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Scholastic Reports Fiscal 2025 Third Quarter Results

Published

1 year ago

on

Over $35 Million Returned to Shareholders in Third Quarter; Share Repurchase Authorization Increased to $100 Million

Company Affirms Adjusted EBITDA Outlook at Low End of Range

NEW YORK, March 20, 2025 /PRNewswire/ — Scholastic Corporation (NASDAQ: SCHL), the global children’s publishing, education and media company, today reported financial results for the Company’s fiscal third quarter ended February 28, 2025.

Peter Warwick, President and Chief Executive Officer, said, “Scholastic achieved modest revenue growth and improved operating results in the third quarter. Despite increasing pressure on family and school spending on books and educational materials, strong performance by School Book Fairs and Clubs, successful new titles and the addition of 9 Story Media Group contributed to positive results, underscoring Scholastic’s unique strengths engaging kids with great books and quality children’s media.

“Scholastic’s winning record creating global children’s franchises continued last quarter. Dog Man: Big Jim Begins, the thirteenth book in Dav Pilkey’s global phenomenon, has been the top-selling book in the US and major English-speaking markets since its release in early December. Earlier this week Scholastic published the fifth book in Suzanne Collins’ bestselling Hunger Games® series, Sunrise on the Reaping, which is already topping some bestseller lists based on pre-orders. Last quarter Scholastic Entertainment also leveraged its new capabilities to greatly expand the distribution and monetization of the Company’s IP on YouTube, the dominant platform for kids’ media consumption. In February alone Scholastic’s branded channels drew almost 10 million views, up nearly 40 times from a year ago.

“The Education Solutions division was impacted by the continued slow-down in the supplemental curriculum market in the third quarter, but we remain encouraged by upcoming product launches. We have also begun a strategic review of this important and valuable business, as we explore options to optimize it for long-term success.

“Based on the intensifying spending pressure that we experienced last quarter and expect to continue into the fourth quarter, we forecast full-year Adjusted EBITDA at the low end of our fiscal 2025 guidance and more modest revenue growth year-over-year. We have taken a number of one-time and ongoing cost actions in response to these headwinds, as previously disclosed, benefiting both the current and next fiscal years. As we continue to focus on Scholastic’s long-term growth and profitability, we remain committed to our capital allocation priorities, expanding our share repurchase authorization to $100 million and after having returned over $35 million to shareholders through share repurchases and dividends last quarter.”

Outlook 

For fiscal year 2025, the Company has narrowed its outlook for Adjusted EBITDA (as defined in the accompanying tables) to approximately $140 million, from $140 million to $150 million previously. The Company now forecasts modest full-year revenue growth, compared to prior guidance of 4% to 6% growth.

Fiscal 2025 Q3 Review

In $ millions (except per share data)

Third Quarter

Change

Fiscal 2025

Fiscal 2024

$

%

Revenues

$

335.4

$

323.7

$

11.7

4 %

Operating income (loss)

$

(23.9)

$

(34.9)

$

11.0

32 %

Earnings (loss) before taxes

$

(28.4)

$

(34.6)

$

6.2

18 %

Diluted earnings (loss) per share

$

(0.13)

$

(0.91)

$

0.78

86 %

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

$

(20.9)

$

(30.6)

$

9.7

32 %

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

$

(0.05)

$

(0.80)

$

0.75

94 %

Adjusted EBITDA *

$

6.0

$

(7.2)

$

13.2

183 %

* Please refer to the non-GAAP financial tables attached

Revenues increased 4% to $335.4 million, reflecting the contribution of 9 Story Media Group, recorded in the Entertainment segment, and higher revenues in School Reading Events, partly offset by lower supplemental curriculum and collections product sales in Education Solutions.

Operating loss improved 32% to a loss of $23.9 million in the quarter compared to a loss of $34.9 million a year ago, including $3.0 million and $4.3 million in one-time charges in each period, respectively. Excluding one-time charges in both periods, operating loss improved $9.7 million. Adjusted EBITDA (a non-GAAP measure of operations explained in the accompanying tables) increased 183% to $6.0 million. The improved seasonal loss primarily reflects a reduction in discretionary overhead expenses and higher revenues in the Children’s Book Publishing and Distribution segment, which more than offset the impact of lower sales in Education Solutions.

Quarterly Results 

Children’s Book Publishing and Distribution

In the fiscal third quarter, the Children’s Book Publishing and Distribution segment’s revenues increased 5% to $203.3 million.

Book Fairs revenues were $110.7 million, up 8% from the prior year period, reflecting a larger number of fall-season fairs occurring in December compared to the prior year period, which contributed to higher fair count in the quarter. Fair count remains on track to achieve 90,000 fairs in fiscal 2025. Revenue per fair was in-line with prior year.Book Clubs revenues were $15.2 million, up 14% from the prior year period, primarily reflecting higher order volumes and revenue per sponsor.Consolidated Trade revenues were $77.4 million, in line with the prior year period, primarily reflecting the strong performance of the global bestselling Dog Man® series, offset by lower backlist sales as increasing pressure on consumer spending led to softness in the retail book market. Fourth quarter revenues are expected to benefit from the March 2025 release of Sunrise on the Reaping, the fifth book in Suzanne Collins’ Hunger Games® series.

Segment operating income was $7.6 million, compared to $2.3 million a year ago, which included one-time charges of $0.5 million in the prior year period. Excluding one-time charges, adjusted operating loss improved by $4.8 million. The year-over-year increase was primarily driven by higher revenue in School Reading Events.

Education Solutions

Education Solutions revenues decreased 16% to $57.2 million, on lower sales driven by the continuing headwinds in the supplemental curriculum market. Segment operating loss was $6.9 million, compared to segment operating loss of $0.8 million in the prior period, reflecting lower segment revenues. The segment continues to invest in new products for release in the 2025/2026 school year.

Entertainment

Segment revenues were $12.8 million, primarily reflecting the addition of 9 Story Media Group. Segment operating loss was $3.9 million, which included one-time charges of $1.5 million, compared to $3.1 million in the prior year period, which included one-time charges of $3.0 million. Excluding one-time charges, adjusted segment operating loss increased $2.3 million. As part of the acquisition, the Company incurred $2.3 million of intangible amortization during the quarter. Excluding the amortization, operating loss was $0.1 million.

International

Excluding unfavorable foreign currency exchange of $2.7 million, International revenues increased 5% to $59.3 million, reflecting higher revenues in major markets. Segment operating loss was $2.1 million, which included one-time charges of $0.1 million, compared to a loss of $5.9 million in the prior year period. Excluding one-time charges, adjusted operating loss improved by $3.9 million, driven by higher revenues and operational efficiencies.

Overhead

Overhead costs were $18.6 million, which included one-time charges of $1.4 million, compared to $27.4 million in the prior year period, which included one-time charges of $0.8 million. Excluding one-time charges, adjusted overhead costs decreased $9.4 million driven by lower employee-related costs.

Capital Position and Liquidity 

In $ millions

Third Quarter

Change

Fiscal 2025

Fiscal 2024

$

%

Net cash (used) provided by operating activities

$

(12.0)

$

13.1

$

(25.1)

NM

Additions to property, plant and equipment and prepublication expenditures

(14.7)

(20.2)

5.5

27 %

Net borrowings (repayments) of film related obligations

(4.0)

—

(4.0)

NM

Free cash flow (use)*

$

(30.7)

$

(7.1)

$

(23.6)

NM

Net cash (debt)*

$

(189.4)

$

78.9

$

(268.3)

NM

NM – Not meaningful

* Please refer to the non-GAAP financial tables attached

Net cash used by operating activities was $12.0 million, compared to net cash provided of $13.1 million in the prior year period, primarily driven by lower customer remittances and higher interest payments, partly offset by lower taxes. Free cash use (a non-GAAP measure of operations explained in the accompanying tables) was $30.7 million in fiscal 2025, compared to free cash use of $7.1 million in the prior period.

Net debt was $189.4 million compared to a net cash position of $78.9 million in the prior year period, reflecting the Company’s borrowings under its recently upsized revolving credit facility to fund the acquisition of 9 Story Media Group. The Company believes its balance sheet provides significant flexibility, with modest debt and non-operating assets that could be monetized, if and when the Company chose to, market conditions permitting, in accordance with its capital allocation priorities.

The Company owns its headquarters building at 555 / 557 Broadway in Soho, New York City, with 355,000 square feet, of which 26,600 square feet is premium retail space that is currently under lease and is expected to generate $11.1 million in rental revenue in fiscal year 2026, based on currently held lease agreements. Of the remaining 328,400 square feet of Class A office space, 108,000 square feet are currently being marketed, as the Company consolidates its use of the building. Offsetting gains on any potential monetization transaction, the tax basis of the New York City headquarters reflects the purchase of 555 Broadway in 2014 for approximately $255 million and subsequent improvements, less accumulated depreciation.

In addition to the New York City headquarters building, the Company owns its distribution facilities, including three warehouses with 1,459,000 square feet of space and 162 acres of related land, situated in and around Jefferson City, MO. These facilities are approximately 70% utilized at the moment. The tax basis on this asset is low, reflecting many years of accumulated depreciation.

Consistent with its capital allocation priorities, the Company distributed $5.7 million in dividends and repurchased 1,450,274 shares of its common stock for $30.0 million in the third quarter.

The Company’s Board of Directors authorized an additional $53.4 million for repurchases of its common stock under the Company’s stock repurchase program increasing the authorization to $100 million. 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.

Fiscal Year-To-Date 2025 Review

In $ millions (except per share data)

Year-To-Date

Change

Fiscal 2025

Fiscal 2024

$

%

Revenues

$

1,117.2

$

1,114.8

$

2.4

0 %

Operating income (loss)

$

(37.7)

$

(32.7)

$

(5.0)

(15) %

Earnings (loss) before taxes

$

(50.2)

$

(31.1)

$

(19.1)

(61) %

Diluted earnings (loss) per share

$

(0.61)

$

(0.80)

$

0.19

24 %

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

$

(27.6)

$

(22.1)

$

(5.5)

(25) %

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

$

(0.34)

$

(0.53)

$

0.19

36 %

Adjusted EBITDA *

$

54.2

$

46.2

$

8.0

17 %

* Please refer to the non-GAAP financial tables attached

Revenues of $1,117.2 million year to date were in line with the prior year period, primarily reflecting the contribution of 9 Story Media Group, recorded in the Entertainment segment, offset by lower supplemental curriculum and collections product sales in Education Solutions.

Operating loss was $37.7 million year to date, compared to operating loss of $32.7 million a year ago, including $10.1 million and $10.6 million in one-time charges related to restructuring and cost-savings activities in each period, respectively. Excluding one-time charges, operating loss increased $5.5 million from a year ago. This primarily reflects the impact of lower sales in Education Solutions and the impact of the 9 Story Media Group acquisition. Adjusted EBITDA increased $8.0 million to $54.2 million, primarily reflecting the impact of the 9 Story Media Group acquisition. As part of the acquisition, the Company incurred $6.5 million of intangible amortization during the period. Excluding the amortization, operating loss was $31.2 million.

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, March 20, 2025. 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 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

Nine months ended

02/28/25

02/29/24

02/28/25

02/29/24

Revenues (1)

$

335.4

$

323.7

$

1,117.2

$

1,114.8

Operating costs and expenses:

Cost of goods sold

154.6

148.7

511.5

512.8

Selling, general and administrative expenses (2)

187.5

194.8

594.5

592.1

Depreciation and amortization

16.9

14.6

48.5

42.1

Asset impairments and write downs (3)

0.3

0.5

0.4

0.5

Total operating costs and expenses

359.3

358.6

1,154.9

1,147.5

Operating income (loss)

(23.9)

(34.9)

(37.7)

(32.7)

Interest income (expense), net

(4.3)

0.6

(11.7)

2.4

Other components of net periodic benefit (cost)

(0.2)

(0.3)

(0.8)

(0.8)

Earnings (loss) before income taxes

(28.4)

(34.6)

(50.2)

(31.1)

Provision (benefit) for income taxes (4)

(24.8)

(8.1)

(32.9)

(7.3)

Net income (loss) (1)

(3.6)

(26.5)

(17.3)

(23.8)

Basic and diluted earnings (loss) per share of Class A and Common Stock (5)

Basic

$

(0.13)

$

(0.91)

$

(0.61)

$

(0.80)

Diluted

$

(0.13)

$

(0.91)

$

(0.61)

$

(0.80)

Basic weighted average shares outstanding

27,778

29,052

28,135

29,906

Diluted weighted average shares outstanding

27,876

29,815

28,490

30,747

(1)

The financial results of 9 Story Media Group from the date of acquisition on June 20, 2024 through February 28, 2025 are included in
the Company’s consolidated results of operations as of February 28, 2025. The unaudited pro-forma consolidated results of operations
as if the acquisition had occurred on June 1, 2023, the beginning of fiscal 2024, includes revenues of $335.4 and $1,122.9 and net loss
of $3.6 and $19.1 for the three and nine months ended February 28, 2025, respectively, and revenues of $341.9 and $1,169.0 and net
loss of $29.3 and $34.2 for the three and nine months ended February 29, 2024, respectively.

(2)

In the three and nine months ended February 28, 2025, the Company recognized pretax severance of $1.8 and $6.8, respectively, related
to cost-savings initiatives and pretax costs of $0.9 and $3.0, respectively, related to the acquisition of 9 Story Media Group and other costs.
In the three and nine months ended February 29, 2024, the Company recognized pretax costs related to its planned investment in 9 Story
Media Group of $3.0 and pretax severance of $0.8 and $7.1, respectively, related to restructuring and cost-savings initiatives.

(3)

In the three and nine months ended February 28, 2025, the Company recognized pretax asset impairment of $0.3 related to an early exit
of an office lease. In the three and nine months ended February 29, 2024, the Company recognized pretax asset impairment of $0.5 related
to an early exit of a sales office lease.

(4)

In the three and nine months ended February 28, 2025, the Company recognized a benefit of $0.7 and $2.4, respectively, for income taxes
in respect to one-time pretax items. In the three and nine months ended February 29, 2024, the Company recognized a benefit of $1.1 and
$2.7, respectively, for income taxes in respect to one-time pretax items.

(5)

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

Nine months ended

Change

02/28/25

02/29/24

$

%

02/28/25

02/29/24

$

%

Children’s Book Publishing and Distribution (1)

Revenues

Books Clubs

$

15.2

$

13.3

$

1.9

14 %

$

51.1

$

48.3

$

2.8

6 %

Book Fairs

110.7

102.7

8.0

8 %

370.5

372.1

(1.6)

(0) %

School Reading Events

125.9

116.0

9.9

9 %

421.6

420.4

1.2

0 %

Consolidated Trade

77.4

77.1

0.3

0 %

254.1

267.5

(13.4)

(5) %

Total Revenues

203.3

193.1

10.2

5 %

675.7

687.9

(12.2)

(2) %

Operating income (loss)

7.6

2.3

5.3

NM

73.1

72.9

0.2

0 %

Operating margin

3.7 %

1.2 %

10.8 %

10.6 %

Education Solutions

Revenues

57.2

68.5

(11.3)

(16) %

184.1

215.5

(31.4)

(15) %

Operating income (loss)

(6.9)

(0.8)

(6.1)

NM

(24.4)

(13.7)

(10.7)

(78) %

Operating margin

NM

NM

NM

NM

Entertainment (1)

Revenues

12.8

0.5

12.3

NM

46.2

1.3

44.9

NM

Operating income (loss)

(3.9)

(3.1)

(0.8)

(26) %

(9.1)

(4.4)

(4.7)

(107) %

Operating margin

NM

NM

NM

NM

International

Revenues

59.3

59.1

0.2

0 %

202.8

202.8

0.0

0 %

Operating income (loss)

(2.1)

(5.9)

3.8

64 %

(4.7)

(6.1)

1.4

23 %

Operating margin

NM

NM

NM

NM

Overhead

Revenues

2.8

2.5

0.3

12 %

8.4

7.3

1.1

15 %

Operating income (loss)

(18.6)

(27.4)

8.8

32 %

(72.6)

(81.4)

8.8

11 %

Operating income (loss)

$

(23.9)

$

(34.9)

$

11.0

32 %

$

(37.7)

$

(32.7)

$

(5.0)

(15) %

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 and nine months ended February 29, 2024 have been reclassified to Entertainment to reflect this change.

 

Table 3

Scholastic Corporation

Supplemental Information

(Unaudited)

(In $ Millions)

Selected Balance Sheet Items

02/28/25

02/29/24

Cash and cash equivalents

$

94.7

$

110.4

Accounts receivable, net

255.9

253.0

Inventories, net

270.8

282.5

Accounts payable

133.5

126.1

Deferred revenue

205.2

193.8

Accrued royalties

85.1

75.1

Film related obligations

18.8

—

Lines of credit and long-term debt

280.8

31.5

Net cash (debt) (1)

(189.4)

78.9

Total stockholders’ equity

941.3

997.6

Selected Cash Flow Items

Three months ended

Nine months ended

02/28/25

02/29/24

02/28/25

02/29/24

Net cash provided by (used in) operating activities

$

(12.0)

$

13.1

$

17.3

$

84.7

Property, plant and equipment additions

(9.0)

(14.7)

(39.9)

(43.8)

Prepublication expenditures

(5.7)

(5.5)

(15.8)

(17.2)

Net borrowings (repayments) of film related obligations

(4.0)

—

(18.6)

—

Free cash flow (use) (2)

$

(30.7)

$

(7.1)

$

(57.0)

$

23.7

(1)

Net cash (debt) is defined by the Company as cash and cash equivalents less production cash of $3.3
as of February 28, 2025, 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.

 

Table 4

Scholastic Corporation

Supplemental Results – Excluding One-Time Items

(Unaudited)

(In $ Millions, except per share data)

Three months ended

02/28/2025

02/29/2024

Reported

One-time
items

Excluding
One-time
items

Reported

One-time
items

Excluding
One-time
items

Diluted earnings (loss) per share (1)

$

(0.13)

$

0.08

$

(0.05)

$

(0.91)

$

0.11

$

(0.80)

Net income (loss)

$

(3.6)

$

2.3

$

(1.3)

$

(26.5)

$

3.2

$

(23.3)

Earnings (loss) before income taxes

$

(28.4)

$

3.0

$

(25.4)

$

(34.6)

$

4.3

$

(30.3)

Children’s Book Publishing and Distribution (2)

$

7.6

$

—

$

7.6

$

2.3

$

0.5

$

2.8

Education Solutions

(6.9)

—

(6.9)

(0.8)

—

(0.8)

Entertainment (3)

(3.9)

1.5

(2.4)

(3.1)

3.0

(0.1)

International (4)

(2.1)

0.1

(2.0)

(5.9)

—

(5.9)

Overhead (5)

(18.6)

1.4

(17.2)

(27.4)

0.8

(26.6)

Operating income (loss)

$

(23.9)

$

3.0

$

(20.9)

$

(34.9)

$

4.3

$

(30.6)

Nine months ended

02/28/2025

02/29/2024

Reported

One-time
items

Excluding
One-time
items

Reported

One-time
items

Excluding
One-time
items

Diluted earnings (loss) per share (1)

$

(0.61)

$

0.27

$

(0.34)

$

(0.80)

$

0.26

$

(0.53)

Net income (loss)

$

(17.3)

$

7.7

$

(9.6)

$

(23.8)

$

7.9

$

(15.9)

Earnings (loss) before income taxes

$

(50.2)

$

10.1

$

(40.1)

$

(31.1)

$

10.6

$

(20.5)

Children’s Book Publishing and Distribution (2)

$

73.1

$

—

$

73.1

$

72.9

$

0.5

$

73.4

Education Solutions

(24.4)

—

(24.4)

(13.7)

—

(13.7)

Entertainment (3)

(9.1)

4.0

(5.1)

(4.4)

3.0

(1.4)

International (4)

(4.7)

1.5

(3.2)

(6.1)

1.2

(4.9)

Overhead (5)

(72.6)

4.6

(68.0)

(81.4)

5.9

(75.5)

Operating income (loss)

$

(37.7)

$

10.1

$

(27.6)

$

(32.7)

$

10.6

$

(22.1)

(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 nine months ended February 29, 2024, the Company recognized pretax asset impairment of $0.5 related to an
early exit of a sales office lease.

(3)

In the three and nine months ended February 28, 2025, the Company recognized pretax severance of $0.7 and $1.1, respectively,
related to cost-savings initiatives, pretax costs of $0.5 and $2.6, respectively, related to the acquisition of 9 Story Media Group and
pretax asset impairment of $0.3 related to an early exit of an office lease. In the three and nine months ended February 29, 2024,
the Company recognized pretax costs associated with its planned investment in 9 Story Media Group of $3.0.

(4)

In the three and nine months ended February 28, 2025, the Company recognized pretax severance of $0.1 and $1.5, respectively,
related to cost-savings initiatives. In the nine months ended February 29, 2024, the Company recognized pretax severance of $1.2
related to cost-savings initiatives.

(5)

In the three and nine months ended February 28, 2025, the Company recognized pretax severance of $1.0 and $4.2, respectively,
related to cost-savings initiatives and other pretax expenses of $0.4. In the three and nine months ended February 29, 2024, the
Company recognized pretax severance of $0.8 and $5.9, respectively, related to restructuring and cost-savings initiatives.

 

Table 5

Scholastic Corporation

Consolidated Statements of Operations – Supplemental

Adjusted EBITDA

(Unaudited)

(In $ Millions)

Three months ended

02/28/25

02/29/24

Earnings (loss) before income taxes as reported

$

(28.4)

$

(34.6)

One-time items before income taxes

3.0

4.3

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

(25.4)

(30.3)

Interest (income) expense (1)

4.3

(0.6)

Depreciation and amortization

27.1

23.7

Adjusted EBITDA (2)

$

6.0

$

(7.2)

Nine months ended

02/28/25

02/29/24

Earnings (loss) before income taxes as reported

$

(50.2)

$

(31.1)

One-time items before income taxes

10.1

10.6

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

(40.1)

(20.5)

Interest (income) expense (1)

11.9

(2.4)

Depreciation and amortization

82.4

69.1

Adjusted EBITDA (2)

$

54.2

$

46.2

(1)

For the three and nine months ended February 28, 2025, 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

02/28/25

CBPD (1)

EDUC (1)

ENT (1)

INTL (1)

OVH (1)

Total

Earnings (loss) before income taxes as reported

$

7.5

$

(6.9)

$

(4.6)

$

(2.5)

$

(21.9)

$

(28.4)

One-time items before income taxes

—

—

1.5

0.1

1.4

3.0

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

7.5

(6.9)

(3.1)

(2.4)

(20.5)

(25.4)

Interest (income) expense (2)

0.0

0.0

0.7

0.0

3.6

4.3

Depreciation and amortization (3)

7.8

6.2

5.0

1.9

6.2

27.1

Adjusted EBITDA

$

15.3

$

(0.7)

$

2.6

$

(0.5)

$

(10.7)

$

6.0

Three months ended

02/29/24

CBPD (1)

EDUC (1)

ENT (1)

INTL (1)

OVH (1)

Total

Earnings (loss) before income taxes as reported

$

2.3

$

(0.8)

$

(3.1)

$

(6.3)

$

(26.7)

$

(34.6)

One-time items before income taxes

0.5

—

3.0

—

0.8

4.3

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

2.8

(0.8)

(0.1)

(6.3)

(25.9)

(30.3)

Interest (income) expense (2)

0.0

0.0

—

(0.0)

(0.6)

(0.6)

Depreciation and amortization (3)

8.3

7.7

0.0

2.0

5.7

23.7

Adjusted EBITDA

$

11.1

$

6.9

$

(0.1)

$

(4.3)

$

(20.8)

$

(7.2)

Nine months ended

02/28/25

CBPD (1)

EDUC (1)

ENT (1)

INTL (1)

OVH (1)

Total

Earnings (loss) before income taxes as reported

$

73.0

$

(24.4)

$

(11.4)

$

(6.0)

$

(81.4)

$

(50.2)

One-time items before income taxes

—

—

4.0

1.5

4.6

10.1

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

73.0

(24.4)

(7.4)

(4.5)

(76.8)

(40.1)

Interest (income) expense (2)

0.1

0.0

2.5

0.0

9.3

11.9

Depreciation and amortization (3)

23.1

18.6

16.5

5.9

18.3

82.4

Adjusted EBITDA

$

96.2

$

(5.8)

$

11.6

$

1.4

$

(49.2)

$

54.2

Nine months ended

02/29/24

CBPD (1)

EDUC (1)

ENT (1)

INTL (1)

OVH (1)

Total

Earnings (loss) before income taxes as reported

$

72.8

$

(13.7)

$

(4.4)

$

(7.2)

$

(78.6)

$

(31.1)

One-time items before income taxes

0.5

—

3.0

1.2

5.9

10.6

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

73.3

(13.7)

(1.4)

(6.0)

(72.7)

(20.5)

Interest (income) expense (2)

0.1

0.0

—

(0.1)

(2.4)

(2.4)

Depreciation and amortization (3)

24.0

23.3

0.2

5.5

16.1

69.1

Adjusted EBITDA

$

97.4

$

9.6

$

(1.2)

$

(0.6)

$

(59.0)

$

46.2

(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)

For the three and nine months ended February 28, 2025, amounts include production loan interest amortized into cost of goods sold.

(3)

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

 

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SOURCE Scholastic Corporation

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Hilco Global Engaged by Stan Lee Holdings to Sell Rare & Valuable Intellectual Property Portfolio

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NEW YORK, July 24, 2026 /PRNewswire/ — Hilco Global, a diversified financial services company that delivers expert professional services and capital solutions to help clients maximize value and drive performance across the business lifecycle, is pleased to announce that its IP Services practice has been engaged by Stan Lee Holdings, Ltd. (“SLH”) to sell a legendary portfolio of intellectual property developed by Stan Lee, the iconic “father of the super hero.” Known as the Omniverse Collection created by Stan Lee, the portfolio represents a treasure trove of original characters and source material developed by Stan when he was leading Marvel Comics and when he built Stan Lee Entertainment – the first super hero animation studio created for the Internet age. This rare and valuable collection of Intellectual Property encompasses dozens of compelling super heroes and stories conceived by Stan from 1999 to 2001 as well as a franchise comprising over 50 well-known characters – the only franchise of Marvel-created characters not owned by Marvel. Full details of the collection, including the individual characters, franchises, and story properties it comprises, will be released in the coming weeks.

Through this collaboration, Hilco Global will work alongside SLH and former EVP of Marvel Entertainment Shirrel Rhoades to find a new home for a body of largely underleveraged super hero and other characters, as well as world-building intellectual property. Numerous supporting  scripts, episodes, and development materials spanning Stan Lee’s career are also part of the offering.

“The Omniverse Collection created by Stan Lee is one of the most significant super hero IP offerings of the decade,” said Eric Hurwitz, Senior Director of the Hilco Global IP Services practice. “This large, diverse portfolio presents the opportunity to capitalize on untapped material with an unmatched pedigree. A buyer essentially has a blank slate to bring these characters to fans worldwide and expand on Stan Lee’s legacy. Hilco Global is thrilled to bring these assets to market, leveraging deep experience across intellectual property and media valuation, licensing, and transaction execution.”

Among the intellectual property being offered is a hidden gem; a connected entertainment universe of Stan Lee’s own creation. “This one-of-a-kind IP collection illustrates just how far ahead Stan was in understanding the future of entertainment,” observed Shirrel Rhoades, who was handpicked by Stan Lee to succeed him as publisher of Marvel. “What we’re bringing to market isn’t a collection of isolated ideas. It’s pieces of one larger vision, a living digital universe in which characters can be created, experienced, and expanded across every form of media.”

Parties can reach out to Ehurwitz@hilcoglobal.com to register interest. More information about the offering, the individual properties within the collection, and the sale process will become available soon.

About Hilco Global:  Hilco Global, a subsidiary of ORIX Corporation USA, is a diversified financial services company that delivers integrated professional services and capital solutions that help clients maximize value and drive performance across the retail, commercial and industrial, real estate, manufacturing, and intellectual property sectors. Hilco Global provides a range of customized solutions to healthy, stressed, and distressed companies to resolve complex situations and enhance long-term enterprise value. Hilco Global works to deliver the best possible result by aligning interests with clients and providing strategic advice and, in many instances, the capital required to transact. Hilco Global is based in Northbrook, Illinois and has more than 810 professionals operating on four continents. Visit www.hilcoglobal.com

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SOURCE Hilco Trading, LLC

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GR0 to Acquire Ultimate AI’s Deployment Division and Launch GR0 AI, Turning Brands’ Existing Customer Data Into Revenue

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July 24, 2026

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The new company pairs GR0’s performance marketing distribution with Ultimate Deployment’s AI agents and customer intelligence to build AI revenue systems for DTC and ecommerce brands; in one early deployment, AI-led customer conversations were associated with more than $350,000 in sales.

LOS ANGELES, July 24, 2026 /PRNewswire/ — GR0, the Los Angeles-based digital marketing agency, today announced plans to acquire Ultimate Deployment and launch GR0 AI, a new company that builds and deploys AI revenue systems for direct-to-consumer (DTC) and ecommerce brands. GR0 AI combines GR0’s performance marketing expertise, client relationships and sales infrastructure with Ultimate Deployment’s technology and experience deploying AI agents inside operating businesses.

“AI is creating an entirely new performance channel for brands,” said Jon Zacharias, co-founder and president of GR0. “Most companies already have the traffic, customer data and demand. What they’re missing is an intelligent system that knows who to contact, what to say and when to say it. GR0 AI turns the customer signals brands already own into personalized conversations and measurable revenue.”

The approach is already producing results. In one early deployment, AI-led customer conversations were associated with more than $350,000 in sales during a period in which the brand generated approximately $1 million in total revenue. GR0 AI deployments include attribution and incrementality reporting so brands can measure both assisted and directly generated revenue.

GR0 AI deploys inside a brand’s existing commerce, CRM, email, SMS, phone and customer-data infrastructure. Its systems:

Identify and prioritize high-intent customers and prospects Personalize outreach and follow-up based on customer behavior and company data Conduct two-way conversations across messaging channels, recovering revenue from abandoned carts, dormant customers and unconverted leads Escalate complex or high-value opportunities to human sales and support teams Measure the revenue associated with AI-driven interactions

“Most brands do not have a demand problem.  They already have thousands of customers and prospects sitting inside their systems,” said Ben Ganz, founder of Ultimate Deployment. “We build the company brain, unify the data and deploy AI employees that act on that intelligence. The opportunity falls into two buckets: recover the demand a brand has already earned, and make sure no new opportunity slips through the cracks. GR0 gives us the distribution, market access and operating experience to bring this to hundreds of brands.”

Ganz has spent his career at the intersection of entertainment and technology. He began as a producer on American Idol before moving into digital leadership at Fox, then founded VEGO Pictures, a digital production and technology company that worked with major entertainment and consumer brands and served as in-house production partner to Kevin Hart’s Laugh Out Loud Network. He also co-founded a virtual events company that produced digital graduation experiences for hundreds of thousands of students during the COVID-19 pandemic.

From there, Ganz and his team moved to the frontier of consumer AI, creating what FOX News called Hollywood’s first AI interactive voice experience. They powered AI personalities for creators with a combined audience of 100 million followers and engineered the world’s first AI assembly line for replicating personalities at scale, work the Hollywood Reporter recognized as the “Real-life Her.”  Ultimate Deployment then turned that conversational AI expertise toward the enterprise, building systems that connect company knowledge, customer data, and operational software with AI agents capable of performing real, meaningful business work.

“Ben and his team have built something with the potential to become a major new revenue channel for ecommerce companies,” Zacharias said. “We have seen very few offerings create this level of excitement among sophisticated performance marketers.”

Every GR0 AI engagement begins with an intensive discovery and implementation process: the team interviews key employees, maps the company’s systems and builds a centralized intelligence layer around the business. Lead scoring and prioritization are connected to the brand’s CRM before customer-facing AI agents go live.

“The technical opportunity is clear, and our job is to make it just as clear commercially,” said Kevin Miller, founder and CEO of GR0. “A brand that works with GR0 AI will know exactly what is being installed, how quickly it goes live and what revenue it is producing.”

The acquisition is expected to close this quarter, subject to completion of definitive agreements. Financial terms were not disclosed.

Brands interested in early GR0 AI deployments can learn more at www.gr0.com.

About GR0

GR0 is a full-service digital marketing agency that helps DTC and ecommerce brands accelerate growth through data-driven performance marketing, creative strategy and emerging technology. Co-founded by Kevin Miller and Jon Zacharias, GR0 provides services across SEO, Generative Engine Optimization, paid media, email, SMS, creative, affiliate and marketplace growth, and was among the first agencies to build a dedicated GEO practice, which is recognized by VentureBeat as one of America’s premier Generative Engine Optimization agencies. GR0 is headquartered in Los Angeles. Learn more at GR0.com.

About Ultimate Deployment

Ultimate Deployment builds AI employees for growing companies. Founded by Ben Ganz, the company captures how a business operates, organizes its institutional knowledge, connects its systems and deploys AI agents that perform real operational work across sales, customer experience, marketing, finance and internal teams.

Before its enterprise focus, Ultimate Deployment’s team built consumer AI at entertainment scale, creating Hollywood’s first interactive voice experience, powering AI personalities for creators with a combined audience of 100 million followers and engineering the world’s first AI assembly line for replicating personalities’ work featured by Fox News and recognized by The Hollywood Reporter as the real-life Her.

About Ultimate AI

Ultimate AI, founded by Ben Ganz, is a holding company building AI across consumer and enterprise. It launched during the first wave of consumer generative AI as an early AI super app, bringing more than 100 AI tools and assistants into a single consumer platform that peaked within the top 10 of its Apple App Store category, according to company data. The company then expanded into creator AI, developing technology that lets public figures build interactive AI experiences around their personality, voice, knowledge and content. In 2024, Ultimate AI created Pookie Tools (widely known as the Hawk Tuah AI app), whose launch generated more than 400 million organic social media views and more than 10,000 downloads in its first seven days with no paid marketing, according to company data. It went on to develop real-time voice and personality products, including an experience Fox News described as Hollywood’s first real-time AI experience.

Ultimate Deployment, the enterprise arm that GR0 is acquiring, formed in March 2026 following the release of frontier agentic models from Anthropic and OpenAI, and applies that technology inside operating companies. It builds AI employees that capture how a business operates, unify its data and systems, and perform real operational work across sales, customer experience, marketing, finance and internal teams.

Company: GR0
Media Contact Name: GR0 Agency
Media Contact Email: press@gr0.com
Phone: +1 (310) 439-1887
Address: Los Angeles, CA, USA
Website: https://gr0.com/

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SOURCE GR0.com LLC

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Tech Mahindra and Cisco Partner to Bring AI-Driven Security Service Edge to Global Enterprises

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July 24, 2026

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PUNE, India, July 24, 2026 /PRNewswire/ — Tech Mahindra (NSE: TECHM), a leading global provider of technology consulting and digital solutions to enterprises across industries, announced a partnership with Cisco to deliver an AI-driven Security Service Edge (SSE) offering for global enterprises. The joint offering will help enterprises reduce security complexity, improve visibility and control, deliver seamless user access, and strengthen resilience as they scale cloud, hybrid work, and AI adoption.

The partnership combines Tech Mahindra’s global managed services, integration, and delivery expertise with Cisco’s industry-leading Security Service Edge (SSE) platform (Cisco Secure Access) to provide unified, cloud-native security and seamless zero-trust access across users, devices, networks, and locations. For Tech Mahindra, the partnership strengthens its cybersecurity portfolio with differentiated, high-value managed security services, expands its addressable market, and accelerates pipeline growth in cloud security.

Saket Singh, SVP & Business Head – Digital Core Services (Cloud, Infrastructure, Network and Cyber Security Services), Tech Mahindra, said, “As enterprises increasingly operate in hybrid and distributed environments, security must evolve from siloed controls to unified, cloud-native platforms. Fragmented tools, inconsistent user experiences, and rising threats are creating visibility and control gaps as applications are accessed from anywhere. Through our partnership with Cisco, we are combining advanced SSE capabilities with Tech Mahindra’s managed services expertise to simplify operations, strengthen zero-trust enforcement, and deliver consistent, AI-powered protection at scale.”

By integrating a secure web gateway, cloud access security broker (CASB), zero trust network access (ZTNA), firewall-as-a-service, data loss prevention (DLP), and much more into a single platform, the offering simplifies security operations and delivers AI-powered protection. Enterprises benefit from end-to-end visibility, faster deployment, and a streamlined path to modernizing their security architecture while accelerating secure cloud adoption and cyber resilience. Additionally, as enterprises inevitably step into the agentic era, this solution provides robust and rapidly expanding protections for the use of generative AI and AI agents.

Raj Chopra, SVP & Chief Product Officer, Cisco Security Business Group, said, “Enterprises don’t need another tool to stitch into an already complex security stack. They need a simpler way to secure how work actually happens across users, devices, applications, clouds, and increasingly AI agents. Cisco Secure Access brings zero trust, identity context, and AI-powered protection into one cloud-delivered platform, helping teams enforce policy consistently while giving users seamless access from anywhere. Together with Tech Mahindra’s global managed services and integration expertise, we can help organizations modernize security operations, accelerate secure cloud and AI adoption, and move with confidence in the agentic era.”

The integrated SSE solution reinforces Tech Mahindra and Cisco’s leadership in unified cloud-security, helping enterprises simplify secure access, strengthen resilience and accelerate digital transformation in an increasingly distributed and AI-driven world.

 

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SOURCE Tech Mahindra

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