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Feb 29, 2020
Scholastic Q3 2020 Earnings Report
Scholastic reported a 4% increase in revenue, driven by strong performance in the education and trade businesses, but operating loss was impacted by a one-time inventory write-down.
Key Takeaways
Scholastic's third quarter revenue increased by 4% due to strong education and trade business performance. However, the company reported an operating loss, largely due to a one-time non-cash inventory write-down. Due to coronavirus-related school closings, Scholastic withdrew its fiscal year guidance and is implementing cost-saving measures.
Third quarter revenue increased 4% year-over-year, led by education and trade businesses.
Operating loss was $60.0 million, impacted by a $40.0 million non-cash inventory write-down.
Excluding one-time items, the operating loss improved by 10% compared to the prior year period.
Company withdrew fiscal year guidance due to coronavirus-related school closings and is implementing cost-saving measures.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
Scholastic anticipates lower revenues in the fourth quarter due to coronavirus-related school closings, but is taking actions to reduce operating expenses and protect its financial position.
Positive Outlook
- Aggressive actions to reduce operating expenses are being implemented.
- The company has significant cash reserves and access to liquidity.
- Non-essential cash outlays are being discontinued.
- Capital spending plans are being deferred.
- The company is providing free access to its Learn at Home digital hub.
Challenges Ahead
- Coronavirus-related school closings will affect the school-based businesses directly.
- Revenues will be lower in the seasonally important fourth quarter.
- The company is no longer affirming guidance for the fiscal year.
- Temporary closing of warehousing and distribution centers.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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