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Solventum Reports Third Quarter 2024 Financial Results and Raises Full-Year Guidance

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2 years ago

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Reported sales increased 0.4% to $2.082 billion; organic sales increased 0.3%GAAP Earnings Per Share (EPS) of $0.70; adjusted EPS1 of $1.64Generated $169 million in cash from operations; free cash flow1 of $76 millionRaises full-year 2024 organic sales growth, adjusted EPS and free cash flow guidance

ST. PAUL, Minn., Nov. 7, 2024 /PRNewswire/ — Solventum (NYSE: SOLV) today reported financial results for the third quarter ended September 30, 2024.

“We have now delivered consecutive quarters of outperformance against our expectations, and based on these results, we are again raising our full-year guidance,” said Bryan Hanson, chief executive officer, Solventum. “It has been an exciting start, and we are confident that our three-phased approach will drive long-term growth and significant value creation.”

Third Quarter 2024 Financial Results

3 months ended September 30, 2024

(Millions of dollars, except per share amounts)

GAAP

non-GAAP1

Sales

$2,082

$2,082

Operating income

$275

$475

Operating income margin

13.2 %

22.8 %

Earnings per share (EPS)

$0.70

$1.64

Cash from operations/free cash flow1

$169

$76

Reported and organic sales growth reflect the expected normalization of pricing. By segment, organic sales growth was primarily driven by the MedSurg and Health Information Systems segments, partially offset by the Dental Solutions and Purification and Filtration segments. 

GAAP and adjusted operating income margin declined due to lower gross margins, including the impact from the 3M supply agreement mark-up, and an increase in operating expenses related to public company stand-up costs and growth investments.

1 Represents non-GAAP financial measure; see the “Non-GAAP Financial Measures” section for applicable information.

 

Segment and Total Company Net Sales for Third Quarter*

Three months ended
September 30

Increase/(Decrease)

(Dollars in millions)

2024

2023

Total

Currency
Impact

Other2

Organic

MedSurg

$          1,182

$          1,180

0.1 %

(0.1) %

(0.7) %

1.0 %

Dental Solutions

313

331

(5.2)

—

(1.2)

(3.9)

Health Information Systems

326

321

1.5

0.1

—

1.5

Purification and Filtration

238

242

(1.5)

—

(1.1)

(0.3)

Corporate and Unallocated3

23

—

NM

NM

NM

NM

Total Company

$          2,082

$          2,074

0.4 %

(0.1) %

0.2 %

0.3 %

*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum.

2Other represents sales impact from acquisitions and divestitures measured separately for the first 12 months post-transaction. Divestiture impacts include lost sales from the company’s dental anesthetics business that was sold in August 2023 and certain health care businesses retained by 3M India in connection with the spin-off.

3Corporate and unallocated includes sales related to product supplied to 3M and other supply agreements related to legacy 3M business and assumed by the company at spin-off.

Full-Year 2024 Guidance
Solventum is raising its full-year 2024 guidance

Organic sales growth to the upper half of 0% to +1.0% (previously 0% to +1.0%)Adjusted EPS of $6.50 to $6.65 (previously $6.30 to $6.50)Free cash flow of $750M to $850M (previously $700M to $800M)

Organic sales, adjusted EPS and free cash flow amounts included in Solventum’s full-year guidance and additional considerations below are non-GAAP financial measures. Solventum does not provide reconciliations of the forward-looking non-GAAP financial measures to the respective GAAP metrics as it is unable to predict with reasonable certainty and without unreasonable effort certain items, such as the impact of changes in currency exchange rates, impacts associated with business acquisitions or divestitures, and the timing and magnitude of restructuring activities, among other items. 

Solventum’s full-year 2024 guidance is based on Q1 2024 as a carve-out plus the remainder of the year as a stand-alone company starting April 1, 2024.

See the “Non-GAAP Financial Measures” section for explanations of our non-GAAP financial measures.

Earnings Conference Call
Solventum will host a conference call today, November 7, at 4:30 p.m. Eastern Time to discuss its third quarter financial results and provide an update on its business. The conference call can be accessed via audio webcast at investors.solventum.com or by dialing (800) 715-9871 within the U.S. or +1 (646) 307-1963 for international callers, using the conference ID 6342275.

A replay of the webcast, along with the earnings press release, slides highlighting the results, and supplemental financial disclosures, will also be available at the same link on the Investor Relations section of the company’s website.

Forward-Looking Statement
This news release contains forward-looking information about Solventum’s financial results and estimates and business prospects that involve substantial risks and uncertainties. In particular, statements regarding the future performance of Solventum, including guidance for 2024, are forward-looking statements. You can identify these statements by the use of words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans or prospects. Among the factors that could cause actual results to differ materially are the following: (1) worldwide economic, political, regulatory, international, trade and geopolitical conditions, natural disasters, war, public health crises, and other events beyond Solventum’s control; (2) operational execution risks; (3) damage to Solventum’s reputation or its brands; (4) risks from acquisitions, strategic alliances, divestitures and other strategic events; (5) Solventum’s business dealings involving third-party partners in various markets; (6) Solventum’s ability to access the capital and credit markets and changes in Solventum’s credit ratings; (7) exposure to interest rate and currency risks; (8) the highly competitive environment in which Solventum operates and consolidation in the healthcare industry; (9) reduction in customers’ research budgets or government funding; (10) the timing and market acceptance of Solventum’s new product and service offerings; (11) ongoing working relationships with certain key healthcare professionals; (12) changes in reimbursement practices of governments or private payers or other cost containment measures; (13) Solventum’s ability to obtain components or raw materials supplied by third parties and other manufacturing and related supply chain difficulties, interruptions, and disruptive factors; (14) legal and regulatory proceedings and legal compliance risks (including third-party risks) with regards to antitrust, FCPA and other anti-bribery laws, environmental laws, anti-kickback and false claims laws, privacy laws, product liability claims, tax laws, and other laws and regulations in the United States and other countries in which Solventum operates; (15) potential liabilities related to per-and polyfluoroalkyl substances; (16) risks related to the highly regulated environment in which Solventum operates; (17) climate change and measures to address climate change; (18) security breaches and other disruptions to information technology infrastructure; (19) Solventum’s failure to obtain, maintain, protect, or effectively enforce its intellectual property rights; (20) pension and postretirement obligation liabilities; (21) any events that adversely affect the sale or profitability of one of Solventum’s key products or the revenue delivered from sales to its key customers; (22) any failure by 3M Company (“3M“) to perform any of its obligations under the various separation agreements entered into in connection with the separation of Solventum from 3M and distribution (the “Spin-Off”); (23) any failure to realize the expected benefits of the Spin-Off; (24) Solventum’s ability to execute its turnaround strategy; (25) a determination by the IRS or other tax authorities that the Separation or certain related transactions should be treated as taxable transactions; (26) indebtedness incurred in the financing transactions undertaken in connection with the Separation and risks associated with additional indebtedness; (27) the risk that incremental costs of operating on a standalone basis (including the loss of synergies), costs of restructuring transactions and other costs incurred in connection with the Spin-Off will exceed Solventum’s estimates; and (28) the impact of the Spin-Off on Solventum’s businesses and the risk that the separation from 3M may be more difficult, time-consuming or costly than expected, including the impact on Solventum’s resources, systems, procedures and controls, diversion of management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located under “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Solventum’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. Solventum assumes no obligation to update any forward-looking statements discussed herein as a result of new information or future events or developments.

Non-GAAP Financial Measures
In addition to reporting financial results in accordance with U.S. GAAP, Solventum also provides non-GAAP measures that we use, and plan to continue using, when monitoring and evaluating operating performance and measuring cash available to invest in our business. The adjusted measures are not in accordance with, nor are they a substitute for, GAAP measures. These non-GAAP financial measures are supplemental measures of our performance and our liquidity that we believe help investors understand our underlying business performance and Solventum uses these measures as an indication of the strength of Solventum and its ability to generate cash.

Solventum calculates forward-looking non-GAAP financial measures, including organic sales growth, adjusted operating income, adjusted operating income margin, adjusted effective tax rate, adjusted earnings per share, and free cash flow based on internal forecasts that omit certain amounts that would be included in GAAP financial measures. Solventum does not provide reconciliations of these forward-looking non-GAAP financial measures to the respective GAAP metrics as it is unable to predict with reasonable certainty and without unreasonable effort certain items such as the impact of changes in currency exchange rates, impacts associated with business acquisitions or divestitures, and the timing and magnitude of restructuring activities, among other items. The timing and amounts of these items are uncertain and could have a material impact on Solventum’s results in accordance with GAAP. 

The Q3 2024 financial statements and financial information, including reconciliations of non-GAAP financial measures, are available on Solventum’s website: investors.solventum.com.

About Solventum
At Solventum, we enable better, smarter, safer healthcare to improve lives. As a new company with a long legacy of creating breakthrough solutions for our customers’ toughest challenges, we pioneer game-changing innovations at the intersection of health, material and data science that change patients’ lives for the better — while empowering healthcare professionals to perform at their best. See how at Solventum.com. 

Solventum Corporation

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME

(Dollars in millions, except per-share amounts)

(Unaudited)

Three months ended
September 30,

Nine months ended
September 30,

2024

2023

2024

2023

Net sales of product

$       1,608

$       1,593

$       4,766

$       4,750

Net sales of software and rentals

474

481

1,413

1,411

Total net sales

2,082

2,074

6,179

6,161

Cost of product

793

748

2,341

2,262

Cost of software and rentals

124

117

364

364

Gross profit

1,165

1,209

3,474

3,535

Selling, general and administrative expenses

701

525

1,998

1,681

Research and development expenses

189

180

576

568

Total operating expenses

1,807

1,570

5,279

4,875

Operating income

275

504

900

1,286

Interest expense, net

107

—

260

—

Other expense (income), net

1

4

48

10

Income before income taxes

167

500

592

1,276

Provision for income taxes

45

40

144

202

Net Income

$          122

$          460

$          448

$       1,074

Earnings per share:

Basic earnings per share

$         0.70

$         2.66

$         2.59

$         6.22

Diluted earnings per share

0.70

2.66

2.58

6.22

Weighted-average number of share outstanding:

Basic

173.4

172.7

173.1

172.7

Diluted

173.9

172.7

173.4

172.7

 

Solventum Corporation

CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS

(Dollars in millions)

(Unaudited)

September 30,

December 31,

(Millions)

2024

2023

Assets

Current assets

Cash and cash equivalents

$            772

$            194

Accounts receivable — net of allowances of $86 and $82

1,105

1,313

Due from related parties

222

—

Inventories

Finished goods

529

453

Work in process

181

171

Raw materials and supplies

243

233

Total inventories

953

857

Other current assets

302

155

Total current assets

3,354

2,519

Property, plant and equipment — net

1,599

1,457

Goodwill

6,592

6,535

Intangible assets — net

2,651

2,902

Other assets

549

530

Total assets

$        14,745

$        13,943

Liabilities

Current liabilities

Short-term borrowings and current portion of long-term debt

$            300

$               —

Accounts payable

560

477

Due to related parties

450

—

Unearned revenue

563

574

Other current liabilities

1,031

677

Total current liabilities

2,904

1,728

Long-term debt

7,809

—

Pension and postretirement benefits

321

166

Deferred income taxes

214

231

Other liabilities

305

152

Total liabilities

$        11,553

$          2,277

Equity

Common stock par value, $0.01 par value, 750,000,000 shares authorized

$                2

$               —

Shares issued and outstanding – September 30, 2024: 172,754,070

Shares issued and outstanding – December 31, 2023: 0

Additional paid-in capital

3,744

—

Retained earnings

211

—

Net parent investment

—

12,003

Accumulated other comprehensive income (loss)

(765)

(337)

Total equity

3,192

11,666

Total liabilities and equity

$        14,745

$        13,943

 

Solventum Corporation

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(Dollars in millions)

(Unaudited)

Nine months ended September 30,

(Millions)

2024

2023

Cash Flows from Operating Activities

Net income

$            448

$          1,074

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

405

422

Postretirement benefit plan expense

30

31

Stock-based compensation expense

87

32

Gain on business divestitures

—

(56)

Deferred income taxes

(93)

(99)

Changes in assets and liabilities

Accounts receivable

14

(24)

Due from related parties

200

—

Inventories

(99)

(7)

Accounts payable

200

48

Due to related parties

(393)

—

All other operating activities

167

(53)

Net cash provided by operating activities

966

1,368

Cash Flows from Investing Activities

Purchases of property, plant and equipment

(253)

(202)

Proceeds from sale of business

—

60

Net cash used in investing activities

(253)

(142)

Cash Flows from Financing Activities

Repayment of debt

(200)

—

Net transfers to 3M

(8,247)

(1,248)

Proceeds from long-term debt, net of issuance costs

8,303

—

Other — net

8

2

Net cash used in financing activities

(136)

(1,246)

Effect of exchange rate changes on cash and cash equivalents

1

1

Net increase (decrease) in cash and cash equivalents

578

(19)

Cash and cash equivalents at beginning of year

194

61

Cash and cash equivalents at end of period

$            772

$              42

 

Solventum Corporation

SALES CHANGE ANALYSIS4

(Dollars in millions)

(Unaudited)

Segment and Total Company Net Sales for the First Nine Months*

Nine months ended
September 30,

Increase/(Decrease)

(Dollars in millions)

2024

2023

Total

Currency
Impact

Other

Organic

MedSurg

$         3,463

$        3,464

— %

(0.6) %

(0.5) %

1.1 %

Dental Solutions

979

1,023

(4.3)

(0.6)

(1.9)

(1.8)

Health Information Systems

971

953

1.8

—

—

1.8

Purification and Filtration

721

721

0.1

(0.7)

(0.9)

1.7

Corporate and Unallocated5

45

—

NM

NM

NM

NM

Total Company

$         6,179

$        6,161

0.3 %

(0.5) %

— %

0.8 %

*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum.

4Total sales change is calculated based on reported sales results. The components of sales change include organic local-currency sales, translation, and other. Organic local-currency sales include both organic volume impacts (which excludes acquisition and divestiture impacts, in addition to supply agreement and impacts) and selling price changes. Other represents sales impact from acquisitions and divestitures measured separately for the first 12 months post-transaction. Divestiture impacts include lost sales from the company’s dental anesthetics business that was sold in August 2023 and certain health care businesses retained by 3M India in connection with the spin-off.

5Corporate and Unallocated also includes sales and cost of sales related to products supplied to 3M and other supply agreements related to legacy 3M business and assumed by the company at spin-off.

Solventum Corporation and Subsidiaries
BUSINESS SEGMENTS
(Unaudited)

Operating segments include components of an enterprise where separate financial information is available that is evaluated regularly by the company’s Chief Operating Decision Maker (“CODM”) for the purpose of assessing performance and allocating resources. The company’s CODM is its Chief Executive Officer. The company’s operating activities are managed through four operating segments: MedSurg, Dental Solutions, Health Information Systems, and Purification and Filtration. There have been no changes to the composition of the segments or to financial information reported within each of the business segments. These segments have been identified based on the nature of the products sold and how the company manages its operations. Transactions among reportable segments are recorded at cost. No operating segments have been aggregated to form reportable segments.

Corporate and Unallocated includes amortization of acquired intangible assets, restructuring and related charges, benefits or costs related to capitalized manufacturing variances, spin-off and separation-related costs and other net costs that the company chose not to allocate directly to its business segments. Spin-off and separation-related costs include any costs incurred as part of our separation from 3M and costs to setup operations as a standalone company, including system implementations, manufacturing relocation, legal entity separation, certain equity awards granted as part of the spin-off, profit mark-ups on transition service arrangements with 3M and other one-time costs. 

Corporate and Unallocated also includes sales and cost of sales related to products supplied to 3M and other supply agreements related to legacy 3M business and assumed by the company at spin-off. Because Corporate and Unallocated includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis. Business segment operating income is reconciled to total operating income below:

BUSINESS SEGMENT INFORMATION

Three months ended September 30, 2024

Three months ended September 30, 2023

(Dollars in millions)

Net Sales

Operating
Income

Operating
Margin %

Net Sales

Operating
Income

Operating
Margin %

MedSurg

$      1,182

$         243

20.6 %

$      1,180

$         307

26.0 %

Dental Solutions

313

72

23.0

331

114

34.4

Health Information Systems

326

105

32.2

321

114

35.5

Purification and Filtration

238

20

8.4

242

48

19.8

Total business segment operating income

$         440

$         583

Corporate and Unallocated:

Amortization expense

$         (88)

$         (92)

Other Corporate and Unallocated

(77)

13

Total Corporate and Unallocated

23

(165)

NM

—

(79)

NM

Total Company

$      2,082

$         275

13.2 %

$      2,074

$         504

24.3 %

BUSINESS SEGMENT INFORMATION

Nine months ended September 30, 2024

Nine months ended September 30, 2023

(Dollars in millions)

Net Sales

Operating
Income

Operating
Margin %

Net Sales

Operating
Income

Operating
Margin %

MedSurg

$      3,463

$         678

19.6 %

$      3,464

$         829

23.9 %

Dental Solutions

979

272

27.8

1,023

349

34.1

Health Information Systems

971

317

32.6

953

304

31.9

Purification and Filtration

721

78

10.8

721

134

18.6

Total business segment operating income

$      1,345

$      1,616

Corporate and Unallocated:

Amortization expense

$       (261)

$       (276)

Other Corporate and Unallocated

(184)

(54)

Total Corporate and Unallocated

45

(445)

NM

—

(330)

NM

Total Company

$      6,179

$         900

14.6 %

$      6,161

$      1,286

20.9 %

 

Solventum Corporation
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP MEASURES
(Unaudited)

In addition to reporting financial results in accordance with U.S. GAAP, the company use non-GAAP financial measures to supplement the financial measures prepared in accordance with U.S. GAAP. These include (1) Adjusted operating income, and adjusted operating income margin, (2) Adjusted earnings per share, and (3) Free cash flow. Management believes that these non-GAAP financial measures are useful in evaluating current performance and focusing management on our underlying operational results.

There are limitations to the use of the non-GAAP financial measures presented in this information statement. These non-GAAP financial measures are not prepared in accordance with U.S. GAAP nor do they have any standardized meaning under U.S. GAAP. In addition, other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to such similarly titled non-GAAP financial measures used by other companies. Management cautions you not to place undue reliance on these non-GAAP financial measures, but instead to consider them with the most directly comparable U.S. GAAP measure. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation. These non-GAAP financial measures should be considered supplements to, not substitutes for, or superior to, the corresponding financial measures calculated in accordance with U.S. GAAP.

The tables below reconcile our non-GAAP financial measures to the nearest financial measure that is in accordance with U.S. GAAP for the periods presented.

Adjusted Operating Income, Adjusted Operating Income Margin and Adjusted Earnings Per Share (Non-GAAP measures)

Adjusted operating income and adjusted operating income margin are not defined under U.S. GAAP. Therefore, they should not be considered a substitute for earnings data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Solventum defines adjusted operating income as operating income excluding the effects of amortization, restructuring costs, and spin-off and separation-related costs. Adjusted operating income margin is adjusted operating income divided by the U.S GAAP measure total net sales for the same period. The company believes adjusted operating income and adjusted operating income margin provide investors with visibility into the company’s unleveraged, pre-tax operating results and reflects underlying financial performance. However, adjusted operating income should not be construed as inferring that the company’s future results will be unaffected by the items for which the measure adjusts.

Adjusted earnings per share is not defined under U.S. GAAP. Therefore, it should not be considered a substitute for earnings data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Solventum defines adjusted earnings per share as net income excluding the after-tax effects of amortization, restructuring costs, spin-off and separation-related costs, and legal entity restructuring costs. The company believes adjusted earnings per share provides investors with improved comparability of underlying operating results and a further understanding and additional transparency regarding how the company evaluate the business. However, adjusted earnings per share should not be construed as inferring that the company’s future results will be unaffected by the items for which the measure adjusts.

Solventum Corporation

SUPPLEMENTAL FINANCIAL INFORMATION

NON-GAAP MEASURES – (CONTINUED)*

(Unaudited)

Three months ended September 30, 2024

(Dollars in millions, except per share amounts)

Net sales

Cost of
Sales6

Gross
Margin %

Other
Operating
Expenses7

Operating
Income

Operating
Income
Margin %

Non-
Operating
Expense
(Income),
net8

Income
Before
Income
Taxes

Net Income
Attributable
to
Solventum

Diluted
EPS

Effective
Tax Rate

GAAP

$ 2,082

$    917

56.0 %

$  1,807

$    275

13.2 %

$    108

$    167

$      122

$   0.70

26.9 %

Non-GAAP Adjustments:

Amortization of acquisition-related intangible assets

—

—

—

(88)

88

4.2

—

88

73

0.42

Restructuring costs (a)

—

(1)

—

(1)

1

0.1

—

1

1

0.01

Spin-off and separation-related costs (b)

—

(27)

1.3

(111)

111

5.3

—

111

85

0.49

Legal entity restructuring (c)

—

—

—

—

—

—

—

—

4

0.02

Non-GAAP

$ 2,082

$    889

57.3 %

$  1,607

$    475

22.8 %

$    108

$    367

$      285

$   1.64

22.3 %

Three months ended September 30, 2023

(Dollars in millions, except per share amounts)

Net sales

Cost of
Sales6

Gross
Margin %

Other
Operating
Expenses7

Operating
Income

Operating
Income
Margin %

Non-
Operating
Expense
(Income),
net8

Income
Before
Income
Taxes

Net Income
Attributable
to
Solventum

Diluted
EPS

Effective
Tax Rate

GAAP

$ 2,074

$    865

58.3 %

$  1,570

$    504

24.3 %

$        4

$    500

$      460

$   2.66

8.0 %

Non-GAAP Adjustments:

Amortization of acquisition-related intangible assets

—

—

—

(92)

92

4.4

—

92

77

0.45

Restructuring costs (a)

—

(1)

—

1

(1)

—

—

(1)

(1)

(0.01)

Spin-off and separation-related costs (b)

—

—

—

—

—

—

—

—

—

—

Gain on business divestitures

—

—

—

56

(56)

(2.7)

—

(56)

(40)

(0.23)

Non-GAAP

$ 2,074

$    864

58.3 %

$  1,535

$    539

26.0 %

$        4

$    535

$      496

$   2.87

7.3 %

_________

*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum.

(a)    Consists of severance associated with restructuring programs.

(b)    Consists of costs specifically incurred in connection with the separation from 3M.

(c)    Consists of tax impacts for legal entity restructuring in connection with the separation from 3M.

6Cost of sales is the combination of cost of product and cost of software and rental line items from the Condensed Consolidated and Combined Statements of Income and represents the total company cost of sales.

7Other operating expenses is a combination of selling, general and administrative expenses and research and development expenses from the Condensed Consolidated and Combined Statements of Income and represents the total company other operating expenses.

8 Non-operating expense (income), net is the combination of interest expense, net and other expense (income), net line items from the Condensed Consolidated and Combined Statements of Income and represents the total company non-operating expense.

 

Solventum Corporation

SUPPLEMENTAL FINANCIAL INFORMATION

NON-GAAP MEASURES – (CONTINUED)*

(Unaudited)

Nine months ended September 30, 2024

(Dollars in millions, except per share amounts)

Net sales

Cost of
Sales6

Gross
Margin %

Other
Operating
Expenses7

Operating
Income

Operating
Income
Margin %

Non-
Operating
Expense
(Income),
net8

Income
Before
Income
Taxes

Net Income
Attributable
to
Solventum

Diluted
EPS

Effective
Tax Rate

GAAP

$ 6,179

$ 2,705

56.2 %

$  5,279

$    900

14.6 %

$    308

$    592

$      448

$   2.58

24.3 %

Non-GAAP Adjustments:

Amortization of acquisition-related intangible assets

—

—

—

(261)

261

4.2

—

261

218

1.26

Restructuring costs (a)

—

(5)

0.1

(13)

13

0.2

—

13

9

0.06

Spin-off and separation-related costs (b)

—

(48)

0.8

(215)

215

3.5

(38)

253

205

1.18

Legal entity restructuring (c)

—

—

—

—

—

—

—

—

35

0.20

Non-GAAP

$ 6,179

$ 2,652

57.1 %

$  4,790

$ 1,389

22.5 %

$    270

$ 1,119

$      915

$   5.28

18.2 %

Nine months ended September 30, 2023

(Dollars in millions, except per share amounts)

Net sales

Cost of
Sales6

Gross
Margin %

Other
Operating
Expenses7

Operating
Income

Operating
Income
Margin %

Non-
Operating
Expense
(Income),
net8

Income
Before
Income
Taxes

Net Income
Attributable
to
Solventum

Diluted
EPS

Effective
Tax Rate

GAAP

$ 6,161

$ 2,626

57.4 %

$  4,875

$ 1,286

20.9 %

$      10

$ 1,276

$   1,074

$   6.22

15.8 %

Non-GAAP Adjustments:

Amortization of acquisition-related intangible assets

—

—

—

(276)

276

4.5

—

276

231

1.33

Restructuring costs (a)

—

(12)

0.2

(38)

38

0.6

—

38

31

0.18

Spin-off and separation-related costs (b)

—

—

—

—

—

—

—

—

—

—

Gain on business divestitures

—

—

—

56

(56)

(0.9)

—

(56)

(40)

(0.23)

Non-GAAP

$ 6,161

$ 2,614

57.6 %

$  4,617

$ 1,544

25.1 %

$      10

$ 1,534

$   1,296

$   7.50

15.5 %

__________

*Data in the schedule above is intentionally rounded to the nearest million and, therefore, may not sum.

(a)    Consists of severance associated with restructuring programs.

(b)    Consists of costs specifically incurred in connection with the separation from 3M.

(c)    Consists of tax impacts for legal entity restructuring in connection with the separation from 3M.

6Cost of sales is the combination of cost of product and cost of software and rental line items from the Condensed Consolidated and Combined Statements of Income and represents the total company cost of sales.

7Other operating expenses is a combination of selling, general and administrative expenses and research and development expenses from the Condensed Consolidated and Combined Statements of Income and represents the total company other operating expenses.

8 Non-operating expense (income), net is the combination of interest expense, net and other expense (income), net line items from the Condensed Consolidated and Combined Statements of Income and represents the total company non-operating expense.

Free Cash Flow (non-GAAP measure):

Free cash flow is not defined under U.S. GAAP. Therefore, it should not be considered a substitute for income or cash flow data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. The company defines free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. The company believes free cash flow is meaningful to investors as it is a useful measure of liquidity and the company uses these measures as an indication of the strength of the company and its ability to generate cash. Free cash flow varies across quarters throughout the year. Below find a recap of free cash flow.

(Dollars in millions)

Three months ended
September 30,

Nine months ended
September 30,

Major GAAP Cash Flow Categories

2024

2023

2024

2023

Net cash provided by operating activities

$           169

$           493

$           966

$         1,368

Net cash used in investing activities

(93)

(6)

(253)

(142)

Net cash used in financing activities

(202)

(485)

(136)

(1,246)

Free Cash Flow (non-GAAP measure)

Net cash provided by operating activities

$           169

$           493

$           966

$         1,368

Purchases of property, plant and equipment

(93)

(66)

(253)

(202)

Free cash flow*

76

427

713

1,166

__________________

*         Non-GAAP financial measure.

 

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SOURCE Solventum

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Technology

Escalade Announces Second Quarter 2026 Results Conference Call Date

Published

17 minutes ago

on

July 23, 2026

By

EVANSVILLE, Ind., July 23, 2026 /PRNewswire/ — Escalade, Inc. (NASDAQ: ESCA, or the “Company”), a leading manufacturer and distributor of sporting goods and indoor/outdoor recreational equipment, today announced that it will issue its second quarter 2026 results before the market opens on Thursday, July 30, 2026. A conference call will be held that day at 11:00 a.m. ET to review the Company’s financial results and conduct a question-and-answer session.

A webcast of the conference call will be available in the Investor Relations section of Escalade’s website at www.escaladeinc.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.

To participate in the live teleconference:

Domestic Live:

833-890-3250

International Live: 

412-206-6441

To listen to a replay of the teleconference, which subsequently will be available through August 13, 2026:

Domestic Replay: 

844-512-2921

International Replay:

412-317-6671

Conference ID:

10209663

ABOUT ESCALADE

Founded in 1922, and headquartered in Evansville, Indiana, Escalade designs, manufactures, and sells sporting goods, safety, fitness, and indoor/outdoor recreation equipment. Our mission is to connect family and friends, create lasting memories, and play life to the fullest. Leaders in our respective categories, Escalade’s distinct and acclaimed brands include Goalrilla™ in-ground basketball hoops; STIGA® tennis tables and accessories; Bear® Archery and archery equipment; Brunswick Billiards® tables and accessories; Accudart® darting; ONIX® pickleball; Lifeline® fitness products; and RAVE Sports® water recreation products. Escalade’s products are available online and through leading retailers nationwide. For more information about Escalade’s diverse and prominent brand portfolio, history, financials, and governance, please visit www.escaladeinc.com.

INVESTOR RELATIONS CONTACT

Wesley Smith
Vice President, Financial Reporting & Investor Relations
812-467-1334

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SOURCE Escalade, Incorporated

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Analog Devices to Report Third Quarter Fiscal Year 2026 Financial Results on Wednesday, August 19, 2026

Published

17 minutes ago

on

July 23, 2026

By

WILMINGTON, Mass., July 23, 2026 /PRNewswire/ — Analog Devices, Inc. (Nasdaq: ADI) today announced it will release financial results for the third quarter fiscal year 2026 at 7:00 a.m. Eastern time on Wednesday, August 19, 2026. Following the press release, the Company will host a conference call at 10:00 a.m. Eastern time, the same day. Vincent Roche, Chief Executive Officer and Chair, Richard Puccio, Executive Vice President and Chief Financial Officer, and Jeff Ambrosi, Head of Investor Relations, Senior Director, will discuss ADI’s results and business outlook.

The press release, live conference call and subsequent archived copies can be accessed on Analog Devices’ Investor Relations website at investor.analog.com. To participate in the live conference call, please pre-register at: register-conf.media.server.com. Upon registering, you will be emailed a dial-in number and unique PIN.

About Analog Devices, Inc.
Analog Devices, Inc. (NASDAQ: ADI) is a global semiconductor leader that bridges the physical and digital worlds to enable breakthroughs at the Intelligent Edge. ADI combines analog, digital, AI, and software technologies into solutions that combat climate change, reliably connect humans and the world, and help drive advancements in automation and robotics, mobility, healthcare, energy and data centers. With revenue of more than $11 billion in FY25, ADI ensures today’s innovators stay Ahead of What’s Possible. Learn more at www.analog.com and on LinkedIn and X.

Jeff Ambrosi
Head of Investor Relations, Senior Director
Analog Devices, Inc.
781-461-3282
invesor.relations@analog.com

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SOURCE Analog Devices, Inc.

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Technology

Scholastic Reports Fourth Quarter and Fiscal 2026 Results

Published

17 minutes ago

on

July 23, 2026

By

Fiscal 2026 Operating Income of $15.2 Million; Adjusted EBITDA of $151.5 Million, Up 4%, in Line With Guidance

Returned Over $285 Million to Shareholders During Fiscal Year

Fiscal 2027 Outlook Targets Return to Revenue Growth and Higher Adjusted EBITDA on Comparable Basis

NEW YORK, July 23, 2026 /PRNewswire/ — Scholastic Corporation (NASDAQ: SCHL), the global children’s publishing, education and media company, today reported financial results for the Company’s fiscal fourth quarter and full year ended May 31, 2026.

Peter Warwick, President and Chief Executive Officer, said, “Fiscal 2026 demonstrated the earnings power of a more focused Scholastic, as the Company made substantial progress in a multi-year transformation of its governance, organization, strategy and balance sheet. Adjusted EBITDA rose, in line with guidance, positioning the Company for growth in fiscal 2027.”

Fiscal 2026 revenue decreased 3%, and operating income was $15.2 million, compared with $15.8 million in fiscal 2025. Adjusted operating income, excluding one-time items, increased to $47.1 million from $35.8 million in the prior year period. Adjusted EBITDA was $151.5 million, up 4%, and increased 15% on a comparable basis, reflecting the full-year impact of additional lease expense and the loss of rental income from the sale-leaseback transactions in both periods. In the fourth quarter, Adjusted EBITDA increased $1.0 million on that same comparable basis, driven by continued strong execution in Book Fairs, Entertainment’s return to growth and disciplined cost management across the Company, even as revenue was affected by expected comparisons against an exceptional prior-year quarter in Trade and continued funding volatility in Education.

Mr. Warwick continued, “Today, our company is more clearly organized around the advantages that make Scholastic distinctive: a trusted brand, beloved IP, proprietary school-based channels and deep relationships with educators and families built over more than a century. Scholastic remains uniquely positioned to connect books, schools, homes and screens in ways that deepen kids’ engagement with stories and bring more children back to reading at a scale and depth that others cannot easily replicate.

“During the fourth quarter, we continued to see the impact of this strategy across the business. Book Fairs deepened our reach with schools and families, Trade Publishing remained anchored by enduring children’s franchises, and Entertainment expanded discovery and engagement with Scholastic IP across platforms. In Education, while funding volatility and a challenging supplemental curriculum market continued to pressure results, we made progress repositioning the business around a more focused strategy, improved execution and lower cost structure, with trends improving throughout the year.

“Fiscal 2026 was also an important year of capital deployment and shareholder value creation. Following the sale-leaseback transactions, we returned significant capital to shareholders through share repurchases, a modified Dutch auction tender offer and dividends, and established a long-term leverage framework that supports both disciplined investment and continued capital returns. Together, these actions completed major elements of our financial transformation and provide Scholastic with greater financial flexibility to enhance shareholder returns.

“As we enter fiscal 2027, Scholastic is strongly positioned to translate its durable advantages into profitable, sustained growth. Our outlook reflects expected revenue growth and higher Adjusted EBITDA on a comparable basis, reflecting the full-year impact of the sale-leaseback transactions in both periods. We remain focused on continued execution of our plan, disciplined cost management and targeted investment in the areas where Scholastic has the greatest opportunity to drive long-term growth, deepen our impact with children, families and educators, and create sustained value for shareholders.”

Outlook

In fiscal 2027, the Company expects revenue growth of approximately 2% to 4% and Adjusted EBITDA of approximately $135 million to $145 million. The Adjusted EBITDA range represents growth compared with fiscal 2026 Adjusted EBITDA on a comparable basis, reflecting the full-year impact of the sale-leaseback transactions in both periods.

This outlook reflects expected growth in Children’s Books, Entertainment and International, improved performance in Education, disciplined cost management and targeted investment in long-term growth opportunities.

The Company also expects Free Cash Flow (a non-GAAP financial measure, explained in the accompanying tables) of approximately $35 million to $40 million.

Fiscal 2026 Q4 Review

In $ millions (except per share data)

Fourth Quarter

Change

Fiscal 2026

Fiscal 2025

$

%

Revenues

$

476.1

$

508.3

$

(32.2)

(6) %

Operating income (loss)

$

51.4

$

53.5

$

(2.1)

(4) %

Earnings (loss) before taxes

$

14.5

$

48.9

$

(34.4)

(70) %

Diluted earnings (loss) per share

$

0.45

$

0.59

$

(0.14)

(24) %

Operating income (loss), ex. one-time items* (1)

$

58.3

$

63.4

$

(5.1)

(8) %

Diluted earnings (loss) per share, ex. one-time items*

$

2.19

$

0.87

$

1.32

152 %

Adjusted EBITDA* (1)

$

84.7

$

91.2

$

(6.5)

(7) %

Pro forma Adjusted operating income* (2)

$

58.3

$

59.5

$

(1.2)

(2) %

Pro forma Adjusted EBITDA* (2)

$

84.7

$

83.7

$

1.0

1 %

* Please refer to the non-GAAP financial tables attached

(1)

Fiscal 2026 fourth-quarter Operating income excluding one-time items and Adjusted EBITDA include
net costs of $4.2 and $7.8, respectively, related to the sale-leaseback transactions completed in
December 2025.

(2)

Pro forma Adjusted operating income and Pro forma Adjusted EBITDA reflect the full-period impact of
the sale-leaseback transactions in each period presented. The Company refers to these measures in
this release as results “on a comparable basis.” See Table 7 for the reconciliation to Adjusted operating
income and Adjusted EBITDA.

Revenues decreased 6% to $476.1 million, as continued growth in Book Fairs and higher Entertainment revenues were more than offset by lower Trade and International revenues due to more challenging comparisons with the prior-year publishing schedule and lower revenues in Education.

Operating Income decreased 4% to $51.4 million in the quarter compared to $53.5 million a year ago, including $6.9 million and $9.9 million in one-time charges in each period, respectively. Excluding one-time charges in both periods, adjusted operating income decreased $5.1 million to $58.3 million. On a comparable basis, reflecting the full-period impact of the sale-leaseback in both periods, adjusted operating income decreased $1.2 million from $59.5 million. Adjusted EBITDA (a non-GAAP measure of operations explained in the accompanying tables) was $84.7 million, compared to $91.2 million in the prior-year period. On the same comparable basis, Adjusted EBITDA increased $1.0 million from $83.7 million in the prior year period, primarily reflecting improved profitability in Children’s Book Publishing and Distribution and Entertainment, partly offset by lower results in Education and International.

Quarterly Results

Children’s Book Publishing and Distribution

In the fiscal fourth quarter, the Children’s Book Publishing and Distribution segment’s revenues decreased 4% to $276.3 million.

In School Reading Events, Book Fairs revenues were $186.6 million, up 5% from the prior year period, reflecting higher fair count. Book Clubs revenues were $12.2 million, a decline of 7% from the prior year period, primarily reflecting lower participation throughout the year.

Consolidated Trade revenues decreased 20% from the prior year period to $77.5 million, reflecting a challenging comparison with the prior-year publishing schedule, which included the release of Sunrise on the Reaping, the fifth book in Suzanne Collins’ global bestselling The Hunger Games® series.

Segment operating income was $60.3 million, compared to $57.6 million a year ago, which included one-time charges of $0.6 million. Excluding one-time charges, adjusted operating income increased $2.1 million, primarily driven by higher revenues and improved profitability in Book Fairs, partly offset by lower Trade results.

Education

Education revenues decreased 13% to $109.2 million, primarily reflecting continued pressure on school and district spending for supplemental curriculum materials. Segment operating income was $27.0 million, which included one-time charges of $0.9 million, compared to $30.7 million in the prior year period, which included one-time charges of $0.6 million. Excluding one-time charges, adjusted operating income decreased by $3.4 million, as a result of lower revenues, partly offset by benefits from the segment’s improved cost structure. While fourth-quarter revenues remained below the prior year, the rate of decline improved in the second half of fiscal 2026 compared to the first half of the year, as the segment advanced its product, marketing and sales strategies following its repositioning.

Entertainment

Segment revenues increased 42% to $21.0 million, reflecting higher production services revenues. Segment operating income was $0.4 million, which included one-time charges of $0.4 million, compared to an operating loss of $3.0 million in the prior year period, which included one-time charges of $0.9 million. Excluding one-time charges, adjusted segment operating income improved $2.9 million to $0.8 million, primarily reflecting higher revenues.

International

International revenues decreased 13% to $69.6 million, excluding favorable foreign currency exchange of $3.1 million, primarily reflecting lower Trade revenues against a more challenging comparison with the prior-year publishing schedule. Segment operating income was $2.9 million, which included one-time charges of $0.2 million, compared to $3.7 million in the prior year period, which included one-time charges of $2.4 million. Excluding one-time charges, adjusted operating income decreased by $3.0 million to $3.1 million primarily reflecting lower revenues, partly offset by cost management.

Overhead

Overhead costs were $39.2 million, which included one-time charges of $5.4 million, compared to $35.5 million in the prior year period, which included one-time charges of $5.4 million. Excluding one-time charges, adjusted overhead costs increased $3.7 million to $33.8 million. On a comparable basis, reflecting the pro forma impact of the sale-leaseback transactions in both periods, adjusted overhead costs were approximately in line with the prior-year period.

Fiscal 2026 Full Year Review

In $ millions (except per share data)

Full Year

Change

Fiscal 2026

Fiscal 2025

$

%

Revenues

$

1,581.9

$

1,625.5

$

(43.6)

(3) %

Operating income (loss)

$

15.2

$

15.8

$

(0.6)

(4) %

Earnings (loss) before taxes

$

85.2

$

(1.3)

$

86.5

NM

Diluted earnings (loss) per share

$

2.34

$

(0.07)

$

2.41

NM

Operating income (loss), ex. one-time items* (1)

$

47.1

$

35.8

$

11.3

32 %

Diluted earnings (loss) per share, ex. one-time items*

$

1.87

$

0.48

$

1.39

NM

Adjusted EBITDA* (1)

$

151.5

$

145.4

$

6.1

4 %

Pro forma Adjusted operating income* (2)

$

35.3

$

19.9

$

15.4

77 %

Pro forma Adjusted EBITDA* (2)

$

132.4

$

115.3

$

17.1

15 %

* Please refer to the non-GAAP financial tables attached

(1)

Fiscal 2026 full-year Operating income excluding one-time items and Adjusted EBITDA include net costs
of $7.2 and $14.5, respectively, related to the sale-leaseback transactions completed in December 2025.

(2)

Pro forma Adjusted operating income and Pro forma Adjusted EBITDA reflect the full-period impact of
the sale-leaseback transactions in each period presented. The Company refers to these measures in
this release as results “on a comparable basis.” See Table 7 for the reconciliation to Adjusted operating
income and Adjusted EBITDA.

Revenues decreased 3% to $1,581.9 million, primarily reflecting lower revenues in Education and lower Consolidated Trade revenues against a more challenging comparison with the prior-year publishing schedule, partly offset by strong performance in Book Fairs and higher Entertainment revenues.

Operating Income decreased 4% to $15.2 million, compared to $15.8 million a year ago, including $31.9 million and $20.0 million in one-time charges in each period, respectively. Excluding one-time charges in both periods, adjusted operating income increased $11.3 million to $47.1 million. On a comparable basis, reflecting the full-year impact of the sale-leaseback transactions in both periods, adjusted operating income increased $15.4 million to $35.3 million, compared to $19.9 million in the prior year. Adjusted EBITDA increased $6.1 million, or 4%, to $151.5 million, in-line with the Company’s guidance. On the same comparable basis, Adjusted EBITDA increased 15%, or $17.1 million, to $132.4 million from $115.3 million. The improvement on a comparable basis primarily reflected strong performance in Children’s Book Publishing and Distribution and International, as well as lower adjusted overhead costs, which more than offset the impact of lower sales in Education.

Capital Position and Liquidity

In $ millions

Full Year

Change

Fiscal 2026

Fiscal 2025

$

%

Net cash provided by operating activities

$

50.9

$

124.2

$

(73.3)

(59) %

Net proceeds from sale and lease transactions (1)

452.4

—

452.4

NM

Additions to property, plant and equipment and
prepublication expenditures

(66.3)

(76.7)

10.4

14 %

Net borrowings (repayments) of film related obligations

(1.0)

(18.3)

17.3

95 %

Free cash flow (use)*

$

436.0

$

29.2

$

406.8

NM

Net cash (debt)*

$

48.9

$

(136.6)

$

185.5

136 %

NM – Not Meaningful

* Please refer to the non-GAAP financial tables attached

(1) Excludes tax impact from sale-leaseback transactions.

Net cash provided by operating activities was $50.9 million, compared to $124.2 million in the prior year period, primarily reflecting higher tax payments associated with the sale-leaseback transactions, as well as higher severance-related payments as part of cost savings initiatives. Free cash flow was $436.0 million in fiscal 2026, compared to $29.2 million in the prior year period, primarily reflecting over $400 million in net proceeds from the Company’s sale-leaseback transactions.

The Company ended fiscal 2026 with net cash of $48.9 million compared to a net debt position of $136.6 million at the end of fiscal 2025, primarily reflecting the net proceeds from the sale-leaseback transactions, partly offset by significant capital returns to shareholders.

In fiscal 2026, the Company returned approximately $288.6 million to shareholders through share repurchases and dividends. This included the repurchase of 7,336,966 shares of common stock for $268.6 million, including shares purchased through the Company’s modified Dutch auction tender offer and open-market repurchases, and $20.0 million of dividends, including $4.6 million in the fourth quarter.

At May 31, 2026, $183.0 million remained authorized for future repurchases under the Company’s stock repurchase program. The Company expects to continue purchasing shares, from time to time as conditions allow, on the open market or in negotiated private transactions.

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, “Adjusted Operating Income”, 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, July 23, 2026. 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/n2mcunuo. To access the conference call by phone, please go to https://register-conf.media-server.com/register/BIe4453c04814b4def819b83eaf92a8731, 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 meeting children where they are – at school, at home and in their communities – by creating quality content and experiences, all beginning with literacy. Scholastic delivers stories, characters, and learning moments that empower all kids to become lifelong readers and learners through bestselling children’s books, literacy- and knowledge-building resources for schools including classroom magazines, and award-winning, entertaining children’s media. As the world’s largest publisher and distributor of children’s books through school-based book clubs and book fairs, classroom libraries, school and public libraries, retail, and online, and with a global reach into more than 135 countries, Scholastic encourages the personal and intellectual growth of all children, while nurturing a lifelong relationship with reading, themselves, and the world around them. 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

Twelve months ended

05/31/26

05/31/25

05/31/26

05/31/25

Revenues

$

476.1

$

508.3

$

1,581.9

$

1,625.5

Operating costs and expenses:

Cost of goods sold

190.4

207.3

689.8

718.8

Selling, general and administrative expenses

219.7

227.8

807.2

822.3

Depreciation and amortization

13.1

17.2

58.8

65.7

Asset impairments and write downs

1.5

2.5

10.9

2.9

Total operating costs and expenses

424.7

454.8

1,566.7

1,609.7

Operating income (loss)

51.4

53.5

15.2

15.8

Interest income (expense), net

(0.9)

(4.3)

(11.2)

(16.0)

Other components of net periodic benefit (cost)

(0.3)

(0.3)

(1.3)

(1.1)

Loss on sale of investments

(17.2)

—

(17.2)

—

Gain (loss) on sale and leaseback transactions

(18.5)

—

99.7

—

Earnings (loss) before income taxes

14.5

48.9

85.2

(1.3)

Provision (benefit) for income taxes

5.1

33.5

28.5

0.6

Net income (loss)

$

9.4

$

15.4

$

56.7

$

(1.9)

Basic and diluted earnings (loss) per share of Class A and
Common Stock (1)

Basic

$

0.46

$

0.59

$

2.39

$

(0.07)

Diluted

$

0.45

$

0.59

$

2.34

$

(0.07)

Basic weighted average shares outstanding

20,343

26,113

23,698

27,631

Diluted weighted average shares outstanding

20,992

26,209

24,222

27,907

(1)

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, Excluding One-Time Items

(Unaudited)

(In $ Millions)

Three months ended

Change

Twelve months ended

Change

05/31/26

05/31/25

$

%

05/31/26

05/31/25

$

%

Children’s Book Publishing
and Distribution

Revenues

Book Clubs

$

12.2

$

13.1

$

(0.9)

(7) %

$

57.1

$

64.2

$

(7.1)

(11) %

Book Fairs

186.6

177.8

8.8

5 %

576.0

548.3

27.7

5 %

School Reading Events

198.8

190.9

7.9

4 %

633.1

612.5

20.6

3 %

Consolidated Trade

77.5

97.3

(19.8)

(20) %

331.1

351.4

(20.3)

(6) %

Total Revenues

276.3

288.2

(11.9)

(4) %

964.2

963.9

0.3

0 %

Operating income (loss) ex.
one-time items *

60.3

58.2

2.1

4 %

143.7

131.3

12.4

9 %

Adjusted operating margin *

21.8 %

20.2 %

14.9 %

13.6 %

Education

Revenues

109.2

125.7

(16.5)

(13) %

267.6

309.8

(42.2)

(14) %

Operating income (loss) ex.
one-time items *

27.9

31.3

(3.4)

(11) %

0.2

6.9

(6.7)

(97) %

Adjusted operating margin *

25.5 %

24.9 %

0.1 %

2.2 %

Entertainment

Revenues

21.0

14.8

6.2

42 %

65.7

61.0

4.7

8 %

Operating income (loss) ex.
one-time items *

0.8

(2.1)

2.9

138 %

(9.3)

(7.2)

(2.1)

(29) %

Adjusted operating margin *

3.8 %

NM

NM

NM

International

Revenues

69.6

76.8

(7.2)

(9) %

277.2

279.6

(2.4)

(1) %

Operating income (loss) ex.
one-time items *

3.1

6.1

(3.0)

(49) %

7.1

2.9

4.2

145 %

Adjusted operating margin *

4.5 %

7.9 %

2.6 %

1.0 %

Overhead

Revenues

—

2.8

(2.8)

(100) %

7.2

11.2

(4.0)

(36) %

Operating income (loss) ex.
one-time items *

(33.8)

(30.1)

(3.7)

(12) %

(94.6)

(98.1)

3.5

4 %

Operating income (loss) ex.
one-time items *

$

58.3

63.4

(5.1)

(8) %

$

47.1

35.8

11.3

32 %

Adjusted operating margin *

12.2 %

12.5 %

3.0 %

2.2 %

NM – Not meaningful

* Please refer to Table 4 for one-time items and a reconciliation of the non-GAAP financials.

 

Table 3

Scholastic Corporation

Supplemental Information

(Unaudited)

(In $ Millions)

Selected Balance Sheet Items

05/31/26

05/31/25

Cash and cash equivalents

$

134.9

$

124.0

Accounts receivable, net

236.4

273.4

Inventories, net

265.0

250.2

Accounts payable

144.2

157.3

Deferred revenue

179.2

178.8

Accrued royalties

50.3

69.1

Film related obligations

17.1

18.3

Lines of credit and long-term debt

80.5

256.2

Net cash (debt) (1)

48.9

(136.6)

Total stockholders’ equity

750.8

946.5

Selected Cash Flow Items

Three months ended

Twelve months ended

05/31/26

05/31/25

05/31/26

05/31/25

Net cash provided by (used in) operating activities

$

90.0

$

106.9

$

50.9

$

124.2

Net proceeds from sale and lease transactions (3)

—

—

452.4

—

Property, plant and equipment additions

(15.0)

(12.3)

(48.4)

(52.2)

Prepublication expenditures

(4.9)

(8.7)

(17.9)

(24.5)

Net borrowings (repayments) of film related obligations

(0.1)

0.3

(1.0)

(18.3)

Free cash flow (use) (2)

$

70.0

$

86.2

$

436.0

$

29.2

(1)

Net cash (debt) is defined by the Company as cash and cash equivalents less production cash of $5.5
and $4.4 as of May 31, 2026 and May 31, 2025, respectively, net of lines of credit and 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 the 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.

(3)

Excludes tax impact from sale-leaseback transactions.

 

Table 4

Scholastic Corporation

Supplemental Results – Excluding One-Time Items

(Unaudited)

(In $ Millions, except per share data)

Three months ended

05/31/2026

05/31/2025

Reported

One-time
items

Excluding
One-time
items

Reported

One-time
items

Excluding
One-time
items

Diluted earnings (loss) per share (1)

$

0.45

$

1.79

$

2.19

$

0.59

$

0.29

$

0.87

Net income (loss) (2)

$

9.4

$

36.5

$

45.9

$

15.4

$

7.5

$

22.9

Earnings (loss) before income taxes (3)

$

14.5

$

42.6

$

57.1

$

48.9

$

9.9

$

58.8

Children’s Book Publishing and
Distribution (4)

$

60.3

$

—

$

60.3

$

57.6

$

0.6

$

58.2

Education (5)

27.0

0.9

27.9

30.7

0.6

31.3

Entertainment(6)

0.4

0.4

0.8

(3.0)

0.9

(2.1)

International (7)

2.9

0.2

3.1

3.7

2.4

6.1

Overhead (8)

(39.2)

5.4

(33.8)

(35.5)

5.4

(30.1)

Operating income (loss)

$

51.4

$

6.9

$

58.3

$

53.5

$

9.9

$

63.4

Twelve months ended

05/31/2026

05/31/2025

Reported

One-time
items

Excluding
One-time
items

Reported

One-time
items

Excluding
One-time
items

Diluted earnings (loss) per share (1)

$

2.34

$

(0.47)

$

1.87

$

(0.07)

$

0.55

$

0.48

Net income (loss) (2)

$

56.7

$

(11.3)

$

45.4

$

(1.9)

$

15.2

$

13.3

Earnings (loss) before income taxes (3)

$

85.2

$

(50.6)

$

34.6

$

(1.3)

$

20.0

$

18.7

Children’s Book Publishing and
Distribution (4)

$

142.9

$

0.8

$

143.7

$

130.7

$

0.6

$

131.3

Education (5)

(4.1)

4.3

0.2

6.3

0.6

6.9

Entertainment(6)

(16.1)

6.8

(9.3)

(12.1)

4.9

(7.2)

International (7)

6.4

0.7

7.1

(1.0)

3.9

2.9

Overhead (8)

(113.9)

19.3

(94.6)

(108.1)

10.0

(98.1)

Operating income (loss)

$

15.2

$

31.9

$

47.1

$

15.8

$

20.0

$

35.8

(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 and twelve months ended May 31, 2026, the Company recognized a benefit of $6.1 and a provision of
$39.3, respectively, for income taxes in respect to one-time pretax items. In the three and twelve months ended May
31, 2025, the Company recognized a benefit of $2.4 and $4.8, respectively, for income taxes in respect to one-time
pretax items.

(3)

In the three and twelve months ended May 31, 2026, the Company recognized a pretax loss of $17.2 related to the
sale of its 26.2% equity interest in a U.K.-based children’s book publishing business. In the three months ended May
31, 2026, the Company recognized an adjustment of $18.5 million to the pretax gain related to the sale-leaseback
transactions. In the twelve months ended May 31, 2026, the Company recognized a pretax gain of $99.7 related to
sale-leaseback transactions involving its facilities in New York City and Jefferson City, Missouri.

(4)

In the twelve months ended May 31, 2026, the Company recognized a pretax asset impairment charge of $0.8 related
to a certain product. In the three and twelve months ended May 31, 2025, the Company recognized a pretax asset
impairment charge of $0.6 related to a digital product.

(5)

In the three and twelve months ended May 31, 2026, the Company recognized pretax asset impairment charges of
$0.9 and $4.3, respectively, related to certain education and digital products. In the three and twelve months ended May
31, 2025, the Company recognized a pretax asset impairment charge of $0.6 related to certain digital products.

(6)

In the three and twelve months ended May 31, 2026, the Company recognized other pretax expenses of $0.4 and $1.4,
respectively. In the twelve months ended May 31, 2026, the Company recognized pretax severance of $0.2 and a pretax
asset impairment charge of $5.2 primarily related to certain film and television programs in development. In the three
and twelve months ended May 31, 2025, the Company recognized pretax severance of $0.3 and $1.4, respectively,
related to cost-savings initiatives, pretax costs of $0.4 and $3.0, respectively, related to the acquisition of 9 Story Media
Group and pretax asset impairment charges of $0.2 and $0.5, respectively, related to the early exit of certain leased
office space in Canada and Ireland.

(7)

In the three and twelve months ended May 31, 2026, the Company recognized pretax severance of $0.2 and $0.7,
respectively, related to cost-savings initiatives. In the three and twelve months ended May 31, 2025, the Company
recognized pretax severance of $1.3 and $2.8, respectively, related to cost-savings initiatives and a pretax asset
impairment charge of $1.1 related to the reorganization in China. 

(8)

In the three and twelve months ended May 31, 2026, the Company recognized pretax severance of $3.7 and $15.5,
respectively, related to cost-savings initiatives, and other pretax expenses of $1.7 and $3.8, respectively. In the three
and twelve months ended May 31, 2025, the Company recognized pretax severance of $3.4 and $7.6, respectively,
related to cost-savings initiatives, other pretax expenses of $1.9 and $2.3, respectively, and an asset impairment
charge of $0.1 related to the early exit of an office lease.

 

Table 5

Scholastic Corporation

Consolidated Statements of Operations – Supplemental

Adjusted EBITDA

(Unaudited)

(In $ Millions)

Three months ended

05/31/26

05/31/25

Earnings (loss) before income taxes as reported

$

14.5

$

48.9

One-time items before income taxes

42.6

9.9

Earnings (loss) before income taxes excluding one-time items

57.1

58.8

Interest (income) expense (1)

0.9

4.5

Depreciation and amortization

26.7

27.9

Adjusted EBITDA (2)

$

84.7

$

91.2

Twelve months ended

05/31/26

05/31/25

Earnings (loss) before income taxes as reported

$

85.2

$

(1.3)

One-time items before income taxes

(50.6)

20.0

Earnings (loss) before income taxes excluding one-time items

34.6

18.7

Interest (income) expense (1)

11.6

16.4

Depreciation and amortization

105.3

110.3

Adjusted EBITDA (2)

$

151.5

$

145.4

(1)

Amounts include production loan interest amortized into cost of goods sold.

(2)

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

05/31/26

CBPD (1)

EDUC (1)

ENT (1)

INTL (1)

OVH (1)(4)

Total

Earnings (loss) before income taxes as reported

$

60.1

$

27.0

$

(0.0)

$

(14.8)

$

(57.8)

$

14.5

One-time items before income taxes

—

0.9

0.4

17.4

23.9

42.6

Earnings (loss) before income taxes excluding
one-time items

60.1

27.9

0.4

2.6

(33.9)

57.1

Interest (income) expense (2)

0.2

0.0

0.5

0.0

0.2

0.9

Depreciation and amortization (3)

8.3

6.0

8.0

2.2

2.2

26.7

Adjusted EBITDA (4)

$

68.6

$

33.9

$

8.9

$

4.8

$

(31.5)

$

84.7

Three months ended

05/31/25

CBPD (1)

EDUC (1)

ENT (1)

INTL (1)

OVH (1)

Total

Earnings (loss) before income taxes as reported

$

57.5

$

30.7

$

(2.9)

$

2.9

$

(39.3)

$

48.9

One-time items before income taxes

0.6

0.6

0.9

2.4

5.4

9.9

Earnings (loss) before income taxes excluding
one-time items

58.1

31.3

(2.0)

5.3

(33.9)

58.8

Interest (income) expense  (2)

0.1

0.0

0.7

0.1

3.6

4.5

Depreciation and amortization (3)

8.0

6.2

5.0

2.0

6.7

27.9

Adjusted EBITDA

$

66.2

$

37.5

$

3.7

$

7.4

$

(23.6)

$

91.2

Twelve months ended

05/31/26

CBPD (1)

EDUC (1)

ENT (1)

INTL (1)

OVH (1)(4)

Total

Earnings (loss) before income taxes as reported

$

142.5

$

(4.1)

$

(17.9)

$

(12.9)

$

(22.4)

$

85.2

One-time items before income taxes

0.8

4.3

6.8

17.9

(80.4)

(50.6)

Earnings (loss) before income taxes excluding
one-time items

143.3

0.2

(11.1)

5.0

(102.8)

34.6

Interest (income) expense (2)

0.4

0.0

2.2

0.1

8.9

11.6

Depreciation and amortization (3)

31.2

24.9

24.4

8.1

16.7

105.3

Adjusted EBITDA (4)

$

174.9

$

25.1

$

15.5

$

13.2

$

(77.2)

$

151.5

Twelve months ended

05/31/25

CBPD (1)

EDUC (1)

ENT (1)

INTL (1)

OVH (1)

Total

Earnings (loss) before income taxes as reported

$

130.5

$

6.3

$

(14.3)

$

(3.1)

$

(120.7)

$

(1.3)

One-time items before income taxes

0.6

0.6

4.9

3.9

10.0

20.0

Earnings (loss) before income taxes excluding
one-time items

131.1

6.9

(9.4)

0.8

(110.7)

18.7

Interest (income) expense  (2)

0.2

0.0

3.2

0.1

12.9

16.4

Depreciation and amortization (3)

31.1

24.8

21.5

7.9

25.0

110.3

Adjusted EBITDA

$

162.4

$

31.7

$

15.3

$

8.8

$

(72.8)

$

145.4

(1)

The Company’s segments are defined as the following: CBPD – Children’s Book Publishing and Distribution
segment; EDUC – Education segment; ENT – Entertainment segment; INTL – International segment; OVH –
unallocated overhead.

(2)

Amounts include production loan interest amortized into cost of goods sold.

(3)

Depreciation and amortization in the Children’s Book Publishing and Distribution, Education and International
segments includes amounts allocated from overhead.

(4)

Adjusted EBITDA for unallocated overhead and total includes the net cost impact of the sale-leaseback
transactions of $7.8 and $14.5 for the three and twelve months ended May 31, 2026, respectively.

 

Table 7

Scholastic Corporation

Pro Forma Supplemental Information

(Unaudited)

(In $ Millions)

Three months ended

Change

05/31/26

05/31/25

$

%

Adjusted unallocated overhead

$

(33.8)

$

(30.1)

$

(3.7)

(12) %

Incremental full-year impact of sale-leaseback transactions

—

(3.9)

3.9

Pro forma Adjusted unallocated overhead (1)

$

(33.8)

$

(34.0)

$

0.2

1 %

Adjusted operating income

$

58.3

$

63.4

$

(5.1)

(8) %

Incremental full-year impact of sale-leaseback transactions

—

(3.9)

3.9

Pro forma Adjusted operating income (1) (2)

$

58.3

$

59.5

$

(1.2)

(2) %

Adjusted EBITDA

$

84.7

$

91.2

$

(6.5)

(7) %

Incremental full-year impact of sale-leaseback transactions

—

(7.5)

7.5

Pro forma Adjusted EBITDA (1) (2)

$

84.7

$

83.7

$

1.0

1 %

Twelve months ended

Change

05/31/26

05/31/25

$

%

Adjusted unallocated overhead

$

(94.6)

$

(98.1)

$

3.5

4 %

Incremental full-year impact of sale-leaseback transactions

(11.8)

(15.9)

4.1

Pro forma Adjusted unallocated overhead (1)

$

(106.4)

$

(114.0)

$

7.6

7 %

Adjusted operating income

$

47.1

$

35.8

$

11.3

32 %

Incremental full-year impact of sale-leaseback transactions

(11.8)

(15.9)

4.1

Pro forma Adjusted operating income (1) (2)

$

35.3

$

19.9

$

15.4

77 %

Adjusted EBITDA

$

151.5

$

145.4

$

6.1

4 %

Incremental full-year impact of sale-leaseback transactions

(19.1)

(30.1)

11.0

Pro forma Adjusted EBITDA (1) (2)

$

132.4

$

115.3

$

17.1

15 %

(1)

Pro forma Adjusted unallocated overhead, Pro forma Adjusted operating income and Pro forma Adjusted
EBITDA reflect the net impacts of the sale-leaseback transactions as if the transactions had occurred on
June 1, 2024, the beginning of fiscal 2025. Fiscal 2026 reported results include the actual impact beginning
upon completion of the transactions in December 2025. The incremental adjustments shown above reflect
the additional impact for the portion of fiscal 2026 prior to completion of the transactions. Fiscal 2025
reported results include no impact from the transactions.

(2)

For fiscal 2026, the full-year pro forma cost impact was $19.0 on Adjusted operating income, consisting of
$7.2 recognized in reported fiscal 2026 results and $11.8 of incremental adjustments. For fiscal 2026, the
full-year pro forma cost impact on Adjusted EBITDA was $33.6, consisting of $14.5 recognized in reported
fiscal 2026 results and $19.1 of incremental adjustments. For fiscal 2025, the full-year pro forma cost
impacts were $15.9 on Adjusted operating income and $30.1 on Adjusted EBITDA.

 

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SOURCE Scholastic Corporation

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