Good day, and thank you for standing by, and welcome to the Scholastic reports Fourth Quarter and Fiscal Year 2025 Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jeffrey Mathews. Executive Vice President and Chief Growth Officer. Please go ahead.

Hello, and welcome, everyone, to Scholastic's Fiscal 2025 Fourth 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. As usual, we have 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'll be discussing some non-GAAP financial measures as defined in Regulation G. A reconciliation of these measures to the most directly comparable GAAP measures can 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.

Thank you, Jeff, and good afternoon, everyone. Thank you for joining us. Scholastic delivered strong financial and strategic results in the fourth quarter of fiscal 2025. Adjusted EBITDA grew robustly in line with our original guidance range. Effective cost controls and a sustained focus on operational efficiency allowed us to overcome continued pressure on consumer and school spending while positioning us for earnings growth in fiscal 2026. Revenue growth was also in line with expectations driven by a strong performance in our Children's Book Publishing and Distribution segment and the strategic acquisition of 9 Story Media Group early in the financial year. This strong finish reflects the collective efforts of our teams. Amid a challenging macroeconomic environment, we made meaningful progress on the priorities we set at the start of the year, strengthening our core businesses, unlocking value from our iconic IP and positioning Scholastic for long-term profitable growth. We continue to return capital to shareholders, investing over $35 million in dividends and share repurchases in the fourth quarter for a total of $92 million in fiscal 2025 while advancing efforts to unlock value from our significant real estate assets. At the same time, we began executing on a set of significant organizational changes, work that's continued into quarter 1 that we believe will strengthen leadership, enhance growth and improve efficiencies. These actions set the stage for continued earnings growth and increased shareholder value in fiscal 2026 while deepening Scholastic's impact in schools, homes and communities around the world. Let me now walk through our quarter 4 and fiscal 2025 segment performance. Children's Book Publishing and Distribution segment, revenue and profit increased last quarter, driven by strength across both publishing and book fairs. In Trade Publishing, we launched Sunrise on the Reaping, the newest installment in Suzanne Collins' Hunger Games…

Thank you, Peter, and good afternoon, everyone. Before discussing our outlook, let me begin with our consolidated financial results for the quarter and full fiscal year. As usual, I will refer to our adjusted results, 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. Revenue increased 7% to $508.3 million in the fourth quarter and was up 2% to $1,625.5 million for the fiscal year. Adjusted operating income decreased to $63.4 million in the fourth quarter from $66.8 million in the prior year period. For the full year, adjusted operating income was $35.8 million compared to $44.7 million. Lower adjusted operating income in both periods versus a year ago was primarily caused by incremental amortization expenses on intangible assets related to the acquisition of 9 Story in the first quarter of fiscal 2025. Adjusted EBITDA increased 1% to $91.2 million in the fourth quarter and was up 6% to $145.4 million for the fiscal year. Turning to our segment results. In Children's Book Publishing and Distribution, revenue for the fourth quarter increased 9% to $288.2 million driven by strong performance in book fairs and our Trade Publishing division following the publication of Sunrise on the Reaping. For the full fiscal year, revenue increased 1% to $963.9 million, segment adjusted operating income was $58.2 million, up $7.8 million from the prior year period, reflecting higher revenue in our consolidated trade and School Reading Events divisions. For the full fiscal year, adjusted operating income for the Children's Book segment increased $7.5 million to $131.3 million. Within school reading events, book fair revenue increased 5% in the fourth quarter to $177.8 million and 1% for the full year to $548.3 million. These results benefited from…

Thank you, Haji. We are very pleased with the meaningful progress our team has made over the past 6 months, executing strongly, reducing significant costs, strengthening our organization and organizational structures, returning capital to shareholders and taking steps to optimize our capital structure and balance sheet. Thanks to this work, which continues, we're well positioned for profitable strategic growth in fiscal 2026. We continue to focus on our long-term opportunity as a global leader in the children's publishing, media and education space where Scholastics brand, IP and distribution channels present compelling growth opportunities to meet kids, families and schools essential needs to educate, inform and engage kids. I want to thank our employees, authors, illustrators and creators for their tremendous dedication and hard work and our shareholders for their continued support. We all look forward to continuing our momentum to create value and impact in the year ahead. Thank you very much. And 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 will come from the line of Brendan McCarthy from Sidoti.

I wanted to start off on the cost side. I know you pointed to potential cost savings in fiscal '26. Curious as to what are the sources of those cost savings going forward?

So a majority of the cost actions are coming out of non -- more discretionary functions, things that we can cut back on as we're looking to be more frugal as an organization. Things that are not really revenue-driven. Those are the major areas that we're looking at from our perspective right now.

Got it. So you expect that will flow through to overhead ultimately stepping down in fiscal 2016 compared to fiscal '25?

Exactly. So we're getting the full year impact of the stuff right in FY '26. So the FY '25 stuff as we showed in -- we talked about in the script, we're experiencing -- we saw $15 million of that in FY '25, and we're going to see another $10 million in FY '26.

Great. Great. Got it. And turning to the Education Solutions business. I think you mentioned you're looking for maybe flat revenue there in fiscal '26. Curious as to what are the kind of driving factors behind that expectation? And is that different from what you had expected for fiscal '26 a couple of quarters ago?

Yes. It's Peter here. Yes, we -- when we actually look at our overall education business, we do have parts which actually have been going well. And therefore, a lot of the state-sponsored work that we do, for example, and some of the supported work that we get, I mean, are going well. So we could -- we would certainly see those increasing. I mean, the market continues to be cyclically difficult, especially with districts and schools but we do expect the situation to progressively improve just because of the normal cyclicality of the education business. So we think that we'll be in a good position to at least have flat revenues in what we do in education. But allied to that is the fact that we see growth in the more profitable parts of the business that we are conducting and also, we've taken some major steps to make sure that we are operating as efficiently as possible and repositioning the business for medium- to longer-term growth.

Great. I appreciate the color there. And when you look at how states or school districts are approaching literacy instruction, are you still seeing a pretty large shift towards the science-based reading approach? And do you ultimately still anticipate to launch products geared towards the science of reading in fiscal '26?

Yes. I mean, science of reading is certainly continuing its sort of growth and the importance across states. We've already got some materials which we have, which are ready for it, the knowledge library, for example, is strongly aligned with the signs of reading. And has had very -- we expect it to have a very positive feedback. So that's all looking good. I think the other thing, which is happening around literacy though, which is worth saying, is this increasing realization that having books in the home is 1 of the really key things for helping kids. And of course, that's where our state sponsored and some of our other activities are based. So I think what we're doing is very, very much in line with the way in which literacy is being tackled in all states.

Understood there. And on the state-sponsored programs, what's the pipeline look like there? I know that there's a handful of states in the Southeast that you're -- that you've partnered -- have partnership with, just wondering what the pipeline looks there for additional state partnerships?

No we have -- the pipeline, we have multiple conversations which are going on with state governments. And I just had a full, as it were, a review of this actually this week. I'm pretty optimistic that things are going well, both in terms of being able to expand what we do in those states, which are, generally speaking, are in the Southeast. We also have to acknowledge that the sales cycles are quite long. And we've been in discussions for quite some time. But I think there's a growing realization that this literacy is a problem that really needs to be tackled. And people understand that that's what parents and electors and everybody else wants. And I think that we're seeing that there's very, very good progress being made in a number of states now. And it's also that we're very uniquely positioned here. Our brand, our books, our distribution channels, we can really offer a tremendous service here, and that's recognized by the way, we've been able to build our business here over the last 4 years.

Understood. I appreciate the detail there, Peter. And I wanted to talk about the trade channel combination with the school channels. I guess are you seeing or hearing any initial feedback from customers just related to that combination or maybe any internal feedback on kind of how that -- or I guess, what impact that combination has made so far?

Well, the main impact at the moment is really internal rather than external. And it's been tremendous, actually. I mean I've been super pleased with the way in which people feel that this creates an environment whereby both the publishing and the distribution channels can work more effectively together going forward. And there is tremendous excitement about that internally. And we're going to see that externally as well. I'm sure. I mean we have the opportunity to be able to link what we're selling in schools through the book fairs and book club channels in a much more integrated way than we've done before with the Trade Publishing. And we'll see that because they're working on short- term gains which we can leverage and benefit from in FY '26, particularly in book fairs in the spring, for example, and we have this secret sauce, which is that we are both a publisher and a distributor. And that gives us a lot of knowledge. It gives us a lot of leverage, and it's very, very powerful. And I think that bringing this together has been something that I think is really going to make a difference. And it's even going to make a difference in the short term. It's going to have a much bigger impact, I think, during the -- once you go forward into the next 2 financial years beyond FY '26.

Great. That makes sense. One more question for me just on the entertainment business. It looks like revenues stepped down there in fiscal '25, but you're looking for the return to revenue growth in fiscal '26. I guess from a profitability standpoint, what's your expectation there for the entertainment business for fiscal '26?

Brendan, this is Haji again. We expect it to be slightly lower, but in line with this year. We have the headwinds, of course, inflation that is impacting that organization. but we're guiding to see basically flat profitability.

Understood. And is that just -- just to provide more detail there. Is that just inflationary impacts on the production side, on the cost side? Or are there other cost trends in play?

Yes, so from an entertainment perspective, we're actually seeing the production activity pick up a little bit with more green lights coming in, but that's usually going to -- like I said in my talk earlier, it's going to mainly impact us in FY '27. We're going to see some stuff on the end of FY '26, but mainly in FY '27 on the revenue side.

Got it. Got it. And Haji, I know you mentioned the real estate assets and the potential monetization there. Are you able to provide any color on the timing of a potential sale leaseback transaction and looking at -- I know you mentioned potentially buying back shares or paying down debt. But are you confident in buying back shares at this level? Or how do you -- how can we kind of think about the capital allocation priorities?

Well, first of all, I'll talk about the timing. The team is working really hard right now to get things out. Newmark has been a really good partner with us so far. And we're hoping, as I mentioned earlier, to have something within the next 90 to 120 days. In terms of our capital allocation priorities, we're going to remain consistent with returning capital to shareholders as possible when we can. But we did a lot of share repurchasing in the fourth quarter which is shown in our numbers already. So we were ahead of the game because the share price was a good opportunity for us to really buy some stuff back.

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

Yes. No, I'm excited -- it's Peter here. I'm excited about the new fiscal year ahead. I mean, I think we're in good momentum. We've got a positive outlook, and we continue to focus on creating shareholder value and impact, that's so important to us. And we look forward to providing more updates including on our first quarter call in a couple of months' time. So thank you to all who joined us this afternoon live or if you're listening to the recorded call later, we very much appreciate your support. So thank you all very much, and goodbye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.