Scholastic Reports 4% Revenue Growth, Operating Loss Improvement in Q3 2024

For the three months ended August 31, 2024, Scholastic Corporation reported total revenues of $237.2 million, reflecting a 4% increase from $228.5 million in the same period of 2023. The Children's Book Publishing and Distribution segment generated revenues of $105.4 million, up from $102.4 million, driven by higher foreign rights sales. However, the Education Solutions segment saw a decline, with revenues decreasing to $55.7 million from $66.0 million, primarily due to reduced spending on supplemental materials. The Entertainment segment experienced significant growth, with revenues rising to $16.6 million from just $0.4 million, attributed to the acquisition of 9 Story Media Group Inc. on June 20, 2024.

Despite the revenue growth, Scholastic reported an operating loss of $(88.5) million, an improvement from the $(99.1) million loss in the prior year. The net loss for the quarter was $(62.5) million, compared to $(74.2) million in the same period last year, resulting in a basic loss per share of $(2.21), an improvement from $(2.35).

Total assets as of August 31, 2024, increased to $1,960.0 million from $1,671.2 million as of May 31, 2024, but decreased from $1,772.3 million a year earlier. Current assets rose to $715.1 million, while current liabilities increased to $628.4 million. Notably, total noncurrent liabilities surged to $374.3 million from $118.4 million, largely due to the new debt incurred from the 9 Story acquisition, which totaled $176.4 million.

Cash used in operating activities was $(41.9) million, slightly higher than $(38.1) million in the previous year. Cash used in investing activities increased significantly to $(200.8) million, primarily due to the 9 Story acquisition. Conversely, cash provided by financing activities was $211.9 million, a substantial increase from cash used of $(39.3) million in the prior year, mainly from borrowings under the U.S. credit agreement.

The company declared dividends of $0.20 per share, totaling $(5.6) million, and had $81.6 million remaining for future share repurchases as of August 31, 2024. The effective tax rate for the quarter was 31.9%, up from 24.3% in the prior year, influenced by state and local taxes and non-deductible compensation.

Overall, Scholastic's strategic acquisitions and revenue growth in specific segments reflect ongoing efforts to enhance its market position, despite challenges in certain areas.