Scholastic Corp (NASDAQ:SCHL) stock rose 8.89% (As on December 16, 12:13:32 AM UTC-4, Source: Google Finance) after the company in the second quarter of FY 23 has reported 12% increase in the revenues, primarily driven by strong results in the Children’s Book Publishing and Distribution segment. The Company’s school-based book channels, in particular Book Fairs, rose significantly, and multiple best sellers benefited sales in the school channels and in Trade, despite a softer retail book-selling environment. Operating income increased $16.7 million to $100.1 million while Adjusted EBITDA (a non-GAAP measure of operations explained in the accompanying tables) increased $14.8 million to $122.3 million. The improvement in operating income was primarily driven by the higher revenue and profit contribution from the Children’s Books segment, as well as the Company’s efforts to address inflationary pressures with cost containment and pricing related initiatives. Further, spending on long-term strategic investments continued in the Education Solutions segment.
Moreover, In the fiscal second quarter, the Children’s Book Publishing and Distribution segment’s revenues increased $65.8 million to $418.3 million. Segment operating income increased $28.0 million, reflecting strong growth and the segment’s improved distribution efficiencies, as well as pricing initiatives which more than offset the rising costs associated with freight, paper, and labor.
Book Fairs revenues increased $64.6 million to $240.8 million. Increased fair count is trending, as planned, at 85% of pre-pandemic levels compared to 70% in the prior period. Revenue per fair continues to outperform both prior period and fiscal year end. Better fair offerings, overall improved marketing efforts, the optimization of warehouse branches and process enhancements continue to benefit the Book Fairs channel.
Trade revenues of $119.9 million were near prior-period levels, as multiple best-selling releases mostly offset the impact of a softer retail market and a difficult year-over-year comparison. The current fiscal period benefited from the release of Dav Pilkey’s Cat Kid Comic Club #4, the new illustrated edition of Harry Potter and the Order of the Phoenix, higher sales within the specialty product line of Make Believe Ideas, and media revenue recognized for the Eva the Owle animated series.
Additionally, Scholastic has added $48.8 million to its existing share buyback program, bringing the total amount available to $75 million. In a separate statement, the company said it has retained its quarterly dividend of $0.20 per share, payable March 15 to shareholders of record on Jan. 31.
Scholastic has affirmed its fiscal 2023 guidance for Adjusted EBITDA of $195 million to $205 million and revenue growth of 8% to 10%.