Scholastic Corporation (NASDAQ:SCHL) Q2 2018 Earnings Conference Call Transcript

Dec 14, 2017 • 08:30 am ET

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Scholastic Corporation (NASDAQ:SCHL) Q2 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Scholastic Reports Fiscal 2018 Second Quarter Results 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 follow at that time. (Operator Instructions). As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Mr. Gil Dickoff, SVP, Treasurer and Head of IR. Please go ahead.

Executive
Gil Dickoff

Thank you, Crystal, and good morning, everyone. Welcome to Scholastic's Second Quarter 2018 Earnings Call. Joining me here today are Dick Robinson, our Chairman, President and CEO; and Ken Cleary, the Company's CFO. We have posted an investor presentation on our IR website at investor.scholastic.com, which we encourage you to download if you have not already done so.

(Forward-Looking Cautionary Statements). In addition, we will be discussing some non-GAAP financial measures, as defined in Regulation G and the reconciliations of those measures to the most directly comparable GAAP measures can be found in the Company's earnings release filed this morning on a Form 8-K, which has also been posted to our Investor Relations website. We encourage you to review the disclaimers in our press release and investor presentation and to review the risk factors contained in our annual and quarterly reports filed with the SEC. And now, I would like to turn the call over to Dick Robinson.

Executive
Dick Robinson

Good morning everybody and thank you for joining us today. I look forward to introducing you to Ken Cleary, our new CFO in just a few minutes. Ken has been with Scholastic for ten years, most recently as CAO and he is entirely familiar with all our financial and business operations. He has quickly moved ahead in his new role bringing excellent analytical skills and hands-on approach to working with the business units to improve profitability.

As you know, the 2018 fiscal year is a swing year between 2017 when we had significant additional revenues from Harry Potter and the Cursed Child and the 2019 fiscal year when the effects of our Scholastic 2020 plan will begin to kick in. Second quarter results demonstrated progress in our core businesses and were solidly in line with expectations, including holding profitability for the corporation, even though we were down almost $18 million in trade revenues based on the comparison with the Fantastic Beasts Screenplay released in November 16 -- November 2016, which led to strong revenues in the second quarter last year.

Cost savings throughout the organization including overhead resulted in only a slight decline in profits versus last year and kept us on pace with our forecast for 2018. We are therefore affirming our guidance for the full year. Our core Children's Book Publishing showed resilience in the quarter, underlining the many reasons why Scholastic is the world's largest publisher and distributor of children's books. While Book Clubs and Book Fairs both lost revenues in September from the hurricanes in Texas and Florida, we were able to end