Q2 2026 Scholastic Corp Earnings Call

December 18, 2025

Operator: Good day, and thank you for standing by. Welcome to the Scholastic Q4 FY 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 speaker's presentation, there will be a question-and-answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. I would now like to hand the conference over to your speaker today, Jeffrey Mathews, Executive Vice President and Chief Growth Officer.

Operator: Good day, and thank you for standing by. Welcome to the Scholastic Q2 FY 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 speaker's presentation, there will be a question-and-answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. I would now like to hand the conference over to your speaker today, Jeffrey Mathews, Executive Vice President and Chief Growth Officer.

Speaker #1: 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 star 1-1 on your telephone and wait for your name to be announced.

Speaker #1: To withdraw your question, please press star 11 again. I would now like to hand the conference over to your speaker today, Jeffrey Mathews, Executive Vice President and Chief Growth Officer.

Speaker #2: Hello, and welcome everyone to Scholastic's fiscal 2026 second quarter earnings call. Today on the call, I'm joined by Peter Warwick, our President and Chief Executive Officer, and Haji Glover, our Chief Financial Officer and Executive Vice President.

Jeffrey Mathews: Hello and welcome, everyone, to Scholastic's fiscal 2026 Q2 earnings call. Today on the call, I'm joined by Peter Warwick, our President and Chief Executive Officer, and Haji Glover, our Chief Financial Officer and Executive Vice President. As usual, we posted the accompanying investor presentation on our IR website at investors.scholastic.com, which you may download now if you've 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. The actual results may differ materially from those currently anticipated. In addition, we'll be discussing some non-GAAP financial measures as defined in Regulation G. The reconciliations of those measures to the most directly comparable GAAP measures may be found in the company's earnings release and accompanying financial tables filed this afternoon on a Form 8-K.

Speaker #2: As usual, we posted the accompanying investor presentation on our IR website at investors.scholastic.com, which you may download now if you've not already done so.

Speaker #2: 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.

Speaker #2: In addition, we'll be discussing some non-GAAP financial measures as defined in Regulation G. The reconciliations of those measures to the most directly comparable GAAP measures may be found in the company's earnings release and the company financial tables, filed this afternoon on a Form 8-K.

Speaker #2: This earnings release has also been posted to our Investor Relations website. We encourage you to review the disclaimers in the release and investor presentation, and to review the risk factors disclosed in the company's annual and quarterly reports filed with the SEC.

Jeffrey Mathews: This earnings release has also been posted to our Investor Relations website. We encourage you to review the disclaimers in the release and investor presentation, and to review the risk factors disclosed in the company's annual and quarterly reports filed with the SEC. Should you have any questions after today's call, please send them directly to our IR email address, investor_relations@scholastic.com. And now I'd like to turn the call over to Peter to begin this afternoon's presentation.

This earnings release has also been posted to our Investor Relations website. We encourage you to review the disclaimers in the release and investor presentation, and to review the risk factors disclosed in the company's annual and quarterly reports filed with the SEC. Should you have any questions after today's call, please send them directly to our IR email address, investor_relations@scholastic.com. And now I'd like to turn the call over to Peter to begin this afternoon's presentation.

Speaker #2: Should you have any questions after today's call, please send them directly to our IR email address, investor_relations@scholastic.com. And now, I'd like to turn the call over to Peter to begin this.

Speaker #2: afternoon's presentation. Thank

Peter Warwick: Thank you, Jeff. Good afternoon, everyone. Scholastic performed strongly in our important back-to-school season. We delivered 13% Adjusted EBITDA growth in Q2 and have affirmed our FY26 earnings guidance after adjustments for the sale-leasebacks that we closed yesterday, which were not assumed in our original guidance. I'll discuss this further in a moment, as will Haji, who will provide the adjusted view based on these highly accretive transactions. In Q2, we also sustained our momentum with key strategic and financial initiatives, achieving major goals in our transformation to a more growth-focused, shareholder-oriented company. Before discussing Q2 results, I want to take a moment to review Scholastic's journey over the last four years.

Speaker #3: Thank you, Jeff. Good afternoon, everyone. Scholastic performed strongly in our important back-to-school season. We delivered 13% adjusted EBITDA growth in the second quarter, and have affirmed our FY26 earnings guidance after adjustments for the sale-leasebacks that we closed yesterday, which were not assumed in our original guidance.

Speaker #3: Further, in a moment, as we'll view based on these highlights, Haji, who will provide the adjusted—I'll discuss these accretive transactions. In Q2, we also sustained our momentum with key strategic and financial initiatives, achieving major goals in our transformation to a more growth-focused, shareholder-oriented company.

Speaker #3: Before discussing quarter two results, I want to take a moment to review Scholastic's journey over the last four years. Since the start of fiscal 2022, I've had the privilege of working with our new Board Chair, Yola Lekesi, to remake Scholastic with a singular purpose: realizing the power of our unmatched brand, IP, channels, and balance sheet for long-term growth and value creation.

Peter Warwick: Since the start of fiscal 2022, I've had the privilege of working with our new board chair, Iole Lucchese, to remake Scholastic with a singular purpose: realizing the power of our unmatched brand, IP, channels, and balance sheet for long-term growth and value creation. While significant opportunity and work remain, I'm proud of the progress that we've made. So first, we've refreshed our board and leadership team. We've added seven new independent directors with deep expertise in education, digital media, and capital allocation. We've also appointed new leaders in each of our major segments and in key corporate functions, including Chief Financial Officer. These changes ensure the board has the experience and perspectives needed to maximize Scholastic's long-term opportunity and value while bringing innovative thinking, sharper strategic focus, operating discipline, and renewed accountability to our management.

Since the start of fiscal 2022, I've had the privilege of working with our new board chair, Iole Lucchese, to remake Scholastic with a singular purpose: realizing the power of our unmatched brand, IP, channels, and balance sheet for long-term growth and value creation. While significant opportunity and work remain, I'm proud of the progress that we've made. So first, we've refreshed our board and leadership team. We've added seven new independent directors with deep expertise in education, digital media, and capital allocation. We've also appointed new leaders in each of our major segments and in key corporate functions, including Chief Financial Officer. These changes ensure the board has the experience and perspectives needed to maximize Scholastic's long-term opportunity and value while bringing innovative thinking, sharper strategic focus, operating discipline, and renewed accountability to our management.

Speaker #3: While significant opportunity and work remain, I'm proud of the progress that we've made. So, first, we've refreshed our board and leadership team. We've added seven new independent directors with deep expertise in education, digital media, and capital allocation.

Speaker #3: We've also appointed new leaders in each of our major segments and in key corporate functions, including Chief Financial Officer. These changes ensure the board has the experience and perspectives needed to maximize Scholastic's long-term value, bringing innovative thinking, opportunity, and value, while providing sharper strategic focus, operating discipline, and renewed accountability to our management.

Speaker #3: Second, we've reorganized and re-engineered our core businesses and overhead functions to better align with Scholastic's long-term growth opportunities, improve execution of our plan, and unlock operational efficiencies.

Peter Warwick: Second, we've reorganized and re-engineered our core businesses and overhead functions to better align with Scholastic's long-term growth opportunities, improve execution of our plan, and unlock operational efficiencies. We unified our children's book group, bringing together our publishing and proprietary distribution channels to fully capitalize on Scholastic's scale as the world's largest and only vertically integrated children's book publisher and distributor. We restructured education solutions to focus our product portfolio, strengthen go-to-market capabilities, and reset our cost structure. We've also reorganized our international segment. At the same time, we've significantly reduced costs in our shared services and overhead functions by eliminating redundancies, improving processes, and reducing our real estate footprint. Third, we've invested and expanded into highly strategic growth opportunities.

Second, we've reorganized and re-engineered our core businesses and overhead functions to better align with Scholastic's long-term growth opportunities, improve execution of our plan, and unlock operational efficiencies. We unified our children's book group, bringing together our publishing and proprietary distribution channels to fully capitalize on Scholastic's scale as the world's largest and only vertically integrated children's book publisher and distributor. We restructured education solutions to focus our product portfolio, strengthen go-to-market capabilities, and reset our cost structure. We've also reorganized our international segment. At the same time, we've significantly reduced costs in our shared services and overhead functions by eliminating redundancies, improving processes, and reducing our real estate footprint. Third, we've invested and expanded into highly strategic growth opportunities.

Speaker #3: We unified our Children's Book group, bringing together our publishing channels to fully capitalize on—and proprietary distribution—Scholastic’s scale as the world’s largest and only vertically integrated children’s book publisher and distributor.

Speaker #3: We restructured Education Solutions to focus our product portfolio and strengthen go-to-market capabilities, and reset our cost structure. We've also reorganized our International segment. At the same time, we've significantly reduced costs in our shared services and overhead functions by eliminating redundancies, improving processes, and reducing our real estate footprint.

Speaker #3: Third, we've invested and expanded into highly strategic growth opportunities. The acquisition and integration of Nine Story Media Group further differentiates Scholastic as a global children's media, book, and IP company, with the ability to reach kids and families where they are today.

Peter Warwick: The acquisition and integration of Nine Story Media Group further differentiates Scholastic as a global children's media, book, and IP company with the ability to reach kids and families where they are today, on screens, as well as on the page. In addition, we've significantly scaled models and channels to tap new sources of corporate, philanthropic, and state and local government funding for literacy, generating over $300 million in revenue for our books and literacy solutions since fiscal 2022. And fourth, we've implemented a disciplined and shareholder-focused approach to capital allocation. Since fiscal 2022, we have returned almost $500 million to shareholders through share repurchases and dividends, reducing our share count by approximately 25%, at the same time as we have invested in the opportunities that I've just described.

The acquisition and integration of Nine Story Media Group further differentiates Scholastic as a global children's media, book, and IP company with the ability to reach kids and families where they are today, on screens, as well as on the page. In addition, we've significantly scaled models and channels to tap new sources of corporate, philanthropic, and state and local government funding for literacy, generating over $300 million in revenue for our books and literacy solutions since fiscal 2022. And fourth, we've implemented a disciplined and shareholder-focused approach to capital allocation. Since fiscal 2022, we have returned almost $500 million to shareholders through share repurchases and dividends, reducing our share count by approximately 25%, at the same time as we have invested in the opportunities that I've just described.

Speaker #3: On screens, as well as on the page. In addition, we've significantly scaled models and channels to tap new sources of corporate, philanthropic, and state and local government funding for literacy, generating over $300 million in revenue for our books and literacy solutions since fiscal 2022.

Speaker #3: And fourth, we’ve implemented a disciplined capital allocation. Since fiscal 2022, we have returned almost $500 million to shareholders through share repurchases and dividends, reducing our share count by approximately 25%.

Speaker #3: At the same time, as we have invested in the opportunities that I've just described, this month we crossed another major milestone with the closing of two successful sale-leasebacks that have unlocked more than $400 million in net proceeds from our major non-operating real estate assets.

Peter Warwick: This month, we crossed another major milestone with the closing of two successful sale leasebacks that have unlocked more than $400 million in net proceeds from our major non-operating real estate assets. As a first step to deploy this incremental liquidity, our board has increased our open market share repurchase authorization to $150 million. Haji will speak later in the call about the financial impact of these highly accretive transactions and uses of proceeds. I want to be clear, though. The board and I are absolutely committed to deploying this incremental cash in ways that create value for our shareholders, and our top opportunity is returning it efficiently to shareholders.

This month, we crossed another major milestone with the closing of two successful sale leasebacks that have unlocked more than $400 million in net proceeds from our major non-operating real estate assets. As a first step to deploy this incremental liquidity, our board has increased our open market share repurchase authorization to $150 million. Haji will speak later in the call about the financial impact of these highly accretive transactions and uses of proceeds. I want to be clear, though. The board and I are absolutely committed to deploying this incremental cash in ways that create value for our shareholders, and our top opportunity is returning it efficiently to shareholders.

Speaker #3: As a first step to deploy this incremental liquidity, our board has increased our open market share repurchase authorization to $150 million. Haji will speak later in the call about the financial impact of these highly accretive transactions and uses of proceeds.

Speaker #3: I want to be clear, though. The board and I are absolutely committed to deploying this incremental cash in ways that create value for our shareholders, and our top opportunity is returning it efficiently to shareholders.

Speaker #3: In summary, carefully executed, comprehensive changes over the past four years position Scholastic's organization, strategy, and finances to better realize the value of its unique strengths that were built over the past century.

Peter Warwick: In summary, carefully executed comprehensive changes over the past four years position Scholastic's organization, strategy, and finances to better realize the value of its unique strengths that were built over the past century, that is, our brand, our IP, and our channels, by growing profitably, delivering impact and value for our customers, and driving returns for our owners. As we enter the second half of fiscal 2026, we remain focused on continuing this work. Turning now to the second quarter results, the performance of our children's book publishing and distribution segment demonstrates the strength of Scholastic's proprietary school-based channels and the power of our major global franchises. School book fairs delivered another strong back-to-school season and remain a cornerstone of Scholastic's reach and engagement with kids.

In summary, carefully executed comprehensive changes over the past four years position Scholastic's organization, strategy, and finances to better realize the value of its unique strengths that were built over the past century, that is, our brand, our IP, and our channels, by growing profitably, delivering impact and value for our customers, and driving returns for our owners. As we enter the second half of fiscal 2026, we remain focused on continuing this work. Turning now to the Q2 results, the performance of our children's book publishing and distribution segment demonstrates the strength of Scholastic's proprietary school-based channels and the power of our major global franchises. School book fairs delivered another strong back-to-school season and remain a cornerstone of Scholastic's reach and engagement with kids.

Speaker #3: That is, our brand, our IP, and our channels by growing profitably, delivering impact and value for our customers, and driving returns for our owners.

Speaker #3: As we enter the second half of fiscal 2026, we remain focused on continuing this work. Turning now to the second quarter results. The performance of our Children's Book Publishing and Distribution segment demonstrates the strength of Scholastic's proprietary school-based global franchises.

Speaker #3: School book fairs delivered another strong back-to-school season. Channels and the power of our major remain a cornerstone of Scholastic's reach and engagement with kids.

Speaker #3: Growth across key performance metrics—that's fair counts, revenue per fair, and e-wallet usage—and lower cancellations underscore the unique strength and relevance of this beloved event-focused channel and its ability to spark excitement among students, families, and educators.

Peter Warwick: Growth across key performance metrics, that's fair counts, revenue per fair, and e-Wallet usage, and lower cancellations underscore the unique strength and relevance of this beloved event-focused channel and its ability to spark excitement among students, families, and educators. We continue to execute on initiatives to profitably grow fairs, expanding the addressable market, improving selling and marketing effectiveness, introducing new fair formats, and advancing merchandising with strategic pricing optimization. These efforts are contributing to revenue per fair growth. We expect these positive trends to continue into the spring season as we build on the strong engagement we saw in the first half. In book clubs, our smaller school channel, softer results reflect the continued evolution of classroom and teacher engagement patterns. We remain focused on key strategies, improving teacher engagement and increasing student participation to ensure clubs remain an accessible entry point into reading for kids and families.

Growth across key performance metrics, that's fair counts, revenue per fair, and e-Wallet usage, and lower cancellations underscore the unique strength and relevance of this beloved event-focused channel and its ability to spark excitement among students, families, and educators. We continue to execute on initiatives to profitably grow fairs, expanding the addressable market, improving selling and marketing effectiveness, introducing new fair formats, and advancing merchandising with strategic pricing optimization. These efforts are contributing to revenue per fair growth. We expect these positive trends to continue into the spring season as we build on the strong engagement we saw in the first half. In book clubs, our smaller school channel, softer results reflect the continued evolution of classroom and teacher engagement patterns. We remain focused on key strategies, improving teacher engagement and increasing student participation to ensure clubs remain an accessible entry point into reading for kids and families.

Speaker #3: We continue to execute on initiatives to profitably grow fairs, expanding the addressable market, improving selling and marketing effectiveness, introducing new fair formats, and advancing merchandising with strategic pricing optimization.

Speaker #3: These efforts are contributing to revenue per fair growth. We expect these positive trends to continue into the spring season, as we build on the strong engagement we saw in the first half.

Speaker #3: In book clubs, our smaller school channel's softer results reflect the continued evolution of classroom and teacher engagement patterns. We remain focused on key strategies: improving teacher engagement and increasing student participation, to ensure clubs remain an accessible entry point into reading for kids and families.

Speaker #3: Trade publishing delivered another strong quarter, underscoring the power of Scholastic's global franchises and our continued ability to bring compelling new content to readers across channels.

Peter Warwick: Trade publishing delivered another strong quarter, underscoring the power of Scholastic's global franchises and our continued ability to bring compelling new content to readers across channels. Dav Pilkey's Dog Man: Big Jim Begins, the 14th book in the global phenomenon, debuted as the number one best-selling title across adult and children's categories in the US on 11 November and has already sold over 2 million copies in print. The book currently holds the number one spot on the New York Times Graphic Books and Manga Bestseller List, where titles from the series hold three of the top five positions, and per Circana BookScan, nine out of the top 10 kids' graphic novels in November were Scholastic titles. This spring, Pilkey's universe is expanding into the growing category of children's manga, with Captain Underpants, the first epic manga, illustrated by the acclaimed manga artist Motojiro.

Trade publishing delivered another strong quarter, underscoring the power of Scholastic's global franchises and our continued ability to bring compelling new content to readers across channels. Dav Pilkey's Dog Man: Big Jim Begins, the 14th book in the global phenomenon, debuted as the number one best-selling title across adult and children's categories in the US on 11 November and has already sold over 2 million copies in print. The book currently holds the number one spot on the New York Times Graphic Books and Manga Bestseller List, where titles from the series hold three of the top five positions, and per Circana BookScan, nine out of the top 10 kids' graphic novels in November were Scholastic titles. This spring, Pilkey's universe is expanding into the growing category of children's manga, with Captain Underpants, the first epic manga, illustrated by the acclaimed manga artist Motojiro.

Speaker #3: Dav Pilkey's Dog Man: Big Jim Believes, the 14th book in the global phenomenon, debuted as the number one best-selling title across adult and children's categories in the US on November 11th, and has already sold over 2 million copies in print.

Speaker #3: The book currently holds the number one spot on the New York Times Graphic Books, and titles from the series hold three of the top five positions on the manga bestseller list.

Speaker #3: Kids' graphic novels in November were Scholastic titles. This spring, Pilke's universe is expanding into the growing category—per Sakana Book—of children's manga, with Captain Underpants: The First Epic Manga, illustrated by the acclaimed manga artist Motojir?.

Speaker #3: The new title and series capitalize on Scholastic's longstanding leadership in graphic novels and our role in helping children discover and deepen their love of reading.

Peter Warwick: The new title and series capitalize on Scholastic's long-standing leadership in graphic novels and our role in helping children discover and deepen their love of reading. A new edition of Sunrise on the Reaping sustained momentum of the latest title in the Hunger Games series, which has sold almost 5 million copies since its March release, with anticipation building ahead of a film release next fall. Similarly, sales of the Harry Potter series benefited from the new interactive illustrated edition of The Goblet of Fire, with fans gushing on social media about a new upcoming Harry Potter series on HBO currently expected in spring 2027. The Wings of Fire series also delivered a breakout moment with Darkstalker, the first prequel, which became an instant bestseller.

The new title and series capitalize on Scholastic's long-standing leadership in graphic novels and our role in helping children discover and deepen their love of reading. A new edition of Sunrise on the Reaping sustained momentum of the latest title in the Hunger Games series, which has sold almost 5 million copies since its March release, with anticipation building ahead of a film release next fall. Similarly, sales of the Harry Potter series benefited from the new interactive illustrated edition of The Goblet of Fire, with fans gushing on social media about a new upcoming Harry Potter series on HBO currently expected in spring 2027. The Wings of Fire series also delivered a breakout moment with Darkstalker, the first prequel, which became an instant bestseller.

Speaker #3: A new edition of Sunrise on the Reaping sustained momentum for the latest title in the Hunger Games series, which has sold almost 5 million copies since its March release, with anticipation building ahead of a film release next fall.

Speaker #3: Similarly, sales of the Harry Potter series benefited from the new interactive illustrated edition of The Goblet of Fire, with fans gushing on social media about a new upcoming Harry Potter series on HBO, currently expected in spring 2027.

Speaker #3: The Wings of Fire series also delivered a breakout moment with Darkstalker, the first prequel, which became an instant bestseller. We're excited to build on this momentum with the 16th Wings of Fire book, The Hybrid Prince, in March—the first new installment in four years—and then later this month with the graphic novel edition of the ninth book in the series, Talons of Power.

Peter Warwick: We're excited to build on this momentum with the 16th Wings of Fire book, The Hybrid Prince, in March, the first new installment in four years, and then later this month with the graphic novel edition of the ninth book in the series, Talons of Power. Our consistently high-performing series highlights Scholastic's unique ability to build enduring children's stories, characters, and franchises that grow with readers and extend across formats, channels, and generations. We're moving forward to realize the strategic potential of the newly combined children's book group, which unifies editorial, marketing, distribution, and merchandising to reach more kids through a programmatic and coordinated approach.

We're excited to build on this momentum with the 16th Wings of Fire book, The Hybrid Prince, in March, the first new installment in four years, and then later this month with the graphic novel edition of the ninth book in the series, Talons of Power. Our consistently high-performing series highlights Scholastic's unique ability to build enduring children's stories, characters, and franchises that grow with readers and extend across formats, channels, and generations. We're moving forward to realize the strategic potential of the newly combined children's book group, which unifies editorial, marketing, distribution, and merchandising to reach more kids through a programmatic and coordinated approach.

Speaker #3: Our consistently high-performing series highlights Scholastic's unique ability to build enduring children's stories, characters, and franchises that grow with readers and extend across formats, channels, and generations.

Speaker #3: We're moving forward to realize the strategic potential of the newly combined Children's Book Group, which unifies editorial, marketing, distribution, and merchandising to reach more kids through a programmatic and coordinated approach.

Speaker #3: As an example of what's now uniquely possible at Scholastic with this integrated approach, we just announced a comprehensive branding, publishing, and distribution partnership with Mark Rober, the former NASA engineer whose highly popular CrunchLabs brand and YouTube channel reached more than 70 million subscribers—mostly kids.

Peter Warwick: As an example of what's now uniquely possible at Scholastic with this integrated approach, we just announced a comprehensive branding, publishing, and distribution partnership with Mark Rober, the former NASA engineer whose highly popular CrunchLabs brand and YouTube channel reached more than 70 million subscribers, mostly kids. We look forward to sharing more about this partnership on future calls. In Scholastic Entertainment, we continue to strengthen our position as a leading producer of high-quality children's content, expanding the reach and value of our IP. During the quarter, we began production on three premium animated series with major media partners, an encouraging sign of improving greenlight activity, which we expect to continue to build into next year and to contribute to growth. We also see momentum across our development slate with a major project based on a long-standing Scholastic brand slated to launch in fiscal 2027.

As an example of what's now uniquely possible at Scholastic with this integrated approach, we just announced a comprehensive branding, publishing, and distribution partnership with Mark Rober, the former NASA engineer whose highly popular CrunchLabs brand and YouTube channel reached more than 70 million subscribers, mostly kids. We look forward to sharing more about this partnership on future calls. In Scholastic Entertainment, we continue to strengthen our position as a leading producer of high-quality children's content, expanding the reach and value of our IP. During the quarter, we began production on three premium animated series with major media partners, an encouraging sign of improving greenlight activity, which we expect to continue to build into next year and to contribute to growth. We also see momentum across our development slate with a major project based on a long-standing Scholastic brand slated to launch in fiscal 2027.

Speaker #3: Sharing more about this partnership, we look forward to on future calls. In Scholastic Entertainment, we continue to strengthen our position as a leading producer of high-quality children's content, expanding the reach and value of our IP.

Speaker #3: During the quarter, we began production on three premium animated series with major media partners, an encouraging sign of improving greenlight activity, which we expect to continue to build into next year and to contribute to growth.

Speaker #3: We also see momentum across our development slate, with a major project based on a longstanding Scholastic brand slated to launch in fiscal 2027. We hope to be able to announce more details of this soon.

Peter Warwick: We hope to be able to announce more details of this soon. Our digital channels, particularly YouTube and Scholastic TV, also continue to scale, meeting kids where they are and expanding the discoverability and value of Scholastic IP. Across YouTube channels, engagement remains strong as kids and families discover and consume more and more stories on digital platforms. Since its September launch, Paris & Pups, our new animated series in partnership with Paris Hilton, has surpassed over 23 million views across all channels on the platform, with steady weekly engagement as new episodes debut. We expect the potential of this franchise engagement to continue to grow ahead of the fall 2026 launch of a global tie-in publishing program and of Playmates Toys, as well as emerging opportunities for long-form content.

We hope to be able to announce more details of this soon. Our digital channels, particularly YouTube and Scholastic TV, also continue to scale, meeting kids where they are and expanding the discoverability and value of Scholastic IP. Across YouTube channels, engagement remains strong as kids and families discover and consume more and more stories on digital platforms. Since its September launch, Paris & Pups, our new animated series in partnership with Paris Hilton, has surpassed over 23 million views across all channels on the platform, with steady weekly engagement as new episodes debut. We expect the potential of this franchise engagement to continue to grow ahead of the fall 2026 launch of a global tie-in publishing program and of Playmates Toys, as well as emerging opportunities for long-form content.

Speaker #3: Our digital channels, particularly YouTube and Scholastic TV, also continue to scale, meeting kids where they are and expanding the discoverability and value of Scholastic IP.

Speaker #3: Across YouTube channels, engagement remains strong, as kids and families discover and consume more and more stories on digital platforms. Since its September launch, Paris and Pops, our new animated series in partnership with Paris Hilton, has surpassed over 23 million views across all channels on the platform, with steady weekly engagement as new episodes debut.

Speaker #3: We expect the potential of this franchise engagement to continue to grow ahead of the fall 2026 launch of a global tie-in publishing program and of Playmates Toys, as well as emerging opportunities for long-form content.

Speaker #3: One of the clearest proof points of our 360-degree strategy has been data on the impact of the iconic Scholastic Red Bar and branding. Since updating our YouTube channels at the end of August with the Scholastic brand identity, we have seen an immediate lift in visibility and audience engagement, and now have more than 253 million views and over 2 million subscribers across all Scholastic channels.

Peter Warwick: One of the clearest proof points of our 360-degree strategy has been data on the impact of the iconic Scholastic red bar and branding. Since updating our YouTube channels at the end of August with the Scholastic brand identity, we have seen an immediate lift in visibility and audience engagement, and now have more than 253 million views and over 2 million subscribers across all Scholastic channels. These results reinforce that the Scholastic red bar continues to be a meaningful differentiator of quality and reliability as families navigate an increasingly crowded digital landscape. September's launch of Scholastic TV, our first Scholastic-branded streaming platform, has further demonstrated the power of our trusted brand and content. The app provides a curated, kid-friendly destination for our shows. Early performance has been extremely strong, with over 350,000 downloads, 3.5 million views, and over 64 million minutes watched to date.

One of the clearest proof points of our 360-degree strategy has been data on the impact of the iconic Scholastic red bar and branding. Since updating our YouTube channels at the end of August with the Scholastic brand identity, we have seen an immediate lift in visibility and audience engagement, and now have more than 253 million views and over 2 million subscribers across all Scholastic channels. These results reinforce that the Scholastic red bar continues to be a meaningful differentiator of quality and reliability as families navigate an increasingly crowded digital landscape. September's launch of Scholastic TV, our first Scholastic-branded streaming platform, has further demonstrated the power of our trusted brand and content. The app provides a curated, kid-friendly destination for our shows. Early performance has been extremely strong, with over 350,000 downloads, 3.5 million views, and over 64 million minutes watched to date.

Speaker #3: These results reinforce that the SCHOLASTIC Red Bar continues to be a meaningful differentiator of quality and reliability as families navigate an increasingly crowded digital landscape.

Speaker #3: September's launch of SCHOLASTIC TV, our first Scholastic-branded streaming platform, has further demonstrated the power of our trusted brand and content. The app provides a curated, kid-friendly destination for our shows.

Speaker #3: Early performance has been extremely strong, with over 350,000 downloads, 3.5 million views, and over 64 million minutes watched to date. This momentum reinforces SCHOLASTIC Entertainment's outlook as an increasingly meaningful contributor to SCHOLASTIC's long-term earnings, driven by both production revenue and our expanding digital footprint.

Peter Warwick: This momentum reinforces Scholastic Entertainment's outlook as an increasingly meaningful contributor to Scholastic's long-term earnings, driven by both production revenue and our expanding digital footprint. Now, turning to Scholastic Education, where the strategic value of our reading, learning, and literacy offerings not only align with Scholastic's core strengths but are essential to helping kids read and learn, which is at the center of Scholastic's mission and brand. As we discussed in Q1, we continue to navigate a challenging funding environment again in Q2, as delayed federal disbursements and slower district decision cycles impacted near-term sales across the industry. That said, we've made meaningful progress focusing our product portfolio and refining our go-to-market approach. In Q2, our state and local literacy partnerships continued to perform solidly. Sales to schools and districts accelerated quarter over quarter. Our magazines have outperformed other categories, reflecting their strong value and customer loyalty.

This momentum reinforces Scholastic Entertainment's outlook as an increasingly meaningful contributor to Scholastic's long-term earnings, driven by both production revenue and our expanding digital footprint. Now, turning to Scholastic Education, where the strategic value of our reading, learning, and literacy offerings not only align with Scholastic's core strengths but are essential to helping kids read and learn, which is at the center of Scholastic's mission and brand. As we discussed in Q1, we continue to navigate a challenging funding environment again in Q2, as delayed federal disbursements and slower district decision cycles impacted near-term sales across the industry. That said, we've made meaningful progress focusing our product portfolio and refining our go-to-market approach. In Q2, our state and local literacy partnerships continued to perform solidly. Sales to schools and districts accelerated quarter-over-quarter. Our magazines have outperformed other categories, reflecting their strong value and customer loyalty.

Speaker #3: Now, turning to Scholastic Education, where the strategic value of our reading, learning, and literacy offerings not only align with Scholastic's core strengths, but are essential to helping kids read and learn, which is at the center of Scholastic's mission and brand.

Speaker #3: As we discussed last quarter, we continue to navigate a challenging funding environment again in the second quarter, as delayed federal disbursements and slower district decision cycles impacted near-term sales across the industry.

Speaker #3: That said, we've made meaningful progress focusing our product portfolio and refining our go-to-market approach. In Q2, our state and local literacy partnerships continue to perform solidly.

Speaker #3: Sales to schools and districts accelerated quarter over quarter. Our magazines have outperformed other categories, reflecting their strong value and customer loyalty. We're also beginning to see growth in the sales pipeline for our second half.

Peter Warwick: We're also beginning to see growth in the sales pipeline for our second half. With our actions to restructure the organization and improve efficiencies, we were able to offset most of the impact of lower sales again last quarter. Looking ahead, especially at our important spring selling season, we remain cautiously optimistic that better execution, new products like Knowledge Library, and spring disbursements of some federal funds will stabilize the top line while we benefit from lower costs. As I've said on prior calls, despite a challenging near-term environment, we remain very optimistic about the long-term strategic value and opportunity presented by this business. In our international segment, we saw a strong performance across global markets from key franchises, including Dog Man.

We're also beginning to see growth in the sales pipeline for our second half. With our actions to restructure the organization and improve efficiencies, we were able to offset most of the impact of lower sales again last quarter. Looking ahead, especially at our important spring selling season, we remain cautiously optimistic that better execution, new products like Knowledge Library, and spring disbursements of some federal funds will stabilize the top line while we benefit from lower costs. As I've said on prior calls, despite a challenging near-term environment, we remain very optimistic about the long-term strategic value and opportunity presented by this business. In our international segment, we saw a strong performance across global markets from key franchises, including Dog Man.

Speaker #3: With our actions to restructure the organization and improve efficiencies, we were able to offset most of the impact of lower sales again last quarter.

Speaker #3: Looking ahead, especially at our important spring selling season, we remain cautiously optimistic that better execution, new products like Knowledge Library, and spring disbursements of some federal funds will stabilize the top line while we benefit from lower costs.

Speaker #3: As I've said on prior calls, despite a challenging near-term environment, we remain very optimistic about the long-term strategic value and opportunity presented by this business.

Speaker #3: In our international segment, we saw a strong performance across global markets from key franchises, including Dog Man. We continue to see opportunities in emerging markets like India and in other Asian countries, and to capitalize on the growing demand for materials for English as a second language.

Peter Warwick: We continue to see opportunities in emerging markets like India and in other Asian countries and to capitalize on the growing demand for materials for English as a second language. Under refreshed leadership, the team remains focused on improving margins and positioning the business for long-term growth. In summary, as we enter the second half of fiscal 2026, we're operating from a position of strength. The closing of our sale leaseback transactions and the resulting $400 million in liquidity reflect our commitment to disciplined, shareholder-focused capital allocation. Combined with continued momentum across our core businesses and progress on our strategic initiatives, we believe Scholastic is well positioned to accelerate profitability, deliver long-term growth, and deepen our impact on children, families, and educators while creating lasting value for our shareholders. Thank you. I'll now turn the call over to Haji. Thank you, Peter, and good afternoon, everyone.

We continue to see opportunities in emerging markets like India and in other Asian countries and to capitalize on the growing demand for materials for English as a second language. Under refreshed leadership, the team remains focused on improving margins and positioning the business for long-term growth. In summary, as we enter the second half of fiscal 2026, we're operating from a position of strength. The closing of our sale leaseback transactions and the resulting $400 million in liquidity reflect our commitment to disciplined, shareholder-focused capital allocation. Combined with continued momentum across our core businesses and progress on our strategic initiatives, we believe Scholastic is well positioned to accelerate profitability, deliver long-term growth, and deepen our impact on children, families, and educators while creating lasting value for our shareholders. Thank you. I'll now turn the call over to Haji.

Speaker #3: Under refreshed leadership, the team remains focused on improving margins and positioning the business for long-term growth. In summary, as we enter the second half of fiscal 2026, we're operating from a position of strength.

Speaker #3: Sale lease-back transactions and the resulting $400 million in the closing of our liquidity reflect our commitment to disciplined, shareholder-focused capital allocation. Combined with continued momentum across our core businesses and progress on our strategic initiatives, we believe Scholastic is well positioned to accelerate profitability, deliver long-term growth, and deepen our impact on children, families, and educators while creating lasting value for our shareholders.

Speaker #3: Thank you. I'll now turn the call over to

Speaker #3: Haji. Thank you, Peter.

Haji Glover: Thank you, Peter, and good afternoon, everyone. As usual, I'll refer to our adjusted results for the second quarter, excluding one-time items unless otherwise indicated. Please refer to our press release tables and SEC filings for a complete discussion of one-time items. As Peter discussed earlier, second quarter results were solid, reflecting strength in book fairs and momentum across our major global franchises. As a reminder, the second quarter represents one of Scholastic's seasonally more profitable periods as kids return to school and our school-based channels ramp up again.

Speaker #2: And good afternoon, everyone. As usual, I'll refer to our adjusted results for the second quarter, excluding one-time items, unless otherwise indicated. Please refer to our press release tables and SEC filings for a complete discussion of one-time items.

Peter Warwick: As usual, I'll refer to our adjusted results for the second quarter, excluding one-time items unless otherwise indicated. Please refer to our press release tables and SEC filings for a complete discussion of one-time items. As Peter discussed earlier, second quarter results were solid, reflecting strength in book fairs and momentum across our major global franchises. As a reminder, the second quarter represents one of Scholastic's seasonally more profitable periods as kids return to school and our school-based channels ramp up again. Beginning with our consolidated financial results, in the second quarter, revenues increased 1% to $551.1 million. Operating income improved to $95 million from $78.9 million in the prior year period, reflecting the company's cost-saving initiatives. Adjusted EBITDA was $122.5 million, a significant improvement from $108.7 million a year ago. Net income was $66.3 million compared to $52 million in the prior year period.

Speaker #2: As Peter discussed earlier, second quarter results were solid, reflecting strength in Book Fairs and momentum across our major global franchises. As a reminder, the second quarter represents one of Scholastic's seasonally more profitable periods, as kids return to school and our school-based channels ramp up again.

Beginning with our consolidated financial results, in the second quarter, revenues increased 1% to $551.1 million. Operating income improved to $95 million from $78.9 million in the prior year period, reflecting the company's cost-saving initiatives. Adjusted EBITDA was $122.5 million, a significant improvement from $108.7 million a year ago. Net income was $66.3 million compared to $52 million in the prior year period.

Speaker #2: Beginning with our consolidated financial results, in the second quarter, revenues increased 1% to $551.1 million. Operating income improved to $95 million from $78.9 million in the prior-year period, reflecting the company's cost-saving initiatives.

Speaker #2: Adjusted EBITDA was $122.5 million, a significant improvement from $108.7 million a year ago. Net income was $66.3 million, compared to $52.0 million in the prior year period.

Speaker #2: On a per-diluted share basis, adjusted earnings increased to $2.57, compared to $1.82 last year. Turning to our segment results, in the Children's Book Publishing and Distribution, revenues for the second quarter increased 4% to $380.9 million, reflecting strong performance in Book Fairs and the strength of our major global franchises and trade.

Peter Warwick: On a per-diluted share basis, adjusted earnings increased to $2.57 compared to $1.82 last year. Turning to our segment results, in the children's book publishing and distribution, revenues for the second quarter increased 4% to $380.9 million, reflecting strong performance in book fairs and the strength of our major global franchises and trade. Segment-adjusted operating profit improved to $108.8 million from $102.1 million in the prior year period. Book fair revenues were $242 million in the quarter, an increase of 5% driven by higher fair count and increased revenue per fair. We continue to expect higher fair count and revenue per fair to contribute to revenue growth in our book fairs business this fiscal year. Book clubs revenue were $28.5 million in the quarter compared to $33.2 million a year ago, reflecting lower teacher sponsors. As a reminder, clubs is our smaller school-based channel.

On a per-diluted share basis, adjusted earnings increased to $2.57 compared to $1.82 last year. Turning to our segment results, in the children's book publishing and distribution, revenues for the second quarter increased 4% to $380.9 million, reflecting strong performance in book fairs and the strength of our major global franchises and trade. Segment-adjusted operating profit improved to $108.8 million from $102.1 million in the prior year period. Book fair revenues were $242 million in the quarter, an increase of 5% driven by higher fair count and increased revenue per fair. We continue to expect higher fair count and revenue per fair to contribute to revenue growth in our book fairs business this fiscal year. Book clubs revenue were $28.5 million in the quarter compared to $33.2 million a year ago, reflecting lower teacher sponsors. As a reminder, clubs is our smaller school-based channel.

Speaker #2: Segment-adjusted operating profit improved to $108.8 million, from $102.1 million in the prior-year period. Book fair revenues were $242 million in the quarter, an increase of 5%, driven by higher fair count and increased revenue per fair.

Speaker #2: We continue to expect higher fair count and revenue per fair to contribute to revenue growth in our book fairs business this fiscal year. Book clubs revenue was $28.5 million in the quarter, compared to $33.2 million a year ago, reflecting lower teacher sponsors.

Speaker #2: As a reminder, Clubs is our smaller, school-based channel. We anticipate these trends continuing in the spring season. In our Trade Publishing division, revenues were $110.4 million.

Peter Warwick: We anticipate these trends continuing in the spring season. In our trade publishing division, revenues were $110.4 million in the second quarter, an increase of 7%. These results reflect strong performance of new publishing releases across our major global franchises, led by the 14th Dog Man title, which published in November, as Peter discussed. We remain optimistic about sustained momentum across our major global franchises and continue to expect trade to be in line with prior year on a full-year basis. As a reminder, this year's publishing schedule is weighted more towards Q2 compared to last fiscal year, which benefited from a major Dog Man and Hunger Games releases in Q3 and in Q4. Turning to our entertainment segment, revenues decreased by $1.7 million to $15.1 million compared to $16.8 million in the prior year, primarily driven by fewer episode deliveries, in line with expectations.

We anticipate these trends continuing in the spring season. In our trade publishing division, revenues were $110.4 million in the second quarter, an increase of 7%. These results reflect strong performance of new publishing releases across our major global franchises, led by the 14th Dog Man title, which published in November, as Peter discussed. We remain optimistic about sustained momentum across our major global franchises and continue to expect trade to be in line with prior year on a full-year basis. As a reminder, this year's publishing schedule is weighted more towards Q2 compared to last fiscal year, which benefited from a major Dog Man and Hunger Games releases in Q3 and in Q4. Turning to our entertainment segment, revenues decreased by $1.7 million to $15.1 million compared to $16.8 million in the prior year, primarily driven by fewer episode deliveries, in line with expectations.

Speaker #2: In the second quarter, an increase of 7%. These results reflect strong performance of new publishing releases across our major global franchises, led by the 14th Dog Man title, which published in November, as Peter discussed.

Speaker #2: We remain optimistic about sustained momentum across our major global franchises, and continue to expect Trade to be in line with the prior year on a full-year basis.

Speaker #2: As a reminder, this year's publishing schedule is weighted more towards Q2. Compared to last fiscal year, which benefited from a major Dog Man and Hunger Games releases in Q3 and in Q4.

Speaker #2: Turning to our Entertainment segment, revenues decreased by $1.7 million to $15.1 million, compared to $16.8 million in the prior year, primarily driven by fewer episode deliveries, in line with expectations.

Speaker #2: As Peter discussed, we remain encouraged by recent Greenlight momentum and our position for renewed growth in the second half of fiscal 2026 and in fiscal 2027, particularly reflecting revenue recognition typical of media development and production.

Peter Warwick: As Peter discussed, we remain encouraged by recent greenlight momentum and our position for renewed growth in the second half of fiscal 2026 and in fiscal 2027, particularly reflecting revenue recognition typical of media development and production. Segment-adjusted operating loss was $3.6 million, an improvement of $0.3 million from prior year quarter. Turning to Scholastic Education, segment revenues were $62.2 million in the second quarter versus $71.2 million in the prior year period, reflecting lower spending on supplemental curriculum products. Segment-adjusted operating loss was $1.3 million in the second quarter compared to a loss of $0.5 million in the prior year period, reflecting lower gross profit, mostly offset by cost reductions from reorganization initiatives and ongoing cost management.

As Peter discussed, we remain encouraged by recent greenlight momentum and our position for renewed growth in the second half of fiscal 2026 and in fiscal 2027, particularly reflecting revenue recognition typical of media development and production. Segment-adjusted operating loss was $3.6 million, an improvement of $0.3 million from prior year quarter. Turning to Scholastic Education, segment revenues were $62.2 million in the second quarter versus $71.2 million in the prior year period, reflecting lower spending on supplemental curriculum products. Segment-adjusted operating loss was $1.3 million in the second quarter compared to a loss of $0.5 million in the prior year period, reflecting lower gross profit, mostly offset by cost reductions from reorganization initiatives and ongoing cost management.

Speaker #2: Segment-adjusted operating loss was $3.6 million, an improvement of $0.3 million from the prior year quarter. Turning to Scholastic Education, segment revenues were $62.2 million in the second quarter, versus $71.2 million in the prior year period.

Speaker #2: Reflecting lower spending on supplemental curriculum products. Segment-adjusted operating loss was $1.3 million in the second quarter, compared to a loss of $0.5 million in the prior-year period.

Speaker #2: Reflecting lower gross profit, mostly offset by cost reductions from reorganization initiatives and ongoing cost management. As Peter discussed, we continue to experience near-term funding volatility in this segment, though expect year-over-year declines to moderate in the second half, based on an improving sales pipeline, new products, and improved execution.

Peter Warwick: As Peter discussed, we continue to experience near-term funding volatility in this segment, though expect year-over-year declines to moderate in H2 based on an improving sales pipeline, new products, and improved execution. Ahead of an expected market recovery, we continue to target improved profitability in H2 of the year. International segment revenues were $89.5 million in Q2, up from $86.7 million a year ago. Excluding the $0.5 million year-over-year impact of favorable foreign currency exchange, segment revenues were up $3.3 million, primarily driven by the new Dog Man title as well as new additions across other major franchises. Segment-adjusted operating income improved to $12.8 million compared to $7.1 million in the prior year period, reflecting higher revenues and operational efficiencies. We continue to expect modest declines in revenues and profitability in this segment following strong trade performance in fiscal 2025, as I just discussed.

As Peter discussed, we continue to experience near-term funding volatility in this segment, though expect year-over-year declines to moderate in H2 based on an improving sales pipeline, new products, and improved execution. Ahead of an expected market recovery, we continue to target improved profitability in H2 of the year. International segment revenues were $89.5 million in Q2, up from $86.7 million a year ago. Excluding the $0.5 million year-over-year impact of favorable foreign currency exchange, segment revenues were up $3.3 million, primarily driven by the new Dog Man title as well as new additions across other major franchises. Segment-adjusted operating income improved to $12.8 million compared to $7.1 million in the prior year period, reflecting higher revenues and operational efficiencies. We continue to expect modest declines in revenues and profitability in this segment following strong trade performance in fiscal 2025, as I just discussed.

Speaker #2: Ahead of the expected market recovery, we continue to target improved profitability in the second half of the year. International segment revenues were $89.5 million in the second quarter, up from $86.7 million a year ago.

Speaker #2: Excluding the $0.5 million year-over-year impact of favorable foreign currency exchange, segment revenues were up $3.3 million, primarily driven by the new Dogman title, as well as new additions across other major franchises.

Speaker #2: Segment-adjusted operating income improved to $12.8 million, compared to $7.1 million in the prior year period, reflecting higher revenues and operational efficiencies. We continue to expect modest declines in revenues and profitability in this segment following strong trade performance in fiscal 2025, as I just discussed.

Speaker #2: Unallocated overhead costs decreased by $4.2 million to $21.7 million in the second quarter, primarily driven by lower employee expenses from cost reduction initiatives. Now turning to cash flow and the balance sheet.

Peter Warwick: Unallocated overhead costs decreased by $4.2 million to $21.7 million in the second quarter, primarily driven by lower employee expenses from cost reduction initiatives. Now turning to cash flow in the balance sheet. As a reminder, our free cash flow and net debt at the quarter end do not reflect the cash proceeds from the sale leaseback transactions, which closed in our third quarter, and that I will discuss momentarily. In the quarter, net cash provided by operating activities were $73.2 million compared to $71.2 million in the prior year period, primarily related to lower operating expenditures and timing of payments, partially offset by higher severance-related payments as part of the cost-saving initiatives. Free cash flow in the second quarter was $59.2 million compared to $42.4 million in the prior year period, reflecting lower payments of film-related obligations and higher cash flows from operations in the current period.

Unallocated overhead costs decreased by $4.2 million to $21.7 million in the second quarter, primarily driven by lower employee expenses from cost reduction initiatives. Now turning to cash flow in the balance sheet. As a reminder, our free cash flow and net debt at the quarter end do not reflect the cash proceeds from the sale leaseback transactions, which closed in our third quarter, and that I will discuss momentarily. In the quarter, net cash provided by operating activities were $73.2 million compared to $71.2 million in the prior year period, primarily related to lower operating expenditures and timing of payments, partially offset by higher severance-related payments as part of the cost-saving initiatives. Free cash flow in the second quarter was $59.2 million compared to $42.4 million in the prior year period, reflecting lower payments of film-related obligations and higher cash flows from operations in the current period.

Speaker #2: As a reminder, our free cash flow and net debt at the quarter end do not reflect the cash proceeds from the sale-leaseback transactions which closed in our third quarter.

Speaker #2: And that I will discuss momentarily. In the quarter, net cash provided by operating activities was $73.2 million, compared to $71.2 million in the prior year period.

Speaker #2: Primarily related to lower operating expenditures and timing of payments, partially offset by higher severance-related payments as part of the cost-saving initiatives. Free cash flow in the second quarter was $59.2 million, compared to $42.4 million in the prior-year period.

Speaker #2: Reflecting lower payments of film-related obligations and higher cash flows from operations in the current period. At the quarter end, the company had borrowings of $275 million under its unsecured revolving credit facility.

Peter Warwick: At the quarter end, the company had borrowings of $275 million under its unsecured revolving credit facility. Net debt was $186.6 million compared to net debt of $136.6 million at the end of fiscal 2025, primarily driven by operational working capital needs. Consistent with our capital allocation priorities, we continue to return excess cash to shareholders. Through our regular dividend, the company distributed $5.1 million in the second quarter. As announced earlier today, we closed two sale-leaseback transactions of our owned real estate in New York City, and our Jefferson City distribution centers. We expect the net cash proceeds of over $400 million to be used in line with our capital allocation priorities, which include share repurchases. As Peter noted, our top priority is returning incremental cash to shareholders, something we've demonstrated a strong track record of doing over the last four years.

At the quarter end, the company had borrowings of $275 million under its unsecured revolving credit facility. Net debt was $186.6 million compared to net debt of $136.6 million at the end of fiscal 2025, primarily driven by operational working capital needs. Consistent with our capital allocation priorities, we continue to return excess cash to shareholders. Through our regular dividend, the company distributed $5.1 million in the second quarter. As announced earlier today, we closed two sale-leaseback transactions of our owned real estate in New York City, and our Jefferson City distribution centers. We expect the net cash proceeds of over $400 million to be used in line with our capital allocation priorities, which include share repurchases. As Peter noted, our top priority is returning incremental cash to shareholders, something we've demonstrated a strong track record of doing over the last four years.

Speaker #2: Net debt was $186.6 million, compared to net debt of $136.6 million at the end of fiscal 2025, primarily driven by operational working capital needs.

Speaker #2: Consistent with our capital allocation priorities, we continue to return excess cash to shareholders. Through our regular dividend, the company distributed $5.1 million in the second quarter.

Speaker #2: As announced earlier today, we closed two sale-leaseback transactions of our owned real estate in New York City and our Jefferson City distribution centers.

Speaker #2: We expect the net cash proceeds of over $400 million to be used in line with our capital allocation priorities, which include share repurchases. As Peter noted, our top priority is returning incremental cash to shareholders.

Speaker #2: Something we've demonstrated a strong track record of doing over the last four years. Our first step to return excess capital to shareholders is reflected in the board's decision to expand our open market share repurchase authorization to $150 million.

Peter Warwick: Our first step to return excess capital to shareholders is reflected in the board's decision to expand our open market share repurchase authorization to $150 million. The company expects to continue purchasing shares from time to time as conditions allow, on the open market or negotiated private transactions for the foreseeable future. Beyond initially paying down the credit facility and moving forward with our current $150 million open market repurchase authorization, we are exploring additional means to efficiently return excess cash to shareholders and to return to moderate leverage levels, consistent with our recent levels while preserving a strong and flexible balance sheet. Now for our outlook for the remainder of the year.

Our first step to return excess capital to shareholders is reflected in the board's decision to expand our open market share repurchase authorization to $150 million. The company expects to continue purchasing shares from time to time as conditions allow, on the open market or negotiated private transactions for the foreseeable future. Beyond initially paying down the credit facility and moving forward with our current $150 million open market repurchase authorization, we are exploring additional means to efficiently return excess cash to shareholders and to return to moderate leverage levels, consistent with our recent levels while preserving a strong and flexible balance sheet. Now for our outlook for the remainder of the year.

Speaker #2: The company expects to continue purchasing shares from time to time, as conditions allow, on the open market or through negotiated private transactions for the foreseeable future.

Speaker #2: Beyond initially paying down the credit facility, and moving forward with our current $150 million open market repurchase authorization, we are exploring additional means to efficiently return excess cash to shareholders and to return to moderate leverage levels.

Speaker #2: Consistent with our recent levels, while preserving a strong and flexible balance sheet. Now for our outlook for the remainder of the year. Looking ahead to the second half of the year, we anticipate revenue growth in School Reading Events and Entertainment divisions.

Peter Warwick: Looking ahead to the second half of the year, we anticipate revenue growth in school reading events and entertainment divisions, partly offset by modestly lower year-over-year revenues in trade and in international versus a strong prior year comparison when the publishing schedule benefited from major releases in the second half of fiscal 2025. Reflecting strength in children's book group, partially offset by lower sales in education solutions in the first half of fiscal 2026, we now expect fiscal 2026 revenues to be level with or slightly above the prior year. More broadly, we remain focused on driving favorable operating margins as we benefit from our lower cost structure. As for the impact of tariffs, we are closely following changes in policy and continue to expect approximately $10 million of incremental tariff expense in our cost of product this fiscal year.

Looking ahead to the second half of the year, we anticipate revenue growth in school reading events and entertainment divisions, partly offset by modestly lower year-over-year revenues in trade and in international versus a strong prior year comparison when the publishing schedule benefited from major releases in the second half of fiscal 2025. Reflecting strength in children's book group, partially offset by lower sales in education solutions in the first half of fiscal 2026, we now expect fiscal 2026 revenues to be level with or slightly above the prior year. More broadly, we remain focused on driving favorable operating margins as we benefit from our lower cost structure. As for the impact of tariffs, we are closely following changes in policy and continue to expect approximately $10 million of incremental tariff expense in our cost of product this fiscal year.

Speaker #2: Partly offset by modestly lower year-over-year revenues in Trade and in International, versus a strong prior year comparison, when the publishing schedule benefited from major releases in the second half of fiscal 2025.

Speaker #2: Reflecting strength in the Children's Book Group, partially offset by lower sales in Education Solutions, in the first half of fiscal 2026, we now expect fiscal 2026 revenues to be level with or slightly above the prior year.

Speaker #2: More broadly, we remain focused on driving favorable operating margins as we benefit from our lower cost structure. As for the impact of tariffs, we are closely following changes in policy, and continue to expect approximately $10 million of incremental tariff expense in our cost of product this fiscal year.

Speaker #2: On a four-year basis, we have a firm outlook for fiscal 2026, adjusted EBITDA, and free cash flow. This is before the impact of the sale-leaseback transactions, which closed in our third quarter.

Peter Warwick: On a four-year basis, we have affirmed our outlook for fiscal 2026 Adjusted EBITDA and Free Cash Flow before the impact of the sale-leaseback transactions, which closed in our third quarter. Adjusting for partial-year impact of the highly accretive transactions, our outlook for Adjusted EBITDA is now $146 to $156 million, which includes a partial-year impact of approximately $14 million. In our smaller third quarter, we anticipate a higher seasonal operating loss followed by profitable gains in Q4. For our fiscal 2026 Free Cash Flow outlook, which was previously $30 to $40 million, we now forecast Free Cash Flow to exceed $430 million, reflecting the proceeds from the sale of our real estate assets. Please see today's earnings presentation for reconciliation of the estimated partial-year and pro forma full-year impact of the sale-leaseback transaction on the company's guidance. Thank you for your time today.

On a four-year basis, we have affirmed our outlook for fiscal 2026 Adjusted EBITDA and Free Cash Flow before the impact of the sale-leaseback transactions, which closed in our third quarter. Adjusting for partial-year impact of the highly accretive transactions, our outlook for Adjusted EBITDA is now $146 to $156 million, which includes a partial-year impact of approximately $14 million. In our smaller third quarter, we anticipate a higher seasonal operating loss followed by profitable gains in Q4.

Speaker #2: Adjusting for the partial-year impact of the highly accretive transactions, our outlook for adjusted EBITDA is now $146 to $156 million, which includes a partial-year impact of approximately $14 million.

Speaker #2: In our smaller third quarter, we anticipate a higher seasonal operating loss, followed by profitable gains in Q4. For our fiscal 2026 free cash flow outlook, which was previously $30 to $40 million, we now forecast free cash flow to exceed $430 million, reflecting the proceeds from the sale of our real estate assets.

For our fiscal 2026 Free Cash Flow outlook, which was previously $30 to $40 million, we now forecast Free Cash Flow to exceed $430 million, reflecting the proceeds from the sale of our real estate assets. Please see today's earnings presentation for reconciliation of the estimated partial-year and pro forma full-year impact of the sale-leaseback transaction on the company's guidance. Thank you for your time today. I'll now hand the call back to Peter for his final remarks.

Speaker #2: Please see today's earnings presentation for reconciliation of the estimated partial-year and pro forma full-year impact of the sale-leaseback transaction on the company's guidance.

Speaker #2: Thank you for your time today. I'll now hand the call back to Peter for his final remarks. Thank you, Haji. In fiscal 2026, Scholastic continues to make good progress, building on the momentum we've generated since fiscal 2022 to reinforce our foundations for growth, value, and shareholder returns.

Peter Warwick: I'll now hand the call back to Peter for his final remarks. Thank you, Haji. In fiscal 2026, Scholastic continues to make good progress, building on the momentum we've generated since fiscal 2022 to reinforce our foundations for growth, value, and shareholder returns. As I said at the start of the call, we've refreshed our board and leadership team. We've reorganized and re-engineered our core businesses and functions while advancing strategic growth opportunities, and we've carefully allocated capital with a view toward driving shareholder returns, including returning nearly $500 million to our shareholders. We're optimistic about the outlook for our portfolio of businesses for the remainder of the year and over the long term. We also have a very attractive opportunity to repurchase shares using proceeds from our successful sale leaseback transactions, beginning with the $150 million open market authorization.

Peter Warwick: Thank you, Haji. In fiscal 2026, Scholastic continues to make good progress, building on the momentum we've generated since fiscal 2022 to reinforce our foundations for growth, value, and shareholder returns. As I said at the start of the call, we've refreshed our board and leadership team. We've reorganized and re-engineered our core businesses and functions while advancing strategic growth opportunities, and we've carefully allocated capital with a view toward driving shareholder returns, including returning nearly $500 million to our shareholders. We're optimistic about the outlook for our portfolio of businesses for the remainder of the year and over the long term. We also have a very attractive opportunity to repurchase shares using proceeds from our successful sale leaseback transactions, beginning with the $150 million open market authorization.

Speaker #2: As I said at the start of the call, we've refreshed our Board and leadership team. We've reorganized and re-engineered our core businesses and functions, while advancing strategic growth opportunities.

Speaker #2: And we've carefully allocated capital with a view toward driving shareholder returns, including returning nearly $500 million to our shareholders. We're optimistic about the outlook for our portfolio of businesses for the remainder of the year and over the long term.

Speaker #2: We also have a very attractive opportunity to repurchase shares using proceeds from our successful sale lease-back transactions, beginning with $150 million open market authorization.

Speaker #2: We look forward to updating you on additional actions as we implement them. I'd like to close by thanking Scholastic's employees for their dedication and passion serving kids and customers, as well as our shareholders for their continued support.

Peter Warwick: We look forward to updating you on additional actions as we implement them. I'd like to close by thanking Scholastic's employees for their dedication and passion serving kids and customers, as well as our shareholders for their continued support. Thank you all very much. Let me now turn the call over to Jeff. Thank you, Peter. With that, we will open the call for questions. Operator? Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment for questions. Our first question comes from Brendan McCarthy with Sidoti & Company. You may proceed. Great. Good afternoon, everybody. Appreciate you taking my questions here. Congratulations on the quarter and the real estate transaction closing. Yes. Thank you, Brendan. Yep.

We look forward to updating you on additional actions as we implement them. I'd like to close by thanking Scholastic's employees for their dedication and passion serving kids and customers, as well as our shareholders for their continued support. Thank you all very much. Let me now turn the call over to Jeff.

Speaker #2: Thank you all very much. Let me now turn the call over to Jeff.

Jeffrey Mathews: Thank you, Peter. With that, we will open the call for questions. Operator?

Speaker #3: Thank you, Peter. With that, we will open the call for questions.

Speaker #3: Operator? Thank

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment for questions. Our first question comes from Brendan McCarthy with Sidoti & Company. You may proceed.

Speaker #4: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker #4: One moment for questions. And our first question comes from Brennan McCarthy with Sidoti & Company. You may.

Speaker #4: proceed. Great.

Brendan McCarthy: Great. Good afternoon, everybody. Appreciate you taking my questions here. Congratulations on the quarter and the real estate transaction closing. Yes.

Speaker #5: Good afternoon, everybody. I appreciate you taking my questions here, and congratulations on the quarter and the real estate transaction closing. Thank you.

Speaker #4: Yes.

Peter Warwick: Thank you, Brendan.

Speaker #5: Brendan.

Brendan McCarthy: Yep. Just wanted to start on the use of proceeds. Can you provide any color or timing around how we can think about that $80 million increase in the buyback authorization? I know it looks like historically you've taken out about 8% of shares outstanding on a fiscal year basis. What might that look like going forward?

Speaker #4: Yep. Just wanted to start on the use of proceeds. Can you provide any color or timing around how we can think about that $80 million increase in the buyback authorization?

Peter Warwick: Just wanted to start on the use of proceeds. Can you provide any color or timing around how we can think about that $80 million increase in the buyback authorization? I know it looks like historically you've taken out about 8% of shares outstanding on a fiscal year basis. What might that look like going forward? Well, I mean, the first what we've announced is a first step. I mean, because of the very successful and highly accretive sale leaseback transaction, the first thing which we have done and which the board has authorized is to increase our open market share buyback. That's the first step. Let me hand over to Haji, and he can talk a little bit more about how we're thinking about it going forward. Yeah. Thanks, Peter.

Speaker #4: I know it looks like, historically, you've taken out about 8% of shares outstanding on a fiscal year basis. What might that look like going forward?

Peter Warwick: Well, I mean, the first what we've announced is a first step. I mean, because of the very successful and highly accretive sale leaseback transaction, the first thing which we have done and which the board has authorized is to increase our open market share buyback. That's the first step. Let me hand over to Haji, and he can talk a little bit more about how we're thinking about it going forward.

Speaker #2: Well, I mean, the first—what we've announced is the first step. I mean, because of the very successful and highly accretive sale-leaseback transaction, the first thing which we have done and which the Board has authorized is to increase our open market share buyback.

Speaker #2: That's the first step. Let me hand over to Haji, and he can talk a little bit more about how we're thinking about it going.

Speaker #2: forward. Yeah.

Haji Glover: Yeah. Thanks, Peter. So roughly what we're seeing right now is that the sale of the share repurchase program that we currently have will allow us to get into the market soon to continue to focus on returning cash to shareholders. As we mentioned in the call, over the last four years, we did over $500 million return to our shareholders. We're going to continue to do that because we definitely feel that our shares are undervalued right now. So we're definitely going to go into the market. We're contemplating things with our board to figure out other ways of doing things to help bring more money to our shareholders. Hopefully, that answered your question.

Speaker #5: Thanks, Peter. So, roughly what we're seeing right now is that we have the sale, and the share repurchase program that we currently have will allow us to get into the market soon.

Peter Warwick: So roughly what we're seeing right now is that the sale of the share repurchase program that we currently have will allow us to get into the market soon to continue to focus on returning cash to shareholders. As we mentioned in the call, over the last four years, we did over $500 million return to our shareholders. We're going to continue to do that because we definitely feel that our shares are undervalued right now. So we're definitely going to go into the market. We're contemplating things with our board to figure out other ways of doing things to help bring more money to our shareholders. Hopefully, that answered your question. Yeah. That's helpful. Thanks, Haji. Thanks, Peter. Haji, I believe you mentioned you are targeting paying down a large portion of the credit facility. Yeah. I mean, since it is, yeah, exactly.

Speaker #5: To continue to focus on returning cash to shareholders, as we mentioned in the call, over the last four years we did over $500 million returned to our shareholders.

Speaker #5: And we're going to continue to do that thing, because we definitely feel that our shares are undervalued right now. So we're definitely going to go into the market.

Speaker #5: And we're contemplating things with our board to figure out other ways of doing things to help bring more money to our shareholders. Hopefully, that answers your question.

Brendan McCarthy: Yeah. That's helpful. Thanks, Haji. Thanks, Peter. I believe you mentioned you are targeting paying down a large portion of the credit facility.

Speaker #4: Got it, that's helpful. Thanks, Haji. Thanks, Peter. And Haji, I believe you mentioned you are targeting paying down a large portion of the credit.

Haji Glover: Yeah. I mean, since it is, yeah, exactly. Since it is an open line of credit for us, we can pay that down. It's repriced every month, so we'll probably most likely pay that down. Then if we need it, we'll definitely continue to do what we need to do as an organization from a short-term repayment. Our goal is to return to more moderate levels of debt or moderate levels of leverage like we've done over the last few years. As far as debt that you would target, what's a moderate level of leverage? I mean, historically, we've been right around one and three quarters, roughly.

Speaker #5: Yeah, I mean, yeah, exactly. Since it is an open line of credit for us, we can pay that down. We have to; it's repriced every month.

Peter Warwick: Since it is an open line of credit for us, we can pay that down. It's repriced every month, so we'll probably most likely pay that down. Then if we need it, we'll definitely continue to do what we need to do as an organization from a short-term repayment. Our goal is to return to more moderate levels of debt or moderate levels of leverage like we've done over the last few years. As far as debt that you would target, what's a moderate level of leverage? I mean, historically, we've been right around one and three quarters, roughly. Okay. Got it. That's helpful. On the new guidance, specifically the top-line revenue, can you walk us through the changes there? That obviously excludes the rental income at this point. Are there any other changes baked into that lower revenue number? Yes.

Speaker #5: So, we'll probably most likely pay that down. And then, if we need it, we'll definitely continue to do what we need to do as an organization from a short-term repayment.

Speaker #5: Our goal is to return to a moderate level of debt or moderate levels of leverage, like we've done over the last few.

Speaker #5: years. And as far

Speaker #4: As debt that you've been targeting, what's a moderate level of

Speaker #4: leverage? I mean, historically, we've

Speaker #5: Been right around one and three-quarters, roughly.

Brendan McCarthy: Okay. Got it. That's helpful. On the new guidance, specifically the top-line revenue, can you walk us through the changes there? That obviously excludes the rental income at this point. Are there any other changes baked into that lower revenue number?

Speaker #4: Okay, got it. That's helpful. And on the new guidance, specifically the top-line revenue, can you walk us through the changes there? So that obviously excludes the rental income at this point.

Speaker #4: Are there any other changes baked into that lower revenue?

Speaker #4: number? Yes.

Haji Glover: Yes. Peter mentioned this earlier on in his part of the discussion today. We're seeing the education business continue to deal with the softness because of funding. While we also know that in the second half, we're going to see some uplift based on funds being released in the second half, and our sales pipeline is starting to be a lot better. But that was one of the reasons we saw the softness from the education group. We still expect to see growth in fairs to help offset that as we are looking at our fair count. We're projecting to do 92,000 fairs this year compared to almost 90 last year. And then also RPF continues to be strong. But those are the things that are causing us to deal with the second half uptick in our numbers. A bunch of puts and takes. Understood.

Speaker #5: And Peter mentioned this earlier on in his part of the discussion today. We're seeing the education business continue to deal with the softness because of funding.

Peter Warwick: Peter mentioned this earlier on in his part of the discussion today. We're seeing the education business continue to deal with the softness because of funding. While we also know that in the second half, we're going to see some uplift based on funds being released in the second half, and our sales pipeline is starting to be a lot better. But that was one of the reasons we saw the softness from the education group. We still expect to see growth in fairs to help offset that as we are looking at our fair count. We're projecting to do 92,000 fairs this year compared to almost 90 last year. And then also RPF continues to be strong. But those are the things that are causing us to deal with the second half uptick in our numbers. A bunch of puts and takes. Understood. Yep. Understood.

Speaker #5: While we also know that, in the second half, we're going to see some uplift based on funds being released in the second half, and our sales pipeline is starting to be a lot better.

Speaker #5: But that was one of the reasons we saw the softness from the Education group. We still expect to see growth in fares to help offset that. As we are looking at our fare count, we're projecting to do 92,000 fares this year compared to almost 90,000 last year.

Speaker #5: And then also, RPF continues to be strong. But those are the things that are causing us to deal with the second half uptick in our—

Speaker #5: Numbers. A bunch of puts and calls. Understood.

Brendan McCarthy: Yep. Understood. Regarding trade channel sales, obviously a really strong year for content last fiscal year. Tough comparison this year. Is it still expected to be flat to moderately lower for fiscal 2026 trade channel sales?

Speaker #4: And yep, understood. And regarding trade channel sales, he obviously had a really strong year for content last fiscal year. Tough comparison this year. Is it still expected to be flat to moderately lower for fiscal?

Peter Warwick: Regarding trade channel sales, obviously a really strong year for content last fiscal year. Tough comparison this year. Is it still expected to be flat to moderately lower for fiscal 2026 trade channel sales? Yeah. Trade channel sales absolutely is going to be in line with last year as we anticipated. We did, as you know, last year we had the launch of the Dog Man in Q3 versus this year in Q2. And on top of that, we did have the Hunger Games in Q4 last year. But ultimately, we're still getting in nice tailwinds from all of those major franchises, as you can see from our results in the first half of the year. Absolutely. Absolutely. And looking at book fairs, were you surprised at all to see the strong results there?

Speaker #4: '26? Yeah.

Haji Glover: Yeah. Trade channel sales absolutely is going to be in line with last year as we anticipated. We did, as you know, last year we had the launch of the Dog Man in Q3 versus this year in Q2. And on top of that, we did have the Hunger Games in Q4 last year. But ultimately, we're still getting in nice tailwinds from all of those major franchises, as you can see from our results in the first half of the year.

Speaker #5: Trade channel

Speaker #5: Sales absolutely are going to be in line with last year's Trade channel sales. As we anticipate it, we did—as you know—last year have the launch of the Dogman in Q3, versus this year in Q2.

Speaker #5: And on top of that, we did have The Hunger Games in Q4 last year. But ultimately, we're still getting the nice tailwinds from all of those major franchises.

Speaker #5: As you can see from our results, in the first half of the

Speaker #5: year. Absolutely.

Brendan McCarthy: Absolutely. Absolutely. And looking at book fairs, were you surprised at all to see the strong results there? Or are you seeing anything regarding consumer spending that might give you pause for the rest of the year?

Speaker #4: Absolutely. And looking at book fairs, were you surprised at all to see the strong results there? Or are you seeing anything regarding consumer spending that might give you pause for the

Peter Warwick: Or are you seeing anything regarding consumer spending that might give you pause for the rest of the year? Yeah. I'm going to turn that over to Peter, if you don't mind. No, it's been, I mean, really, the trends that we saw last year are really pretty much continuing, which is to say that bookings are good, cancellations are down, and revenue per fair is up. What we're seeing is that in some of the fairs that there, as we saw last year, that there's a somewhat smaller number of kids who are actually buying. But those kids that are buying are buying significantly more, and that's what's driving up the revenue per fair. So I think that's the, we're not seeing anything that's in any way different, actually, from what we saw last year. We're assuming that that is some sort of reflection of the overall economy here.

Speaker #4: rest of the year? Yeah.

Haji Glover: Yeah. I'm going to turn that over to Peter, if you don't mind.

Speaker #5: I'm going to turn that over to Peter, if you don't mind.

Peter Warwick: No, it's been, I mean, really, the trends that we saw last year are really pretty much continuing, which is to say that bookings are good, cancellations are down, and revenue per fair is up. What we're seeing is that in some of the fairs that there, as we saw last year, that there's a somewhat smaller number of kids who are actually buying. But those kids that are buying are buying significantly more, and that's what's driving up the revenue per fair. So I think that's the, we're not seeing anything that's in any way different, actually, from what we saw last year. We're assuming that that is some sort of reflection of the overall economy here.

Speaker #2: No, I mean, really, the trends that we saw last year are pretty much continuing, which is to say that bookings are good and cancellations are down.

Speaker #2: And revenue per fair is up. What we're seeing is that in some of the fairs, as we saw last year, there's a somewhat smaller number of kids who are actually buying.

Speaker #2: But those kids that are buying—they're buying significantly more. And that's what's driving up the revenue per fair. So I think that we're not seeing anything that's in any way different, actually, from what we saw last year.

Speaker #2: We're assuming that that is some sort of reflection of the overall economy here. But thankfully, we've been able to manage that pretty well through just being, I think, very effective, very efficient.

Peter Warwick: But thankfully, we've been able to manage that pretty well through just being, I think, very effective, very efficient. We've got great book selection, marketing, and those kinds of things. So we're actually, the book fair people are feeling pretty good about the spring. So that's very encouraging. That's good. Thanks, Peter. And moving to education solutions, yeah, obviously, it's been a tough year so far for that segment. But it looks like, despite the revenue decline, I think I saw segment Adjusted EBITDA was about flat year over year in the second quarter. Yeah. So you've obviously done well taking costs out of that business. And do you still see much more room there to take costs out of that segment? Well, we've taken significant costs out, which really is reflective of what the current state of the market is.

But thankfully, we've been able to manage that pretty well through just being, I think, very effective, very efficient. We've got great book selection, marketing, and those kinds of things. So we're actually, the book fair people are feeling pretty good about the spring. So that's very encouraging.

Speaker #2: We've got great book selection and marketing and those kinds of things. So actually, the Book Fair people are feeling pretty good about the spring.

Speaker #2: So that's very encouraging.

Brendan McCarthy: That's good. Thanks, Peter. And moving to education solutions, yeah, obviously, it's been a tough year so far for that segment. But it looks like, despite the revenue decline, I think I saw segment Adjusted EBITDA was about flat year over year in the second quarter. Yeah. So you've obviously done well taking costs out of that business. And do you still see much more room there to take costs out of that segment?

Speaker #4: That's good, thanks, Peter. And moving to education solutions—yeah, far for that segment. But it looks like despite the revenue decline, I think I saw segment adjusted EBITDA was about flat year over year in the second quarter.

Speaker #4: So you've obviously done well taking costs out of that business. And do you still see much room—much more room there—to take costs out of that segment?

Peter Warwick: Well, we've taken significant costs out, which really is reflective of what the current state of the market is. What we now need to be able to do is to prepare for regrowing that business to the size that it has been in the past. That's something which almost all educational publishers, and especially those who are involved in supplementary publishing like ourselves, are having to do. I mean, I think we've done a really good job, I think, in very quickly adjusting to what we can do. And I think as the market recovers, what it means is that more cents per dollar is actually going to land on our bottom line.

Speaker #2: Well, we've taken significant costs out, which really is reflective of what the current state of the market is. What we now need to be able to do is to prepare for regrowing that business to the size that it has been in the past.

Peter Warwick: What we now need to be able to do is to prepare for regrowing that business to the size that it has been in the past. That's something which almost all educational publishers, and especially those who are involved in supplementary publishing like ourselves, are having to do. I mean, I think we've done a really good job, I think, in very quickly adjusting to what we can do. And I think as the market recovers, what it means is that more cents per dollar is actually going to land on our bottom line. That makes sense. And with the first, the fall season of the school year behind us, is there—are you more optimistic heading into the spring season? How can we kind of think about that education space? Well, I think I'm more optimistic in the sense that I think we've stabilized the business. We've got it right-sized.

Speaker #2: That's something which almost all educational publishers, and especially those who are involved in supplementary publishing like ourselves, are having to do. I mean, I think we've done a really good job, I think, in very quickly adjusting to what we can do.

Speaker #2: And I think as the market recovers, what it means is that more cents per dollar is actually going to land on our bottom line.

Speaker #2: line. That makes

Brendan McCarthy: That makes sense. And with the first, the fall season of the school year behind us, is there—are you more optimistic heading into the spring season? How can we kind of think about that education space?

Speaker #4: Sense. And with the fall season of the school year behind us, are you more optimistic heading into the spring season? How can we kind of think about that, education-wise?

Speaker #4: space? Well, I think

Peter Warwick: Well, I think I'm more optimistic in the sense that I think we've stabilized the business. We've got it right-sized. We can see that we're dealing with a tough situation just like everybody else as well. But I mean, Q4 is, and the spring tends to be a time when there's significant spending ahead of summer for summer reading, and for materials for the next academic year. So our whole approach has been to get this behind us, deal with this thing as quickly as possible so that we can get to a good situation. So that as the season, just the seasonal market, i.e., with purchasing in the spring, and as we hope there's more opportunities, more federal funding being dispersed as well, we expect in the spring that we'll be able to benefit from that.

Speaker #2: I'm more optimistic in the sense that I think we've stabilized the business. We've got it right-sized. We can see that we're dealing with a tough situation, just like everybody else.

Peter Warwick: We can see that we're dealing with a tough situation just like everybody else as well. But I mean, Q4 is, and the spring tends to be a time when there's significant spending ahead of summer for summer reading, and for materials for the next academic year. So our whole approach has been to get this behind us, deal with this thing as quickly as possible so that we can get to a good situation. So that as the season, just the seasonal market, i.e., with purchasing in the spring, and as we hope there's more opportunities, more federal funding being dispersed as well, we expect in the spring that we'll be able to benefit from that. We'll see that our overall educational, as it were, sales are going to be more second half loaded than we originally anticipated in our first budget.

Speaker #2: As well. But I mean, the fourth quarter is—and the spring tends to be—a time when there's significant spending ahead of summer, for summer reading, and for materials for the next academic year.

Speaker #2: So our whole approach has been to get this behind us, deal with this thing as quickly as possible so that we can get to a good situation. So that as the season—just the seasonal market, i.e., with purchasing in the spring—and as we hope there's more opportunities, more federal funding being dispersed as well, we expect in the spring that we'll be able to benefit from that.

We'll see that our overall educational, as it were, sales are going to be more second half loaded than we originally anticipated in our first budget. And that we've got ourselves in a good position to build, and grow, and move forward as the market improves. I think the stronger margins are something which is really good for us at the moment.

Speaker #2: We'll see that our overall educational, as it were, sales are going to be more second-half loaded than we originally anticipated in our first budget.

Speaker #2: And that will—we've got ourselves in a good position to build and grow and move forward as the market improves. I think the stronger margins are something which is really good for us at the moment.

Peter Warwick: And that we've got ourselves in a good position to build, and grow, and move forward as the market improves. I think the stronger margins are something which is really good for us at the moment. That's great. Really appreciate the detail, Peter and Haji. That's all from me. All right. Thanks, Brendan. Thanks. Cheers. Thank you. Our next question comes from Drew Crum with B. Riley Securities. You may proceed. Okay. Thanks. Good afternoon, everyone. I want to go back to the question on uses of cash. I think you addressed this on several occasions in your preamble as a top priority in terms of deploying the cash. Can you address how dividends play into that? I don't think you guys have paid a special dividend through the years, and the quarterly dividend payout has been relatively flat over the last several years.

Brendan McCarthy: That's great. Really appreciate the detail, Peter and Haji. That's all from me.

Speaker #4: That's great. Really appreciate the detail, Peter and Haji. That's

Speaker #4: all from me.

Haji Glover: All right. Thanks, Brendan. Thanks. Cheers.

Speaker #5: All right. Thanks,

Speaker #5: Brenda.

Brendan McCarthy: Thank you.

Speaker #4: Thank you. Thanks. Cheers. Our next question comes from Drew Crumb with B. Riley Securities. You may proceed.

Operator: Our next question comes from Drew Crum with B. Riley Securities. You may proceed.

Drew Crum: Okay. Thanks. Good afternoon, everyone. I want to go back to the question on uses of cash. I think you addressed this on several occasions in your preamble as a top priority in terms of deploying the cash. Can you address how dividends play into that? I don't think you guys have paid a special dividend through the years, and the quarterly dividend payout has been relatively flat over the last several years. So I just want to get some additional color around that. And then I have a follow-up.

Speaker #6: Okay, thanks everyone. Good afternoon. I want to go back to the question on uses of cash. I think you addressed this on several occasions in your preamble.

Speaker #6: As a top priority, in terms of deploying the cash, can you address how dividends play into that? I don't think you guys have paid a special dividend through the years, and the quarterly dividend payout has been relatively flat over the last several years.

Speaker #6: So I just want to get some additional color around that. And then I have a follow-up.

Peter Warwick: So I just want to get some additional color around that. And then I have a follow-up. Yeah. Our goal is to return capital as efficiently as possible. And as you mentioned, the dividend, yeah, we have been consistent with our dividend payout, which is about $0.20 per share over the last few years. On average quarter, that's about $5 million, so around an average of $20 million per year. We're continuing to build and enduring more value from the organization. But ultimately, it's about investing in our shares. Okay. And Haji, just looking at the second half guidance, if I back out the sale leaseback transactions, it would suggest, at least using the midpoint of the ranges, would suggest that Adjusted EBITDA declines year on year. Just want to make sure that's correct. And if so, what is driving the decline? No, I don't think there's a decline.

Peter Warwick: Yeah. Our goal is to return capital as efficiently as possible. And as you mentioned, the dividend, yeah, we have been consistent with our dividend payout, which is about $0.20 per share over the last few years. On average quarter, that's about $5 million, so around an average of $20 million per year. We're continuing to build and enduring more value from the organization. But ultimately, it's about investing in our shares.

Speaker #5: Sure. Our goal is to return capital as efficiently as possible. And as you mentioned, the dividend—yeah, we have been consistent with our dividend payout, which is about $0.20 per share over the last few years.

Speaker #5: On an average quarter, that's about $5 million, or around an average of $20 million per year. We're continuing to build and enduring more value from the organization.

Speaker #5: But ultimately, it's about investing in our shares.

Drew Crum: Okay. And Haji, just looking at the second half guidance, if I back out the sale leaseback transactions, it would suggest, at least using the midpoint of the ranges, would suggest that Adjusted EBITDA declines year on year. Just want to make sure that's correct. And if so, what is driving the decline?

Speaker #6: Okay, and then Haji, just looking at the second half guidance, if I back out the SLV transactions, it would suggest—at least using the midpoint of the ranges—that adjusted EBITDA declines year on year.

Speaker #6: Just want to make sure that's correct. And if so, what is—

Haji Glover: No, I don't think there's a decline. If you adjust prior year FY25 with the numbers, you will still show growth. We provided that in the press release.

Speaker #5: No, I

Speaker #5: I don't think there's a decline. If you adjust prior year, what's driving the decline? FY25, with the numbers you'll see, we'll still show growth, provided that we provided that in the press release.

Peter Warwick: If you adjust prior year FY25 with the numbers, you will still show growth. We provided that in the press release. Okay. Got it. Okay. Thank you. No, no problem. Thank you. This concludes our Q&A. I will pass the call back to management for any closing remarks. Well, thank you very much, Operator. And look, I'd just like to thank our employees and shareholders as well as our authors, illustrators, educators, and all those who are essential to our success. And of course, all of us here wish you all a very happy and healthy holiday season. Goodbye. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.

Drew Crum: Okay. Got it. Okay. Thank you.

Speaker #6: Okay. Got it.

Speaker #6: Okay. Thank you. No, no

Haji Glover: No, no problem.

Speaker #5: problem.

Operator: Thank you. This concludes our Q&A. I will pass the call back to management for any closing remarks.

Speaker #4: Thank you. And this concludes our Q&A. I will pass the call back to management for any closing remarks.

Speaker #4: Remarks. Well, thank you very much,

Peter Warwick: Well, thank you very much, Operator. And look, I'd just like to thank our employees and shareholders as well as our authors, illustrators, educators, and all those who are essential to our success. And of course, all of us here wish you all a very happy and healthy holiday season. Goodbye.

Speaker #2: Operator. And look, I'd just like to thank our employees and shareholders, as well as our authors, illustrators, educators—all those who are essential to our success.

Speaker #2: And of course, all of us here wish you all a very happy and healthy holiday season. Goodbye.

Peter Warwick: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.

Q2 2026 Scholastic Corp Earnings Call

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