Scholastic CEO Discusses F2Q2011 Results - Earnings Call Transcript
Scholastic Corporation (
)
F2Q2011 Earnings Conference Call
December 16, 2010 8:30 am ET
Executives
Jeff Matthews – VP, Corporate Strategy, Business Development and IR
Richard Robinson, Chairman, President and CEO
Maureen O'Connell, Executive Vice President, CAO and CFO.
Margery Mayer – EVP and President, Scholastic Education
Judith Newman – President of Scholastic Book Clubs
Ellie Berger – President of Scholastic Trade
Deborah Forte – EVP and President, Scholastic Media
Hugh Roome – President of Scholastic Consumer and Professional Publishing
Analysts
Drew Crum – Stifel Nicolaus
Barry Lucas – Gabelli & Company
Presentation
Operator
Compare to:
Previous Statements by SCHL
»
Scholastic CEO Discusses F1Q2011 Results - Earnings Call Transcript
»
Scholastic Corporation F4Q10 (Qtr End 05/31/2010) Earnings Call Transcript
»
Scholastic Corporation F3Q10 (Qtr End 02/28/10) Earnings Call Transcript
Good day ladies and gentlemen, and welcome to the Scholastic Q2 2011 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator instructions) As a reminder, today’s conference call is being recorded.
I would now like to turn the conference over to your host, Mr. Jeff Matthews, Vice President of Corporate Strategy, Business Development, and Investor Relations. Please go ahead.
Jeff Matthews
Thank you Ellie and good morning everyone. Before we begin, I would like to point out that the slides for this presentation are available for simultaneous viewing by going to our Web site, Scholastic.com, clicking on Investor Relations, and following the links on that page.
I would also like to note that this presentation contains certain forward-looking statements, which are subject to various risks and uncertainties, including the conditions of the Children’s Books and Educational Materials markets, acceptance of the company’s products in those markets, and other risk and factors identified from time to time in the company’s filings with the Securities and Exchange Commission. Actual results could differ materially from those currently anticipated.
Our comments today also includes references to certain non-GAAP financial measures as defined in Regulation G. Reconciliation of these non-GAAP financial measures with the relevant GAAP financial information and other information required by Regulation G is provided in our earnings release which is posted in the Company's Investor Relation Web site at Investor.Scholastic.com.
Now I will introduce Dick Robinson, the Chairman, CEO, and President of Scholastic to begin our presentation.
Richard Robinson
Thank you, Jeff and good morning and thank you everyone for joining us on our fiscal 2011-second quarter conference call. This morning, I am joined by Maureen O'Connell, Chief Administrative Officer and CFO, and other members of the executive team are available to answer questions at the end of the prepared comments.
Last quarter we celebrated Scholastic's 90th birthday with the launch of Read Every Day, Lead a Better Life, a global literacy campaign underscoring the importance of reading as the pathway for young people to succeed in the 21st century. We believe our mission of helping kids read and learn has never been more relevant at a time when reading and learning is becoming more digital and more global.
Even as we launched New COOL, our completely revamped e-commerce system to all of our club customers this fall and as we prepared to beta test a major online eBook store in early Spring, our print children’s book business is alive and well and thriving.
School Book Fairs and trades hit strong growth and in Clubs, we sustained last year’s revenue levels. We also achieved significant revenue gains in International driven by positive results in Canada, Australia, Asia and Export. In Scholastic Education, we held much but not all of the revenue gains, we achieved last year when the 2009 federal stimulus program contributed to record growth.
Finally, we returned 156 million to shareholders through a successful tender offer funded by cash to free cash flow during the quarter only temporarily drawing down our credit facility. We remain committed to using our strong free cash flow to return capital to shareholders and have approximately 44 million still authorized for open market repurchases.
In addition, yesterday Scholastic Sport increased their regular dividend to $0.40 annually. While revenues were positive overall last quarter, operating profits were below expectation in education and clubs, we have lowered our full year outlook as Maureen, and I will discuss in more detail.
But first, I'd like to turn to our operating results.
In the Children's Books segment last quarter revenue grew 5% overall showing the continued resilience of the print children's book market as well as the strength of Scholastic's channels and publishing.
In School book fairs, revenue rose 8% from higher revenue per fair. Fair count also rose last quarter and we are on plan to hold 125,000 fairs in the U.S. this year up modestly from fiscal 2010. Strong growth and higher profits in fairs are driven by our successful multi-year plan to streamline operations, strengthen our sales and merchandising, bring more parents and grandparents to our fairs, revamp our loyalty program for schools and celebrate the importance of reading in the schools, which hold fairs.
In trade, sales increased 8% from a year ago driven by bestselling series publishing including Suzanne Collins' Hunger Games trilogy, the multi platform adventure series 39 Clues and Harry Potter. New titles and series from David Shannon and Dave Pilkey also made the New York Times best-seller list. We anticipate trade sales this spring will be below last year when we benefited from multiple new 39 Clues titles but exciting new publishing project, including the re-launch of the hugely popular Adam [ph] series, as well as the second wave of the 39 Clues called Cahill's versus Despers [ph] should drive growth next summer.
Read the rest of this transcript for free on seekingalpha.com