Good day, and thank you for standing by. Welcome to the Scholastic Reports Third Quarter Fiscal Year 2025 Results. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jeffrey Mathews.

Hello, and welcome, everyone, to Scholastic's fiscal 2025 third quarter earnings call. Today on the call, I'm joined by Peter Warwick, our President and Chief Executive Officer; and Haji Glover, our Chief Financial Officer and Executive Vice President. As usual, we posted the accompanying investor presentation on our IR website at investor.scholastic.com, which you may download now if you've not already done so. We would 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 reconciliation 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. We 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.

Thanks, Jeff, and good afternoon, everyone. Thank you for joining us. Scholastic performed solidly in our third quarter. We achieved modest revenue growth and improved operating results relative to a year ago. Strong performance in our Children's Books segment and the addition of 9 Story Media Group contributed to these positive results in spite of increasing pressure on spending by families and schools on books and educational materials. Overall, these results reflected Scholastic's unique strengths in engaging kids with great books and quality children's media. We remain committed to our capital allocation priorities, investing in our growth initiatives and returning over $35 million to shareholders through share repurchases and dividends last quarter. Scholastic maintains a strong balance sheet with modest debt and significant options to unlock additional liquidity for debt reduction and enhancing shareholder returns, including through our significant owned real estate assets. Haji will expand on this topic later. Looking ahead, we now forecast full year adjusted EBITDA of approximately $140 million, consistent with the low end of our fiscal 2025 guidance. Revenue is forecast to be up modestly year-over-year, reflecting the intensifying spending headwinds that we saw last quarter and that we expect to continue into the fourth quarter. As we manage these external factors, we've executed cost-saving actions that we expect to benefit both this fiscal year and fiscal 2026. Before going into our operating results, I'd like to comment on the macro environment and the headwinds that Scholastic and many of our peers are navigating. First, as many major U.S. retailers have recently reported, consumers have begun taking a more cautious approach to spending in today's environment, including in discretionary categories like Children's Book purchases, as seen when analyzing Circana Bookscan data. Second, recent uncertainty around federal education policy and funding mechanisms is causing some schools…

Thank you, Peter, and good afternoon, everyone. Today, I will refer to our adjusted results for the third quarter, excluding onetime items. Please refer to our press release tables and SEC filings for a complete discussion of onetime items and a reconciliation with related GAAP figures. As Peter discussed earlier, third quarter revenues increased and operating loss improved from a year ago. In the third quarter, revenues increased 4% to $335.4 million, and profitability improved by multiple measures. The company's seasonally adjusted operating loss was $20.9 million, an improvement from $30.6 million in the prior year period. Adjusted EBITDA was $6 million relative to a loss of $7.2 million a year ago. Net loss improved to $1.3 million from a loss of $23.3 million in the prior year period. On a per diluted share basis, adjusted loss improved to $0.05 compared to a loss of $0.80 last year. Turning to our segment results. In Children's Book Publishing and Distribution, revenues for the third quarter increased 5% to $203.3 million, primarily reflecting growth in both Book Fairs and Book Club channels. Segment adjusted operating income was $7.6 million, up from $2.8 million in the prior year period, reflecting higher revenues and School Reading Events. Within SRE, Book Fairs revenues were $110.7 million in the third quarter, an increase of 8%, primarily reflecting the larger number of fairs held in December compared to the prior year period, which contributed to higher fair count in the third quarter. Revenue per fair was in line with prior year, close to record levels and significantly higher than pre-pandemic levels. We expect fair count to contribute to modest growth in our Book Fairs business this school year, offsetting the consumer spending headwinds we expect to continue in the fourth quarter. Book Club revenues were $15.2 million…

Thank you, Haji. In conclusion, after achieving solid results in our third quarter, Scholastic is now focused on achieving modest revenue growth in the fourth quarter and managing costs as we navigate short-term headwinds for the remainder of the fiscal year. Despite these near-term pressures, we remain confident in Scholastic's long-term growth opportunity and are committed to continuing our plans to grow in our core and adjoining markets, where Scholastic's brand, IP and distribution channels present compelling growth opportunities to meet kids, families and schools essential needs to educate, inform and engage kids. Thank you very much. Now let me turn the call over to Jeff.

Thank you, Peter. With that, we will open the call for questions. Operator?

[Operator Instructions] Our first question comes from the line of Brendan McCarthy with Sidoti. You may proceed.

Great. Good afternoon, everybody. Thanks for taking my questions here. I just wanted to start off in the Trade channel. I know you mentioned your pretty favorable outlook on frontlist title sales from The Hunger Games title and the new Dog Man release. Just kind of wondering how we can think about backlist sales given consumer pressure, but also the prospect that some of these frontlist titles may drive stronger backlist sales of earlier titles in the series. Just kind of wondering how we can think about that going forward.

Thank you. It's Peter here. One of the great things about successful frontlist titles, particularly the Dav Pilkey that we've just published and also the Suzanne Collins is that it drives their backlist sales as well. So one of the ways in which we can improve backlist performance is actually through very successful frontlist performance with titles from key authors. And I think it's something that we will continue to see because the great benefit we've got going forward, particularly in the fourth quarter -- this fourth quarter with Suzanne Collins and then with the new Dog Man book coming in our next financial year, I think that it's that successful frontlist publishing, which can really help to drive backlist sales. And that's really what we're focusing on right now.

Got it. Peter, and I wanted to turn to Education Solutions. It sounds like this quarter was impacted by a slowdown in sales at the school level and at the state level. Just curious if you've seen -- has there been a change in the funding level for school districts and states? Or has it simply just been a case of the states and school districts pausing spending for the moment?

I think for the most part, it's been a question of schools and districts being more cautious. As you know, schools funding is 90% of that comes from state and local. Where there's been some concern is about the amount of federal funding that there might be going forward. I think everybody expects that federal funding for things like Title 1 and so on is going to continue. But I think it is important that a number of these schools are holding on to some of their funds. Just as kind of pausing so that they can see what things work out like during the next few months. And one other factor that we need to take into account is that schools are putting in quite a lot of focus on their core curriculum needs. We are primarily a supplemental provider. And therefore, in keeping with the other supplemental education providers that we know that has also had some impact on purchasing, which has impacted us. That's a cyclical impact because what tends to happen is that once schools get their materials for core curriculum, they then buy in supplemental materials to suit the particular part of the country or the city or whatever it might happen to be so that they've got an overall both curriculum and library resources to support the students that they're actually educating.

Got it. And as a follow-up, looking at funding on the federal level, we've seen headlines around the Department of Education and cutbacks there. I guess going forward, more from a broad level, do you expect any material changes in funding, I guess, more broadly?

Not necessarily because I think that a lot of funding is congressionally mandated and therefore, it's not suddenly going to be turned off, we don't believe or anything like that. What we are seeing is the continuing -- the continuation of a trend that we've seen, which is more spending is actually being done at a state and local level and rather than from federal. So it's continuing that. We also see a continuing trend of really more parent choice in the way that funding is done so that you will see that in charter schools and private schools and parochial schools, these are opportunities for us going forward because they're more likely to be good hunting grounds as it were for our people going forward.

That makes sense. And in the Education Solutions business, I know you mentioned a strategic review is in the process. Can you provide additional color on what that might entail? Are you considering a sale or maybe something more internally led?

No, at the moment, this is internally led in the sense that what we want to do is to make sure that we're putting our resources into the right places going forward. We're getting some help in doing that. I mean we've got a tremendously powerful brand. And this is a business where we believe that we've got the right to win. And I think we just want to make sure, given that we've had these stresses and strains, alongside some other supplemental publishers as well. But we want to make sure that we're absolutely doing the right thing in order to be successful in part of the market, which is absolutely core to Scholastic's history.

Got it. And one more question for me on the real estate side. I appreciate the color on the asset base there. Just curious if you can provide maybe what a collective fair value might be of the warehouse in Missouri as well as the New York City headquarter buildings.

Yes, Brendan, this is Haji Glover. How are you doing?

Hi Haji. Good. How're you?

All right. So on the real estate, we can't really -- well, we won't provide an estimate on the number or what the properties are worth. But what we wanted to do is really give our investor base an opportunity to actually have all the information in one place. So that's the reason why we're putting it out there. But I'm sure that any investor with the information would be provided can come up with -- based on the rental income and some cap rates, they can come up with a valuation.

Understood. That makes sense. Thanks, Haji. Thanks, Peter. That's all from me.

Thank you, Brendan.

Thanks. Bye-bye, now.

Thank you. And this concludes our Q&A. I will pass the call back to management for any closing remarks.

Well, it's Peter here. Thank you, everyone, for joining today's call and for your continued support. I'd like to thank all of our Scholastic employees for their great work so far this year. And we would also like to thank our shareholders for their continued support. We look forward to executing on our plan for fiscal 2025 and continuing to make progress towards realizing Scholastic's long-term opportunities. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.