Fri, Mar 21, 8:03 PM (37 days ago)
**Scholastic Corporation (SCHL) Q3 2025 Financial Summary** **Quarterly Financial Health:** - **Revenue:** $335.4 million, up 4% from the prior year quarter. - **Net Loss:** $3.6 million, improved by $22.9 million from the prior year quarter. - **Earnings per Share (EPS):** $(0.13) for the quarter, compared to $(0.91) in the prior year quarter. **Performance Metrics:** - **Operating Loss:** Improved by 32%, reflecting reduced discretionary overhead expenses and higher revenues in the Children’s Book Publishing and Distribution segment. - **Revenue Growth:** Driven by the contribution of 9 Story within the Entertainment segment, despite pressure on consumer spending impacting the Children's Book Publishing and Distribution segment. **Revenue Breakdown:** - **Children's Book Publishing and Distribution:** Increased by $10.2 million, driven by higher revenues from School Reading Events. - **Education Solutions:** Decreased by $11.3 million due to reduced spending on supplemental materials and lower subscription revenues. - **Entertainment:** Increased by $12.3 million, reflecting the addition of 9 Story. - **International:** Increased by $2.9 million in local currency, impacted by unfavorable foreign exchange. **Profit Margins:** - **Cost of Goods Sold:** $154.6 million, or 46.1% of revenues, impacted by the addition of production and participation costs from the 9 Story acquisition. - **Selling, General, and Administrative Expenses:** Decreased to $187.5 million, primarily due to lower employee-related costs and commission expenses. **Cash Flow:** - **Operating Activities:** $17.3 million for the nine months ended February 28, 2025, down from $84.7 million in the prior year period. - **Investing Activities:** $232.0 million used, driven by the 9 Story acquisition. - **Financing Activities:** $197.6 million provided, primarily from borrowings under the U.S. Credit Agreement. **Earnings Changes:** - **Interest Expense:** Increased due to borrowings for the 9 Story acquisition. - **Interest Income:** Decreased due to lower average short-term investment balances. **Quarterly Performance Discussion:** - **Seasonality:** The company's business is highly seasonal, with lower revenues in the first and third quarters. - **Future Operations Impact:** The company expects increasing spending headwinds to impact the trade channel and participation at book fairs. New releases are expected to benefit the trade channel in the fourth quarter. **Trends and Uncertainties:** - **Market Conditions:** Continued decline in spending on supplemental materials and softness in the retail book market. - **Production Delays:** Delays in production greenlights from major platforms are expected to impact production work in the near term. **Future Outlook:** - **Entertainment Segment:** Focus on production and development work for video-on-demand platforms and achieving synergies expected to benefit the segment in fiscal 2026 and beyond. - **Liquidity:** The company expects to maintain sufficient liquidity to fund ongoing operations, including working capital requirements, debt service, and shareholder enhancement initiatives.