1. SCHL reported 1% revenue growth to $551.1 million in Q2. 2. Children's Book Publishing revenue rose 4% due to strong Book Fairs. 3. Board authorized $150 million stock repurchase following $400 million asset sales. 4. Adjusted EBITDA increased 13% to $122.5 million amid cost-saving measures. 5. Education Solutions faced 13% revenue drop, affecting overall profitability.
FAQ
Why Bullish?
The revenue increase and stock buyback are positive indicators for shareholder value. Historical instances show repurchases often lead to price appreciation.
How important is it?
Financial results and stock repurchase indicate strong management and capital allocation strategy, likely to influence investor sentiment positively.
Why Short Term?
Immediate effects expected from the share buyback and improved Q2 results, but Education Solutions' decline might dampen long-term prospects.
Scholastic Corporation Reports Strong Q2 Results for Fiscal 2026
Scholastic Corporation (NASDAQ: SCHL), a leading global publisher of children's books, education materials, and media content, announced its financial results for the fiscal second quarter ending November 30, 2025. The company reported notable growth in earnings and revenues, driven by strong performance in its publishing segments and strategic financial maneuvers.
Earnings and Revenue Highlights
During the second quarter, Scholastic's revenues increased by 1%, reaching $551.1 million, compared to $544.6 million in the prior year. This growth was primarily attributed to strong performances in the Children's Book Publishing and Distribution segment, particularly in Book Fairs and Trade publishing.
- Operating income: Increased 11% to $82.9 million from $74.7 million year-over-year.
- Earnings per share: Diluted earnings rose 27% to $2.17, compared to $1.71.
- Adjusted EBITDA: Improved 13% to $122.5 million.
Quarterly Segment Performance
The Children's Book Publishing and Distribution sector performed exceptionally well, with revenues climbing 4% to $380.9 million. Key drivers include:
- Book Fairs revenues increased 5% to $242.0 million, supported by more fairs and higher revenue per fair.
- Trade publishing saw revenues reach $110.4 million, a 7% increase, thanks in part to Dav Pilkey's latest release in the Dog Man series.
Conversely, the Education Solutions segment experienced a 13% decline in revenue, totaling $62.2 million, attributed to a challenging funding environment affecting spending on supplemental curriculum materials.
Capital Allocation and Share Repurchase
In a significant move to enhance shareholder value, Scholastic's Board of Directors authorized a $150 million increase in its share repurchase program. This announcement follows the successful sale-leaseback transactions of major real estate assets, unlocking over $400 million in net proceeds. Scholastic has returned nearly $500 million to shareholders and achieved a 25% reduction in its share count since 2021.
Peter Warwick, President and CEO, emphasized the company's commitment to long-term growth, stating, “As we enter the second half of fiscal 2026, we remain focused on accelerating profitability and value creation, while reaffirming our fiscal 2026 earnings outlook.”
Future Outlook
Scholastic has reaffirmed its outlook for full-year adjusted EBITDA to be between $146 million and $156 million, reflecting the impact of the recent real estate transactions. The company forecasts free cash flow for fiscal 2026 to exceed $430 million.
Despite the challenges faced by the Education Solutions sector, Scholastic expects overall revenue to be in line with or modestly above the prior year, bolstered by the strong performance in its Children's Book Publishing and Distribution segment.