Trade book sales were down slightly at Scholastic, by 2 percent, in their fourth quarter, at $38.5 million, though the segment finished the year up almost 15 percent at $189.4 million. Companywide, sales were $545.8 million for the last quarter, up 1 percent from a year ago, and earnings from continuing operations before taxes were down 21 percent at $43.2 million. But after-tax net income declined less, down 15 percent at $24.8 million–and because of the company’s stock repurchase program, net income of 78 cents a share were almost level with a year ago–and they were ahead of analysts’ expectations of 76 cents a share. (Sales also exceeded the expectation of $511 million.) With the better-than-expected results, shares were up by more than 9 percent in morning trading.
For the full year, sales were virtually flat, down $7 million at $1.906 billion, and earnings from continuing operations before tax of $81.1 million were down over 27 percent. Net income of $39.4 million was similarly down 30 percent. In the most recent quarter, they took a $3.4 impairment charge “related to goodwill in the educational publishing segment.”
Scholastic says the 2011 results “primarily reflected lower sales of educational technology relative to a year ago,” when the federal stimulus program boosted them, “as well as increased strategic spending on digital initiatives in the children’s book business.” The company’s net debt rose to $98.1 million during the year, up from $8.7 million, “as the company returned $176.4 million to shareholders in the form of share buybacks and dividends.”
CEO Dick Robinson says in the announcement, “As we begin fiscal 2012, our plan is to build upon Scholastic’s market-leading positions in education and children’s books, while improving margins and operating profits.” He adds, “in children’s Books, we will continue to move forward with our ebook and ecommerce strategies, including the expanded roll-out of our children’s ereading app and ebookstore, in fiscal 2012. At the same time, we remain focused across the company on reducing costs, generating strong free cash flow and creating value for shareholders.”
Scholastic forecasts “a modest decline in trade sales” in the year ahead, guiding flat overall sales of $1.9 billion, with earnings per share targeted to rise to $1.75 to $2.10 per share (from $1.29 a share this year). But they warn, “everance and other one-time expenses associated with restructuring actions, as well as non-cash, non-operating items, are excluded from this guidance.”
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