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Good day, and thank you for standing by. Welcome to the Scholastic Corporation Reports Third Quarter Fiscal Year 2026 Results. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. To ask a question, please press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. I would now like to hand the conference over to your speaker today, Jeffrey Mathews, Executive Vice President, Chief Growth Officer, and President, Scholastic Education.

Hello, and welcome everyone to Scholastic Corporation's fiscal 2026 Third Quarter Earnings Call. Today on the call, I am joined by Peter Warwick, President and Chief Executive Officer, and Haji Glover, our Chief Financial Officer and Executive Vice President. As usual, we have posted the accompanying investor presentation on our IR website at investors.scholastic.com. You may download it now if you have 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 reconciliations of those 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 email address, [email protected]. I will now turn the call over to Peter Warwick to begin this afternoon's presentation.

Thank you, Jeff. Good afternoon, everyone, and thank you for joining us. In the third quarter, Scholastic Corporation advanced our strategy to support long-term growth and enhance shareholder value. A key milestone was the successful completion of our sale-leaseback transaction involving our New York City headquarters and Jefferson City distribution facility last December. This unlocked more than $400 million in net proceeds and represented an important step in optimizing Scholastic Corporation's balance sheet. Consistent with our disciplined approach to capital allocation and our belief that the company's shares represent a highly accretive investment, we moved quickly to return cash to shareholders under an upsized $150 million share repurchase authorization we have nearly exhausted. We have already bought back more than 4,400,000 shares for approximately $147 million in the open market, or $33.30 per share on average. With a view toward further optimizing our balance sheet and enhancing shareholder value, today, we are announcing long-term net leverage targets for the company, as Haji will discuss. As a next step, the board has authorized a $300 million share repurchase authorization comprising a $200 million modified Dutch auction tender offer, with the remaining $100 million to be used for repurchases in the open market. The offer price range has been set to $36 to $40 per share. Assuming it is fully subscribed, the tender offer would represent approximately 25% of Scholastic Corporation's shares outstanding as of quarter end. This is yet another step in the capital allocation strategy we have been executing since fiscal 2022, already returning over $650 million to shareholders through share repurchases and dividends while continuing to invest in initiatives that support long-term growth. Haji will provide additional details later in the call. Turning to our operating performance, third quarter results were in line with expectations as we continued executing on initiatives supporting long-term growth and margin expansion. As a reminder, this is typically one of our smaller quarters for revenue and profitability given the seasonality of our business. Based on our performance to date and outlook for the remainder of the year, we are reaffirming our fiscal 2026 adjusted EBITDA and free cash flow guidance. We expect full-year revenue to be approximately flat compared to the prior year, reflecting year-to-date softness in Education and very strong comps in Trade a year ago. Let me now turn to our segment performance, beginning with Children’s Book Publishing and Distribution. Last quarter, Children’s Book Group combined powerful publishing and beloved franchises with unique school-based distribution channels. Through Book Fairs, Trade publishing, and our proprietary school network all working together, we reach children and families and connect them with stories in ways no other company can replicate. Book Fairs once again demonstrated the strength of Scholastic Corporation’s unique school-based channels. Fair counts continue to grow year to date, and we are benefiting from higher revenue per fair, strategic merchandising and pricing initiatives, lower cancellations, and greater adoption of eWallet. That is a digital payment account that allows families to preload funds for students to spend at the fair, increasing participation and simplifying transactions. We have also experienced strong redemption of Scholastic Dollars, the reward currency schools receive for hosting Book Fairs. A key innovation this year is the launch of Discovery Fairs, the first new format we have introduced in more than a decade. These fairs feature curated collections that focus on science, technology, engineering, arts, and math, alongside hands-on science and art kits designed to bring discovery-based reading and learning into the fair experience. Early pilots have already shown robust demand. Building on the partnership we announced last quarter with sensation Mark Rober, which reaches more than 70 million subscribers, we are beginning to bring his highly popular science and engineering brand CrunchLabs to students through Scholastic Corporation’s publishing and school channels, including new books, activity guides, and Klutz-branded products. As we look ahead, Book Fairs remain one of Scholastic Corporation’s most powerful channels to reach children and families and represent a meaningful long-term growth opportunity for the company. In Book Clubs, our other school-based channel, results continue to reflect evolving classroom and teacher engagement patterns. The program is expected to reach nearly 300,000 teacher sponsors nationwide this year, providing Scholastic Corporation with a direct connection to classrooms across the country. We saw sequential improvement from the fall as recent program improvements, including updated flyers, improved digital ordering, and targeted promotions, strengthened teacher engagement and participation. In Trade publishing, Scholastic Corporation’s publishing portfolio and global franchises continue to resonate strongly with kids around the world. Third quarter results were solid, though down relative to the prior year, reflecting shifts in the publishing calendar compared to a year ago, along with the impact of adverse winter weather and other short-term impacts on the retail book market. Following the successful launch of Dav Pilkey’s Dog Man: Big Jim Believes in quarter two, momentum across Pilkey’s publishing universe remains strong. The latest title in the series held the number one children’s title for seven consecutive weeks and was the number one overall title across the industry in both November and December, while backlist titles also continued to perform strongly on bestseller lists. Looking ahead at quarter four, Pilkey’s universe expands into the fast-growing category of children’s manga with Captain Underpants: The First Epic Manga publishing in April. The Hunger Games franchise continued to generate strong global demand with the latest title in the series, Sunrise on the Reaping. This book has now sold approximately 5.4 million copies and remained on bestseller lists since its release last March, including 50 consecutive weeks on the young adult bestseller list and currently ranking number three nearly a year after its initial release. More recent special editions, as well as the award-winning audiobook, have helped sustain momentum across the series. We expect continued Hunger Games momentum from paperback and movie tie-in editions ahead of the Lionsgate film adaptation of Sunrise on the Reaping this fall. Our Wings of Fire series also continues to engage readers globally with the recent release of the graphic novel edition of Talons of Power, which debuted at number one overall in December and currently holds the number three position on the New York Times Graphic Books and Manga bestseller list. Furthermore, in the first week of the new quarter, we published Wings of Fire No. 16: The Hybrid Prince, the highly anticipated new installment in the series and the first in several years. The book debuted as the number one title overall across both children’s and adult categories, already captivating avid fans and new readers of this thrilling dragon series around the world. Turning now to Scholastic Entertainment. In the third quarter, this division continued expanding the reach of our IP across digital platforms and new audiences. We advanced our pipeline of media development and production as we begin work on major new projects expected to be announced in the coming months. Greenlight activity also is improving, and with it, the strength of our development slate, supported by our in-house production and animation capabilities. We grew viewership and reach across our digital platforms, particularly YouTube and Scholastic TV, as families continue discovering Scholastic Corporation’s stories and characters in new ways. Our Scholastic-branded YouTube channels generated more than 85 million views in the quarter, up over 200% year over year, with audiences spending over 21 million hours watching our content. On YouTube last quarter, we expanded our network of branded channels with two new curated hubs, Scholastic STEAM and Scholastic International, surfacing our content to a larger global audience. At the same time, our Scholastic-branded set-top TV app continued to scale as a trusted destination for families seeking high-quality children’s programming in an increasingly crowded digital media landscape. The platform now offers more than 800 episodes across Scholastic Corporation properties and is available across major streaming ecosystems, including Roku, Apple TV, Fire TV, and Android platforms. Since launching this fall, the app has already generated nearly 100 million minutes watched and more than 5 million views, with engagement averaging about 30,000 views per day. Growing audiences across our digital platforms create new opportunities to extend our stories and characters across books, digital platforms, television, and consumer products. One example of this is our Clifford the Big Red Dog franchise, where increased engagement across digital platforms and media is helping introduce the character to a new generation of kids and reinforcing demand for the books. Book sales across all Clifford titles have grown meaningfully this financial year compared to the prior year. Turning now to Scholastic Education, where we are making meaningful progress executing our strategy to transform the business for growth. Revenues were down 2%, representing a significant deceleration of the declines we saw in the first and second quarters of the year. Importantly, profitability improved year over year. In January, we appointed Jeff Mathews as the permanent President of the division, after he stepped in to lead this division on an interim basis last June. Jeff also continues in his role as Chief Growth Officer. Under his leadership over the last nine months, the team has refined the go-to-market strategy and streamlined the product portfolio to align more closely with district and school needs. We have also taken significant steps to sharpen our focus on the areas where Scholastic Corporation is best positioned to help children achieve their full potential through literacy, partnering with districts, schools, teachers, families, and communities while improving the cost structure and operating discipline of the segment. District and school spending on supplemental curricula and resources, including our instructional programs, classroom libraries, literacy resources, and professional services, remains tight given continued funding uncertainty and the ongoing transition of the U.S. education system to science-based approaches to literacy instruction. As seen in last quarter’s results, more effective and efficient go-to-market execution and stronger product alignment with the science of reading are having a positive impact. We continue to close the gap with the prior year as we stabilize this portion of the business and position ourselves for growth in a recovering market. It is important to remember, however, that as a product category, supplemental curricula and resources represented only approximately 25% of Scholastic Education’s revenues last year. Unlike most educational publishers that primarily compete in the instructional space, Scholastic Education also has significant business lines dedicated to serving teachers, families, and community partners. Building on the power of our trusted brand, our solutions give children access to engaging books and magazines and enable their development as readers while empowering teachers and families through evidence-based tools and support. Funding here is significantly more diverse than for instructional sales, spanning district and school budgets, state and philanthropic grants, and teacher and parent purchases. It is not surprising this portion of the division is less volatile and has consistently outperformed relative to the school- and district-focused segment. In fact, teacher, family, and community-focused sales here have grown significantly relative to pre-pandemic levels. With modest investment in our non-school channels and in our existing product, this segment of our business represents a significant growth opportunity in the years ahead. Looking ahead, we believe Education is well positioned to continue stabilizing performance in fiscal 2026 with a goal of returning to growth in fiscal 2027. Turning now to our International segment. Our major markets continued to benefit from the strength of Scholastic Corporation’s global publishing franchises in quarter three, even as year-over-year comparisons reflected the timing of this year’s publishing compared to last fiscal year. During the quarter, we saw strong contributions from markets including Australia and the United Kingdom, where we continue to benefit from operational improvements across the business. Demand for English-language learning materials continues to expand globally, representing a long-term opportunity, as schools and families increasingly seek high-quality literacy materials. Looking ahead, we remain focused on growth and margin improvement in our international operations. In summary, our third quarter results reflect progress executing the strategy we put in place to strengthen Scholastic Corporation’s operating performance and create long-term value. The actions we are announcing today, including leverage targets and the new share repurchase authorization, including the tender offer, reflect our continued commitment to disciplined balance sheet management and shareholder value creation while investing to drive sustainable growth. I will now turn the call over to Haji.

Thank you, Peter. And good afternoon, everyone. As usual, I will refer to our adjusted results for the third quarter, excluding one-time items, unless otherwise indicated. Please refer to the tables in today’s earnings press release and SEC filings for a complete discussion on one-time items. As Peter discussed earlier, during the quarter we completed the sale-leaseback transaction related to our New York City headquarters and the Jefferson City distribution facilities. This generated over $400 million in net proceeds to be used in line with our capital allocation priorities. As noted last quarter, these highly accretive transactions will reduce adjusted EBITDA by approximately $14 million on a partial-year basis in fiscal 2026, primarily reflecting incremental lease expense and the elimination of rental income previously recognized on these assets. Please see last quarter’s earnings presentation for a reconciliation of the estimated partial-year and pro forma full-year P&L impact of the sale-leaseback transactions. Let me begin with our consolidated financial results. In the third quarter, revenues were $329.1 million compared to $335.4 million in the prior-year period. Adjusted operating loss was $24.3 million compared to $20.9 million in the prior-year period. Adjusted EBITDA was approximately breakeven compared to $6 million in the prior-year period, primarily reflecting the partial-year impact of the sale-leaseback transactions, offset by higher gross profits in Children’s Book Group reflecting company-wide cost discipline. Excluding the sale-leaseback transaction partial-quarter impact of $3 million on adjusted operating loss and $6.7 million on adjusted EBITDA, adjusted operating loss was $21.3 million and adjusted EBITDA was $6.7 million, approximately in line with the prior year. Net loss was $3.5 million compared to a net loss of $1.3 million in the prior-year period. On a per diluted share basis, adjusted loss increased to $0.15 compared to a loss of $0.05 last year. Turning to our segment results, in Children’s Book Publishing and Distribution, revenues for the third quarter decreased 3% to $197.6 million, reflecting timing of major publishing releases compared to the prior year, partly offset by continued strength in Book Fairs. Segment adjusted operating profit improved to $8.9 million from $7.6 million in the prior-year period, reflecting the benefit of higher Book Fair revenues and continued cost discipline. Book Fairs revenue increased 2% to $113.3 million in the quarter, primarily driven by higher revenue per fair. We expect higher fair count and revenue per fair to contribute to revenue growth in our Book Fairs business this fiscal year. Book Club revenues were $14.6 million in the quarter, relatively flat compared to $15.2 million a year ago, reflecting lower teacher participation at the start of the school year, partly offset by recent program improvements that have increased participation sequentially from the fall period as teacher sponsor counts stabilize. We anticipate these trends continuing into the remainder of the year. In our Trade publishing division, revenues were $69.7 million in the third quarter compared to $77.4 million in the prior year, a decrease of 10%. These results reflect the timing of this year’s publishing calendar compared to the prior year, when the third quarter benefited from a major Dog Man release. Looking ahead, we remain optimistic about sustained momentum across our major global franchises. Given the timing of this year’s publishing plan, coupled with short-term disruption on retail purchasing patterns, including the impact from severe winter weather, we expect Trade to be slightly below the prior year on a full-year basis. Turning to our Entertainment segment, revenues increased by $3.2 million to $16 million compared to $12.8 million in the prior year, primarily driven by increased episodic deliveries and higher production services revenues. We remain positioned for growth in the fourth quarter and into fiscal 2027, reflecting recent greenlight momentum and revenue recognition typical for media development and production. Segment adjusted operating loss was $2.5 million compared to $2.4 million a year ago. Turning to our Education segment, revenues were $56.1 million in the third quarter compared to $57.2 million a year ago, a decrease of 2%, reflecting lower spending on supplemental curriculum products as school and district spending continues to experience near-term funding uncertainty. We have seen moderating declines throughout the fiscal year as the transformation of this business begins to take hold. Segment adjusted operating loss improved to $5.2 million compared to a loss of $6.9 million in the prior-year period, reflecting a lower cost structure, improved operating discipline, and the benefits of reorganization initiatives implemented over the last several quarters. Ahead of what we expect will be a gradual market recovery, we expect profitability in the fourth quarter, ahead of growth in fiscal 2027. Turning to our International segment, revenues were $58.7 million in the third quarter compared to $59.3 million a year ago. Excluding the $3.5 million year-over-year impact of favorable foreign currency exchange, segment revenues declined $4.1 million, primarily driven by the publication timing of Dog Man compared to the prior year. Segment adjusted operating loss was $4.7 million compared to $2 million in the prior-year period, reflecting lower revenues. We continue to expect modest declines in revenues and profitability in this segment following strong Trade performance in fiscal 2025. Unallocated overhead costs increased by $3.6 million to $20.8 million in the third quarter, primarily reflecting $3 million of higher rent expense and lower rental income previously recognized on the New York City headquarters property, all related to the sale-leaseback transactions. Now turning to cash flow and the balance sheet, in the quarter, net cash used by operating activities was $30.5 million compared to $12 million in the prior-year period, primarily driven by higher tax payments related to the sale-leaseback transactions, partially offset by lower royalty payments. Free cash flow in the third quarter was $407 million compared to free cash use of $30.7 million in the prior-year period, reflecting approximately $400 million in net proceeds from the sale-leaseback transactions completed during the quarter. The company fully repaid the outstanding balance on its unsecured revolving credit facility and ended the quarter with net cash of $90.6 million compared to net debt of $136.6 million at the end of fiscal 2025. As a result, interest expense in the quarter was significantly lower year over year. As part of our broader capital allocation strategy, we are establishing long-term net leverage targets of 2.0x to 2.5x adjusted EBITDA for the company. We believe this target range effectively balances balance sheet strength and our ability to continue investing in long-term growth opportunities on the one hand, with balance sheet efficiency and our ability to enhance shareholder returns on the other hand. I want to emphasize that this is a long-term target as we move toward these leverage levels over time. We have already taken near-term steps to accelerate capital returns to shareholders, supported by the significant liquidity unlocked in December. We have already returned approximately $147 million to shareholders through open-market share repurchases, representing the repurchase of more than 4,400,000 shares since completing the sale-leaseback transactions in December. In the third quarter, the company also distributed $5.1 million through its regular dividend. As announced earlier today, the board has authorized a new $300 million share repurchase authorization comprising a $200 million modified Dutch auction tender offer at $36 to $40 per share, with the remainder available for open-market repurchases. This is another disciplined step to return excess cash to shareholders. We expect the tender offer to commence on Monday, March 23, 2026, and to remain open until Monday, April 20, subject to customary conditions. This transaction is expected to be funded through a combination of available cash on hand and borrowings under our credit facility. Following the completion of the tender offer, we expect to maintain substantial liquidity to pursue our capital allocation priorities. Full details regarding the tender offer will be included in the tender offer statement to be filed with the SEC. With these actions in place, the company has taken measured steps to return excess capital to shareholders while maintaining a strong balance sheet and supporting long-term growth initiatives. Now for our outlook. In the fourth quarter, we continue to anticipate revenue growth in our School Reading Events and Entertainment divisions, partly offset by lower year-over-year revenues in our Trade and International divisions, reflecting strong prior-year comparisons when the publishing schedule benefited from the major Hunger Games release in 2025. We expect fiscal 2026 revenue to be approximately in line with the prior year, reflecting strength in Book Fairs offset by year-to-date softness in Education and strong prior-year comps in Trade, as I just discussed. On a full-year basis, we have reaffirmed our outlook for fiscal 2026 adjusted EBITDA of $146 million to $156 million, which includes a partial-year impact of approximately $14 million from the sale-leaseback transactions. As typical for our seasonal business, we expect a return to profitability in the fourth quarter following the seasonal operating loss in the third quarter. We remain focused on driving favorable operating margins as we continue to benefit from our lower cost structure. We have also reaffirmed our fiscal 2026 free cash flow outlook to exceed $430 million, reflecting the proceeds from the sale of our real estate assets, as well as operating cash flow in excess of our CapEx and prepublication needs. As for the impact of tariffs, we continue to expect approximately $10 million of incremental tariff expense in our cost of product this fiscal year. We are closely following changes in policy and will provide additional details as needed once greater clarity emerges. Thank you for your time today. I will now turn the call back to Peter for his final remarks.

Thank you, Haji. In conclusion, we are pleased with our team’s progress during the quarter to advance our strategic plan and execute another step in our capital allocation strategy, including quickly and efficiently returning excess cash to shareholders. As we look to quarter four and beyond, we continue to benefit from the strength of our global franchises, trusted brand, and unique school-based channels, while expanding the reach of our stories and characters to audiences. At the same time, we will continue to reposition our Education business for growth. I would like to thank our employees, authors, illustrators, and creators for their dedication and hard work, as well as our shareholders for their continued support. Thank you very much. I will now turn the call over to Jeff. Thank you, Peter.

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

Thank you. Press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. One moment for questions. Our first question comes from Brendan McCarthy with Sidoti & Company. You may proceed.

Great. Good afternoon, everybody. I appreciate you taking my questions here. Just wanted to start off looking at the rest of the fiscal year and specifically the fourth quarter. Just achieving the flat revenue target for the full fiscal year, it looks like it implies roughly 2% growth in the fourth fiscal quarter compared to the prior-year period. I just wanted to walk through some of the different factors at play there. I know that will exclude about $3 million in rental income in the quarter, and also a challenging comparison in the Trade channel, sales from The Hunger Games release in 2025. I am just curious as to your confidence in achieving that 2% growth target for the quarter?

Hi, Brendan. It is Peter here. I think Book Fairs are the major factor that we see in the fourth quarter in terms of revenue growth. It is a big quarter for Book Fairs, and we have been doing very well, and all the initial indications that we have got so far are positive. So that is one of the key factors. We also, of course, have to take into account, as you mentioned, the Trade timing issue that we do have to deal with, so Trade is not going to exceed the revenues that we got in the fourth quarter last year because of the big success of Sunrise on the Reaping. The other factor is really in Education, because we have been progressively closing the gap in Education against the prior year, and we are anticipating that the reduction that we have been seeing will be much less of an impact in the fourth quarter. It is a big quarter for Education, and it has been encouraging to see that in that segment we have been doing progressively better each quarter. We actually performed on the bottom line better in the third quarter than we did in the same third quarter last year, and so we are anticipating that all the work that Jeff and everybody has been doing in Education will begin to yield some results in the fourth quarter. So that is why we are feeling that we can be there or thereabouts on our revenues for the year.

Understood. I appreciate the detail there. And in the Education business, I think it is great to see the magnitude of top-line declines has been improving. It looks like in each quarter of this fiscal year. Can you talk about the sales pipeline for the fourth quarter as it relates to the different products being, you know, summer reading packages, supplemental materials, and maybe the state- or the state-sponsored programs as well?

In terms of the actual sales pipeline, we are obviously expecting to do well with summer reading because this is the quarter when a lot of that happens. One of the great things that we have seen with our sales pipeline is that it has been improving each quarter—quarter two is better than one, three better than two, and fourth looking better than three. So that is where we expect to do well, with summer reading. We are also expecting to do well with the Knowledge Library and with the book packs that we have been putting together that support science of reading. And we have also got the usual for the fourth quarter; we have good initiatives in line for the Books to Home through the programs that we do with the various states.

Understood. Thanks, Peter. And a similar question on the adjusted EBITDA guidance. It looks like you will need about $80 million in adjusted EBITDA in Q4 to hit the guidance range for the full fiscal year. Again, I know there is an impact from the sale-leaseback transaction—$14 million for the full second half of the fiscal year. Any other factors there that give you confidence that you will hit the guidance range?

Hey, Brendan. This is Haji. How are you doing?

Good, Haji. How are you?

I am alright. As we noted in the script today, we definitely are seeing some favorability from our cost mitigation actions that we have been taking throughout the year. So that is why we feel very confident in the fourth quarter. And plus, as you know from watching us over the years, the fourth quarter is our second biggest performing quarter. It is just a little bit more profitable because of all the cost actions that we have made throughout the year. That is really why we are very confident about the fourth quarter from a profitability standpoint.

That is great. And looking at the Entertainment segment, it looks like solid revenue growth there year over year in the third fiscal quarter. Are you really starting to see the pickup in greenlighting activity flow through to preproduction and ultimately the revenue?

Yes, we are. We have had a number of greenlights that have happened in the third quarter. We have just had a fairly significant one greenlit at the beginning of this week, post-closing for the third quarter, and that is looking good. It is looking better than it was, put it that way. I think that we have seen the bottom of that entertainment market. We have talked to one or two other companies who are involved in entertainment; they are seeing pretty much the same sort of thing. So I think entertainment has turned the corner. It is not going to grow explosively; it is going to be steady growth, but I think that the growth that we see now in that marketplace will sustain the revenues, activities, and bottom line that we have baked into our fourth quarter, and also set us up well for our fiscal year 2027.

That is great. And from an operating income perspective there in the Entertainment segment, are you looking for positive operating income in Q4, or will that flow through in fiscal 2027 maybe?

We should see a little bit of profitability in the fourth quarter from them, from an EBITDA basis.

Got it. Okay. Great. I appreciate the detail. That is all for me.

Thank you, Brendan.

Thanks. Bye.

Our next question comes from Drew Crum with B. Riley Securities. You may proceed.

Okay. Thanks. Hey, guys. Good afternoon. Peter, just on the Book Fairs business to start, a few weeks into the current quarter, it sounds like you are pretty encouraged by what you are seeing, how the business is tracking. Any specific KPIs you can point to behind the confidence in the outlook?

We can point to, first of all, the number of fairs, which is up, so that is good. Also, the revenue per fair is looking in line or better with what we were anticipating. And we have also had fewer cancellations than the prior year. Those are really the big three in terms of performance. So we are feeling good about that. And, thankfully, this year any bad weather was during the time when there were not very many Book Fairs. Compared to some other years, that has been a factor, but we have not really had that in our fairs this year. So things are looking promising.

Got it. Okay. And then maybe for Jeff or Haji—you guys narrowed the revenue guidance range for the year, it looks like; I know, a $15 million to $25 million downgrade to the top end. Our interpretation is this is specific to the Education segment. Was it a shortfall in fiscal 3Q relative to your internal model? Is the business not tracking to your previous plan for fiscal 4Q, or is it a combination of both factors? Because I thought you guys did a pretty nice job of narrowing the year-on-year decline—that is the first part of the question. And did I hear correctly that you expect that business to grow top line in fiscal 2027?

Drew, it is Jeff Mathews here. Great question. So on the adjustment in the top-line outlook, I want to be clear that we mentioned year-to-date Education results. The change in outlook was really more related to some of the dynamics we saw last quarter in Trade. I will let Haji talk about that. As far as the fiscal 2027 outlook for Education, of course, we have not provided guidance for next year. Our goal very much from the beginning has been to return this business to growth. We know that is its opportunity, and it is the mandate the team and I have. We will provide more outlook on that, but clearly we are encouraged by the sequential improvements in the business. The cost savings that we have taken, restructuring very strategically, have given us the runway to make some investment in the growth that we will need to drive for next year. Haji, do you want to take the first part on guidance?

Yes. On the Trade business, as we mentioned before, we had a very strong fourth quarter with the Sunrise on the Reaping book that came out, so we are dealing with that. But at the end of the day, we see other groups like Entertainment performing well in the fourth quarter, so that is why we are expecting some good news. And then you take the impact of the sale-leaseback—if you back that out from an adjustment basis, I think that is about $6 million on the top line as well. The other organizations, in terms of, like Peter had mentioned earlier, we definitely see some strong performance in the CBG group, mainly Fairs, and a leveling off in the Clubs business within that group.

Got it. Okay. And then maybe, Haji, one last one for you. I am not sure you are going to answer this, but I will try. The language you use for the 2.0x to 2.5x net leverage target—being “longer term”—how soon could we see the business reach that threshold?

Like I said before, we are definitely not going to jump in and go right up to 2.0x or 2.5x day one. Right now, as you know, we are in a net cash position. But once we go into the tender, if we fully execute the tender, that would only pull us to a little bit under 1.0x net leverage turn. So we feel very comfortable with that number. Like I said, this is a very historical moment for Scholastic Corporation—just setting out targets in general. So I am confident in our future and making sure we continue to manage our balance sheet effectively. One point I do want to mention on that: we will be saving some working capital draw as well on our debt because, due to our seasonality, we do not have a lot of revenue coming in this period, so we would have to draw on that. So that would increase the leverage, but that is seasonal.

Thank you. Alright.

And this concludes our question-and-answer session. I will pass the call back to Peter Warwick for any closing remarks.

Thank you very much, and thank you to all of you for joining our call today. As you know, we appreciate your support. We will continue on our strategy to strengthen Scholastic Corporation’s operating performance and create long-term value as we move through the end of fiscal 2026. So again, thank you all for your support, and goodbye.