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Nov 30, 2021
Scholastic Q2 2022 Earnings Report
Reported a strong second quarter with book fairs leading the way and outperforming management’s expectations.
Key Takeaways
Scholastic Corporation reported a strong second quarter with a 29% increase in revenues to $524.2 million and a 71% improvement in operating profit to $83.4 million. The book fairs channel was a key driver, achieving 70% of pre-pandemic levels. The company is managing cost pressures in its supply chain and labor pools while remaining optimistic about generating strong free cash flow.
Consolidated revenues increased 29% to $524.2 million, driven by higher revenues in U.S. book fairs and education channels.
Operating profit improved 71% to $83.4 million due to favorable results in U.S. book fairs and higher revenues from education solutions.
Net cash provided by operating activities increased by $31.9 million to $78.0 million, and free cash flow increased by $44.5 million to $75.4 million.
The Company expects the U.S. book fairs business to continue its momentum into the spring season.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
Scholastic expects the U.S. book fairs business to continue its momentum into the spring season. The Company is carefully monitoring the impact any COVID variant may have on the school market’s ability to host in-person fairs and remains optimistic that wide-scale school closures are unlikely.
Positive Outlook
- U.S. book fairs business is expected to continue its momentum into the spring season.
- Education Solutions segment is well-positioned to take advantage of new literacy opportunities in K-12 that may arise from the federal stimulus funds education landscape.
- Internationally, the Company is optimistic that schools in Australia and New Zealand will experience fewer COVID-related interruptions.
- Scholastic’s individual titles and series continue to lead the market
- Paramount’s live-action movie adaptation of Scholastic’s beloved Clifford the Big Red Dog® was a success, resulting in an announcement of a sequel.
Challenges Ahead
- Financial results will reflect the increasing impact of rising cost pressures in paper, printing, and freight.
- Higher labor costs are expected due to continuing inflationary pressures and on-going labor shortages, especially in warehouse and distribution operations.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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