Scholastic (SCHL) investor relations material

Executive summary

• Q3 FY26 revenues were $329.1 million, down 2% year-over-year, with net income rising to $62.5 million due to a $119.8 million gain from sale-leaseback transactions, despite an operating loss of $26.9 million and one-time charges.

• Over $400 million in net proceeds from sale-leaseback transactions strengthened the balance sheet, enabled significant shareholder returns, and funded growth initiatives.

• Nearly exhausted a $150 million share repurchase program, buying back over 4.4 million shares at an average of $33.30 per share, and announced a new $300 million share repurchase authorization, including a $200 million Dutch auction tender offer at $36–$40 per share.

• Book Fairs showed solid growth, while Education segment performance improved sequentially despite ongoing funding challenges.

• Third quarter results aligned with expectations, reaffirming full-year adjusted EBITDA and free cash flow guidance.

Financial highlights

• Q3 revenues were $329.1 million, down from $335.4 million year-over-year; nine-month revenues were $1,105.8 million, down $11.4 million year-over-year.

• Q3 operating loss was $26.9 million, up from $23.9 million last year; excluding one-time items, operating loss was $24.3 million.

• Adjusted EBITDA for Q3 was approximately break even, down from $6 million prior year; excluding sale-leaseback impact, adjusted EBITDA was $6.7 million.

• Net income for Q3 was $62.5 million, or $2.55 per diluted share, driven by a $119.8 million gain from sale-leaseback transactions.

• Free cash flow in Q3 was $407 million, reflecting sale-leaseback proceeds; cash and cash equivalents at period end were $104.6 million.

Outlook and guidance

• Fiscal 2026 revenue expected to be approximately flat year-over-year, with strength in book fairs offset by softness in education and tough comps in trade.

• Reaffirmed adjusted EBITDA guidance of $146 million–$156 million, including a $14 million partial-year impact from sale-leasebacks.

• Fiscal 2026 free cash flow outlook reaffirmed to exceed $430 million.

• Anticipate Q4 revenue growth in school reading events and entertainment, offset by lower trade and international revenues.

• Trade channel expected to benefit from new releases in Q4 FY26; Education Solutions expects improved profitability from cost structure.