Scholastic Corporation, the global children's publishing, education, and media company, reported its fiscal year 2024 fourth quarter and full-year results, showcasing its resilience in the face of a dynamic market environment. Despite headwinds in its Education Solutions and School Reading Events businesses, the company continued to execute on its strategic initiatives, investing in key growth opportunities while returning significant capital to shareholders.

Financials

For the full fiscal year 2024, Scholastic reported revenues of $1.6 billion, a 7% decrease from the prior year. Net income for the year was $34.6 million, down from $86.3 million in fiscal 2023. The company's adjusted EBITDA for the year was $136.9 million, compared to $196.3 million in the prior year. Operating cash flow for fiscal 2024 was a strong $154.6 million, up from $148.9 million in the prior year, while free cash flow increased to $73.4 million from $60 million in fiscal 2023.

In the fourth quarter, Scholastic's revenues declined 10% to $474.9 million, reflecting the challenging market conditions in its Education Solutions and School Reading Events businesses. Operating income for the quarter was $66.8 million, down from $92 million in the prior-year period. Net income for the quarter was $50.5 million, compared to $75.7 million a year ago, while earnings per diluted share were $1.73, down from $2.26 in the prior-year quarter.

Segment Performance

The company's Children's Book Publishing and Distribution segment saw revenues decline 9% in the fourth quarter to $266 million, driven by the resizing of the Book Clubs business, lower revenue per fair in Book Fairs, and timing-related revenue in Scholastic Entertainment. For the full year, the segment's revenues were down 8% to $955.2 million. Segment operating income decreased $8.5 million in the fourth quarter and $21.5 million for the full year, primarily due to the high operating leverage impact of lower revenue per fair in the Book Fairs business.

In the Education Solutions segment, fourth quarter revenues declined 17% to $135.7 million, and full-year revenues were down 9% to $351.2 million. This was primarily due to the challenging market for supplemental literacy curriculum, as many schools have adopted core curricula and implemented new structured literacy programs, pausing spending on supplemental products. Segment operating income decreased $19.4 million in the fourth quarter and $36.5 million for the full year.

The International segment's fourth quarter revenues of $70.8 million trailed the prior-year period's $73.9 million, partly reflecting the $0.4 million negative impact of foreign currency exchange. For the full year, International segment revenues were $273.6 million, down from $279.4 million in the prior year, with a $1.1 million unfavorable foreign exchange impact. The decrease in revenues was primarily due to lower sales in the Asia and Australia trade channels, partially offset by growth in the UK.

Outlook

Looking ahead to fiscal 2025, Scholastic is targeting modest growth in revenue and adjusted EBITDA, including the benefit of its strategic investment in 9 Story Media Group, a leading independent creator, producer, and distributor of premium children's content. The company expects the new Entertainment segment, which will combine Scholastic Entertainment and 9 Story, to contribute over $80 million in revenue with solid EBITDA margins in fiscal 2025.

In the Children's Books segment, Scholastic has an exciting publishing plan, including the release of the 12th book in the bestselling Dog Man series and the highly anticipated fifth book in Suzanne Collins' Hunger Games series, both of which will be accompanied by major film adaptations. The company also expects modest growth in its School Book Fairs business, driven by initiatives to increase revenue per fair and fair count.

In the Education Solutions segment, Scholastic is targeting steady sales despite continued softness in spending on supplemental offerings, offset by the launch of new products aligned with the science of reading in the 2025-2026 school year. The company remains focused on expanding initiatives to secure new funding sources to address the nationwide reading challenges.

Liquidity

Scholastic's strong balance sheet and cash flow generation have enabled the company to continue investing in growth opportunities while returning significant capital to shareholders. In fiscal 2024, the company repurchased over 3.9 million shares, representing 11% of its outstanding shares, and paid $181 million in dividends and share repurchases.

Conclusion

Despite the current market headwinds, Scholastic remains committed to its long-term strategy of leveraging its trusted brand, proprietary distribution channels, and global children's content and franchises to serve the growing need for high-quality books, reading, and media. The company's investments in key growth initiatives, including the strategic acquisition of 9 Story Media Group, position Scholastic for sustainable long-term value creation.