LONDON, UK / ACCESSWIRE / October 5, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Scholastic Corp. (NASDAQ: SCHL), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=SCHL, following the Company’s posting of its first quarter fiscal 2018 financial results on September 21, 2017. The publishing, education, and media Company reported a y-o-y decline in sales, while its loss widened, primarily due to the release of the Harry Potter books in the year-ago same period and seasonality factors. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:
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For the first quarter of the fiscal year 2018 ended August 31, 2017, Scholastic reported revenues of $189.2 million, down 33% compared to revenues of $282.7 million in Q1 FY17. The Company expected first-quarter revenue declines, particularly in its Children’s Book Publishing and Distribution segment and International segment, following the July 2016 publication of Harry Potter and the Cursed Child – Parts One and Two, the best-selling book in North America last year. Scholastic’s revenue missed analysts’ estimates of $208.3 million.
For Q1 FY18, Scholastic reported an operating loss from continuing operations of $101.8 million versus a loss of $62.5 million in Q1 FY17.
Scholastic reported a loss per share from continuing operations of $1.81 in Q1 FY18 versus a loss per share from continuing operations of $1.15 in Q1 FY17. Scholastic typically records a loss in its fiscal first quarter, when most US schools are not in session. The Company reported an adjusted loss per share of $1.67, which was wider than Wall Street’s expectations for a loss per share of $1.34.
During Q1 FY18, Scholastic’s Children’s Book Publishing and Distribution segment’s revenue totaled $66.8 million, down 52% compared to $137.8 million in Q1 FY17, wholly attributable to the strong front-list performance of Harry Potter and the Cursed Child – Parts One and Two, which was released in Q1 FY17. The first quarter is an insignificant period for the segment’s clubs and fairs channels as most schools are not in session for summer recess.
For Q1 FY18, the segment’s operating loss was $58.9 million, versus a quarterly operating loss of $36.2 million in the year-ago same period, primarily due to the lower Harry Potter sales in the trade channel.
During Q1 FY18, Scholastic’s Education segment recorded revenues of $45.0 million, down 18% compared to $55.2 million in Q1 FY17. The sales decline was primarily the result of the timing of orders for customized curriculum products, as well as the absence of classroom magazine’s election skills book revenues in this non-election year. Partially offsetting this decline were higher sales of professional learning products and services.
In the reported quarter, the segment recorded an operating loss of $12.5 million, $8.1 million higher than the loss of $4.4 million recorded in the prior year’s comparable period, primarily due to the lower sales and higher employee expenses for an expanded sales and marketing force with expertise in solution selling of core literacy instruction programs.
For Q1 FY18, Scholastic’s International segment generated revenues of $77.4 million, down 14% compared to $89.7 million in Q1 FY17. The lower revenues in the reported quarter were mainly due to lower sales of the Harry Potter and the Cursed Child – Parts One and Two in the Company’s Canada business unit and export channel. The segment’s operating loss was $2.8 million in Q1 FY18 compared to an operating income of $4.2 million in Q1 FY17.
Cash Flow and Cash Position
Scholastic’s net cash used in operating activities was $92.4 million in Q1 FY18 compared to net cash used in operating activities of $105.5 million in Q1 FY17. The Company had free cash use of $131.0 million in the reported quarter, which was in-line with the Company’s expectations, compared to free cash use of $122.4 million in the year-ago corresponding period.
At the end of the quarter, Scholastic’s cash and cash equivalents exceeded the Company’s total debt by $299.9 million compared to $275.5 million a year ago. The Company distributed $5.3 million in dividends and reacquired $4.7 million of its common stock in open market transactions over the course of the first quarter.
In Q1 FY18, Scholastic spent $32.7 million of capital including $20.7 million towards the redesign and upgrade of its headquarters building in New York City to create a more productive workspace and an expanded retail component; and $10.0 million towards strategic technology upgrades and initiatives forming part of its previously announced multi-year transformational technology investment program.
Scholastic’s Board of Directors declared a quarterly cash dividend of $0.15 per share on the Company’s Class A and Common Stock for the second quarter of the fiscal year 2018. The dividend is payable on December 15, 2017, to shareholders of record as of the close of business on October 31, 2017.
Scholastic affirmed its fiscal 2018 outlook for total revenue of $1.65 billion to $1.70 billion, and earnings per diluted share from continuing operations in the range of $1.20 to $1.30, excluding one-time items. The Company continues to expect free cash use in the range of $10 million to $20 million.
At the close of trading session on Wednesday, October 04, 2017, Scholastic’s stock price marginally rose 0.08% to end the day at $37.77. A total volume of 215.81 thousand shares were exchanged during the session, which was above the 3-month average volume of 148.53 thousand shares. The Company’s shares are trading at a PE ratio of 48.24 and have a dividend yield of 1.59%. At Wednesday’s closing price, the stock’s net capitalization stands at $1.32 billion.
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