Scholastic Strengthens Balance Sheet with Strategic Real Estate Moves

Scholastic US8070661058

Scholastic Corporation has delivered a robust quarterly performance, with earnings significantly outpacing market expectations. While revenue came in slightly below forecasts, the company achieved a notable expansion in its operating margin. A major strategic initiative involving real estate transactions has further positioned the company for enhanced financial flexibility.

The children's publishing and education specialist saw its profitability surge in the fiscal second quarter, driven by cost-saving measures and improved efficiency across its core book publishing and international distribution segments. Although quarterly revenue of $551.1 million narrowly missed the anticipated $556.7 million, operating income jumped approximately 20% year-over-year to $95 million. Adjusted earnings per share (EPS) came in at $2.57, well above the $2.07 consensus estimate. The company also reported a 13% increase in adjusted EBITDA, which reached $122.5 million.

Capital Infusion from Property Portfolio

A cornerstone of Scholastic's recent strategy was the completion of substantial sale-leaseback deals in December. The transactions involved the sale of its global headquarters in New York City for gross proceeds of $386 million and the divestment of distribution centers in Missouri for $95 million. Through long-term lease agreements, Scholastic will maintain its operational presence at these key locations.

Management has outlined clear priorities for deploying the net proceeds of approximately $401 million. The capital is earmarked primarily for debt reduction and shareholder returns. In line with this, the Board of Directors has expanded its existing share repurchase authorization by $80 million, bringing the total available for buybacks to $150 million. Concurrently, the company declared a quarterly cash dividend of $0.20 per share, scheduled for payment in March.

Leadership and Forward Look

The company has made a key leadership appointment within its education division. Jeffrey Mathews, who had been serving as interim leader since June, was formally named President of Scholastic Education in early January. He will continue in his additional role as Chief Growth Officer.

Investors are now looking ahead to the company's next earnings report, scheduled for March 19, which will cover the third quarter of fiscal 2026. This update is expected to provide early insights into how the real estate proceeds are impacting Scholastic's interest expenses and share count.

@ boerse-global.de | US8070661058 SCHOLASTIC