Scholastic Corp (SCHL) Tops Q3 EPS by 34c, Revenues Miss

Scholastic Corp (NASDAQ: SCHL) reported Q3 EPS of ($0.41), $0.34 better than the analyst estimate of ($0.75). Revenue for the quarter came in at $277.5 million versus the consensus estimate of $279.9 million.

Chairman's Commentary

"Getting kids back into school is now a clear national priority and we are experiencing growth in spring fair bookings as more districts offer in-person learning. We are seeing expanded opportunities in all of Scholastic's channels for summer reading, helped by the urgency of parents and educators to accelerate the reading growth of their children. In addition, significant federal stimulus dollars will be supporting K-12 education," said Richard Robinson, Chairman, President and Chief Executive Officer. "These trends support our confidence in a strong recovery for our school-related businesses in our coming fiscal year."

Mr. Robinson continued, "Although school book fairs revenues declined in the quarter, as expected, our trade, teaching resources and digital education businesses continue to perform extremely well. Scholastic's trade group was recently cited as 'untouchable' by Publishers Weekly as evidenced by our top position in their children's fiction bestseller list for 2020, where we held nearly 50% of the bestsellers for the entire year. We are excited about our spring frontlist of new trade titles including Dog Man: Mothering Heights, and we have just released The Power of Story 2021, a valuable resource for parents, teachers, librarians and booksellers seeking diverse books. Responding to new opportunities in the K-12 education market, in the quarter we announced the combination of two education businesses into a new Education Solutions group, with greater focus on digital learning and curriculum programs. This new strategic direction will allow for increased investment in education content, as well as greater market penetration and cross-selling opportunities across our portfolio of both print and digital curriculum and supplemental literacy products and book collections."

Mr. Robinson concluded, "We have successfully delivered on our committed $100 million of cost savings and continue to reduce our cost base in response to lower revenues due to COVID-related school closings, while also continuing to make strategic investments in new trade titles and educational products, including our new early childhood curriculum, as well as technology. Our solid balance sheet and market leading publishing and education content have enabled us to navigate through this challenging period, while strengthening our capacities for greater success long-term in the U.S. and internationally."

Fiscal 2021 Outlook

Scholastic sees increasing opportunities to help students returning to the classroom with its rich and diverse print and digital content, deep market penetration and a capacity through our school-based fair and club channels and curriculum services to help students read and learn. However, given continued COVID-related uncertainty, Scholastic is not providing a financial outlook for the remainder of its 2021 fiscal year.

With more schools resuming in-person instruction, the Company's augmented marketing efforts are driving an increase in spring fair bookings, although on-going COVID challenges will nevertheless have an impact on book fairs' results. The Company expects that its new summer reading campaigns in clubs, fairs and education, with programs and offers to help students accelerate their learning, will have a favorable impact on the Company's fourth quarter revenues. Additionally, Scholastic's trade spring frontlist features the next titles from a number of the Company's top-selling properties and authors, including Dav Pilkey and Wings of Fire™ author, Tui T. Sutherland.

For earnings history and earnings-related data on Scholastic Corp (SCHL) click here.

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