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SCHOLASTIC CORP (SCHL)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue rose 7% to $508.3M and Adjusted EBITDA grew 1% to $91.2M; EPS ex one-time items was $0.87, while reported diluted EPS was $0.59 due to $9.9M in one-time charges .
  • Versus consensus, SCHL delivered a revenue beat ($508.3M vs $494.6M*) and an EPS beat on normalized EPS ($0.87 vs $0.85*), while S&P’s EBITDA actual prints appear lower than company Adjusted EBITDA due to differing definitions (S&P actual $75.2M* vs company $91.2M) .
  • FY2026 guidance introduced: Adjusted EBITDA $160–$170M and revenue growth of 2–4%; includes ~$10M tariff headwind and continuing cost actions; Q1 is expected to be a seasonal loss in line with prior year .
  • Capital allocation and potential real estate monetization remain catalysts; company returned over $92M to shareholders in FY2025 and retained Newmark to explore sale-leasebacks in NYC and Missouri .

What Went Well and What Went Wrong

What Went Well

  • Children’s Book Publishing and Distribution revenue +9% to $288.2M with strong Trade (+19%) and Book Fairs (+5%) performance; segment operating income +14% YoY to $57.6M .
  • International revenue +8% to $76.8M (+9% ex-FX), with segment operating income improving to $3.7M from a loss YoY, driven by Hunger Games and Dog Man sales .
  • Management emphasized strategic reorganization into a unified Children’s Book Group and ongoing cost management enabling FY2026 earnings growth: “We are now operating with a solid foundation and a focus on delivering strong earnings growth” .

What Went Wrong

  • Education Solutions revenue fell 7% to $125.7M; adjusted operating income down $4.3M ex one-time items due to ongoing supplemental curriculum headwinds .
  • Overhead adjusted costs increased $9.6M YoY on timing of employee-related expenses, pressuring consolidated margins .
  • Entertainment segment reported a $3.0M operating loss amid lower industry production activity and $2.7M intangible amortization from 9 Story; adjusted segment operating loss increased $1.6M ex one-time items .

Financial Results

Consolidated trends versus prior quarters (oldest → newest)

MetricQ2 FY2025Q3 FY2025Q4 FY2025
Revenue ($USD Millions)$544.6 $335.4 $508.3
Operating Income ($USD Millions)$74.7 $(23.9) $53.5
Diluted EPS ($)$1.71 $(0.13) $0.59
EPS ex one-time items ($)$1.82 $(0.05) $0.87
Adjusted EBITDA ($USD Millions)$108.7 $6.0 $91.2

Q4 FY2025 vs Q4 FY2024 (segments)

SegmentRevenue Q4 FY2024 ($M)Revenue Q4 FY2025 ($M)YoY %Operating Income Q4 FY2024 ($M)Operating Income Q4 FY2025 ($M)Operating Margin Q4 FY2025
Children’s Book Publishing & Distribution$265.4 $288.2 +9% $50.4 $57.6 20.0%
Education Solutions$135.7 $125.7 (7%) $29.5 $30.7 24.4%
Entertainment$0.6 $14.8 NM $(6.8) $(3.0) NM
International$70.8 $76.8 +8% $(0.8) $3.7 4.8%
Overhead$2.4 $2.8 +17% $(25.1) $(35.5) NM

KPIs and balance sheet (Q4/FY)

KPIValue
Free Cash Flow FY2025 ($M)$29.2
Net Debt FY2025 ($M)$136.6
Dividends FY2025 ($M)$22.6 (Q4 $5.6)
Share Repurchases FY20253,482,280 shares, $70.0M
FY2026 Q1 Dividend Declared$0.20/share, payable Sep 15, 2025

Q4 FY2025 vs Wall Street consensus (S&P Global)

Values marked with an asterisk were retrieved from S&P Global.

MetricConsensus*ActualResult
Revenue ($M)$494.6*$508.3 Bold beat
Primary EPS ($)$0.85*$0.87 (EPS ex one-time) Bold beat
EBITDA ($M)$87.7*$75.2* vs Company Adjusted EBITDA $91.2 Mixed: definitional variance, S&P shows miss

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDAFY2026NA$160–$170M New
Revenue GrowthFY2026NA+2% to +4% New
Tariff Impact (Cost of Product)FY2026NA~$10M incremental expense New
Seasonal Loss (Q1)FY2026 Q1NALoss ~in line with prior year New
Free Cash FlowFY2026NA$30–$40M (call) New
Unallocated OverheadFY2026NADecrease expected (efficiencies) New
FY2025 Adjusted EBITDAFY2025Narrowed to ~$140M In line with original $140–$150M (affirmed) Raised back to range

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Tariffs & Supply ChainLimited FY2025/1H FY2026 impact; flexible sourcing; mid-single-digit millions expected next year FY2026 guidance includes ~$10M tariff headwind; pricing power and scale to mitigate Heightened vigilance; quantified in guidance
School Reading Events (Book Fairs/Clubs)Fair count expansion, near-record revenue per fair; Clubs engagement improving Higher fair count; Book Fairs revenue +5%; Clubs down in Q4 but full-year contribution margin improved Operational momentum; mix normalization
Trade Publishing FranchisesDog Man #13 global hit; Sunrise on the Reaping release slated for Q4; backlist support Sunrise on the Reaping drove Trade +19% in Q4; pipeline includes Dog Man #14 in Nov Strong franchise-led growth
Education SolutionsOngoing supplemental curriculum headwinds; product pipeline (EXPLORE ELA, Knowledge Library) Targeting flat FY2026 revenue under new leadership; repositioning for profitability Stabilization efforts underway
Entertainment / 9 StoryIndustry greenlight slowdown; AVOD/YouTube ramp; Emmy nominations Revenues up on 9 Story; profitability flat expected; new greenlights (Dasher, Daniel Tiger) Building pipeline; monetization grows
Capital Allocation & Real EstateUpsized revolver; buybacks; real estate value discussion $92M returned in FY2025; sale-leaseback processes initiated with Newmark, 90–120 day window Active monetization exploration

Management Commentary

  • CEO on execution and earnings trajectory: “We are now operating with a solid foundation and a focus on delivering strong earnings growth… With focused execution, a revitalized operating model, and the power of our beloved IP, Scholastic is well-positioned…” .
  • CFO on FY2026 outlook: “Adjusted EBITDA of $160–$170 million… mainly driven by disciplined cost management and restructuring initiatives… includes approximately $10 million of expected incremental tariff expense…” .
  • CEO on Children’s Book Group integration benefits: “We expect it to unlock further efficiencies… and increase profitability in fiscal 2026 and beyond” .
  • CFO on real estate monetization: “We retained Newmark Group… sale-leaseback… optimistic about… value accretion… next 90–120 days” .

Q&A Highlights

  • Cost savings cadence: Actions focused on non-revenue/discretionary areas; ~$15M realized in FY2025 with another ~$10M in FY2026; overhead expected to step down .
  • Education FY2026: Management targets flat revenue; pipeline aligned to Science of Reading; state/community literacy partnerships expanding, though sales cycles are long .
  • Entertainment profitability: Expect “slightly lower, but in line” with FY2025 due to inflation; production greenlights skew toward FY2027 revenue recognition .
  • Real estate timing and capital priorities: Potential sale-leaseback within 90–120 days; continued share repurchases when conditions allow .

Estimates Context

  • Q4 FY2025 delivered a revenue beat and normalized EPS beat versus S&P Global consensus (Revenue: $508.3M vs $494.6M*; EPS ex items: $0.87 vs $0.85*). EBITDA comparison is mixed due to divergent definitions (Company Adjusted EBITDA $91.2 vs S&P “actual” $75.2M*) .
  • Thin coverage: S&P shows one estimate for both revenue and EPS in Q4 FY2025*, implying greater potential for revisions following actuals. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Franchise-led momentum (Hunger Games, Dog Man) plus Children’s Book Group integration underpin FY2026 profit growth; guidance embeds tariff headwinds and cost actions .
  • Education is stabilizing with strategy reset and Science of Reading-aligned products; expect flat FY2026 revenue with profitability improvement as initiatives take hold .
  • Real estate monetization could unlock incremental capital for deleveraging/buybacks; monitor Newmark process over next 3–4 months .
  • Near-term seasonality: Q1 FY2026 loss in line with prior year; watch holiday/Back-to-School trends in Book Fairs and Trade to gauge trajectory .
  • Valuation narrative may benefit from cost reduction visibility and EBITDA expansion; however, monitor Entertainment production cycles and tariff impacts on non-book items .
  • Trading implications: Positive setup on guidance and capital actions; catalysts include sale-leaseback outcomes, November Dog Man release, and incremental greenlights in Entertainment .