Revenues jump 12% for Scholastic in second quarter

Revenues increased by 12% year-on-year to $587.9m (£483m) in Scholastic’s latest set of quarterly results, ending 30th November 2022.

The increase was driven by strong results in the Children’s Book Publishing and Distribution segment. Revenue from Book Fairs rose significantly, and multiple bestsellers benefited sales in the school channels and in Trade, the publisher said.

Operating income increased $16.7m (£13.7m) year-on-year to $100.1m. The increase in operating income was primarily driven by the higher revenue and profit contribution from the Children’s Books segment, as well as the company’s efforts to address inflationary pressures with cost containment and pricing related initiatives. 

For Scholastic’s first half, revenue is now up 9% year-on-year to $850.8m (£697m). However, adjusted EBITDA for the first half is down, showing a gain of $86.7m (£71.2m) compared with a gain of $94.5m (£77.6m) in the first six months of fiscal 2022. The decrease has been attributed to the increased spend in the Education Solutions segment and lower margins because of the economic conditions in Canada and the UK, and the higher operating income in the Children’s Book Publishing and Distribution segment.

Peter Warwick, president and c.e.o., said: “Scholastic delivered strong revenue growth and higher earnings in the second quarter. Our Children’s Books business performed strongly, benefiting from robust sales in our unique school-based channels, as well as multiple bestsellers and our broad backlist. In Education Solutions, sales of print and digital educational products to schools, districts and states held steady at last year’s record levels, as we continued investing in the long-term potential of this key growth opportunity, building go-to-market capabilities and developing our comprehensive digital literacy platform.

“Based on our momentum in the first half of the year and expectations for a strong fourth quarter, following a seasonally smaller third quarter, we are affirming our fiscal 2023 guidance, as we continue navigating the current business environment. At the same time, we are focused on realising Scholastic’s long-term opportunity to grow our impact, earnings and shareholder value. 

“Scholastic’s significantly improved margins compared with pre-pandemic levels and strong free cashflow outlook open new opportunities to deploy capital for strategic growth, while maintaining a strong balance sheet and returning excess capital to shareholders. Last quarter, the company returned more than $32.9m to shareholders through an increased dividend, open market repurchases and a modified ‘Dutch Auction’ tender offer. Further demonstrating our board’s commitment to deploying capital, we continue to actively review major long-term growth investment opportunities and have significantly expanded the company’s open market repurchase programme with an increased authorisation now providing $75m in availability.”