter and full
year ended May 31, 2020.
Children's Book Publishing and Distribution (CBP&D)
In $
millions
|
Fiscal
2021
|
Fiscal
2020
|
Δ FY21 vs.
FY20
|
|
4Q
|
FY
|
4Q
|
FY
|
4Q
|
FY
|
Revenues
|
|
|
|
|
|
|
Book
Clubs
|
$
37.4
|
$
145.1
|
$
19.5
|
$
156.8
|
$
17.9
|
$
(11.7)
|
Book
Fairs
|
76.4
|
164.3
|
32.1
|
383.8
|
44.3
|
(219.5)
|
Trade
|
78.4
|
355.3
|
80.4
|
334.8
|
(2.0)
|
20.5
|
Total
Revenue
|
192.2
|
664.7
|
132.0
|
875.4
|
60.2
|
(210.7)
|
Operating income
(loss)
|
11.8
|
13.7
|
(46.5)
|
23.6
|
58.3
|
(9.9)
|
Operating income /
(loss), excluding one-time items*
|
14.3
|
19.1
|
(46.5)
|
23.6
|
60.8
|
(4.5)
|
* Please
refer to the non-GAAP financial tables attached.
|
Fourth quarter 2021 segment revenues were $192.2 million, an increase of $60.2 million, or 46%, versus the comparable
prior year period on higher levels of on-site case book fairs held
and increased book club sponsorship as schools began to return to
in-classroom instruction in the spring. Although trade revenues
were higher sequentially versus the third fiscal quarter on the
strength of top-selling series and graphic novels, trade revenues
were marginally unfavorable to the fourth quarter of fiscal 2020,
which saw the widely-anticipated release of The Ballad of
Songbirds and Snakes by Suzanne
Collins, in print, digital and audio formats. For the
full fiscal year, CBP&D revenues fell $210.7 million, or 24%, as a result of the
COVID-related decline in school book fairs held, partially offset
by strong core frontlist sales of trade titles. Fourth
quarter segment operating income, excluding one-time items relating
to the consolidation of redundant book fairs' facilities, was
$14.3 million, as compared to an
operating loss of $46.5 million in
the fourth quarter of fiscal 2020. Fiscal 2021 CBP&D
operating income, excluding one-time items, was $19.1 million, a reduction of $4.5 million, or 19%, compared to operating
income of $23.6 million in fiscal
2020, and directly attributable to the pandemic-related drop in
book fair revenues, partially offset by cost savings measures taken
throughout the current fiscal year.
Education
In $
millions
|
Fiscal
2021
|
Fiscal
2020
|
Δ FY21 vs.
FY20
|
|
4Q
|
FY
|
4Q
|
FY
|
4Q
|
FY
|
Revenue
|
$
124.9
|
$
312.3
|
$
94.7
|
$
287.3
|
$
30.2
|
$
25.0
|
Operating income
(loss)
|
40.8
|
60.6
|
27.3
|
29.9
|
13.5
|
30.7
|
Fourth quarter 2021 segment revenues grew $30.2 million, or 32%, to $124.9 million, versus the comparable prior year
period on higher sales in most channels, particularly leveled
bookrooms, summer reading programs, paperbacks and collections, and
literacy partnerships, as well as in the segment's teaching
resources and digital subscription product categories. For
the fiscal year, Education segment revenues were $312.3 million, compared to $287.3 million a year ago, an increase of
$25.0 million, or 9%. In
the fourth quarter, segment operating income was $40.8 million versus $27.3
million in the fourth quarter of fiscal 2020, an increase of
49%, reflecting the higher sales volumes. Fiscal 2021
Education operating income was $60.6
million, an increase of $30.7
million, or 103% versus the prior year, driven by higher
revenues and the benefits of the Company's cost savings
actions. Effective June
1st, Education's multiple channels were
consolidated into a single Education Solutions group to allow for
increased investment in digital learning and greater cross-selling
opportunities across the entire segment's portfolio of print and
digital products. The new combined division will now house
all Scholastic programs that are purchased by districts and schools
for use in classroom instruction and supplementary learning, as
well as family and community engagement, professional learning, and
related services.
International
In $
millions
|
Fiscal
2021
|
Fiscal
2020
|
Δ FY21 vs.
FY20
|
|
4Q
|
FY
|
4Q
|
FY
|
4Q
|
FY
|
Revenue
|
$
84.3
|
$
323.3
|
$
57.3
|
$
324.4
|
$
27.0
|
$
(1.1)
|
Operating income
(loss)
|
0.7
|
24.0
|
(10.8)
|
(6.5)
|
11.5
|
30.5
|
Operating income /
(loss), excluding one-time items*
|
5.1
|
31.2
|
(9.1)
|
(4.8)
|
14.2
|
36.0
|
* Please
refer to the non-GAAP financial tables attached.
|
Fourth quarter 2021 segment revenues grew $27.0 million, or 47%, to $84.3 million, as compared to the fourth quarter
of 2020, with higher sales recorded in Canada, Australia, and in Asia across most channels – direct sales,
trade and education. Fiscal 2021 International revenue was
$323.3 million, basically on par with
prior year's results as global markets grappled with COVID-related
disruptions throughout the current fiscal year. In the fourth
quarter, International recorded operating income of $5.1 million, excluding one-time items, versus an
operating loss of $9.1 million,
excluding one-time items, in the fourth quarter of fiscal 2020, on
higher sales volumes. Segment operating income for the full fiscal
year was $31.2 million, excluding
one-time items for restructuring severance and branch consolidation
and other business rationalization costs of $7.2, million, an increase of $36.0 million, as compared to an operating loss
of $4.8 million, which excluded
one-time charges of $1.7
million. The year-over-year improvement in segment
operating income reflects the benefits of the Company's cost
reduction activities and the receipt of certain pandemic-related
government subsidies in the current fiscal year.
In fiscal 2021, the impact of foreign exchange on the Company's
international businesses resulted in a $16.9
million improvement in revenues and a $0.4 million increase in operating income versus
the prior year period.
Overhead
In $
millions
|
Fiscal
2021
|
Fiscal
2020
|
Δ FY21 vs.
FY20
|
|
4Q
|
FY
|
4Q
|
FY
|
4Q
|
FY
|
Overhead
expense
|
$
43.6
|
$
121.0
|
$
16.2
|
$
135.5
|
$
(27.4)
|
$
$14.5
|
Overhead expense,
excluding one-time items*
|
18.6
|
71.9
|
11.1
|
81.0
|
(7.5)
|
9.1
|
* Please
refer to the non-GAAP financial tables attached
|
In the fourth quarter of fiscal 2021, overhead expense,
excluding one-time items, was $18.6
million, an increase of $7.5
million versus $11.1 million
of overhead expense, excluding one-time items, in the fourth
quarter of fiscal 2020. The higher overhead expense in the
current year period reflects higher spending on the Company's
technology roadmap, as well as on certain manufacturing and
logistics programs. Corporate overhead for the fiscal year
was $71.9 million, excluding one-time
items of $49.1 million, pre-tax,
versus corporate overhead of $81.0
million in the prior year, after excluding $54.5 million in one-time items. Excluding
one-time items in both periods, the lower overhead expense in the
current fiscal year was mainly due to the favorable impact of the
Company's cost savings initiatives and lower spending, in general,
across many overhead groups.
Vanderbilt Matter
Subsequent to its fiscal year-end, Scholastic, along with its
co-defendants in a certain legal proceeding, reached a
mediation-assisted settlement with Vanderbilt
University regarding a license agreement for intellectual
property used in the Company's former READ 180 instruction
platform, and certain trademarks in connection with the marketing
and sale of READ 180 and ancillary products, all of which were
included in the sale of Scholastic's Educational Technology and
Services business in May 2015 and are
no longer marketed by the Company. Without admitting to the
allegations raised, the agreement requires the Company to pay
$20 million in a one-time cash
payment to Vanderbilt to avoid the
uncertainties of trial and the additional costs of preparing for
and presenting an on-going legal defense in this matter. The
settlement amount has been reflected in the Company's financial
results as of May 31, 2021 as a
one-time non-recurring item. While Scholastic expects that a
significant portion of the settlement and related defense costs
will be covered by the Company's insurance programs, it is
premature to determine with any level of probability or accuracy
what those recoveries could be at this time.
Chief Executive Officer Appointment
As previously announced, Peter
Warwick has been named the Company's new President and Chief
Executive Officer effective August 1,
2021. Mr. Warwick has served as an independent director on
the Company's board since 2014 and will assume the lead operating
roles and responsibilities of the late M. Richard (Dick) Robinson, Jr.
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 Flow". 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.
Conference Call
The Company will hold a conference call to discuss its results
at 4:30 p.m. ET today, July 22, 2021. Scholastic's Lead Independent
Director, James Barge; Iole Lucchese, Executive Vice President, Chief
Strategy Officer; 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 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 7638704. The recording will be available through
Friday, July 30, 2021.
About Scholastic
For more than 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.
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Table 1
|
Scholastic
Corporation
|
|
Consolidated
Statements of Operations
|
|
(Unaudited)
|
|
(In $
Millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
TWELVE MONTHS
ENDED
|
|
|
|
|
05/31/21
|
05/31/20
|
|
|
05/31/21
|
05/31/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$401.4
|
$284.0
|
|
|
$1,300.3
|
$1,487.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
198.0
|
166.6
|
|
|
666.5
|
751.0
|
|
|
|
|
Selling, general and
administrative expenses (1)
|
179.0
|
147.7
|
|
|
584.9
|
722.5
|
|
|
|
|
Depreciation and
amortization
|
14.5
|
15.3
|
|
|
60.5
|
61.5
|
|
|
|
|
Asset impairments and
write downs (2)
|
0.2
|
0.6
|
|
|
11.1
|
40.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses
|
391.7
|
330.2
|
|
|
1,323.0
|
1,575.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
9.7
|
(46.2)
|
|
|
(22.7)
|
(88.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
(1.7)
|
(0.9)
|
|
|
(5.8)
|
0.1
|
|
|
|
Other components of
net periodic benefit (cost)
|
0.0
|
(0.3)
|
|
|
(0.1)
|
(1.3)
|
|
|
|
Gain (loss) on sale
of assets and other (3)
|
-
|
-
|
|
|
10.4
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before income taxes
|
8.0
|
(47.4)
|
|
|
(18.2)
|
(89.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes(4)
|
0.3
|
(34.4)
|
|
|
(7.3)
|
(46.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
7.7
|
(13.0)
|
|
|
(10.9)
|
(43.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income
(loss) attributable to noncontrolling interest
|
0.1
|
0.0
|
|
|
0.1
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Scholastic Corporation
|
$7.6
|
($13.0)
|
|
|
($11.0)
|
($43.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per share of Class A and Common Stock
(5)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$0.22
|
($0.38)
|
|
|
($0.32)
|
($1.27)
|
|
|
|
|
Diluted
|
$0.22
|
($0.38)
|
|
|
($0.32)
|
($1.27)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
34,378
|
34,244
|
|
|
34,332
|
34,622
|
|
|
|
Diluted weighted
average shares outstanding
|
35,108
|
34,379
|
|
|
34,622
|
34,865
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In the three and
twelve months ended May 31, 2021, the Company recognized pretax
mediation-assisted settlement charges of $20.0 related to
intellectual property used in formerly owned products, pretax
severance of $5.1 and $23.1, respectively, and pretax branch
consolidation and other business rationalization costs of $6.6 and
$7.5, respectively. In the three and twelve months ended May 31,
2020, the Company recognized pretax severance of $6.2 and
$13.1. In the twelve months ended May 31, 2020, the Company
recognized pretax settlement charges of $2.5.
|
|
|
|
|
|
|
(2)
|
In the three and
twelve months ended May 31, 2021, the Company recognized pretax
asset impairments of $0.2 and $2.6 related to its plan to
permanently close 13 of its 54 book fair warehouses in the U.S. as
part of a branch consolidation project. In the twelve months ended
May 31, 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. In the three and twelve months ended
May 31, 2020, the Company recognized a pretax impairment charge of
$0.6 related to an outdated technology platform in Canada. In the
twelve months ended May 31, 2020, the Company recognized a pretax
asset write down of $40.0 related to the Company's club and fair
channels.
|
|
|
|
|
|
|
(3)
|
In the twelve months
ended May 31, 2021, the Company recognized pretax gain on the sale
of its UK distribution center located in Southam of $3.8. In the
twelve months ended May 31, 2021, the Company recognized pretax
gain on the sale of its Danbury facility of $6.6.
|
|
|
|
|
|
|
(4)
|
In the three and
twelve months ended May 31, 2021, the tax impact in respect to
one-time pretax charges was $8.0 and $15.5, respectively. In the
three and twelve months ended May 31, 2020, the tax impact in
respect to one-time pretax charges was $1.8 and $15.3,
respectively.
|
|
|
|
|
|
|
(5)
|
Earnings (loss) per
share are calculated on non-rounded net income (loss) and shares
outstanding. Recalculating earnings per share based on rounded
numbers may not yield the results as presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2
|
Scholastic
Corporation
|
Segment
Results
|
(Unaudited)
|
(In $
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
TWELVE MONTHS
ENDED
|
|
|
|
|
05/31/21
|
05/31/20
|
|
Change
|
|
05/31/21
|
05/31/20
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Clubs
|
$37.4
|
$19.5
|
|
$17.9
|
92%
|
|
$145.1
|
$156.8
|
|
($11.7)
|
(7%)
|
|
|
|
Book Fairs
|
76.4
|
32.1
|
|
44.3
|
138%
|
|
164.3
|
383.8
|
|
(219.5)
|
(57%)
|
|
|
|
Consolidated
Trade
|
78.4
|
80.4
|
|
(2.0)
|
(2%)
|
|
355.3
|
334.8
|
|
20.5
|
6%
|
|
|
|
Total
revenues
|
192.2
|
132.0
|
|
60.2
|
46%
|
|
664.7
|
875.4
|
|
(210.7)
|
(24%)
|
|
|
|
Operating income
(loss)
|
11.8
|
(46.5)
|
|
58.3
|
125%
|
|
13.7
|
23.6
|
|
(9.9)
|
(42%)
|
|
|
|
Operating
margin
|
6.1%
|
-
|
|
|
|
|
2.1%
|
2.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Education
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
124.9
|
94.7
|
|
30.2
|
32%
|
|
312.3
|
287.3
|
|
25.0
|
9%
|
|
|
|
Operating income
(loss)
|
40.8
|
27.3
|
|
13.5
|
49%
|
|
60.6
|
29.9
|
|
30.7
|
103%
|
|
|
|
Operating
margin
|
32.7%
|
28.8%
|
|
|
|
|
19.4%
|
10.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
84.3
|
57.3
|
|
27.0
|
47%
|
|
323.3
|
324.4
|
|
(1.1)
|
(0%)
|
|
|
|
Operating income
(loss)
|
0.7
|
(10.8)
|
|
11.5
|
106%
|
|
24.0
|
(6.5)
|
|
30.5
|
nm
|
|
|
|
Operating
margin
|
0.8%
|
-
|
|
|
|
|
7.4%
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overhead
expense
|
43.6
|
16.2
|
|
(27.4)
|
nm
|
|
121.0
|
135.5
|
|
14.5
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$9.7
|
($46.2)
|
|
$55.9
|
121%
|
|
($22.7)
|
($88.5)
|
|
$65.8
|
74%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3
|
Scholastic
Corporation
|
|
Supplemental
Information
|
|
(Unaudited)
|
|
(In $
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Balance Sheet Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/31/21
|
05/31/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$366.5
|
$393.8
|
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
256.1
|
239.8
|
|
|
|
|
|
|
|
|
Inventories,
net
|
269.7
|
270.6
|
|
|
|
|
|
|
|
|
Accounts
payable
|
138.0
|
153.6
|
|
|
|
|
|
|
|
|
Accrued
royalties
|
45.5
|
37.8
|
|
|
|
|
|
|
|
|
Lines of credit and
current portion of long-term debt
|
182.9
|
7.9
|
|
|
|
|
|
|
|
|
Long-term
debt
|
7.3
|
210.6
|
|
|
|
|
|
|
|
|
Total debt
|
190.2
|
218.5
|
|
|
|
|
|
|
|
|
Net debt (cash)
(1)
|
(176.3)
|
(175.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
1,182.3
|
1,180.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Cash Flow Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
TWELVE MONTHS
ENDED
|
|
|
|
|
05/31/21
|
05/31/20
|
|
|
05/31/21
|
05/31/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
$34.5
|
($41.9)
|
|
|
$71.0
|
$2.1
|
|
|
|
|
Add: Net proceeds from sale
of assets
|
0.0
|
-
|
|
|
17.4
|
-
|
|
|
|
|
Less: Additions to property, plant
and equipment
|
10.1
|
14.3
|
|
|
47.2
|
62.7
|
|
|
|
|
Prepublication expenditures
|
5.4
|
7.0
|
|
|
20.7
|
28.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow (use)
(2)
|
$19.0
|
($63.2)
|
|
|
$20.5
|
($89.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
|
|
|
|
|
05/31/21
|
items
|
One-time
items
|
|
05/31/20
|
items
|
One-time
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share (1)
|
|
$0.22
|
$0.68
|
$0.90
|
|
($0.38)
|
$0.15
|
($0.23)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(2)
|
|
$7.6
|
$23.9
|
$31.5
|
|
($13.0)
|
$5.0
|
($8.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution(3)
|
|
$11.8
|
$2.5
|
$14.3
|
|
($46.5)
|
$0.0
|
($46.5)
|
|
|
|
|
|
|
Education
|
|
40.8
|
-
|
40.8
|
|
27.3
|
-
|
27.3
|
|
|
|
|
|
|
International(4)
|
|
0.7
|
4.4
|
5.1
|
|
(10.8)
|
1.7
|
(9.1)
|
|
|
|
|
|
|
Overhead(5)
|
|
(43.6)
|
25.0
|
(18.6)
|
|
(16.2)
|
5.1
|
(11.1)
|
|
|
|
|
|
|
Operating income
(loss)
|
|
$9.7
|
$31.9
|
$41.6
|
|
($46.2)
|
$6.8
|
($39.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TWELVE MONTHS
ENDED
|
|
|
|
|
|
|
|
Reported
|
One-time
|
Excluding
|
|
Reported
|
One-time
|
Excluding
|
|
|
|
|
|
|
|
|
05/31/21
|
items
|
One-time
items
|
|
05/31/20
|
items
|
One-time
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share (1)
|
|
($0.32)
|
$1.35
|
$1.02
|
|
($1.27)
|
$1.18
|
($0.08)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(2)
|
|
($11.0)
|
$46.2
|
$35.2
|
|
($43.8)
|
$40.9
|
($2.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Children's Book
Publishing and Distribution(3)
|
|
$13.7
|
$5.4
|
$19.1
|
|
$23.6
|
$0.0
|
$23.6
|
|
|
|
|
|
|
Education
|
|
60.6
|
-
|
60.6
|
|
29.9
|
-
|
29.9
|
|
|
|
|
|
|
International(4)
|
|
24.0
|
7.2
|
31.2
|
|
(6.5)
|
1.7
|
(4.8)
|
|
|
|
|
|
|
Overhead(5)
|
|
(121.0)
|
49.1
|
(71.9)
|
|
(135.5)
|
54.5
|
(81.0)
|
|
|
|
|
|
|
Operating income
(loss)
|
|
($22.7)
|
$61.7
|
$39.0
|
|
($88.5)
|
$56.2
|
($32.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Earnings (loss) per
share are calculated on non-rounded net income (loss) and shares
outstanding. Recalculating earnings per share based on rounded
numbers may not yield the results as presented.
|
|
|
|
|
|
|
(2)
|
In the three and
twelve months ended May 31, 2021, the tax impact in respect to
one-time pretax charges was $8.0 and $15.5, respectively. In the
three and twelve months ended May 31, 2020, the tax impact in
respect to one-time pretax charges was $1.8 and $15.3,
respectively.
|
|
|
|
|
|
|
(3)
|
In the three and
twelve months ended May 31, 2021, the Company recognized pretax
asset impairment of $0.2 and $2.6, respectively, and branch
consolidation costs of $2.3 and $2.8, respectively, related to its
plan to permanently close 13 of its 54 book fair warehouses in the
U.S.
|
|
|
|
|
|
|
(4)
|
In the three and
twelve months ended May 31, 2021, the Company recognized pretax
severance of $0.1 and $2.6, respectively, and pretax branch
consolidation and other business rationalization costs of $4.3 and
$4.6, respectively. In the three and twelve months ended May 31,
2020, the Company recognized pretax severance of $1.1 and a pretax
impairment charge of $0.6 related to an outdated technology
platform in Canada.
|
|
|
|
|
|
|
(5)
|
In the three and
twelve months ended May 31, 2021, the Company recognized pretax
mediation-assisted settlement charges of $20.0 related to
intellectual property used in formerly owned products and pretax
severance of $5.0 and $20.5, respectively. In the twelve months
ended May 31, 2021, the Company recognized pretax asset impairment
charges of $8.5 and branch consolidation costs of $0.1,
respectively, 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. In the three and
twelve months ended May 31, 2020, the Company recognized
pretax severance of $5.1 and $12.0, respectively. In the twelve
months ended May 31, 2020, the Company recognized pretax asset
write down of $40.0 related to the Company's club and fair channels
and pretax settlement charges of $2.5.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5
|
Scholastic
Corporation
|
|
Consolidated
Statements of Operations - Supplemental
|
|
Adjusted
EBITDA
|
|
(Unaudited)
|
|
(In $
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
|
|
|
05/31/21
|
|
05/31/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before income taxes as reported
|
|
$8.0
|
|
|
($47.4)
|
|
|
|
|
One-time items before
income taxes
|
|
31.9
|
|
|
6.8
|
|
|
|
|
Earnings (loss)
before income taxes excluding one-time items
|
|
39.9
|
|
|
(40.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income)
expense
|
|
1.7
|
|
|
0.9
|
|
|
|
|
|
Depreciation and
amortization(1)
|
|
15.6
|
|
|
15.9
|
|
|
|
|
|
Amortization of
prepublication costs
|
|
6.4
|
|
|
6.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
|
$63.6
|
|
|
($17.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TWELVE MONTHS
ENDED
|
|
|
|
|
|
|
05/31/21
|
|
05/31/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before income taxes as reported
|
|
($18.2)
|
|
|
($89.7)
|
|
|
|
|
One-time items before
income taxes
|
|
61.7
|
|
|
56.2
|
|
|
|
|
Earnings (loss)
before income taxes excluding one-time items
|
|
43.5
|
|
|
(33.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income)
expense
|
|
5.8
|
|
|
(0.1)
|
|
|
|
|
|
Depreciation and
amortization(1)
|
|
64.9
|
|
|
64.0
|
|
|
|
|
|
Amortization of
prepublication costs
|
|
25.4
|
|
|
26.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
|
$139.6
|
|
|
$56.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For the three and
twelve months ended May 31, 2021, amounts include depreciation of
$0.8 and $3.2, respectively, recognized in cost of goods sold,
amortization of deferred financing costs of $0.1 and $0.5,
respectively, and amortization of capitalized cloud software of
$0.2 and $0.7, respectively, recognized in selling, general and
administrative expenses. For the three and twelve months ended May
31, 2020, amounts include depreciation of $0.5 and $2.2,
respectively, recognized in cost of goods sold, amortization of
deferred financing costs of $0.1 and $0.3, 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
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SOURCE Scholastic Corporation