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Second quarter revenue declines, but trend improving
Margins are challenged, cash flow remains strong
Company reduces debt by $70 million during second quarter
GREENVILLE, Wis., Nov. 18, 2010 (GLOBE NEWSWIRE) --
School Specialty (Nasdaq:SCHS) today reported fiscal 2011 second quarter and year-to-date financial results. Revenue for the second quarter of fiscal 2011 was $291.9 million as compared to $346.1 million in the same period last year, a decline of 15.7 percent. Excluding revenue from divestures in the prior-year quarter of $6.8 million, revenue declined 14.0 percent. Second quarter diluted earnings per share was $0.96, as compared to $1.57 in the second quarter of fiscal 2010. Gross margin was 40.3 percent, a reduction of 100 basis points over last year's second quarter due primarily to market pricing pressures in the Educational Resources Group, partially offset by product mix in the Accelerated Learning Group. Free cash flow for the quarter totaled $69.7 million, an increase of more than $6 million over fiscal 2010's second quarter.
Second quarter revenue for the Accelerated Learning Group was $104.0 million, a 4.3 percent increase over the same period last year, excluding divestiture revenue in the prior-year period, with improved results in the group's reading intervention and student planner categories. Segment revenue decreased 2.4 percent with the divestiture revenue included. Second quarter revenue for the Educational Resources Group was $187.7 million, a decline of 21.8 percent compared to the same period last year, the result of continued reductions in school furniture and consumable product purchases due to education funding cuts and lingering issues related to pricing and bid execution.
"While second quarter Educational Resources revenue met expectations, competitive pricing requirements lowered our profit margins more than we anticipated, especially in furniture where our year-over-year revenue declined 27 percent," said President and Chief Executive Officer David Vander Zanden. "Gross margin was also impacted by product mix, as we have seen more revenue reduction in our higher-margin classroom supplemental products.