Thank you for standing by and welcome to today's conference entitled Scholastic Reports First Quarter Fiscal Year 2024 Results. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded. One moment and I will go ahead and introduce our host for today's program, Jeff Mathews, Executive Vice President, Corporate Development and Investor Relations. Please go ahead sir.

Hello, and welcome, everyone, to Scholastic's Fiscal 2024 First Quarter Earnings Call. Today on the call, I'm joined by Peter Warwick, our President and Chief Executive Officer; and Ken Cleary, our Chief Financial Officer. As usual, we have posted the investor presentation on our IR website, investor.scholastic.com, which you may download now if you've not already done so. We'd like to point out that certain statements made today will be forward-looking. These forward-looking statements, by their nature, are subject to various risks and uncertainties, and actual results may differ materially from those currently anticipated. In addition, we will be discussing some non-GAAP financial measures as defined in Regulation G. The reconciliations of those measures to the most directly comparable GAAP measures may be found in the company's earnings release and accompanying financial tables filed this afternoon on a Form 8-K. This earnings release has also been posted to our Investor Relations website. I encourage you to review the disclaimers in the release and investor presentation and to review the risk factors disclosed in the company's annual and quarterly reports filed with the SEC. Should you have any questions after today's call, please send them directly to our IR e-mail address, investor_relations@scholastic.com. And now I'd like to turn the call over to Peter Warwick to begin this afternoon's presentation.

Thank you, Jeff, and good afternoon, everyone. We're happy you're joining us. Scholastic began fiscal 2024 solidly, excited and well-positioned for the year's back-to-school season, which represents another opportunity for Scholastic to work with families, educators and kids to address the critical needs for literacy, reading and stories. We continue to execute on our integrated strategy to drive growth, impact and shareholder value creation over the coming years while we protect margins and sustain the growth that we achieved in fiscal 2023. Last quarter, we continued to invest in strategic growth initiatives, including in go-to-market and blended product development capabilities in Education Solutions as we took further steps to ensure Scholastic is structured for future growth, executing reorganizations in our U.S. and Canadian Book Clubs and announcing key leadership changes. As we expected and previewed on last quarter's call, first quarter's operating loss grew from a year ago, reflecting these ongoing and onetime investments as well as the changing seasonality and timing of education revenues and planned spending ahead of expected growth in school reading events, our recently combined Book Fairs and Clubs division. As a reminder, Scholastic typically records operating losses in the first and third quarters, which coincide with summer and winter school vacations in the Northern Hemisphere. We generate the greatest contribution in the seasonally important second and fourth quarters. Based on quarter one results, we are affirming our fiscal 2024 guidance for revenue growth of 3% to 5% and adjusted EBITDA of $190 million to $200 million, excluding the impact of onetime charges of $7 million to $10 million related to restructuring and cost savings activities. Our confidence in our outlook is also demonstrated by our continued share repurchases. In total, last quarter, we returned over $42 million to our shareholders. This afternoon, I'd like to…

Thank you, Peter, and good afternoon, everyone. Today, I will refer to our adjusted results for the first quarter, excluding onetime items in fiscal 2024, unless otherwise indicated. Note that we recorded no onetime items in fiscal 2023. Please refer to our press release tables and SEC filings for a complete discussion of onetime items. As Peter discussed earlier, we are excited for this year's back-to-school season. After a strong finish to fiscal 2023, results in our seasonally quiet first quarter were in line with our expectations, including a greater year-over-year operating loss. Over the past three months, we have made progress and execute organizational improvements across all three of our business segments. I am proud of our team's hard work and preparations ahead of the back-to-school season. These actions have positioned us for upcoming fall and spring seasons and we look forward to continuing our progress next quarter and beyond. Turning to our consolidated financial results. First quarter revenues decreased 13% to $228.5 million. Operating loss in the quarter was $92.8 million, down from $58.1 million from the prior year period. Net loss was $69.5 million compared to $45.5 million in the prior year period and adjusted EBITDA was a loss of $70.6 million from $35.6 million a year ago. Loss per diluted share was $2.20 compared to a loss of $1.33 last year. Year-to-date free cash use was $57.8 million, improving from $76.5 million in the prior year period. As discussed, first quarter's operating loss grew from a year ago as expected. After a record generating operating income in the fourth quarter, we anticipated these results as we continue to prioritize strategic investments and growth initiatives and execute on our plan in the school reading events business. Additionally, our Education Solutions business saw lower sales, driven by the…

Thank you, Ken. This past quarter, our team made good progress and built a solid foundation for the remainder of fiscal 2024. After first quarter results that were in line with expectations overall, we are affirming our guidance and looking ahead. We're positive about fiscal 2024 and our multiple long-term opportunities to grow our business and impact, addressing kids' pressing need for reading, learning and stories. Thank you very much. Let me now turn the call over to Jeff.

Thank you, Peter. We appreciate everyone's time today and continuing support. With that, we will open the call for questions.

Certainly. [Operator Instructions] And our first question comes from the line of Brendan McCarthy from Sidoti. Your question please.

Yes, thank you for taking my question. I think I wanted to start off at the trade channel sales and just the general, the retail market in general. I'm just wondering if you can kind of talk about what you're seeing in the industry versus your back and frontlist sellers. It looks like, obviously, you mentioned it's kind of reverting to the pre-pandemic normal -- more normalized levels. But I was also wondering if you could provide some insight into when you might think the timing of that might play out.

Yes, it's Peter here. I mean, what we -- there are two things going on at the moment, the first of which is that we're seeing that, hang on, yes, sorry, it’s Peter here. The first thing that we're seeing is that sales are soft going out of the door. And the second thing we're seeing is that the larger inventory purchases, which many book sellers have made during the pandemic mean that restocking has not been happening at the same level as before. This has been coming for the last few months and parts of this year. But we see this, I think, as reverting to more normal sort of activities in the trade channel once the full impact of the pandemic is through. And indeed, we're beginning to see some stronger elements of that post the quarter. Certainly the last weeks of August, which is our third month and now in September are encouraging. I think also with the trade, one's position in the trade market is that a lot depends too on the new publishing that you're doing. And whilst our trade channel was soft during the first quarter, we've got much more in terms of our publishing coming in quarter two. So we would expect quarter two to be a really quite strong trade month. And we don't really have any major concerns about our overall trade forecast for the year as a whole. The other piece to bear in mind is that we can see a more complete picture really of book buying because of our school book fairs in particular. And school book fair buying has been very strong. It was strong through the spring season this year. And in terms of fairs booked for the fall season, that all looks very, very promising and strong as well. So I think one's got to look at this in terms of the totality of the market, we're in a particularly good position to see the totality of the market because of the volume of books which are actually sold through the Book Fairs and Book Clubs, which are not captured by BookScan.

Great. Thank you, Peter. I was also wondering as a follow-up, do you think it's fair that -- or I guess do you think it's fair to say, is inflation still having an impact on consumer purchasing patterns as it pertains to trade channel sales?

Well, we haven't particularly seen that. I think probably not is the answer. Again, we can look at things like revenue per fair as an indication of, as it were, kids and parents purchasing. And we saw throughout our last fiscal year and particularly in the spring this year that actually the revenues per fair have been strong and stronger than pre-pandemic. So I think it's not that particularly. I think one's also got to think of this in terms of the, as I said earlier, the totality of what goes on in trade and how parents and children actually buy kids' books. And so I think that we feel reasonably, I have to say, we feel comfortable about how trade publishing and trade forecasting because in many ways, one year is never exactly the same as the prior year because of timing of new titles. And so we're -- that's not a cause of concern for us at all.

Got it. That's helpful. One question on the Education Solutions segment. I know you mentioned there was some impact from the timing of state-sponsored programs. I was just wondering if you could go into detail about that specific timing.

Hey, Brendan, this is Ken Cleary. How are you? So there was -- we have a very large contract with NWRI in the State of Florida, and part of that called for some billings that we don't have this year. So we continue to grow our student base there, and we continue to reach out to more students because there's an awful lot of more students in Florida that are eligible for this program and we're investing in marketing to reach these students. And therefore, the timing in really the beginning of the year cycle starts, I believe, in July and continues through the next July. So we're -- this quarter really caught the beginning of the year cycle for that. But the idea is that we're looking to increase participation in that program. And to that end, we have incremental opportunities in terms of, it's now open to kindergartners and Pre-K as well. So we're very encouraged by our sponsored programs, particularly in Florida, and that's what you're seeing impacting in the quarter, but also elsewhere, as we continue to try and replicate this model in similar models in other states and through other either state-sponsors or other sponsors in general.

Got it. Thank you, Ken. One more quick question for me. I just noticed the over cost or I'm sorry, overhead costs were up year-over-year and that was driven by employee-related costs. Is that just compensation or?

Yes. Some of its higher headcount, but a good bulk of it is higher utilization of medical expenses as well. And again because our medical expenses don't particularly time out with our fiscal year, our medical year is the calendar year and our fiscal year is a full year, we're still working to look at those accruals and understand exactly where they are. So right now, this is what we have in there, but we're definitely seeing higher utilization post-pandemic of medical costs, but more to come as the year progresses. We'll certainly have it ironed out by the time we get to the end of the year.

Great. Thank you, Ken. Thank you, Peter. That's all from me.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to management for any further remarks.

Thank you, everyone, for joining today's call and for your continued support. I'd like to thank again all of Scholastic's employees for their hard work and preparation ahead of the back-to-school season. We're positive about our plan for fiscal 2024 and about the long-term opportunities for Scholastic as we continue to execute on our strategy this year and beyond.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.