Scholastic Affirms Fiscal 2027 Outlook After Seasonal Loss
The children’s publisher posted a $63.6 million adjusted EBITDA loss in the fiscal first quarter and kept full-year Adjusted EBITDA at $135 million to $145 million.
Scholastic Corporation (SCHL) affirmed its fiscal 2027 outlook after a seasonally small first quarter in which Entertainment and International more than offset higher overhead on a comparable basis, even as Education and Children’s Book Publishing and Distribution weighed on the top line.
The global children’s publishing, education and media company said it remains confident in the growth trajectory outlined at year-end and is affirming full-year revenue growth of approximately 2% to 4% and Adjusted EBITDA of approximately $135 million to $145 million, a range that represents growth versus fiscal 2026 on a comparable basis after the full-year impact of sale-leaseback transactions in both periods. It also continues to expect free cash flow of approximately $35 million to $40 million.
Revenues were $216.8 million, down 4% from $225.6 million a year earlier, primarily reflecting lower Education and Children’s Book Publishing and Distribution sales and the elimination of rental income recorded in Overhead after December 2025 sale-leasebacks, partly offset by higher Entertainment revenues. Operating loss was $92.2 million, matching the prior-year period. Diluted loss was $3.77 a share.
On a comparable basis, after reflecting the full-period sale-leaseback impact in the prior-year period, Adjusted EBITDA improved $0.6 million to a loss of $63.6 million from a loss of $64.2 million. Adjusted operating loss increased $2.0 million from $86.7 million on that same footing.
Entertainment was the clearest operating turn. Revenues increased $6.5 million to $20.1 million, primarily reflecting higher production revenues. Excluding one-time charges, adjusted operating loss improved $2.4 million to $1.6 million. President and Chief Executive Officer Peter Warwick said Entertainment’s production activity and pipeline continued to grow strongly as the company expanded capabilities to extend Scholastic IP across formats and platforms.
International revenues increased $1.1 million to $60.5 million. Excluding $1.2 million of favorable foreign currency exchange, revenues were approximately in line with the year-earlier period. Adjusted operating loss improved $1.4 million to $2.7 million, primarily reflecting cost management and operational efficiencies.
Education remained the drag. Revenues decreased $9.7 million to $30.4 million during the segment’s seasonally smallest quarter, reflecting continued pressure on school and district funding and spending on supplemental curriculum materials. Segment operating loss was $23.3 million. On a comparable basis, adjusted operating loss increased $1.3 million, primarily reflecting lower revenues, partly offset by benefits from the segment’s improved cost structure. Warwick said the company continued to align the cost structure and advance the business’s transformation.
Children’s Book Publishing and Distribution revenues decreased $3.6 million to $105.8 million. Book Fairs revenues were $33.2 million. Consolidated Trade revenues decreased $3.0 million to $70.5 million, primarily reflecting higher international co-edition sales in the prior-year period that did not recur. Adjusted operating loss in the segment increased $3.5 million to $37.8 million excluding one-time charges. Warwick said the company begins the second quarter with positive momentum, with Book Fair bookings ahead of the prior year and a publishing and franchise schedule that positions it well for the year ahead, both domestically and internationally.
Overhead costs were $26.0 million, including $2.7 million of one-time charges. Excluding those items, adjusted overhead costs increased $5.0 million to $23.3 million. On a comparable basis, adjusted overhead costs increased $3.9 million, primarily reflecting higher costs related to corporate initiatives and the timing of employee-related expenses.
Net cash used in operating activities was $94.6 million, compared with $81.8 million a year earlier, primarily reflecting higher working capital requirements as well as higher rent expense and loss of rental income related to the sale-leasebacks. Free cash use was $110.8 million. Net debt was $86.8 million, compared with $242.8 million a year earlier, primarily reflecting net proceeds from the December 2025 sale-leasebacks, partly offset by capital returns. The company returned approximately $29.6 million to shareholders in the quarter through $25.8 million of share repurchases and $3.8 million of dividends. At August 31, 2026, $157.4 million remained authorized for future repurchases.
Warwick said the operating loss for the quarter included the full-period impact of the sale-leaseback transactions and that the company sustained investments to support growth priorities in the quarters ahead.