Scholastic Reports Fiscal 2015 Second Quarter Results
Revenue in the second quarter was
Second quarter results were largely driven by strong sales in children's books, especially in the Company's school-based distribution channels, and continued growth in classroom books and magazines. These gains were partially offset by the adverse effect of foreign exchange on the Company's international business and higher planned investment in technology infrastructure, as well as lower sales of the Company's educational technology products and reduced revenues in
During the second quarter, the Company generated free cash flow (as defined) of
"Scholastic had a solid quarter of revenue growth with significant gains in our Club and Fair school distribution channels, reflecting the success of the new marketing strategies implemented by Clubs in the second half of last year, as well as in classroom books.
Non-recurring items reflected in the Company's pre-tax results for the second quarter include a non-cash settlement charge of
Scholastic affirmed its fiscal 2015 outlook for total revenue of approximately
Second Quarter Results
Educational Technology and Services. Segment revenue in the quarter fell by 16% to
International. Segment revenue in the quarter was
Media, Licensing and Advertising. Segment revenue in the quarter was
Other Financial Results. Corporate overhead in the second quarter was
As previously announced, the Company's Board of Directors declared a quarterly cash dividend of
Real Estate Update
The Company previously announced that it is reconfiguring the ground floor of its headquarters location at
Defined Benefit Pension Plan
During the quarter, the Company offered certain former employees the option of receiving one-time lump sum payments from the plan, and recorded a non-cash pre-tax settlement charge of
Year-to-Date Results
For the first half of fiscal 2015, revenue was
Additional Information
To supplement our financial statements presented in accordance with GAAP, we include certain non-GAAP calculations and presentations. Please refer to the non-GAAP financial tables attached to this press release for supporting details on special one-time items and other 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
The conference call and accompanying slides will be webcast and accessible through the Investor Relations section of Scholastic's website, 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 investor.scholastic.com. An audio-only replay of the call will be available until
About Scholastic
Forward-Looking Statements
This news release contains certain forward-looking statements. Such forward-looking statements are subject to various risks and uncertainties, including the conditions of the children's book and educational materials markets 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
SCHL: Financial
SCHOLASTIC CORPORATION |
||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||
(UNAUDITED) |
||||||||||
(Amounts in millions except per share data) |
||||||||||
THREE MONTHS ENDED |
SIX MONTHS ENDED |
|||||||||
|
|
|
|
|||||||
Revenues |
|
|
|
|
||||||
Operating costs and expenses: |
||||||||||
Cost of goods sold |
288.7 |
264.8 |
438.9 |
402.7 |
||||||
Selling, general and administrative expenses (1)(2) |
244.0 |
231.9 |
415.3 |
398.9 |
||||||
Bad debt expense |
4.2 |
2.5 |
6.4 |
3.9 |
||||||
Depreciation and amortization |
13.0 |
15.9 |
26.5 |
31.8 |
||||||
Asset impairments (3) |
2.9 |
13.4 |
2.9 |
13.4 |
||||||
Total operating costs and expenses |
552.8 |
528.5 |
890.0 |
850.7 |
||||||
Operating income (loss) |
112.8 |
94.7 |
59.4 |
48.8 |
||||||
Interest expense, net |
1.0 |
2.1 |
1.9 |
4.0 |
||||||
(Gain) loss on investments (4) |
(0.6) |
- |
(0.6) |
- |
||||||
Earnings (loss) from continuing operations before income taxes |
112.4 |
92.6 |
58.1 |
44.8 |
||||||
Provision (benefit) for income taxes |
43.8 |
34.3 |
23.5 |
16.6 |
||||||
Earnings (loss) from continuing operations |
68.6 |
58.3 |
34.6 |
28.2 |
||||||
Earnings (loss) from discontinued operations, net of tax |
(0.1) |
0.0 |
(0.2) |
0.2 |
||||||
Net income (loss) |
|
|
|
|
||||||
Basic and diluted earnings (loss) per Share of Class A and Common Stock: (5) |
||||||||||
Basic: |
||||||||||
Earnings (loss) from continuing operations |
2.10 |
1.82 |
1.06 |
0.88 |
||||||
Earnings (loss) from discontinued operations, net of tax |
(0.01) |
0.00 |
(0.00) |
0.01 |
||||||
Net income (loss) |
2.09 |
1.82 |
1.06 |
0.89 |
||||||
Diluted: |
||||||||||
Earnings (loss) from continuing operations |
2.06 |
1.80 |
1.04 |
0.87 |
||||||
Earnings (loss) from discontinued operations, net of tax |
(0.01) |
0.00 |
(0.00) |
0.01 |
||||||
Net income (loss) |
2.05 |
1.80 |
1.04 |
0.88 |
||||||
Basic weighted average shares outstanding |
32,714 |
31,864 |
32,540 |
31,842 |
||||||
Diluted weighted average shares outstanding |
33,331 |
32,289 |
33,173 |
32,362 |
||||||
(1) |
In the three and six months ended |
|||||||||
(2) |
In the three and six months ended |
|||||||||
(3) |
In the three and six months ended |
|||||||||
(4) |
In the three and six months ended |
|||||||||
(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. |
|||||||||
SCHOLASTIC CORPORATION |
||||||||||||||
RESULTS OF CONTINUING OPERATIONS - SEGMENTS |
||||||||||||||
(UNAUDITED) |
||||||||||||||
(Amounts in millions) |
||||||||||||||
THREE MONTHS ENDED |
SIX MONTHS ENDED |
|||||||||||||
|
|
Change |
|
|
Change |
|||||||||
|
||||||||||||||
Revenue |
||||||||||||||
|
|
|
|
33% |
|
|
|
33% |
||||||
Book Fairs |
217.4 |
202.2 |
15.2 |
8% |
229.2 |
212.9 |
16.3 |
8% |
||||||
Consolidated Trade |
55.6 |
52.5 |
3.1 |
6% |
90.1 |
90.2 |
(0.1) |
(0%) |
||||||
Total revenue |
402.6 |
352.1 |
50.5 |
14% |
457.3 |
406.7 |
50.6 |
12% |
||||||
Operating income (loss) |
108.3 |
68.9 |
39.4 |
57% |
47.8 |
7.4 |
40.4 |
|||||||
Operating margin |
26.9% |
19.6% |
10.5% |
1.8% |
||||||||||
Educational Technology and Services |
||||||||||||||
Revenue |
50.9 |
60.9 |
(10.0) |
(16%) |
140.3 |
155.7 |
(15.4) |
(10%) |
||||||
Operating income (loss) |
(1.2) |
6.9 |
(8.1) |
29.1 |
43.1 |
(14.0) |
(32%) |
|||||||
Operating margin |
- |
11.3% |
20.7% |
27.7% |
||||||||||
|
||||||||||||||
Revenue |
64.8 |
60.9 |
3.9 |
6% |
107.6 |
98.7 |
8.9 |
9% |
||||||
Operating income (loss) |
12.7 |
11.6 |
1.1 |
9% |
11.8 |
9.7 |
2.1 |
22% |
||||||
Operating margin |
19.6% |
19.0% |
11.0% |
9.8% |
||||||||||
International |
||||||||||||||
Revenue |
132.8 |
135.6 |
(2.8) |
(2%) |
219.1 |
214.3 |
4.8 |
2% |
||||||
Operating income (loss) |
19.9 |
22.2 |
(2.3) |
(10%) |
18.0 |
21.5 |
(3.5) |
(16%) |
||||||
Operating margin |
15.0% |
16.4% |
8.2% |
10.0% |
||||||||||
Media, Licensing and Advertising |
||||||||||||||
Revenue |
14.5 |
13.7 |
0.8 |
6% |
25.1 |
24.1 |
1.0 |
4% |
||||||
Operating income (loss) |
(0.7) |
(1.3) |
0.6 |
(4.2) |
(2.9) |
(1.3) |
||||||||
Operating margin |
- |
- |
- |
- |
||||||||||
Overhead expense |
26.2 |
13.6 |
(12.6) |
(93%) |
43.1 |
30.0 |
(13.1) |
(44%) |
||||||
Operating income (loss) from continuing operations |
|
|
|
19% |
|
|
|
22% |
||||||
SCHOLASTIC CORPORATION |
||||||||||
SUPPLEMENTAL INFORMATION |
||||||||||
(UNAUDITED) |
||||||||||
(Amounts in millions) |
||||||||||
SELECTED BALANCE SHEET ITEMS |
||||||||||
|
|
|||||||||
Continuing Operations |
||||||||||
Cash and cash equivalents |
|
|
||||||||
Accounts receivable, net |
287.6 |
286.4 |
||||||||
Inventories, net |
346.5 |
342.3 |
||||||||
Accounts payable |
183.6 |
196.0 |
||||||||
Accrued royalties |
41.9 |
41.8 |
||||||||
Lines of credit, short-term debt and current portion of long-term debt |
9.2 |
9.6 |
||||||||
Long-term debt, excluding current portion |
95.0 |
0.0 |
||||||||
Total debt |
104.2 |
9.6 |
||||||||
Total capital lease obligations |
1.6 |
58.0 |
||||||||
Net debt (1) |
61.3 |
(107.6) |
||||||||
Discontinued Operations |
||||||||||
Total assets of discontinued operations |
0.4 |
0.4 |
||||||||
Total liabilities of discontinued operations |
1.0 |
1.2 |
||||||||
Total stockholders' equity |
948.2 |
883.4 |
||||||||
SELECTED CASH FLOW ITEMS |
||||||||||
THREE MONTHS ENDED |
SIX MONTHS ENDED |
|||||||||
|
|
|
|
|||||||
Net cash provided by (used in) operating activities |
|
|
|
|
||||||
Less: Additions to property, plant and equipment |
6.1 |
6.8 |
13.4 |
14.1 |
||||||
Pre-publication and production costs |
14.9 |
16.1 |
28.7 |
31.8 |
||||||
Free cash flow (use) (2) (3) |
|
|
|
|
||||||
(1) |
Net debt 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), reduced by spending on property, plant and equipment and pre-publication and production 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.
|
|||||||||
(3) |
Free cash flow (use) includes discontinued operations for the three and six months ended |
|||||||||
SCHOLASTIC CORPORATION |
||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS SUPPLEMENTAL |
||||||||||||||
(UNAUDITED) |
||||||||||||||
(Amounts in millions except per share data) |
||||||||||||||
THREE MONTHS ENDED |
||||||||||||||
Reported |
One-time |
Excluding |
Reported |
One-time |
Excluding |
|||||||||
|
items |
One-time items |
|
items |
One-time items |
|||||||||
Revenues |
|
|
|
|
|
|
||||||||
Operating costs and expenses: |
||||||||||||||
Cost of goods sold |
288.7 |
- |
288.7 |
264.8 |
- |
264.8 |
||||||||
Selling, general and administrative expenses (1)(2) |
244.0 |
(4.6) |
239.4 |
231.9 |
(5.5) |
226.4 |
||||||||
Bad debt expense |
4.2 |
- |
4.2 |
2.5 |
- |
2.5 |
||||||||
Depreciation and amortization |
13.0 |
- |
13.0 |
15.9 |
- |
15.9 |
||||||||
Asset impairments (3) |
2.9 |
(2.9) |
- |
13.4 |
(13.4) |
- |
||||||||
Total operating costs and expenses |
552.8 |
(7.5) |
545.3 |
528.5 |
(18.9) |
509.6 |
||||||||
Operating income (loss) |
112.8 |
7.5 |
120.3 |
94.7 |
18.9 |
113.6 |
||||||||
Interest expense, net |
1.0 |
- |
1.0 |
2.1 |
- |
2.1 |
||||||||
(Gain) loss on investments (4) |
(0.6) |
0.6 |
- |
- |
- |
- |
||||||||
Earnings (loss) from continuing operations before income taxes |
112.4 |
6.9 |
119.3 |
92.6 |
18.9 |
111.5 |
||||||||
Provision (benefit) for income taxes |
43.8 |
2.8 |
46.6 |
34.3 |
7.7 |
42.0 |
||||||||
Earnings (loss) from continuing operations |
68.6 |
4.1 |
72.7 |
58.3 |
11.2 |
69.5 |
||||||||
Earnings (loss) from discontinued operations, net of tax |
(0.1) |
- |
(0.1) |
0.0 |
- |
0.0 |
||||||||
Net income (loss) |
|
|
|
|
|
|
||||||||
Basic and diluted earnings (loss) per Share of Class A and Common Stock: |
||||||||||||||
Basic: |
||||||||||||||
Earnings (loss) from continuing operations |
2.10 |
0.12 |
2.22 |
1.82 |
0.35 |
2.17 |
||||||||
Earnings (loss) from discontinued operations, net of tax |
(0.01) |
- |
(0.01) |
0.00 |
- |
0.00 |
||||||||
Net income (loss) |
2.09 |
0.12 |
2.21 |
1.82 |
0.35 |
2.17 |
||||||||
Diluted: |
||||||||||||||
Earnings (loss) from continuing operations |
2.06 |
0.12 |
2.18 |
1.80 |
0.35 |
2.15 |
||||||||
Earnings (loss) from discontinued operations, net of tax |
(0.01) |
- |
(0.01) |
0.00 |
- |
0.00 |
||||||||
Net income (loss) |
2.05 |
0.12 |
2.17 |
1.80 |
0.35 |
2.15 |
||||||||
SIX MONTHS ENDED |
||||||||||||||
Reported |
One-time |
Excluding |
Reported |
One-time |
Excluding |
|||||||||
|
items |
One-time items |
|
items |
One-time items |
|||||||||
Revenues |
|
|
|
|
|
|
||||||||
Operating costs and expenses: |
||||||||||||||
Cost of goods sold |
438.9 |
438.9 |
402.7 |
- |
402.7 |
|||||||||
Selling, general and administrative expenses (1)(2) |
415.3 |
(5.8) |
409.5 |
398.9 |
(7.5) |
391.4 |
||||||||
Bad debt expense |
6.4 |
- |
6.4 |
3.9 |
- |
3.9 |
||||||||
Depreciation and amortization |
26.5 |
- |
26.5 |
31.8 |
- |
31.8 |
||||||||
Asset impairments (3) |
2.9 |
(2.9) |
- |
13.4 |
(13.4) |
- |
||||||||
Total operating costs and expenses |
890.0 |
(8.7) |
881.3 |
850.7 |
(20.9) |
829.8 |
||||||||
Operating income (loss) |
59.4 |
8.7 |
68.1 |
48.8 |
20.9 |
69.7 |
||||||||
Interest expense, net |
1.9 |
- |
1.9 |
4.0 |
- |
4.0 |
||||||||
(Gain) loss on investments (4) |
(0.6) |
0.6 |
- |
0.0 |
- |
- |
||||||||
Earnings (loss) from continuing operations before income taxes |
58.1 |
8.1 |
66.2 |
44.8 |
20.9 |
65.7 |
||||||||
Provision (benefit) for income taxes |
23.5 |
3.3 |
26.8 |
16.6 |
8.4 |
25.0 |
||||||||
Earnings (loss) from continuing operations |
34.6 |
4.8 |
39.4 |
28.2 |
12.5 |
40.7 |
||||||||
Earnings (loss) from discontinued operations, net of tax |
(0.2) |
- |
(0.2) |
0.2 |
- |
0.2 |
||||||||
Net income (loss) |
|
|
|
|
|
|
||||||||
Basic and diluted earnings (loss) per Share of Class A and Common Stock: |
||||||||||||||
Basic: |
||||||||||||||
Earnings (loss) from continuing operations |
1.06 |
0.14 |
1.20 |
0.88 |
0.39 |
1.27 |
||||||||
Earnings (loss) from discontinued operations, net of tax |
(0.00) |
- |
(0.00) |
0.01 |
- |
0.01 |
||||||||
Net income (loss) |
1.06 |
0.14 |
1.20 |
0.89 |
0.39 |
1.28 |
||||||||
Diluted: |
||||||||||||||
Earnings (loss) from continuing operations |
1.04 |
0.14 |
1.18 |
0.87 |
0.39 |
1.26 |
||||||||
Earnings (loss) from discontinued operations, net of tax |
(0.00) |
- |
(0.00) |
0.01 |
- |
0.01 |
||||||||
Net income (loss) |
1.04 |
0.14 |
1.18 |
0.88 |
0.39 |
1.27 |
||||||||
(1) |
In the three and six months ended |
|||||||||||||
(2) |
In the three and six months ended |
|||||||||||||
(3) |
In the three and six months ended |
|||||||||||||
(4) |
In the three and six months ended |
|||||||||||||
SCHOLASTIC CORPORATION |
|||||||||||||||
RESULTS OF CONTINUING OPERATIONS - SEGMENT SUPPLEMENTAL |
|||||||||||||||
(UNAUDITED) |
|||||||||||||||
(Amounts in millions except per share data) |
|||||||||||||||
THREE MONTHS ENDED |
|||||||||||||||
Reported |
One-time |
Excluding |
Reported |
One-time |
Excluding |
||||||||||
|
items |
One-time items |
|
items |
One-time items |
||||||||||
|
|||||||||||||||
Revenue |
|||||||||||||||
|
|
|
|
|
|||||||||||
Book Fairs |
217.4 |
217.4 |
202.2 |
202.2 |
|||||||||||
Consolidated Trade |
55.6 |
55.6 |
52.5 |
52.5 |
|||||||||||
Total revenue |
402.6 |
402.6 |
352.1 |
352.1 |
|||||||||||
Operating income (loss) (1) |
108.3 |
108.3 |
68.9 |
13.4 |
82.3 |
||||||||||
Operating margin |
26.9% |
26.9% |
19.6% |
23.4% |
|||||||||||
Educational Technology and Services |
|||||||||||||||
Revenue |
50.9 |
50.9 |
60.9 |
60.9 |
|||||||||||
Operating income (loss) |
(1.2) |
(1.2) |
6.9 |
6.9 |
|||||||||||
Operating margin |
- |
- |
11.3% |
11.3% |
|||||||||||
|
|||||||||||||||
Revenue |
64.8 |
64.8 |
60.9 |
60.9 |
|||||||||||
Operating income (loss) |
12.7 |
12.7 |
11.6 |
11.6 |
|||||||||||
Operating margin |
19.6% |
19.6% |
19.0% |
19.0% |
|||||||||||
International |
|||||||||||||||
Revenue |
132.8 |
132.8 |
135.6 |
135.6 |
|||||||||||
Operating income (loss) |
19.9 |
19.9 |
22.2 |
22.2 |
|||||||||||
Operating margin |
15.0% |
15.0% |
16.4% |
16.4% |
|||||||||||
Media, Licensing and Advertising |
|||||||||||||||
Revenue |
14.5 |
14.5 |
13.7 |
13.7 |
|||||||||||
Operating income (loss) |
(0.7) |
(0.7) |
(1.3) |
(1.3) |
|||||||||||
Operating margin |
- |
- |
- |
- |
|||||||||||
Overhead expense (2)(3)(4) |
26.2 |
(7.5) |
18.7 |
13.6 |
(5.5) |
8.1 |
|||||||||
Operating income (loss) from continuing operations |
|
|
|
|
|
|
|||||||||
SIX MONTHS ENDED |
|||||||||||||||
Reported |
One-time |
Excluding |
Reported |
One-time |
Excluding |
||||||||||
|
items |
One-time items |
|
items |
One-time items |
||||||||||
|
|||||||||||||||
Revenue |
|||||||||||||||
|
|
|
|
|
|||||||||||
Book Fairs |
229.2 |
229.2 |
212.9 |
212.9 |
|||||||||||
Consolidated Trade |
90.1 |
90.1 |
90.2 |
90.2 |
|||||||||||
Total revenue |
457.3 |
457.3 |
406.7 |
406.7 |
|||||||||||
Operating income (loss) (1) |
47.8 |
47.8 |
7.4 |
13.4 |
20.8 |
||||||||||
Operating margin |
10.5% |
10.5% |
1.8% |
5.1% |
|||||||||||
Educational Technology and Services |
|||||||||||||||
Revenue |
140.3 |
140.3 |
155.7 |
155.7 |
|||||||||||
Operating income (loss) |
29.1 |
29.1 |
43.1 |
43.1 |
|||||||||||
Operating margin |
20.7% |
20.7% |
27.7% |
27.7% |
|||||||||||
|
|||||||||||||||
Revenue |
107.6 |
107.6 |
98.7 |
98.7 |
|||||||||||
Operating income (loss) |
11.8 |
11.8 |
9.7 |
9.7 |
|||||||||||
Operating margin |
11.0% |
11.0% |
9.8% |
9.8% |
|||||||||||
International |
|||||||||||||||
Revenue |
219.1 |
219.1 |
214.3 |
214.3 |
|||||||||||
Operating income (loss) (5) |
18.0 |
18.0 |
21.5 |
0.6 |
22.1 |
||||||||||
Operating margin |
8.2% |
8.2% |
10.0% |
10.3% |
|||||||||||
Media, Licensing and Advertising |
|||||||||||||||
Revenue |
25.1 |
25.1 |
24.1 |
24.1 |
|||||||||||
Operating income (loss) |
(4.2) |
(4.2) |
(2.9) |
(2.9) |
|||||||||||
Operating margin |
- |
- |
- |
- |
|||||||||||
Overhead expense (2)(3)(4) |
43.1 |
(8.7) |
34.4 |
30.0 |
(6.9) |
23.1 |
|||||||||
Operating income (loss) from continuing operations |
|
|
|
|
|
|
|||||||||
(1) |
In the three and six months ended |
||||||||||||||
(2) |
In the three and six months ended |
||||||||||||||
(3) |
In the three and six months ended |
||||||||||||||
(4) |
In the three and six months ended |
||||||||||||||
(5) |
In the six months ended |
||||||||||||||
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SOURCE
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