Scholastic (SCHL) is one of the world’s largest publishers and distributors of children’s books. The company has original publications like Harry Potter, Hunger Games and Wings of Fire to its credit.
In its recent Q4 results, Scholastic achieved improved profitability across all its operating segments on a lower cost base.
Let’s take a look at the company’s financial performance and what has changed in its key risk factors that investors should know.
During the quarter, improving market conditions, higher demand for foundational literacy programs and summer reading, and top trade titles helped Scholastic’s revenue jump to $401.4 million versus $284 million a year ago.
James Barge, a member of Scholastic’s Board of Directors, said, “In the fourth quarter, Scholastic’s businesses showed dramatically improved results on both the top and bottom lines, even as educators around the globe still struggled with transitioning their students safely back to the classroom…Our Strength in execution was most evident in our positive free cash flow generation and improved operating margins, which resulted in meaningful year-over-year growth in adjusted EBITDA despite a drop in full-year revenues.”
Owing to higher sales volume and cost savings initiatives, which improved operating leverage, the company generated an operating income of $41.6 million in Q4, compared to an operating loss of $39.4 million a year ago. (See Scholastic stock chart on TipRanks)
Looking ahead to Fiscal Year 2022, Scholastic expects significant revenue growth over prior-year levels, along with an improvement in adjusted EBITDA, on the back of improving market conditions, return of students to classrooms, and reopening of stores.
Now, let’s look at what has changed in the company’s key risk factors profile.
According to the new Tipranks Risk Factors tool, Scholastic’s two main risk categories are Ability to Sell and Production, which account for 33% and 24%, respectively, of the total 21 risks identified. Since May, the company has added one new key risk factor under the Tech & Innovation category and changed another under Finance & Corporate category.
Scholastic notes that privacy breaches and other cybersecurity threats could negatively impact its reputation, credibility, and business. A failure to protect the personal data of customers or children or other data security failure could result in penalties, remediation costs, and reputation damage to Scholastic.
Under the Finance & Corporate category, the company highlights that its control, through the ownership of Scholastic’s Class A shares, is exclusively vested with the estate of its former Chairman of the Board, President and CEO, Richard Robinson, who passed away in June. Moreover, it states, investors in common stock generally have no voting rights towards transactions that require stockholder approval.
The Ability to Sell risk factor’s sector average is at 17%, compared to Scholastic’s 33%. Shares are up 38% so far this year.
Related News:
F5 Networks Q3 Results Surpass Expectations; Stock Gains 6.1%
Logitech Delivers Impressive Q1 Results on Strong Revenues
Brown & Brown Posts Upbeat Results in Q2
