SCHL Shareholder/Stockholder Letter Transcript:
2023 / 2024
ANNUAL REP RT
While market conditions grew
more challenging in scal 2024,
Scholastic managed its businesses
carefully and kept sight on the
Company s mission and substantial
opportunity: to serve the broader,
growing need for trusted children s
books, reading and media by
investing in, building on, and
adapting our unique strengths
and competitive advantages.
- Peter Warwick
President & CEO
557 Broadway, New York, NY 10012
212 343 6100
scholastic.com
August 2, 2024
Fellow Shareholders,
In scal 2024, Scholastic made signi cant progress advancing our long-term goals: to broaden our
reach to children, families and educators; to realize the full potential of our trusted brand and beloved
publishing and content; and to grow as a trusted, global children s books and media company. We
invested in key growth initiatives and long-term opportunities. We continued to prove our leadership
in children s publishing and media, as we navigated challenging market headwinds. We carefully
managed our balance sheet, returning $182 million to shareholders through our regular dividend and
share repurchases.
With the addition of the award-winning 9 Story Media Group to our portfolio, announced in March and
closed in June, our new Scholastic Entertainment segment has gained industry-leading production,
distribution and licensing capabilities, an extensive children s content library, and a highly talented
team. In addition to adding a sizable business with solid Adjusted EBITDA margins today, the 9 Story
acquisition signi cantly expands Scholastic s opportunities to leverage its trusted brand, best-selling
publishing and beloved global children s franchises across print, screens and merchandising. After only
a month, the combined business is already executing on an expanded development and production
slate, updating franchise and licensing plans for top Scholastic brands, and planning to leverage 9
Story s strong YouTube presence and expertise across Scholastic s content.
In scal 2024, Scholastic s publishing, where our beloved content begins, continued to prove its ability
to engage and reach the next generation of readers, as it extended its unmatched track record building
global franchises. Scholastic topped best-seller lists with new front-list titles, including the twelfth
book in Dav Pilkey s Dog Man series, which reached the number one best-selling spot across all book
categories in the U.S., Canada, Ireland, Australia and New Zealand and the top children s book spot in
the U.K. We continued to expand our market share of middle-grade graphic novels. In fact, Scholastic
titles lled every spot on Circana Bookscan s top-20 list of bestselling juvenile graphic novels at one
point last year.
Looking ahead, we have an exciting publishing plan in scal 2025, including another Dog Man title this
fall, followed by the worldwide theatrical release of the Dog Man movie in January 2025; Sunrise on
the Reaping, the fth book in Suzanne Collins worldwide bestselling Hunger Games series, in March
2025 simultaneously in the U.S., Canada, U.K., Australia and New Zealand; and, this coming holiday
season, Christmas at Hogwarts, a timeless picture book that will delight families and Harry Potter
fans of all ages. Building upon our leading position in graphic novels, in August we launch Unico:
Awakening, the highly anticipated rst title in a multi-volume, kid-friendly manga series.
In our seasonally important fourth quarter, a slowdown in supplemental curriculum purchases by
schools and increasing pressure on consumer spending, as seen across the economy, impacted sales
in Scholastic s Education Solutions and School Book Fairs businesses, respectively. We took steps to
carefully manage and align operating expenses in response, while protecting investment in long-term
growth opportunities, but these factors caused Scholastic s fourth quarter revenue and pro t to come
in below our expectations. Despite the cyclical headwinds, these two trusted channels to families and
educators continued to execute well, with robust fair bookings and transaction sizes in Book Fairs,
as we invest to expand this businesses reach long-term. In Education Solutions, we made progress
developing new literacy products, leveraging Scholastic s engaging content and strong brand.
Scholastic s strategy to grow long-term earnings and free cash ow builds on our unique strengths
our trusted brand, proprietary distribution channels, unmatched children s content and global
franchises while also protecting the pro tability and cash ow generation of our core business
models. Leveraging our balance sheet and strong free cash ow outlook, we aim to sustainably
fund these growth investments and return capital to shareholders.
Four key market trends shape Scholastic s opportunity and growth strategy:
First, as brands, content and channels proliferate online and on screens, accelerated by new
technologies, we are leaning into Scholastic s trusted brand with families and educators, and our
global bestselling children s franchises, to differentiate ourselves and grow sustainably.
Second, as kids spend more and more time on screens, we are expanding our ability to reach kids
where they are, with high-quality, engaging content both on screens and on the page.
Third, as schools struggle to reverse declining reading scores, as seen again with recent national
reading results at over 30-year lows, we are developing new partnership models with state,
community and philanthropic organizations to support and fund literacy programs outside the school.
And fourth, as parents and families take a more active role in their children s education at school and
at home, especially post-COVID, we are building new channels to reach and support families directly.
In summary, while market conditions grew more challenging in scal 2024, especially in the fourth
quarter, Scholastic managed its businesses carefully and kept sight on the Company s mission and
substantial opportunity: to serve the broader, growing need for trusted children s books, reading and
media by investing in, building on, and adapting our unique strengths and competitive advantages in a
dynamic market, driven by long-term, favorable trends.
With the talent and creativity of our employees, authors, illustrators and creators and the support of
our shareholders, we look forward to continuing to pursue this opportunity to create value and impact
in scal 2025 and the years ahead.
Sincerely,
Peter Warwick
President & CEO
Forward-Looking Statements: This Chairman s Letter contains certain forward-looking statements relating to future periods. Such forward-looking statements are subject to various risks and uncertainties, including the
conditions of the children s book and educational materials markets and acceptance of the Company s products within those markets, and other risk and factors identi ed from time to time in the Company s lings with the
Securities and Exchange Commission. Actual results could differ materially from those currently anticipated.
8/8/2024 Letter Continued (Full PDF)