Scholastic Corporation (NASDAQ:SCHL) Q1 2021 Earnings Conference Call - Final Transcript
Sep 24, 2020 • 04:30 pm ET
[Operator Instructions] We have a question from the line of Drew Crum with Stifel. Your line is now open.
Okay, thanks. Hey guys, good afternoon. So you've given us a sense as to what the shape of fiscal 2Q should look like for clubs and fairs. As we think about the second half your comment that you should see increasing demand as you progress through the period. Understanding you're not providing guidance at this point, but directionally should or could clubs and fairs grow year-on-year in the second half?
It's a little too soon for us to really know that in detail Drew. Obviously, we think about it and we think about the pace of which schools are coming back to fairs and sponsoring clubs and given the way they're adjusting to what's going on in schools, it's taking them a little longer to organize themselves to avail themselves of these services and they are changing the nature of what they order, their integrated interest and the virtual online fairs as other schools can come back and want to sponsor in-person fairs. So we believe that the second quarter will be a difficult one with lower revenues clearly than in the prior year, where we had an excellent second quarter particularly in fairs. But the second half of the year, we should see continued momentum in fairs and of course and clubs and at the end of the year of course we had the pandemic from last year, which reduced significantly our fourth quarter revenues. So we see a sort of a reverse pattern this year with stronger revenues in the second half.
Okay, okay. Fair enough. And then with the Education business 11% growth in the quarter and then you mentioned that the digital offerings are gaining some traction. How would you characterize the funding environment as you move into the 2020-'21 academic year? And then on a related note you referenced the sales of Scholastic Literacy to the LA Unified School District. What's been the receptivity to that product? And can you comment on what your backlog or pipeline looks like for this product?
Scholastic Literacy is one of the number of different solutions that we offer. It's more of a core instructional program. It's used in certain schools, districts very effectively. But it's not broad scale in its use. Most of our revenues are really coming from our normal classroom collections, Grab and Go packs, growing digital sales, classroom magazine sales, and we see quite a positive environment. As schools try to bridge the gap between school and home obviously they're turning to some of our online programs. There is also a need for engagement of kids of getting them back into school, getting the learning loss -- overcoming the learning loss, having access to a wide number of classroom libraries but also programs that help teachers understand where the kid stand with their skill development such as Literacy Pro or actually teach foundational literacy and phonics and