Technology
Scholastic Reports Fiscal 2025 First Quarter Results
Published
2 years agoon
By
Company Affirms Fiscal 2025 Guidance
NEW YORK, Sept. 26, 2024 /PRNewswire/ — Scholastic Corporation (NASDAQ: SCHL), the global children’s publishing, education and media company, today reported financial results for the Company’s fiscal first quarter ended August 31, 2024.
Peter Warwick, President and Chief Executive Officer, said, “During our first quarter, Scholastic prepared for another important back-to-school season, as we executed on our long-term growth initiatives. In the seasonally quiet quarter for our school-based channels, first quarter’s operating loss improved modestly versus the prior year.
“Scholastic advanced its strategy as a global children’s media and content company last quarter, with engaging and critically acclaimed publishing, a growing slate of exciting media properties in development and production, and early wins from our acquisition of 9 Story Media Group. Scholastic-published titles maintained their presence on bestseller lists during the quarter, including the latest book in Aaron Blabey’s Bad Guys® series, with exciting new titles in major global franchises planned for release in the fall and spring. In our integrated Scholastic Entertainment division, we took advantage of early opportunities to monetize and expand the reach of Scholastic IP, with the launch of new The Magic School Bus® and Clifford Classic® channels on advertising-supported distribution platforms.
“With most children in the U.S. now back at school, our School Reading Events division remains as differentiated and relevant as ever, bringing the excitement of books, reading and stories to millions of kids and families, while generating approximately $200 million in cash and in-kind value last year to support schools and educators. In fiscal 2025 we remain focused on expanding the reach and impact of our Book Fairs and Clubs in this division, while innovating in how we serve our school partners. In our Education Solutions division, we continue to develop new structured literacy programs and supplemental products for schools, scheduled for launch next summer. We are confident these core businesses are well positioned for long-term growth.
“We remain focused on realizing Scholastic’s opportunity to create value and impact this year and beyond. We are affirming our fiscal 2025 guidance and are committed to our capital allocation priorities, including investing in our most compelling growth opportunities to meet the demand for children’s books, reading and media from a trusted brand, and returning capital to shareholders.”
Fiscal 2025 Q1 Review
In $ millions
First Quarter
Change
Fiscal 2025
Fiscal 2024
$
%
Revenues
$
237.2
$
228.5
$
8.7
4 %
Operating income (loss)
$
(88.5)
$
(99.1)
$
10.6
11 %
Earnings (loss) before taxes
$
(91.8)
$
(98.0)
$
6.2
6 %
Diluted earnings (loss) per share
$
(2.21)
$
(2.35)
$
0.14
6 %
Operating income (loss), ex. one-time items *
$
(85.6)
$
(92.8)
$
7.2
8 %
Diluted earnings (loss) per share, ex. one-time items *
$
(2.13)
$
(2.20)
$
0.07
3 %
Adjusted EBITDA *
$
(60.5)
$
(70.6)
$
10.1
14 %
* Please refer to the non-GAAP financial tables attached
Revenues increased 4% to $237.2 million, reflecting the contribution of 9 Story Media Group, recorded in the Entertainment segment, partly offset by lower supplemental curriculum and collections product sales in Education Solutions.
Operating loss decreased 11% to $88.5 million in the quarter, including $2.9 million in one-time charges, compared to $99.1 million a year ago, which included $6.3 million of one-time charges. Excluding one-time charges, operating loss improved 8% from a year ago. The improved seasonal loss primarily reflected increased results in Children’s Book Publishing and Distribution. Adjusted EBITDA (a non-GAAP measure of operations explained in the accompanying tables) improved 14% to a loss of $60.5 million.
Quarterly Results
Children’s Book Publishing and Distribution
In the fiscal first quarter, the Children’s Book Publishing and Distribution segment’s revenues increased 3% to $105.4 million.
Book Fairs revenues were $28.8 million, up 5% from the prior year period. Fairs activity is minimal during the first quarter based on the seasonality of the business. We expect participation at our book fairs to remain strong this school year, with fair count on track to achieve our target of 90,000 fairs in fiscal 2025.Book Clubs revenues were $2.7 million, in line with the prior year period. Clubs activity is seasonally quiet during the summer months. After strategically transitioning Book Clubs to a smaller, more profitable core business in fiscal 2024, we implemented new strategies to reengage customers this back-to-school season.Consolidated Trade revenues were $73.9 million, up 2% from the prior year period, primarily driven by higher foreign rights revenues, partly offset by lower frontlist sales compared to the prior year period when the Company released the paperback edition of the fourth book in the Hunger Games® series, The Ballad of Songbirds and Snakes. Fiscal 2025 revenues are expected to benefit from new releases in the second half of the fiscal year, including the newest book in Dav Pilkey’s Dog Man® series and the fifth book in Suzanne Collins’ Hunger Games® series, Sunrise on the Reaping.
Segment operating loss was $36.6 million, compared to $41.0 million a year ago. The year-over-year improvement was primarily driven by higher foreign rights revenues on relatively consistent operating expenses.
Education Solutions
Education Solutions revenues decreased 16% to $55.7 million, due to lower sales of supplemental curriculum products, as school districts focus on adopting and implementing new core programs. This was partly offset by increased sales to state-sponsored partners, driven by the growing number of kids participating in these programs.
Segment operating loss was $17.0 million, compared to $18.7 million in the prior period, primarily reflecting higher state-sponsored program revenues, as increases in participation have a significant impact on profitability, and lower operating expenses in the quarter, which more than offset the impact of lower segment revenues.
Entertainment
The newly formed Entertainment segment includes the operations of Scholastic Entertainment Inc. (SEI), which were included in the Children’s Book Publishing and Distribution segment in prior year periods, combined with 9 Story Media Group.
Segment revenues were $16.6 million, primarily reflecting the addition of 9 Story Media Group revenues, which closed in June.
Segment operating loss was $0.5 million which included one-time charges of $1.7 million. Excluding one-time charges, adjusted segment operating income was $1.2 million reflecting the contribution from 9 Story Media Group.
International
Excluding unfavorable foreign currency exchange of $0.2 million, International revenues were in line with the prior year period. Revenues increased on the strong performance of backlist sales in the U.K., which were offset by revenue declines in Canada.
Segment operating loss was $8.3 million compared to $8.2 million in the prior year period, which included one-time charges of $1.2 million in the prior year period. Excluding one-time charges, adjusted operating loss increased $1.3 million.
Overhead
Overhead costs were $26.1 million compared to $30.7 million in the prior year period, which included one-time charges of $1.2 million and $5.1 million, respectively. Excluding one-time charges, adjusted overhead costs decreased $0.7 million driven by lower employee-related expenses.
Capital Position and Liquidity
In $ millions
First Quarter
Change
Fiscal 2025
Fiscal 2024
$
%
Net cash (used) provided by operating activities
$
(41.9)
$
(38.1)
$
(3.8)
(10) %
Additions to property, plant and equipment and prepublication expenditures
(24.4)
(19.7)
(4.7)
(24) %
Net borrowings (repayments) of film related obligations
(2.4)
—
(2.4)
NM
Free cash flow (use)*
$
(68.7)
$
(57.8)
$
(10.9)
(19) %
Net cash (debt)*
$
(152.1)
$
119.9
$
(272.0)
NM
* Please refer to the non-GAAP financial tables attached
Net cash used by operating activities was $41.9 million, in line with the prior year period. Free cash use (a non-GAAP measure of operations explained in the accompanying tables) was $68.7 million in fiscal 2025, compared to free cash use of $57.8 million in the prior period, reflecting higher capital expenditures and production spend.
Net debt was $152.1 million compared to a net cash position of $119.9 million in the prior year period, reflecting the Company’s borrowings under its existing revolving credit facility to fund the acquisition of 9 Story Media Group.
The Company distributed $5.7 million in dividends and repurchased 163,194 shares of its common stock for $5.0 million in the first quarter. The Company expects to continue purchasing shares, from time to time as conditions allow, on the open market or in negotiated private transactions for the foreseeable future.
Additional Information
To supplement our financial statements presented in accordance with GAAP, we include certain non-GAAP calculations and presentations including, as noted above, “Adjusted EBITDA” and “Free Cash Flow”. Please refer to the non-GAAP financial tables attached to this press release for supporting details on the impact of one-time items on operating income, net income and diluted EPS, and the use of non-GAAP financial measures included in this release. This information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP.
Conference Call
The Company will hold a conference call to discuss its results at 4:30 p.m. ET today, September 26, 2024. Peter Warwick, Scholastic President and Chief Executive Officer, and Haji Glover, the Company’s Chief Financial Officer, Executive Vice President, will moderate the call.
A live webcast of the call can be accessed at https://edge.media-server.com/mmc/p/m98wgyws/. To access the conference call by phone, please go to https://register.vevent.com/register/BIba13029c72e1414fa441a92404a14a4d, which will provide dial-in details. To avoid delays, participants are encouraged to dial into the conference call five minutes ahead of the scheduled start time. Shortly following the call, an archived webcast and accompanying slides from the conference call will be posted at investor.scholastic.com.
About Scholastic
For more than 100 years, Scholastic Corporation (NASDAQ: SCHL) has been encouraging the personal and intellectual growth of all children, beginning with literacy. Having earned a reputation as a trusted partner to educators and families, Scholastic is the world’s largest publisher and distributor of children’s books, a leading provider of literacy curriculum, professional services, and classroom magazines, and a producer of educational and entertaining children’s media. The Company creates and distributes bestselling books and e-books, print and technology-based learning programs for pre-K to grade 12, and other products and services that support children’s learning and literacy, both in school and at home. With international operations and exports in more than 135 countries, Scholastic makes quality, affordable books available to all children around the world through school-based book clubs and book fairs, classroom libraries, school and public libraries, retail, and online. Learn more at www.scholastic.com.
Forward-Looking Statements
This news release contains certain forward-looking statements relating to future periods. Such forward-looking statements are subject to various risks and uncertainties, including the conditions of the children’s book and educational materials markets generally and acceptance of the Company’s products within those markets, and other risks and factors identified from time to time in the Company’s filings with the Securities and Exchange Commission. Actual results could differ materially from those currently anticipated.
SCHL: Financial
Table 1
Scholastic Corporation
Consolidated Statements of Operations
(Unaudited)
(In $ Millions, except shares and per share data)
Three months ended
08/31/24
08/31/23
Revenues (1)
$
237.2
$
228.5
Operating costs and expenses:
Cost of goods sold
128.3
130.0
Selling, general and administrative expenses (2)
182.1
184.2
Depreciation and amortization
15.3
13.4
Total operating costs and expenses
325.7
327.6
Operating income (loss)
(88.5)
(99.1)
Interest income (expense), net
(3.0)
1.4
Other components of net periodic benefit (cost)
(0.3)
(0.3)
Earnings (loss) before income taxes
(91.8)
(98.0)
Provision (benefit) for income taxes (3)
(29.3)
(23.8)
Net income (loss) (1)
(62.5)
(74.2)
Basic and diluted earnings (loss) per share of Class A and Common Stock (4)
Basic
$
(2.21)
$
(2.35)
Diluted
$
(2.21)
$
(2.35)
Basic weighted average shares outstanding
28,290
31,564
Diluted weighted average shares outstanding
28,908
32,604
(1)
The financial results of 9 Story Media Group from the date of acquisition on June 20, 2024 through August 31, 2024
are included in the Company’s consolidated results of operations as of August 31, 2024. The unaudited pro-forma
consolidated results of operations for the three months ended August 31, 2024 and August 31, 2023 as if the acquisition
had occurred on June 1, 2023, the beginning of fiscal 2024, includes revenues of $242.9 and $248.3, respectively, and
net loss of $64.3 and $78.9, respectively.
(2)
In the three months ended August 31, 2024 and August 31, 2023, the Company recognized pretax severance of $1.2
and $6.3, respectively, related to cost-savings initiatives. In the three months ended August 31, 2024, the Company
recognized pretax costs of $1.7 related to the acquisition of 9 Story Media Group.
(3)
In the three months ended August 31, 2024 and August 31, 2023, the Company recognized a benefit of $0.7 and
$1.6, respectively, for income taxes in respect to one-time pretax items.
(4)
Earnings (loss) per share are calculated on non-rounded net income (loss) and shares outstanding. Recalculating
earnings per share based on numbers rounded to millions may not yield the results as presented.
Table 2
Scholastic Corporation
Segment Results
(Unaudited)
(In $ Millions)
Three months ended
Change
08/31/24
08/31/23
$
%
Children’s Book Publishing and Distribution (1)
Revenues
Books Clubs
$
2.7
$
2.6
$
0.1
4 %
Book Fairs
28.8
27.3
1.5
5 %
School Reading Events
31.5
29.9
1.6
5 %
Consolidated Trade
73.9
72.5
1.4
2 %
Total Revenues
105.4
102.4
3.0
3 %
Operating income (loss)
(36.6)
(41.0)
4.4
11 %
Operating margin
NM
NM
Education Solutions
Revenues
55.7
66.0
(10.3)
(16) %
Operating income (loss)
(17.0)
(18.7)
1.7
9 %
Operating margin
NM
NM
Entertainment (1)
Revenues
16.6
0.4
16.2
NM
Operating income (loss)
(0.5)
(0.5)
0.0
NM
Operating margin
NM
NM
International
Revenues
56.8
57.2
(0.4)
(1) %
Operating income (loss)
(8.3)
(8.2)
(0.1)
(1) %
Operating margin
NM
NM
Overhead
Revenues
2.7
2.5
0.2
8 %
Operating income (loss)
(26.1)
(30.7)
4.6
15 %
Operating income (loss)
$
(88.5)
$
(99.1)
$
10.6
11 %
NM – Not meaningful
(1)
The newly formed Entertainment segment includes the operations of Scholastic Entertainment Inc.
(SEI), which were included in the Children’s Book Publishing and Distribution segment in prior periods,
and 9 Story Media Group. The financial results for SEI for the three months ended August 31, 2023
have been reclassified to Entertainment to reflect this change.
Table 3
Scholastic Corporation
Supplemental Information
(Unaudited)
(In $ Millions)
Selected Balance Sheet Items
08/31/24
08/31/23
Cash and cash equivalents
$
84.1
$
125.8
Accounts receivable, net
201.1
201.9
Inventories, net
310.3
353.2
Accounts payable
184.0
167.7
Deferred revenue
173.9
171.1
Accrued royalties
77.5
72.0
Film related obligations
34.1
—
Lines of credit and long-term debt
231.1
5.9
Net cash (debt) (1)
(152.1)
119.9
Total stockholders’ equity
957.3
1,054.6
Selected Cash Flow Items
Three months ended
08/31/24
08/31/23
Net cash provided by (used in) operating activities
$
(41.9)
$
(38.1)
Property, plant and equipment additions
(20.0)
(14.3)
Prepublication expenditures
(4.4)
(5.4)
Net borrowings (repayments) of film related obligations
(2.4)
—
Free cash flow (use) (2)
$
(68.7)
$
(57.8)
(1)
Net cash (debt) is defined by the Company as cash and cash equivalents less
production cash of $5.1 as of August 31, 2024, net of lines of credit, short-term
and long-term debt. Film related obligations are not included. The Company utilizes
this non-GAAP financial measure, and believes it is useful to investors, as an
indicator of the Company’s effective leverage and financing needs.
(2)
Free cash flow (use) is defined by the Company as net cash provided by or used
in operating activities (which includes royalty advances) and cash acquired through
acquisitions and from sale of assets, reduced by spending on property, plant and
equipment and prepublication costs and adjusted for net cash flows from film
related obligations. The Company believes that this non-GAAP financial measure is
useful to investors as an indicator of cash flow available for debt repayment and
other investing activities, such as acquisitions. The Company utilizes free cash flow
as a further indicator of operating performance and for planning investing activities.
Table 4
Scholastic Corporation
Supplemental Results
Excluding One-Time Items
(Unaudited)
(In $ Millions, except per share data)
Three months ended
08/31/2024
08/31/2023
Reported
One-time
items
Excluding
One-time
items
Reported
One-time
items
Excluding
One-time
items
Diluted earnings (loss) per share (1)
$
(2.21)
$
0.08
$
(2.13)
$
(2.35)
$
0.15
$
(2.20)
Net income (loss) (2)
$
(62.5)
$
2.2
$
(60.3)
$
(74.2)
$
4.7
$
(69.5)
Earnings (loss) before income taxes
$
(91.8)
$
2.9
$
(88.9)
$
(98.0)
$
6.3
$
(91.7)
Children’s Book Publishing and Distribution (3)
$
(36.6)
$
—
$
(36.6)
$
(41.0)
$
—
$
(41.0)
Education Solutions
(17.0)
—
(17.0)
(18.7)
—
(18.7)
Entertainment (3) (4)
(0.5)
1.7
1.2
(0.5)
—
(0.5)
International (5)
(8.3)
—
(8.3)
(8.2)
1.2
(7.0)
Overhead (6)
(26.1)
1.2
(24.9)
(30.7)
5.1
(25.6)
Operating income (loss)
$
(88.5)
$
2.9
$
(85.6)
$
(99.1)
$
6.3
$
(92.8)
(1)
Earnings (loss) per share are calculated on non-rounded net income (loss) and shares outstanding. Recalculating earnings
per share based on rounded numbers may not yield the results as presented.
(2)
In the three months ended August 31, 2024 and August 31, 2023, the Company recognized a benefit of $0.7 and $1.6,
respectively, for income taxes in respect to one-time pretax items.
(3)
The newly formed Entertainment segment includes the operations of Scholastic Entertainment Inc. (SEI), which were included
in the Children’s Book Publishing and Distribution segment in prior periods, and 9 Story Media Group. The financial results for
SEI for the three months ended August 31, 2023 have been reclassified to Entertainment to reflect this change.
(4)
In the three months ended August 31, 2024, the Company recognized pretax costs of $1.7 related to the acquisition of 9 Story
Media Group.
(5)
In the three months ended August 31, 2023, the Company recognized pretax severance of $1.2 related to cost-savings initiatives.
(6)
In the three months ended August 31, 2024 and August 31, 2023, the Company recognized pretax severance of $1.2 and $5.1,
respectively, related to cost-savings initiatives.
Table 5
Scholastic Corporation
Consolidated Statements of Operations – Supplemental
Adjusted EBITDA
(Unaudited)
(In $ Millions)
Three months ended
08/31/24
08/31/23
Earnings (loss) before income taxes as reported
$
(91.8)
$
(98.0)
One-time items before income taxes
2.9
6.3
Earnings (loss) before income taxes excluding one-time items
(88.9)
(91.7)
Interest (income) expense (1)
3.4
(1.4)
Depreciation and amortization (2)
25.0
22.5
Adjusted EBITDA (3)
$
(60.5)
$
(70.6)
(1)
For the three months ended August 31, 2024, amount includes production loan interest of
$0.4 amortized into cost of goods sold.
(2)
For the three months ended August 31, 2024 and August 31, 2023, amounts include
prepublication and production cost amortization of $6.7 and $6.7, respectively, and
depreciation of $0.7 and $0.6, respectively, recognized in cost of goods sold, amortization
of deferred financing costs of $0.1 and $0.1 respectively, and amortization of capitalized
cloud software of $2.2 and $1.7, respectively, recognized in selling, general and
administrative expenses.
(3)
Adjusted EBITDA is defined by the Company as earnings (loss), excluding one-time
items, before interest, taxes, depreciation and amortization. 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.
Table 6
Scholastic Corporation
Consolidated Statements of Operations – Supplemental
Adjusted EBITDA by Segment
(Unaudited)
(In $ Millions)
Three months ended
08/31/24
CBPD (1) (2)
EDUC (1)
ENT (1) (2)
INTL (1)
OVH (1)
Total
Earnings (loss) before income taxes as reported
$
(36.6)
$
(17.0)
$
(1.1)
$
(8.7)
$
(28.4)
$
(91.8)
One-time items before income taxes
—
—
1.7
—
1.2
2.9
Earnings (loss) before income taxes excluding one-time items
(36.6)
(17.0)
0.6
(8.7)
(27.2)
(88.9)
Interest (income) expense (3)
0.0
—
1.1
(0.0)
2.3
3.4
Depreciation and amortization (4)
7.5
6.2
3.5
1.9
5.9
25.0
Adjusted EBITDA (5)
$
(29.1)
$
(10.8)
$
5.2
$
(6.8)
$
(19.0)
$
(60.5)
Three months ended
08/31/23
CBPD (1) (2)
EDUC (1)
ENT (1) (2)
INTL (1)
OVH (1)
Total
Earnings (loss) before income taxes as reported
$
(41.1)
$
(18.7)
$
(0.5)
$
(8.5)
$
(29.2)
$
(98.0)
One-time items before income taxes
—
—
—
1.2
5.1
6.3
Earnings (loss) before income taxes excluding one-time items
(41.1)
(18.7)
(0.5)
(7.3)
(24.1)
(91.7)
Interest (income) expense
0.0
0.0
—
(0.1)
(1.3)
(1.4)
Depreciation and amortization (4)
7.7
7.8
0.1
1.9
5.0
22.5
Adjusted EBITDA (5)
$
(33.4)
$
(10.9)
$
(0.4)
$
(5.5)
$
(20.4)
$
(70.6)
(1)
The Company’s segments are defined as the following: CBPD – Children’s Book Publishing and Distribution segment; EDUC – Education
Solutions segment; ENT – Entertainment segment; INTL – International segment; OVH – unallocated overhead.
(2)
The newly formed Entertainment segment includes the operations of Scholastic Entertainment Inc. (SEI), which were included in the
Children’s Book Publishing and Distribution segment in prior periods, and 9 Story Media Group. The financial results for SEI for the
three months ended August 31, 2023 have been reclassified to Entertainment to reflect this change.
(3)
For the three months ended August 31, 2024, amount includes production loan interest of $0.4 amortized into cost of goods sold.
(4)
Depreciation and amortization in the Children’s Book Publishing and Distribution, Education Solutions and International segments
includes amounts allocated from overhead.
(5)
Adjusted EBITDA is defined by the Company as earnings (loss), excluding one-time items, before interest, taxes, depreciation
and amortization. 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.
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SOURCE Scholastic Corporation
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During the fights against the previous four Kuomintang (KMT) “encirclement” campaigns, the Red Army adopted Mao Zedong’s strategy of “luring the enemy in deep.” With flexible tactics in mobile warfare, the Red Army worked miracles of defeating superior enemies time and again. Yet, the tide turned completely during the KMT’s fifth “encirclement.”
At that time, the CPC was a branch of the Communist International (Comintern). After 1927, the Comintern instructed the CPC to adopt an urban-centered path in its revolution, for it was how Russia’s October Revolution had achieved victory. Affected by this directive, during the Fifth Counter-Campaign against “Encirclement and Suppression”, Bo Gu and Otto Braun, who held actual command of the Red Army, insisted on launching offensive operations to seize major cities.
Otto Braun also mechanically applied European conventional warfare tactics, forcing the Red Army into rigid positional and fortress battles. In the Battle of Guangchang, the poorly equipped Red Army fought head-on against enemy tanks and artillery on open terrain, resulting in more than 5,000 casualties, about one-fourth of all participating troops.
Successive military defeats forced the Red Army to launch a strategic shift. However, Bo Gu and Otto Braun insisted that everything be evacuated, including heavy equipment: printing presses, currency-making machines, and arms-manufacturing facilities… When crossing the Xiangjiang River, troops were slowed down by these cumbersome supplies, and numerous soldiers even laid down their lives for protecting these assets. Chen Shuxiang and his 34th Division wrote the gravest footnote to this bloody sacrifice.
By the banks of the Xiangjiang River, the spark of hope in the eyes of the Red Army soldiers was nearly quenched by the cold water. Could the rigid foreign doctrines truly guide the Red Army and China’s revolution? What path lay ahead?
History often unfolds in paradoxes: when all hope seems lost, a historical turning point is quietly emerging.
After the Battle of Xiangjiang River, Mao firmly opposed the original plan drafted by Bo Gu and Otto Braun to march towards Hunan. Instead, he proposed to advance to Guizhou where enemy defenses were weak. There, the Red Army broke through the natural barrier of the Wujiang River, and captured Zunyi. On Jan. 15, 1935, the CPC Central Committee convened an enlarged Political Bureau meeting in an old mansion, later known to the world as the Zunyi Conference.
Inside the modest living room on the second floor, a charcoal brazier expelled the winter chill. The CPC leadership sat around a long table to review why the Red Army had fallen into passive positions since 1933. Bo Gu attributed the defeats solely to the enemy’s overwhelming strength, while other leading officials like Zhou Enlai and Zhang Wentian pinpointed flawed military command as the fundamental cause.
Mao Zedong also made a pivotal speech.
As a revolutionary forged in rural base-area practice, Mao always sought truth from real combat experience. Citing victories from the previous four counter-“encirclement” campaigns, he rebutted Bo Gu’s opinions and criticized the flawed strategies of passive defense and abandoning mobile warfare tactics. In plain, incisive language, he pointed out that “the soldiers also needed to march, eat and sleep,” and that Braun’s rigid commands were completely divorced from the realities of China’s revolutionary warfare.
Throughout the whole meeting, Bo Gu remained dejected; Braun sat near the door and lit one cigarette after another. Never had these “true Bolsheviks” faced such rigorous criticism before.
The intensive confrontation lasted three days. In the end, Mao Zedong was elected to the leadership of the Red Army and the CPC Central Committee, putting an end to the wrong guidance. This marked a life-and-death turning point in the history of the Communist Party of China.
The Zunyi Conference freed the CPC from the Comintern’s intervention, enabling the Party to independently master the destiny of China’s revolution. From then on, the Red Army turned peril into safety, and China’s revolution emerged from despair toward new life.
David Ferguson:
When faced with major setbacks, the Communist Party of China was not crushed; instead, it demonstrated the courage to confront and correct its own mistakes, thereby turning adversity into opportunity. For any ruling party, this kind of courage is exceptionally rare.
Throughout history, guided by the principle of seeking truth from facts, the Party has always corrected errors, updated systems and adjusted course. By doing so, it has guaranteed social progress. This is precisely the secret to success that has made the Party resilient and invincible.
Wang Xiaohui:
No grand undertaking advances without setbacks. Faced with obstacles and defeats, the CPC demonstrated extraordinary courage and wisdom. They sought truth from facts, corrected wrong courses, and led the revolution towards triumph.
The Zunyi Conference Spirit, embodied in firm conviction, adherence to truth, independence and self-reliance, solidarity and unity, was forged amid blood and fire. It has shaped the unique spiritual character of the CPC. In the years that followed, these timeless values continued to evolve and sustain the Party in the face of trials and challenges, endowing it with enduring vitality.
China Mosaic
http://www.china.org.cn/video/node_7230027.htm
Faith: The Spark Born by the Yudu Riverside
http://www.china.org.cn/2026-10/17/content_118737624.shtml
View original content to download multimedia:https://www.prnewswire.com/news-releases/truth-seeking-the-turning-point-in-zunyi-302912139.html
SOURCE China.org.cn
Technology
Truth-seeking: the Turning Point in Zunyi
Published
30 seconds agoon
October 19, 2026By
BEIJING, Oct. 18, 2026 /PRNewswire/ — An interview from China.org.cn with Wang Xiaohui and David Ferguson on the Long March:
Wang Xiaohui:
When you march toward your ideals but encounter repeated setbacks and failures, do you have the courage to pause, reflect on the path taken, and chart a new way forward?
David Ferguson:
If I continually encountered setbacks on the road to my ideals, I would stop and reflect seriously on whether my methods need adjusted or my direction needs corrected. This is a matter of being honest with oneself and honest about one’s shortcomings. Granted, this requires as much courage as setting out in the first place — because what you have to confront is not only the judgment of others, but your own ingrained reluctance to accept that you might have got it wrong.
Wang Xiaohui:
The waters of the Xiangjiang River ran crimson in the winter of 1934.
To cover the Red Army’s main force as they crossed the river, Chen Shuxiang, then Commander of the 34th Division of the Fifth Army Corps, led his troops to fight against vastly superior enemy forces until they ran out of ammunition and supplies. Severely wounded, Chen was captured alive. On the way to the enemy camp to be paraded for merit, Chen seized a moment of the enemy’s unawareness, tore his own intestines through his abdominal wound, and died a heroic death. He was only 29 years old.
The Battle of Xiangjiang River was the deadliest campaign for the Red Army since the start of the Long March. In less than two months, their troop strength plummeted from over 86,000 to just over 30,000.
At that critical moment, doubts and discontent among officers and soldiers with the military leadership peaked.
During the fights against the previous four Kuomintang (KMT) “encirclement” campaigns, the Red Army adopted Mao Zedong’s strategy of “luring the enemy in deep.” With flexible tactics in mobile warfare, the Red Army worked miracles of defeating superior enemies time and again. Yet, the tide turned completely during the KMT’s fifth “encirclement.”
At that time, the CPC was a branch of the Communist International (Comintern). After 1927, the Comintern instructed the CPC to adopt an urban-centered path in its revolution, for it was how Russia’s October Revolution had achieved victory. Affected by this directive, during the Fifth Counter-Campaign against “Encirclement and Suppression”, Bo Gu and Otto Braun, who held actual command of the Red Army, insisted on launching offensive operations to seize major cities.
Otto Braun also mechanically applied European conventional warfare tactics, forcing the Red Army into rigid positional and fortress battles. In the Battle of Guangchang, the poorly equipped Red Army fought head-on against enemy tanks and artillery on open terrain, resulting in more than 5,000 casualties, about one-fourth of all participating troops.
Successive military defeats forced the Red Army to launch a strategic shift. However, Bo Gu and Otto Braun insisted that everything be evacuated, including heavy equipment: printing presses, currency-making machines, and arms-manufacturing facilities… When crossing the Xiangjiang River, troops were slowed down by these cumbersome supplies, and numerous soldiers even laid down their lives for protecting these assets. Chen Shuxiang and his 34th Division wrote the gravest footnote to this bloody sacrifice.
By the banks of the Xiangjiang River, the spark of hope in the eyes of the Red Army soldiers was nearly quenched by the cold water. Could the rigid foreign doctrines truly guide the Red Army and China’s revolution? What path lay ahead?
History often unfolds in paradoxes: when all hope seems lost, a historical turning point is quietly emerging.
After the Battle of Xiangjiang River, Mao firmly opposed the original plan drafted by Bo Gu and Otto Braun to march towards Hunan. Instead, he proposed to advance to Guizhou where enemy defenses were weak. There, the Red Army broke through the natural barrier of the Wujiang River, and captured Zunyi. On Jan. 15, 1935, the CPC Central Committee convened an enlarged Political Bureau meeting in an old mansion, later known to the world as the Zunyi Conference.
Inside the modest living room on the second floor, a charcoal brazier expelled the winter chill. The CPC leadership sat around a long table to review why the Red Army had fallen into passive positions since 1933. Bo Gu attributed the defeats solely to the enemy’s overwhelming strength, while other leading officials like Zhou Enlai and Zhang Wentian pinpointed flawed military command as the fundamental cause.
Mao Zedong also made a pivotal speech.
As a revolutionary forged in rural base-area practice, Mao always sought truth from real combat experience. Citing victories from the previous four counter-“encirclement” campaigns, he rebutted Bo Gu’s opinions and criticized the flawed strategies of passive defense and abandoning mobile warfare tactics. In plain, incisive language, he pointed out that “the soldiers also needed to march, eat and sleep,” and that Braun’s rigid commands were completely divorced from the realities of China’s revolutionary warfare.
Throughout the whole meeting, Bo Gu remained dejected; Braun sat near the door and lit one cigarette after another. Never had these “true Bolsheviks” faced such rigorous criticism before.
The intensive confrontation lasted three days. In the end, Mao Zedong was elected to the leadership of the Red Army and the CPC Central Committee, putting an end to the wrong guidance. This marked a life-and-death turning point in the history of the Communist Party of China.
The Zunyi Conference freed the CPC from the Comintern’s intervention, enabling the Party to independently master the destiny of China’s revolution. From then on, the Red Army turned peril into safety, and China’s revolution emerged from despair toward new life.
David Ferguson:
When faced with major setbacks, the Communist Party of China was not crushed; instead, it demonstrated the courage to confront and correct its own mistakes, thereby turning adversity into opportunity. For any ruling party, this kind of courage is exceptionally rare.
Throughout history, guided by the principle of seeking truth from facts, the Party has always corrected errors, updated systems and adjusted course. By doing so, it has guaranteed social progress. This is precisely the secret to success that has made the Party resilient and invincible.
Wang Xiaohui:
No grand undertaking advances without setbacks. Faced with obstacles and defeats, the CPC demonstrated extraordinary courage and wisdom. They sought truth from facts, corrected wrong courses, and led the revolution towards triumph.
The Zunyi Conference Spirit, embodied in firm conviction, adherence to truth, independence and self-reliance, solidarity and unity, was forged amid blood and fire. It has shaped the unique spiritual character of the CPC. In the years that followed, these timeless values continued to evolve and sustain the Party in the face of trials and challenges, endowing it with enduring vitality.
China Mosaic
http://www.china.org.cn/video/node_7230027.htm
Faith: The Spark Born by the Yudu Riverside
http://www.china.org.cn/2026-10/17/content_118737624.shtml
View original content to download multimedia:https://www.prnewswire.com/news-releases/truth-seeking-the-turning-point-in-zunyi-302912139.html
SOURCE China.org.cn
Technology
GMIF2026: AI Inference Powers the “Token Factory” and Drives System-Level Rethinking of Memory & Storage
Published
33 seconds agoon
October 19, 2026By
SHENZHEN, China, Oct. 18, 2026 /PRNewswire/ — The 5th GMIF Innovation Summit (Global Memory Innovation Forum 2026, GMIF2026) recently concluded at the Renaissance Shenzhen Bay Hotel. Co-hosted by the Shenzhen Memory Industry Association (SMIA) and the School of Integrated Circuits at Peking University, the summit was themed “The Future Built on AI Memory and Storage.” Now in its fifth edition, GMIF has grown from a regional industry gathering into a benchmark for the global semiconductor memory ecosystem, with diversified programs including keynote sessions, an investment forum, product exhibitions, a global livestream, and a golf friendship match, all centered on the value of memory and storage in the token economy and the AI inference era.
In the opening remarks by Rixin Sun, President of Shenzhen Memory Industry Association (SMIA), GMIF’s growth over five consecutive editions was traced from its early days to today. As a platform for global exchange, GMIF is built around the memory value chain, linking wafer IDMs and players in controllers, modules, packaging and testing, equipment and materials, and end applications to promote technical exchange, supply-demand matching, and ecosystem cooperation.
President Sun noted that as AI evolves from generative to agentic, inference efficiency, data scheduling, and system coordination have become shared priorities. Collaboration across the value chain is no longer a traditional supply-demand relationship, but a deeper partnership built around workload requirements, joint product definition, and scenario validation. Looking ahead, GMIF will pursue a more specialized and differentiated format, connecting memory companies with AI compute and end-application players worldwide.
Capital Meets Technology: Memory & Storage Moves to the Center of AI Infrastructure
As AI shifts from model training to large-scale commercial inference, the token is becoming a new unit of value. Inference demands low latency, high concurrency, and sustained throughput, which places memory and storage bandwidth, capacity, and energy efficiency among the variables that shape overall system efficiency and cost.
Daniel Yen of Morgan Stanley projected that global data center capital expenditure will stay strong in the coming years, with more than half of cloud data center capex expected to go to memory & storage (excluding HBM) by 2027. Yen identified six innovation paths to overcome the “memory wall” challenge: process migration, design changes, advanced packaging, memory peripherals, PIM/CIM, and new materials.
Prof. Yimao Cai, Dean of the School of Integrated Circuits at Peking University, pointed out that HBM remains central to high-end AI compute, but yield, cost, and thermal constraints limit broader adoption. NAND-based high-bandwidth technologies such as HBF have become a major research focus because of their cost advantage, and hybrid multi-media architectures could balance performance, capacity, and cost for deploying models with hundreds of billions of parameters.
Kevin Yoon, CVP & CTO of Samsung Memory China at Samsung Electronics, described how agents are generating massive KV cache demand and driving rapid iteration of tiered storage, citing Samsung’s work on Z-NAND, PCIe Gen6 SSDs, and ultra-high-capacity data center SSDs. Maya Zhang, Senior Director of Product Marketing from Sandisk, called this the first year of the “inference boom.” As inference reaches commercial scale, AI data centers are shifting from cost centers to value and capacity centers, and the evaluation framework is moving from TCO to TVO. NAND is becoming a strategic core component of AI, and the SSD is becoming a “token battery” that greatly improves the economics of the industry through token reuse.
Solidigm and Arm focused on the evolution of system-level design. Benny Ni, GAR Sales VP at Solidigm, noted high-capacity QLC SSDs are being adopted faster, and that memory offloading has moved from an alternative to a core design paradigm for data centers, while liquid cooling has become a prerequisite for unlocking high-end storage performance. John Xavier Lionel, Head of Global Storage Business at Arm, shared competition in the AI era is shifting from simply chasing higher TOPS to building a more efficient system balance among compute, memory, storage, and data movement. Arm’s cloud-edge-device continuum framework balances power, capacity, bandwidth, latency, security, and cost constraints at each tier, so that “the right AI workload runs in the right place.”
Moving from the cloud to the edge, Stanley Huang, AVP of Silicon Motion, stressed that devices are the ultimate carrier of AI experiences and that intelligent storage directly determines real-world device performance. Its PerformaShape technology allocates resources flexibly across different agents and greatly improves read/write consistency.
Sam Sun, Chairman of BIWIN, explained that large-scale AI inference is extending memory demand from data centers to the edge and endpoints, where differing needs in capacity, performance, power, size, and reliability are pushing storage from general-purpose specifications toward deep matching with specific scenarios and platforms. Drawing on full-stack capabilities from media selection and controller and firmware development to advanced packaging, testing, and volume delivery, BIWIN works closely with customers, platforms, and chip makers to tailor products to each use case, shortening development and validation cycles and improving system space, energy efficiency, and performance.
Token Factories Move Enterprise AI from Pilot to Production
As the token becomes the core unit of value, producing tokens efficiently and at low cost has become a shared challenge for enterprise AI adoption worldwide, and the “token factory” is emerging as a new industry paradigm. Tao Zhou, General Manager of the Server Division of Lenovo ISG China, said 80% of enterprises have deployed at least one type of agent, yet fewer than 40% of projects can scale and deliver positive ROI. Lenovo has built a full-stack “token factory” paradigm spanning data governance, compute optimization, and security management to address this.
A solid token factory depends on underlying storage media and architecture. Numbers Law’s PMD (Parallel Magnetic Drive) technology and NEXWISE‘s “KuberCloud” token factory solution contributed to full-stack capability from hardware to compute scheduling and model operations. Infplane, Maxio, and Genstoraige lowered the deployment threshold for large on-device models through AI SSD tiered offloading and memory expansion.
Real-world applications are also deepening. SYNCORE has achieved vehicle-cloud embodied intelligence across the whole vehicle. Dify, with its private agent architecture, and Paratera, with its MaaS compute service platform, are moving AI from basic compute supply toward deeper industry intelligence services, accelerating the industrialization of AI.
40 Companies Showcase the Core of the AI Memory & Storage Chain
The concurrent exhibition brought together 40 companies across the full value chain, from memory chips and controllers to compute servers, AIDC services, packaging and testing equipment, and system applications, presenting the latest advances in AI memory and storage from around the world.
Memory IDMs and controller makers led with new products. SanDisk featured its iNAND AT EU752 automotive UFS 4.1, SN861 enterprise NVMe SSD, and BiCS8 QLC NAND. Silicon Motion introduced the SM8466 PCIe Gen6 16-channel controller and the SM2524XT controller for edge SSDs. Maxio, YEESTOR, and other Chinese controller makers showed flagship PCIe Gen4/Gen5 and UFS controllers with enhanced LDPC, a sign that China’s controller portfolio is taking shape and benchmarking itself against leading international standards.
Compute and token factory solutions were another highlight. Lenovo exhibited its WenTian series of AI training-and-inference integrated servers. NEXWISE presented its full-stack token factory hardware and software, with heterogeneous compute management and token-based billing. Paratera showed its intelligent compute cloud and supercomputing cloud services, and Numbers Law demonstrated its PMD (Parallel Magnetic Drive) technology, aimed at sharply raising HDD IOPS and throughput. Infplane, Genstoraige, and Quanxing introduced KV cache offload and memory-fusion AI SSD solutions that use storage to share the compute load and significantly cut deployment costs.
Module makers and full-scenario solution providers brought a wide range of products. BIWIN exhibited enterprise SSDs, CXL products, wide-temperature industrial storage, and embedded products spanning AI cloud, edge, and device. KingSpec, POWEV, Topdisk, Barycn, Jielong Storage, HIKSEMI, and others presented industrial-grade, automotive-grade, server, and embedded product families, demonstrating strong volume production and reliable delivery.
Equipment, testing, and materials suppliers rounded out the floor. Attach Point, MICROVIEW, and Maxwell Technologies showed die attach and bonding equipment for 2.5D/3D advanced packaging. OKN Technology, Acroview Technology, Hongjingwei, and Tytantest introduced test and burn-in systems covering SSD, DRAM, and NAND that can accurately reproduce high-load AI I/O scenarios. Hemei Jingyi and Silergy brought storage IC package substrates and dedicated power management ICs. From advanced packaging equipment to test validation to core components, this supporting ecosystem lays the manufacturing foundation for volume production of AI memory and storage and for Chinese suppliers expanding overseas.
GMIF2026 Annual Awards Unveiled: Global Memory & Storage Leaders Build an Open, Collaborative Ecosystem
To recognize companies that have made outstanding contributions to the memory and storage value chain, the summit established the GMIF2026 Annual Awards, which cover memory, compute, packaging and testing equipment, test systems, and end applications across AI infrastructure, and were judged on technological innovation, industry contribution, market service, and real-world results.
Honorees, including Samsung Semiconductor, SanDisk, Solidigm, CXMT, Arm, Lenovo, Dify, Silicon Motion, Infplane, Genstoraige, Numbers Law, Paratera, SYNCORE, NEXWISE, Maxio Technology, BIWIN, Topdisk, KingSpec, POWEV, Quanxing Technology, OKN Technology, Attach Point, COMIX, Barycn, LKAUTO, Maxwell Technologies, Hemei Jingyi, Silergy, Heyan Technology, ExTripod Electronics, UNIMOS, GBAT, and Tytantest, were recognized for standout achievements in technology breakthroughs, product deployment, ecosystem building, and the industry chain.
Global Livestream and Golf Friendship Match Extend the Boundaries of Industry Cooperation
To join the global ecosystem and expand international cooperation, the summit featured a special Global Livestream by Memory Brands on LinkedIn, Facebook, and YouTube. Eight brands presented online: BIWIN, Silicon Motion, Quanxing Technology, OKN Technology, KingSpec, Maxwell Technologies, ExTripod Electronics, and Silergy. They gave overseas audiences a direct look at China’s latest advances in memory chips, advanced packaging, test systems, and other core AI infrastructure components, connecting technology standards, supply chain resources, and market demand across regions.
The momentum carried into the next day. The GMIF2026 “BIWIN Cup” golf friendship match, exclusively sponsored by BIWIN, brought senior executives from across the global memory value chain to the course. After a day of intensive discussion at the main forum, the setting was more relaxed, but the conversations among technology, capital, and markets carried on, helping speed practical cooperation across borders and sectors.
Conclusion
Across the GMIF program, one message stood out: global AI competition is moving beyond the “single-point era” of peak GPU performance into a “system-level era” that integrates storage, compute, networking, and software. In the token economy, memory and storage is shedding its auxiliary role and becoming the strategic foundation of AI inference.
This edition of GMIF brought together capital outlook, frontier technology, product innovation, real-world practice, and ecosystem collaboration, and, with the awards, livestream, and networking events, carried the conversation from ideas to product showcases, overseas exposure, and business deals. Going forward, GMIF will stay focused on the industry’s frontier issues and connect key players across the global memory value chain, promoting joint standards, technology development, and market expansion to open a new chapter for the AI memory and storage industry.
About GMIF
Global Memory Innovation Forum (GMIF) is a premier annual gathering that connects the global memory and storage community. Featuring diverse activities including keynote speeches, roundtable dialogues, supply-demand match-making, product showcases, industry rankings, awards programs, and global livestreaming, GMIF brings together key enterprises across the memory and storage chain, technical experts, terminal companies and investment institutions to exchange insights, build partnerships, and create business opportunities. Learn more about GMIF, please visit https://www.gmif.com.cn/. Follow us on LinkedIn, YouTube and Facebook.
Media Contact:
Carina Gu, wenjing.gu@gmif.com.cn
View original content to download multimedia:https://www.prnewswire.com/news-releases/gmif2026-ai-inference-powers-the-token-factory-and-drives-system-level-rethinking-of-memory–storage-302912123.html
SOURCE Shenzhen Memory Industry Association (SMIA)
Truth-seeking: the Turning Point in Zunyi
Truth-seeking: the Turning Point in Zunyi
GMIF2026: AI Inference Powers the “Token Factory” and Drives System-Level Rethinking of Memory & Storage
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