Scholastic (SCHL) Q2 Earnings Beat Estimates, Decline Y/Y
Zacks Investment Research | Dec 19, 2019 09:28PM ET
Scholastic Corporation (NASDAQ:SCHL) reported second-quarter fiscal 2020 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate. However, both metrics fell year over year.
Sluggishness in book club sales, owing to lesser number of teacher sponsors, affected quarterly results. However, the company witnessed higher number of transactions per fair on better fair quality and selection, and the e-wallet digital payment facility. Further, it remains on track with the Scholastic 2020 program. Additionally, management retained its fiscal 2020 view.
Q2 Details
The company’s adjusted earnings of $2.06 per share surpassed the Zacks Consensus Estimate of $1.77. However, the bottom line decreased 1.4% year over year.
In the reported quarter, its revenues were $597.2 million, down 1% year over year. Meanwhile, the figure surpassed the consensus mark of $591 million. Although soft book club sales hurt the top line, decent performance in book fairs, classroom collections, and consulting services in Scholastic Education, Asia trade and education as well as robust U.S. trade provided some cushion.
Adjusted operating income increased 4% to $107 million in the quarter under review. Adjusted operating margin expanded 90 basis points (bps) to 17.9%, backed by improvements in book fair operations, effective cost management in clubs and reduced overhead expenses related to technology. Moreover, adjusted SG&A expenses were $207.8 million, marking a decline of 6.5% from $222.3 million reported in the year-ago quarter.
Adjusted EBITDA advanced 5% to $129.3 million from $123.3 million reported in the prior-year quarter.
Segment Details
Revenues in the Children’s Book Publishing and Distribution segment edged down 1% to $413.6 million. Operating margin for the segment improved 110 bps to 26.5%.
The Education segment’s revenues were $69.9 million, down 2% from the year-ago quarter. Operating margin contracted 270 bps to 8.9%.
International revenues fell 1% year over year to $113.7 million. Operating margin contracted 100 bps to 10.3% in the reported quarter.
Scholastic Corporation Price, Consensus and EPS Surprise
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