[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / September 27, 2016 / Active Wall St. announces its post-earnings coverage on Scholastic Corporation (NASDAQ: SCHL). The company reported its financial results for the first quarter fiscal 2017 (Q1 FY17) on September 22, 2016. The New York-based company's revenues surged 48% on y-o-y basis in Q1 FY17. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
Scholastic's reported revenues of $282.7 million in Q1 FY17 compared to revenues $191.2 million recorded in Q1 FY16. The revenue growth was led by the Trade division's sales of Harry Potter and the Cursed Child, Parts One and Two, with sales growth across all the three segments.
The distributor of children's book recorded net loss of $39.6 million, or $1.15 loss per diluted share, in Q1 FY17 compared to a net loss of $49.4 million, or $1.48 loss per share, in the prior-year's comparable quarter. Wall Street was expecting the company to report net loss of $1.17 per diluted share. The company generally reports loss in its first quarter earnings, as most of the schools are not open during this time of the year.
Segment-wise
For the quarter ended on August 31, 2016, Children's Book Publishing and Distribution segment reported revenues of $137.8 million compared to $67.7 million in the year ago period. In Q1 FY17, segment's trade sales were up by $69.6 million, or 147% y-o-y. The segment reported an operating loss of $36.2 million in Q1 FY17 versus operating loss of $56.0 million in the prior-year's quarter.
Scholastic Education segment revenues for Q1 FY17 improved 10% y-o-y to $55.2 million from $50.4 reported in Q1 FY16, primarily due to higher sales in classroom books and classroom magazines and was partially offset by lower advertising revenues. Due to increased salary-related costs for expansion of sales force and marketing personal, the segment's operating loss marginally widened to $4.4 million in Q1 FY17 from $4.3 million in Q1 FY16.
The publisher's International segment's revenues grew $16.6 million, or 23%, y-o-y to $89.7 million in Q1 FY17 from $73.1 million in Q1 FY16, primarily due to higher sales of Harry Potter books in Canada and other international markets. For Q1 FY17, the segment reported operating income of $3.9 million compared to an operating loss of $2.7 million in the year ago quarter.
Cash Matters and Balance Sheet
In Q1 FY17, the company used $105.5 million of cash in its operating activities compared to a negative cash flow from operating activities of $291.7 million in Q1 FY16. Free cash use for Q1 FY17 came-in-line with the company's expectation at $122.4 million compared to free cash use of $303.2 million in Q1 FY16.
As on August 31, 2016, Scholastic had cash and cash equivalents balance of $287.6 million which exceeded net debt of $275.5 million. In the year-ago period, the cash and cash equivalents balance stood at $250.3 million, which was above net debt of $244.6 million.
Dividend
In a separate press release, on September 21, 2016, Scholastic's Board of Directors announced a quarterly dividend of $0.15 per share on its Class A stock and Common Stock. The dividend will be paid on December 15, 2016, to all the shareholders registered on records as of the close of business on October 31, 2016.
Magic of J.K. Rowling
It is "Pottermania" that has provided the publisher with robust earnings numbers over the years. And, nine years since the last Harry Potter book series was released, the publisher has been looking for a turnaround in its earnings. J.K. Rowling's Harry Potter series is like a magic wand and it was no surprise that the latest release, "Harry Potter and the Cursed Child"- Parts One and Two would enchant readers. The company is now banking on another original screenplay by J.K. Rowling, "Fantastic Beasts and Where to Find Them", scheduled to release later this year to boost its year-end earnings.
Outlook
Scholastic reiterated its total revenue guidance of full year FY17 and expects it to lie between $1.7 billion and $1.8 billion. Excluding one timers, the company forecasts earnings from continuing operations for FY17 to be in the range of $1.60 per diluted share to $1.70 per diluted share. Free cash flow for FY17 is anticipated to be the range of $40 million to $50 million.
Stock Performance
Scholastic's stock is trading slightly down by 1.07%, closing Monday's session at $38.04 on volume of 106.53 thousand shares. The company's shares gained 0.94% in the last six months. The company's shares are trading a PE ratio of 25.36 and have a dividend yield of 1.58%.
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