Scholastic (SCHL) Q4 2026 earnings summary

Executive summary

• Fiscal 2026 marked significant transformation, with disciplined cost management, governance improvements, and a more focused strategy, resulting in improved earnings power.

• Revenue declined 3% year-over-year to $1,581.9 million, reflecting tough prior-year comparisons and funding pressures in Education.

• Adjusted operating income rose 32% to $47.1 million, and Adjusted EBITDA increased 4% to $151.5 million, up 15% on a comparable basis.

• Over $285 million was returned to shareholders via share repurchases and dividends, enabled by over $400 million in net proceeds from sale-leaseback transactions.

• Book Fairs remained a core earnings engine, with increased fair count and revenue per fair, while Entertainment and International segments showed growth.

Financial highlights

• Fiscal 2026 revenue decreased 3% to $1.582 billion; Q4 revenue down 6% to $476.1 million year-over-year.

• Adjusted operating income for the year rose 32% to $47.1 million; adjusted EBITDA up 4% to $151.5 million.

• Adjusted net income for the year was $45.4 million ($1.87 per diluted share), up from $13.3 million ($0.48 per share) in FY 2025.

• Free cash flow was $436 million, driven by sale-leaseback proceeds.

• Diluted EPS for the year was $2.34, compared to $(0.07) last year; adjusted EPS was $1.87.

Outlook and guidance

• Fiscal 2027 revenue growth expected at 2%-4% over FY 2026; adjusted EBITDA guidance of $135-$145 million.

• Free cash flow outlook of $35-$40 million, normalizing after one-time sale-leaseback proceeds.

• Book Fairs and Trade Publishing expected to drive growth; Education segment targeted for stabilization and improved profitability in the second half.

• Entertainment segment anticipates revenue growth and improved profitability, with strong contracted pipeline.

• Q1 FY27 revenues expected to be slightly down, with growth resuming in Q2; Q1 operating loss to be modestly greater due to sale-leaseback impact.