Scholastic (SCHL) investor relations material

Executive summary

• Fiscal Q1 2027 saw a 4% year-over-year revenue decline to $216.8 million, mainly due to lower Education and Children's Book Publishing revenues and the impact of sale-leaseback transactions, partially offset by higher Entertainment revenues.

• Operating loss was $92.2 million, flat year-over-year, with adjusted operating loss increasing to $88.7 million; net loss was $71.2 million ($3.77/share).

• Strategic investments continued in growth priorities, with strong early indicators for the fall book fairs season and robust franchise activity expected in Q2.

• Entertainment segment delivered significant revenue growth and improved profitability, while Education faced budget pressures but showed operational improvements.

• Full-year fiscal 2027 guidance for 2%-4% revenue growth and adjusted EBITDA of $135-$145 million was reaffirmed.

Financial highlights

• Revenue: $216.8 million, down 4% from $225.6 million in Q1 last year.

• Operating loss: $92.2 million, unchanged year-over-year; adjusted operating loss: $88.7 million, up from $81.9 million.

• Adjusted EBITDA loss: $63.6 million vs. $55.7 million prior year; net loss: $71.2 million ($3.77/share) vs. $71.1 million ($2.83/share) prior year.

• Free cash use: $110.8 million, up from $100.2 million last year; net debt at quarter end: $86.8 million, down from $242.8 million.

• Gross margin was 45.5%, slightly up from 45.3% year-over-year.

Outlook and guidance

• Full-year fiscal 2027 guidance affirmed: revenue growth of 2%-4% and adjusted EBITDA of $135-$145 million.

• Free cash flow expected at $35-$40 million for the year; revenue growth anticipated to begin in Q2 and continue through the year.

• Guidance incorporates higher fuel costs in international markets and ongoing cost discipline.

• Book fair bookings for the fall season are ahead of the prior year.

• Ongoing cost alignment and transformation initiatives in Education are expected to support improved performance.