Hot Stock Buzz: Scholastic Corporation (NASDAQ: SCHL)

On Friday, Shares of Scholastic Corporation (NASDAQ: SCHL) rose 0.29% to $44.52. The stock recorded $44.41 as its minimum price and hit the max level of $45.22, during its most recent trading session. It traded total volume of 22,049 shares higher than the average volume of 125.70K shares.

Scholastic Corporation (SCHL), the global children’s publishing, education and Media Company, recently stated results for the Company’s fiscal 2019 first quarter ended August 31, 2023.

First quarter revenue was $218.40M, a boost of 15% contrast to $189.20M in the first quarter of 2018. The Company stated a first quarter 2019 loss per diluted share of $1.75, contrast to a loss of $1.81 per diluted share in the first quarter of 2018. Excluding one-time items, the first quarter 2019 loss was $1.74. Scholastic typically records a loss in its fiscal first quarter, when most U.S. schools are not in session.

Operating loss in the first quarter was $83.80M, an improvement contrast to an operating loss of $101.80M a year ago. Excluding one-time items, the operating loss in the first quarter was $83.30M, an 11% improvement contrast to an operating loss of $93.50M in the first quarter of 2018.

Net loss for the current period was $61.30M, contrast to a net loss in the prior year period of $63.70M.

Results:

The net loss for the first quarter was $61.30M contrast to a net loss of $63.70M in the first quarter of 2018. Adjusted EBITDA for the first fiscal quarter of 2019 was a loss of $64.50M, contrast to a loss of $78.10M in the first quarter of 2018, reflecting improvement in the Company’s net loss, as noted, and higher levels of depreciation on certain facilities and technology upgrades now in service. The Company believes that Adjusted EBITDA is a meaningful measure of operating profitability and useful for measuring returns on capital investments over time as it is not distorted by unusual gains, losses, or other items.

Segment Results:

First quarter revenues increased $26.50M, or 40%, driven mainly by core growth in trade. Although revenue in the segment’s school-based distribution channels is not meaningful in the first quarter, there was increased teacher sponsorship in book clubs, resulting in a higher number of book club events held, and increases in both fair count and revenue per fair in book fairs, which was also influenced by the seasonal timing of revenue recognition under the newly adopted ASC 606 guidelines. Operating loss improved by $13.00M, or 22%, contrast to last year mainly reflecting leverage on the higher revenues generally and lower catalog cost in clubs. The adoption of the new ASC 606 standard resulted in the recognition of $12.00M in revenue and $8.30M in operating income in the quarter. Key trade titles in the current period included Dav Pilkey’s Dog Man: Lord of the Fleas, a #1 bestseller, as well as The Lost Continent, the 11th book in Tui T. Sutherland’s Wings of Fire series, and City of Ghosts by Victoria Schwab. At quarter-end, Scholastic titles held five of the top six bestselling children’ series on The New York Times list, counting Dog Man, Harry Potter, The Baby-Sitters Club® graphic novels, The Bad Guys, and Captain Underpants.

First quarter revenues increased $5.30M, or 12%, mainly driven by higher sales of classroom collections, summer literacy programs, and teaching resources, as well as guided reading and leveled bookrooms, which benefited from a shift in customer buying patterns from the fourth quarter of fiscal 2018. Operating loss increased by $2.50M, or 20%, contrast to last year mainly reflecting the adoption of the new ASC 606 accounting guidelines, which drove a seasonal increase in direct product expense in classroom magazines of $3.20M in the quarter, as these costs are no longer deferred until later in the school year, as well as increased promotional spending and higher sales staff expense in core instruction in advance of the Scholastic Literacy launch later this year.

First quarter revenues were $74.80M, down $2.60M, or 3%, with improved results in the U.K.’s education, trade, book fairs and export business units, higher trade publishing and book fairs in Canada, and higher direct sales in Indonesia, India and Malaysia more than offset by lower results in Australia and the adverse impact of $1.70M in foreign exchange. Operating loss improved by $0.80M, or 29%, contrast to last year mainly reflecting improved product mix. The adoption of the new ASC 606 standard resulted in the recognition of $0.50M in revenue and a corresponding $0.10M of operating income in the quarter.

First quarter overhead expense was $20.40M, or 6% higher than overhead expense in the first quarter of 2018, excluding one-time items of $0.50M and $8.30M in each period, respectively. The slightly higher overhead, excluding one-time items, in the current period is mainly because of higher depreciation expense for building and technology upgrades now in service.

SCHL has the market capitalization of $1.56B and its EPS growth ratio for the past five years was -33.30%. The return on assets ratio of the Company was -0.10% while its return on investment ratio stands at 4.40%. Price to sales ratio was 0.94 while 88.20% of the stock was owned by institutional investors.