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The call reflected meaningful balance sheet and shareholder‑friendly achievements (>$400M sale‑leaseback proceeds, aggressive buybacks, net cash position, reaffirmed FCF and adjusted EBITDA guidance) alongside operational and seasonal headwinds (modest revenue decline, adjusted EBITDA pressured by sale‑leaseback, Trade and International softness, and tariff costs). Franchise strength (Hunger Games, Dog Man, Wings of Fire), Book Fairs momentum, digital/audience growth, and improving Education profitability are substantial positives that largely offset the near‑term quarter‑specific challenges. Management reiterated confidence in Q4 seasonality, cost mitigation, and longer‑term stabilization and growth actions.
Management reaffirmed fiscal 2026 guidance with full‑year revenue expected to be approximately flat year‑over‑year, adjusted EBITDA of $146–$156 million (including an estimated ~$14 million partial‑year headwind from the December sale‑leaseback), and free cash flow to exceed $430 million (benefiting from the >$400 million net proceeds from the sale‑leaseback and Q3 free cash flow of $407 million); they expect a seasonal return to profitability in Q4 and revenue growth in School Reading Events and Entertainment versus slightly lower Trade and International revenues versus tough prior‑year comps. The company established long‑term net‑leverage targets of 2.0×–2.5× adjusted EBITDA, authorized a $300 million repurchase program (a $200 million modified Dutch‑auction tender offer at $36–$40 per share and $100 million for open‑market repurchases), said the tender will run Mar 23–Apr 20 and be funded with cash and credit, and noted it has already repurchased >4.4 million shares for ~ $147 million at an average $33.30; other key figures mentioned include Q3 revenues of $329.1 million, Q3 net cash of $90.6 million (versus FY25 net debt $136.6 million), and an expected ~ $10 million of incremental tariff expense for the year.
Completed sale‑leaseback of NYC HQ and Jefferson City facility unlocking >$400 million in net proceeds; fully repaid revolver and ended the quarter with net cash of $90.6 million (vs. net debt of $136.6 million at FY25 end); Q3 free cash flow was $407 million (driven by sale proceeds) and management reaffirmed FY26 free cash flow to exceed $430 million.
Since December repurchased >4.4 million shares for ~$147 million at an average $33.30; board authorized a new $300 million buyback program comprising a $200 million modified Dutch tender offer ($36–$40/share) and $100 million open‑market authority (tender could represent ~25% of shares if fully subscribed).
Reaffirmed fiscal 2026 adjusted EBITDA guidance of $146 million–$156 million (includes ~ $14 million partial‑year impact from sale‑leaseback) and expect a return to profitability in Q4; management expressed confidence in hitting guidance driven by seasonal improvement and cost mitigation.
Book Fairs revenue increased 2% to $113.3 million in Q3; fair counts grew year‑to‑date, revenue per fair improved, cancellations declined, eWallet adoption rose and Scholastic Dollars redemptions were strong; launched Discovery Fairs pilots with robust early demand.
Franchises continued to drive demand: Hunger Games 'Sunrise on the Reaping' ~5.4 million copies sold and 50 consecutive weeks on YA bestseller list; Dog Man and Wings of Fire titles produced multiple #1 debuts and backlist momentum despite quarter‑to‑quarter timing shifts.
Entertainment revenues rose to $16.0 million (up $3.2 million, ~25% YoY). Scholastic YouTube channels generated >85 million views (up >200% YoY) and >21 million hours watched; Scholastic TV app recorded nearly 100 million minutes watched and >5 million views since launch, expanding digital reach and IP extension opportunities.
Education revenues modestly declined 2% to $56.1 million, but segment adjusted operating loss improved to $5.2 million from $6.9 million a year ago, reflecting lower cost structure, reorganization savings and sequential stabilization under newly appointed permanent President Jeff Mathews.
International markets including Australia and the U.K. showed strong contributions and operational improvements; management highlighted expanding demand for English‑language learning materials as a long‑term growth opportunity.
Good day, and thank you for standing by. Welcome to the Scholastic Corporation Reports Third Quarter Fiscal Year 2026 Results. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. To ask a question, please press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. I would now like to hand the conference over to your speaker today, Jeffrey Mathews, Executive Vice President, Chief Growth Officer, and President, Scholastic Education.
Hello, and welcome everyone to Scholastic Corporation's fiscal 2026 Third Quarter Earnings Call. Today on the call, I am joined by Peter Warwick, President and Chief Executive Officer, and Haji Glover, our Chief Financial Officer and Executive Vice President. As usual, we have posted the accompanying investor presentation on our IR website at investors.scholastic.com. You may download it now if you have not already done so. We would like to point out that certain statements made today will be forward-looking. These forward-looking statements, by their nature, are subject to various risks and uncertainties, and actual results may differ materially from those currently anticipated. In addition, we will be discussing some non-GAAP financial measures as defined in Regulation G. The reconciliations of those measures to the most directly comparable GAAP measures can be found in the company's earnings release and accompanying financial tables filed this...