Scholastic Corporation (NASDAQ:SCHL) Q1 2021 Earnings Conference Call - Final Transcript
Sep 24, 2020 • 04:30 pm ET
grades K-2 as a core part of the curriculum, which is Scholastic F.I.R.S.T.
So the funding picture is I think rosier than many people predict because people have their budgets from last year and the state governments have not yet begun to cut back on the school funding the way they -- I think they probably will absent a COVID bill from Congress coming in -- in this year. But this year, I don't believe there will be a material impact from school funding. And conversely, there is going to be a demand for materials as kids try to overcome their learning loss from six months of being out of school and the attendant reading drop that many kids are experiencing, that will also help our Club and Fair business.
Got it, okay. And then just shifting gears to the trade business, can you comment on how this year's Dog Man sales performed relative to last year's new release? And then, any way to size Ickabog -- how big of an opportunity is this for the trade business? I mean obviously from one of the best-known authors in the world, but not really sure how to size the opportunity here?
Yeah, well, just starting with Dog Man, it's doing extremely well and is outpacing the Dog Man from the year before. It's the number 1 as we said in our notes here it was the number one top-selling book, adult or children in the U.S. for several weeks at the beginning of September and in Canada similar and this week it became the number 1 best-selling book in Australia of all books. So it's got a tremendous response and it shows that the Dog Man franchise is even expanding as it goes into its second and third year. Ickabog we think will be very strong. A new book by J.K. Rowling also aimed at the sweet spot of age group, really between 7 and 12 is going to really be an outstanding offering in November when it comes out. Helping you size it, we definitely are printing an awful lot of Ickabogs all around the world. And we're expecting that it will do extremely well in this end of the second quarter.
Okay. And then maybe one last one from me for Ken. The 71% improvement in free cash flow used, it's about $84 million swing year-on-year. Can you quantify what came or what cost savings contributed to that versus the collections for The Hunger Games book?
Kenneth J. Cleary
Sure, sure. The Hunger Games book collections, I won't give you an absolute number but as we publish our financial statements, you'll see our receivables are down. Also in terms of the costs, I won't give you an exact number for what the cost savings were, but you can see we're down north of $40 million in SG&A, and that's where the bulk of bulk of it came out of. The other big thing moving through there is inventory purchases, which are $35