Scholastic (SCHL) Q2 2026 earnings summary

Executive summary

• Achieved 13% adjusted EBITDA growth in Q2 FY26, driven by strong global publishing, Book Fairs, and franchise releases, while advancing transformation with leadership changes and strategic investments.

• Closed sale-leaseback transactions, unlocking over $400M in net proceeds to support capital allocation, including a $150M share repurchase authorization.

• Net income for the quarter increased to $66.3M excluding one-time items, with diluted EPS up 27% to $2.17 and adjusted EPS up 41% to $2.57.

• Major transformation over four years included board refresh, business reorganization, and nearly $500M returned to shareholders.

Financial highlights

• Q2 revenues increased 1% year-over-year to $551.1M; operating income rose to $95M from $78.9M; adjusted EBITDA reached $122.5M, up 13%.

• Free cash flow in Q2 was $59.2M, up from $42.4M; net income was $66.3M excluding one-time items.

• Gross margin improved to 59.1% from 58.0% year-over-year.

• Adjusted operating margin for Children's Book Publishing and Distribution improved to 28.6%.

• Net debt at quarter end was $186.6M, up from $120.8M a year ago.

Outlook and guidance

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

• Fiscal 2026 free cash flow expected to exceed $430M, reflecting real estate proceeds.

• Full-year revenue expected to be level with or slightly above prior year, with growth in Book Fairs and Trade offset by lower Education Solutions sales.

• Positive trends in book fairs and trade publishing expected to continue into the spring season.